Working Paper No. 02-19

Inequality and Pharmaceutical Drug Prices: An Empirical Exercise
Eina Vivian Wong
October 2002

ABSTRACT

Several studies report that in both developed and developing countries, poorer individuals go without medical care, including pharmaceuticals. This is associated with both low income and inequality in income. Data also show that pharmaceutical prices in developing countries are sometimes higher than those in developed countries for identical products. While several studies find that per capita income has a significant and positive effect on pharmaceutical prices, the effect of income inequality has not been tested. The purpose of this paper is to estimate the effects of income inequality and per capita income on disaggregated prices of pharmaceutical drugs across countries. I find that inequality has a statistically significant and positive effect on prices. Per capita income, on the contrary, does not add significance to the model.

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