Pharma regulation: A complex problem

Many consumer goods contain an asymmetric information problem. It is unreasonable to think that a consumer will run tests and verify the purity and soundness of a product, especially in the case of food and drugs. As an example, on March 13, there were reports of a big fake drugs racket in Delhi. Government intervention could potentially be useful in addressing this “market failure”, if commensurate state capacity can be created.