Reuters Events | Pharma

Thought leadership and innovation for the Pharmaceutical Industry

A new study from the W. P. Carey School of Business at Arizona State University shows consumers believe prices for essential medicines are based on public need and not profit.

By Louise Kelly on Feb 5, 2013

While many advocate boards and generic companies strive to ensure vital drugs can be accessed easily and at a reasonable by those who require them, many US consumers believe that this is a war that already been won. "We find that people have a fundamental belief that everyone should have access to lifesaving care such as vaccines, doctor's visits, screening tests like mammograms and cancer treatments," says Adriana Samper, an assistant professor at the School.

“[T]hey believe that communal pricing based on need, rather than the normal market pricing for other goods, applies in these situations."  

Furthermore, these individuals may think it's more vital to take their medicine, if that medicine is cheap, as they assume their risk of getting a serious illness is higher when the medicine is less expensive – even if the treatments were to be paid for by insurers rather than themselves.  In a series of experiments, the researchers at Arizona State analyzed the relationship between US consumers and drug pricing.

At the outset, participants were asked to assess a number of products and services that included restaurant meals, home appliances and pharmaceutical products based on whether they believed they were priced for “communal” purposes or driven by market value.  Medical treatment ranked high for communal pricing with vaccines, doctor's visits and drugs for serious illnesses mostly placed in this category. 

Following this, the online respondents were asked for their comments on a fictitious cream described as either preventing skin cancer or preventing age spots. The results demonstrated that price had a huge impact on attitudes towards the skin cancer cream: when the treatment was only $25 (as oppose to $250), respondents believed they needed it more.  Yet, price did not seem to alter consumer opinion at all when applied to the cosmetic ointment.

Developing this finding, the researchers played an ad for the same cream – for skin cancer prevention or cosmetic purposes, respectively – to the survey participants, promoting both the expensive and cheaper price. The study revealed that the initial interest of consumers was retained in the case where the cream was for skin cancer and the price was lower, and the intention to continue treatment was apparent as they felt that this product was vital for their well-being.

In a final experiment, Samper and her colleagues came to the conclusion that “people respond best to messages that emphasize how illness will personally affect them”.  In examining the impact of current flu shots messages – aimed to encourage take up – respondents reiterated earlier views of risk and intentions to get the vaccine in response to lower price.  However, in this instance, the message was only effective when it concentrated on personal consequences (rather than societal impacts) of the flu, such as missing work or paying medical bills as a result of catching the flu virus. 

Samper’s marketing study, co-authored with Assistant Professor Janet Schwartz of Tulane University, will appear in the April edition of the Journal of Consumer Research.