Tackling private corruption in Pakistan’s pharmaceutical sector

Research partners: Collective for Social Science Research

Principal investigator: Asad Sayeed

Summary

Pakistan’s pharmaceutical industry is currently valued at approximately USD$3 billion and comprises more than 750 firms. However, the top 50 firms have a market share of 89% and the top 100 firms have a market share of 97%, with the remaining 650 firms surviving on the remaining 3% market share. Meanwhile, prevalence of sub-standard manufactured pharmaceuticals has negative impacts on health and economic outcomes. The research project will examine different facets of corruption in Pakistan’s pharmaceutical industry, in order to find feasible anti-corruption strategies that increase the quality of available pharmaceuticals and encourage a dynamic economic sector.

Why pharmaceuticals?

Corruption in the pharmaceutical sector in Pakistan has multiple negative impacts on development. It inhibits growth and dynamism in the economy – as an illustration, we compare Pakistan’s export performance with Jordan and India and find Pakistan lagging far behind. Moreover, corruption also leads to higher out-of-pocket expenditures for consumers as well as putting pressure on health care services through repeat patients stretching scarce resources.

The research project

Amidst the different forms of resource capture due to corruption in the pharmaceutical sector, this project will focus on three possible forms in particular. The first is located in the large number of small firms surviving with a very small market share: financial survival may be facilitated through corrupt government contract and sub-standard drug production. The second lies in the prevalence of low quality (sub-standard) drug production, associated with regulatory failure. Third, regulated prices across the entire spectrum of pharmaceutical production in the country, generates incentives for sub-standard drug production.

While anti-corruption strategies to address health care-related regulation or to prevent collusion between doctors and manufacturers will be unfeasible, the research project will investigate possible feasible strategies which will take advantage of the bigger firms, who appear to be more rule following than others and have greater economic power. For example, collective action of large firms, along with coalition building with other relevant actors (such as NGOs) who have significant social power, could be a feasible anti-corruption strategy. The research will use a mixture of political economy and institutional analyses along with primary qualitative research to more accurately assess the feasibility of strategies targeting each of the three forms of corruption set out above.

This research grant project is one of four funded by SOAS-ACE. Read about the others here.