UC Berkeley

Background

Public health initiatives must look for ways to cost-effectively scale critical interventions to achieve high coverage. Private sector distribution channels, can potentially distribute preventive healthcare products to hard-to-reach populations, decongest public healthcare systems, and increase the sustainability of programs by getting customers to share costs. However, little is known about how sellers set prices for new products. By introducing a new product, HIV self-test kits, to local drug shops, we observed whether shops experimented with pricing, charged different buyers different prices, and whether prices converged within the local market over our study period.

Methods

From August to December 2019, we provided free HIV self-test kits, a new product, to 26 drug shops in Shinyanga, Tanzania to sell to the local community. We measured sales volume, price, customer age and sex using shop records. Using a multiple linear regression model, we conducted F-tests to determine whether shop, age, sex, and time (week) respectively were associated with price. We measured willingness-to-pay to restock test kits at the end of the study.

Results

514 test kits were sold over 18 weeks; 69% of buyers were male, 40% were aged 25-34 and 32% aged 35-44. Purchase prices ranged from 1000 to 6000 Tsh (median 3000 Tsh; ~$1.30 USD). Within shops, prices were 11.3% higher for 25-34 and 12.7% higher for 45+ year olds relative to 15-19-year olds (p = 0.029) and 13.5% lower for men (p = 0.023) on average. Although prices varied between shops, prices varied little within shops over time, and did not converge over the study period or cluster geospatially. Mean maximum willingness-to-pay to restock was 2000 Tsh per kit.

Conclusions

Shopkeepers charged buyers different prices depending on buyers' age and sex. There was limited variation in prices within shops over time and low demand among shopkeepers to restock at the end of the study. Given the subsidized global wholesale price ($2 USD or ~ 4600 Tsh), further demand creation and/or cost-reduction is required before HIV self-test kits can become commercially viable in drug shops in this setting. Careful consideration is needed to align the motivations of retailers with public health priorities while meeting their private for-profit needs.