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

Published on 23/01/19 at 10:11am

Requiring pharmaceutical companies to publish the price of their drugs on adverts on TV, would probably not help to control drug prices, according to a study published in the journal JAMA Internal Medicine.

While price disclosure did deter potential customers from asking about highly priced drugs, when patients viewed adverts for highly priced drugs containing a ‘modifier’ – suggesting that patients may not have to pay the full list price – they were still interested in the highly priced drugs.

“Will price disclosure work at all? The answer is yes: price disclosure works, absent anything else,” said co-author Bill Tayler, professor of accounting 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.”

In conducting the study, researchers at Johns Hopkins and Clemson showed 580 participants one of five adverts for the fictional diabetes drug Mayzerium – participants had been 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) and two other ‘modified’ ads which suggested that the patient may pay as little as $0 a month due to insurance programmes or coupon availability.

Showing participants the high price significantly reduced demand. However those who saw the modified ads were still interested in the drugs.

“Price disclosure in drug ads works only under the ‘tell the price, only the price, nothing but the price’ scenario,” said co-author Ge Bai, associate professor of accounting at the Johns Hopkins Carey Business School.

Louis Goss

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