Adherence to ethical standards: Pharmacists as experts

Credence goods are characterised by qualities of products that cannot be detected by consumers before their use, preventing them from assessing beforehand the true experienced utility. This study aims to apply the credence goods framework to the joint diagnosis-treatment in the sale of over-the-counter medicines in a real world setting. The presence of inefficiencies was studied through a unique sample (394 observations) of OTC pharmaceutical purchases in a controlled Australian field setting. This study provides first evidence from a simulated patient experiment on the provision of advice and pharmaceuticals using the credence goods framework in Australia. The results indicate there are significant inefficiencies present through over- and under-treatment, overselling and diagnostic failure. The analysis found that pharmacies were engaging in strategic overselling as a substitute for overcharging strategies which were not attainable due to institutional conditions.