DefinePK

Abstract

The laws of economics oversee the interplay betweenprice of a commodity and how prices affect the demandof that commodity. A logical condition is assumed whilestudying the impact of price on demand, which believesthat “everything else must remain constant”. However, ina real-world scenario there is no such thing as “constant”.It’s an ever-changing world and there are so manyvariables to consider while making any assumption.Healthcare market is unique in the sense that no othermarket has so much difference in the knowledge of client(patient) versus the supplier (doctor). This differencecreates another phenomenon, called “supplier-induceddemand”where the client must follow all the instructionsof the supplier diligently. This phenomenon not onlycreates the demand of prescribing physician (number ofvisits, follow ups) but also it generates the demand ofother players in healthcare market. The physician may askclients to purchase any medicine, or a specific brand ofthe medicine, get tests done from a specific diagnosticcentre or seek admission in a specific health facility fortreatment or surgery. This makes healthcare markethighly imperfect and creates failures in some of the basicassumption of economics.1 Given the nature of healthcareclients, coming to seek health, mostly in a life-or-deathsituation, assumption of rational decision making may notalso hold true. These patients or their relatives are willingto do anything to alleviate pain and suffering and to savetheir lives or the lives of their loved ones. In such acondition there are chances of market failure whensupplier has greatest advantage over the consumer andcan make the market shift towards supplier’s ownbenefits. Even if the notion of ethical practice by physicianis believed to be normal, there are conditions where hugemarket imperfections result in supplier-driven-demand invogue.2
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