Including prices on TV ads only works when the price is listed alone

24 January 2019

The Trump administration's proposal to require pharmaceutical companies to list drug prices in television ads is unlikely to have a large impact on the way consumers think about expensive drugs and whether they would ask their doctor about them, according to research just published in JAMA Internal Medicine.

The study conducted consisted of a behavioural experiment to understand how consumers are likely to respond to the price disclosure. 580 participants were shown one of five adverts for a fictional diabetes drug Mayzerium and were told to assume they have been recently diagnosed with type 2 diabetes.

The control advert contained no mention of the price, while the other four listed a low price ($50 a month), a high price ($15,000 a month) or a modifier which suggested that the patient may pay as little as $0 a month due to insurance programmes or coupon availability.

Price disclosure did deter potential customers from asking about highly priced drugs. However, researchers found that the effect was mitigated when the advertisements included modifiers, which pharmaceutical companies have been pushing to be permitted.

“This regulation has good intentions, but the design of it leaves a huge loophole, and without getting rid of it, this law will have no effect,” said co-author Ge Bai, a researcher at Johns Hopkins University. “The loophole is that pharmaceutical companies understand that modifiers work.”

Researchers were clear to point out that these findings do not mean that price disclosure is ineffective but merely that the effect is conditional. “Will price disclosure work at all? The answer is yes: price disclosure works, absent anything else,” said co-author Bill Tayler, researcher at Brigham Young University. “But in a world where pharmaceutical companies behave logically, they will surely use a modifier of sorts that would unwind the entire benefit of this legislation.”



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