(Press-News.org) Forty percent of all malaria-caused deaths in sub-Saharan Africa occur in the Democratic Republic of Congo and Nigeria, according to the World Health Organization. The private sector "supply chain" manages 74% of the drug volume in Congo and 98% in Nigeria where malaria-stricken patients rely on "drug shops" and other for-profit retail outlets to get life-saving medicine.
New research forthcoming in Management Science determines that the "shelf life" of malaria-fighting drugs plays a significant role in how donors should subsidize the medicine in order to ensure better affordability for patients.
New concerns over the emergence of drug resistant parasites are yet one more reason that private donors who fund malaria drug programs remain intent on making medicine available and affordable to patients. Artemisinin-based combination therapies, known as ACTs, are considered the best anti-malarial drugs but the lack of affordable ACT supplies for the poor motivates private donors to intervene and improve access.
In "Subsidizing the Distribution Channel: Donor Funding to Improve the Availability of Malaria Drugs," Terry Taylor, associate professor, UC Berkeley's Haas School of Business, and co-author Wenqiang Xiao, New York University's Stern School of Business, analyzed purchase subsidies vs. sales subsidies.
Donors structure their purchase and sales subsidies per each product unit. A purchase subsidy is a discount or rebate offered to the retailer at the point of sale or when he places his order. In contrast, the retailer only benefits from a sales subsidy when he sells the product to the consumer.
By analyzing the product characteristics (short vs. long life), customer population (degree of heterogeneity or diverse makeup), and the size of the donor's budget, Taylor and Xiao found that for long shelf life products, such as ACTs (with a 24 to 36-month life from the factory to expiration), donors should only offer a purchase subsidy. In contrast, if a product has a short shelf life, a sufficiently large donor budget and a diverse customer population, it is optimal to offer a sales subsidy in addition to a purchase subsidy. Why?
"The sales subsidy becomes more attractive for perishable products because you don't have to subsidize a purchased product that doesn't sell," says Taylor.
Unlike previous research, the study's micro-level approach focuses on distribution channel details such as demand uncertainty, supply-demand mismatch, and the impact of subsidies on stocking and pricing decisions.
"In principle, it would seem that you would want to use both levers to influence stocking and pricing decisions," says Taylor. "However when we took both into account, our model shows that the purchase subsidy is more effective in increasing consumption of the medicine and ultimately, saving lives."
Taylor hopes these findings will help guide donors in improving the private-sector distribution channel for malaria drugs. He hopes that in the future, the study's results could also help inform subsidy decisions for other global health products such as oral rehydration salts, the first-line of treatment for childhood acute diarrhea in developing countries.
INFORMATION:
See paper: http://haas.org/1NN9kiO
A study published today on the safety of human breast milk bought over the Internet found that 10 percent of samples contained added cow's milk. The discovery that purchased samples of human milk may be purposely "topped off" with cow's milk or infant formula confirms a danger for the large number of babies receiving the purchased milk due to medical conditions. These babies are also vulnerable to the risk of infectious disease from bacterial and viral contamination of such milk, which was identified in a prior study by the same research team led by Nationwide Children's ...
ANN ARBOR, Mich. -- Two young men in their late teens sit in adjacent rooms of an inner-city emergency room. One is getting care for injuries he suffered in a fight, the other, for a sore throat. When the nurse tells each one he can go, both head back out to an environment rampant with violence, poverty and traumatic life experiences.
But, a new University of Michigan study finds, the one who had been in a fight will have a nearly 60 percent chance of becoming involved in a violent incident involving a firearm within the next two years. If he does, it'll probably happen ...
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"This is the largest electric dipole moment ever observed in a molecule," says James Shaffer, professor in the Homer L. Dodge Department of Physics ...
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An experiment conducted by Princeton researchers has revealed an unlikely behavior in a class of materials called frustrated magnets, addressing a long-debated question about the nature of these discontented quantum materials.
The work represents a surprising discovery that down the road may suggest new research directions for advanced electronics. Published this week in the journal Science, the study also someday may help clarify the mechanism of high-temperature superconductivity, the frictionless transmission of electricity.
The researchers tested the frustrated ...
Like most other plants, rice is well equipped with an effective immune system that enables it to detect and fend off disease-causing microbes. But that built-in immunity can be further boosted when the rice plant receives a receptor protein from a completely different plant species, suggests a new study led by UC Davis plant-disease experts.
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"Our results demonstrate ...
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The results appear in the April 2 issue of the American Journal of Human Genetics.
About one in every 5,000 babies is born with Hirschsprung's disease, ...
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The team, from the Cancer Research UK Centre at the UCL (University College London) Cancer Institute, found that mutations in the KRAS gene interferes with protective self-destruct switches, known as TRAIL receptors, which usually help to kill potentially cancerous cells.
The research, carried out in cancer cells and mice, shows ...
