Consumer Responses to Price Disclosure in Direct-to-Consumer Pharmaceutical Advertising

In the “American Patients First”¹ blueprint released in May 2018, the Trump administration proposed including the drug price in any direct-to-consumer pharmaceutical advertising (DTCPA) as an approach to lower prescription drug prices. In October 2018, the Centers for Medicare & Medicaid Services proposed requiring that television DTCPA disclose drug prices.² We conducted a behavioral experiment to understand how consumers are likely to respond to the price disclosure.

We recruited participants using Amazon’s Mechanical Turk,³ an online job board commonly used to enlist experiment participants. Participants were instructed to assume they had recently been diagnosed as having type 2 diabetes. They were randomly assigned to view 1 of 5 advertisements for a fictitious diabetes prescription drug (“Mayzerium”). Representing the current practice, the advertisement in the control condition made no mention of the drug’s price. The remaining 4 advertisements disclosed either a low ($50 per month) or high ($15 500 per month) price, representing the 1st and 99th percentiles, respectively, of the average wholesale price in 2016 of diabetic prescription drugs.⁴ In 2 “modifier” conditions, the advertisement included a modifying statement with the disclosed price indicating that “eligible patients may be able to get Mayzerium for as little as $0 per month” (the advertisements are available in the eAppendix in the Supplement). Such language commonly appears on advertisements for drug coupons and co-pay/coinsurance assistance cards.

This study received institutional review board approval from Clemson University. All participants provided implied consent by participating in the survey.

After viewing the advertisement, participants completed a questionnaire to measure their likelihood (ranging from 1 [highly unlikely] to 7 [highly likely]) of asking their physician about the drug, asking their insurer about the drug, researching the drug online, and taking the drug. Pairwise comparisons of responses were conducted using Wilcoxon rank sum tests. In addition, participants were asked about the expected out-of-pocket cost and the perceived effectiveness of the drug (ranging from 1 [highly ineffective] to 7 [highly effective]). They also answered demographic questions, and each received $0.50 as compensation for participation.

Our sample included 580 participants, representing a wide range of ages, household incomes, education, insurance coverage, and health (Table 1). For the low-priced drug, the price disclosure, with or without the modifier, did not alter consumer responses. For the high-priced drug, the price disclosure significantly reduced the likelihood of participants asking their physician about the drug (5.12 vs 2.90; 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) (Table 2). However, these results were significantly mitigated when the modifier was included: asking their physician about the drug (2.90 vs 4.48; P < .001), asking their insurer about the drug (4.09 vs 4.85; P = .01), researching the drug online (4.92 vs 5.74; P = .003), and taking the drug (3.24 vs 4.36; P < .001). Participants did not perceive the low-priced drug as significantly less effective than the high-priced drug. Results were robust when controlling for all demographic variables listed in Table 1.

Our study had some limitations. First, actual patients might respond differently than experiment participants. Second, our results might not be generalizable to drugs of other therapeutic classes, in different price ranges, or using other marketing strategies in DTCPA. Third, clinician responses to price disclosures were outside the scope of this study.

While price disclosure had little influence on consumer responses to the low-priced drug, it substantially decreased consumer interest in the high-priced drug. However, this finding weakened if the advertisement included a modifier indicating that consumers’ out-of-pocket cost might be zero. Although many challenges remain in designing the ultimate US Food and Drug Administration regulation,⁶ our results suggest that requiring pharmaceutical companies to disclose the price in DCTPA 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.

Accepted for Publication: September 8, 2018.

Corresponding Author: Ge Bai, PhD, CPA, Johns Hopkins Carey Business School, 100 International Dr, Baltimore, MD 21202 (gbai@jhu.edu).

Published Online: January 22, 2019. doi:10.1001/jamainternmed.2018.5976

Author Contributions: Dr Garrett had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Concept and design: All authors.

Acquisition, analysis, or interpretation of data: Garrett, Tayler, Socal.

Drafting of the manuscript: Garrett, Tayler, Bai, Socal.

Critical revision of the manuscript for important intellectual content: All authors.

Statistical analysis: Garrett, Tayler.

Administrative, technical, or material support: Tayler, Bai.

Supervision: Tayler, Bai, Trujillo, Anderson.

Conflict of Interest Disclosures: None reported.

Funding/Support: This research was funded by the BYU Healthcare Industry Research Collaborative, the Sorenson Legacy Foundation, and the Laura and John Arnold Foundation.

Role of the Funder/Sponsor: The funding sources had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.