Contraceptive Price Changes: The Impact on Sales in Bangladesh

By the end of 1993 Bangladeshs Social Marketing Company (SMC) was providing 2.2 million couple-years of protection 60% through condom sales and 40% through sales of oral contraceptives. The 1.4 billion condoms and 60 million cycles of pills it distributed were donated by the US Agency for International Development (USAID) at a cost to the donor in excess of $60 million. By 1989 these subsidies had become of great concern to USAID. The result was that at the beginning of April 1990 the SMC raised all of its prices. The increases averaged about 60% but varied somewhat; the price of a 3-pack of Raja condoms for example doubled. The market reaction was immediate: many of the largest-volume retailers and wholesalers refused to buy SMC products. Consumers also resisted the increases. Sales of Raja condoms fell the most declining by 29% between 1989 and 1990 while sales of Maya pills declined by 15%. Meanwhile hundreds of thousands of the poorest clients were lost to the program. In 1992 the SMC staff and board of directors decided to roll prices back to pre-1990 levels. In February 1992 the price of Raja condoms was reduced to the level it had been in the late 1980s; 6 months later the price of Maya pills was rolled back to early 1980s levels. During the 2 years of increased prices Raja condoms sales had dropped from more than 100 million pieces per year to fewer than 80 million. In 1992 sales rebounded to about 104 million pieces and the following year to nearly 125 million. Furthermore sales of Maya pills with their new low price reached 6.6 million cycles in 1992 nearly triple the figure for 1990. In Bangladesh price increases of low-cost socially marketed contraceptives while periodically necessary should be minimal and should be undertaken with great caution.