January 23, 2019
2 min read

Price disclosure through TV advertising may reduce consumer interest in high-priced drugs

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Requiring pharmaceutical companies to disclose prices in direct-to-consumer pharmaceutical advertising could potentially reduce interest in high-priced drugs, according to findings presented in JAMA Internal Medicine.

“In the ‘American Patients First’ blueprint released in May 2018, the Trump administration proposed including the drug price in any direct-to-consumer pharmaceutical advertising as an approach to lower prescription drug prices,” Jace B. Garrett, PhD, CMA, of the School of Accountancy, College of Business, at Clemson University in South Carolina, and colleagues wrote. “In October 2018, the Centers for Medicare and Medicaid Services proposed requiring that television [direct-to-consumer pharmaceutical advertising] disclose drug prices. We conducted a behavioral experiment to understand how consumers are likely to respond to price disclosure.”

Researchers recruited 580 participants from an online job board. They provided a scenario to participants in which they were to pretend they had recently been diagnosed with type 2 diabetes. The participants were then randomly assigned to view one of five advertisements for a fictitious diabetes drug.

Four of the advertisements disclosed a “low” price of $50 per month or a “high” price of $15,500 per month. The control advertisement did not mention the drug’s price.

Researchers also provided a “modifier” in some cases, which included a statement that indicated eligible patients could pay nothing for the drug per month.

At the end of the experiment, participants were asked to complete a questionnaire that measured how likely they would be to ask their physician about the drug, ask their insurer about the drug, research the drug online or take the drug. Participants also answered questions about the expected out-of-pocket cost and perceived effectiveness of the drug.

Researchers found that the price disclosure, with or without the modifier, did not change consumer responses for the low-priced drug but, for the high-priced drug, the disclosure reduced the likelihood of participants asking their physician about the drug (5.12 vs. 2.9; P < .001), asking their insurer about the drug (5.01 vs. 4.09; P = .003), researching the drug online (5.94 vs. 4.92; P < .001) and taking the drug (4.93 vs. 3.24; P < .001).

Woman taking sleeping pill 
Requiring pharmaceutical companies to disclose prices in direct-to-consumer pharmaceutical advertising could potentially reduce interest in high-priced drugs.
Source: Adobe Stock

However, these differences in responses to the high-priced drug were lessened when the modifier was included.

Finally, the researchers noted that participants did not perceive the low-priced drug as significantly less effective than the high-priced drug.

“Although many challenges remain in designing the ultimate U.S. Food and Drug Administration regulation, our results suggest that requiring pharmaceutical companies to disclose the price in [direct-to-consumer pharmaceutical advertising] can be potentially effective in reducing consumer interest in high-priced drugs, but the inclusion of modifiers in these disclosures can reduce or eliminate the influence of disclosure,” the researchers wrote. – by Melissa J. Webb

Disclosures: The authors report no relevant financial disclosures.