People may think it’s more vital to take their medicine, if that medicine is cheap. A new study from the W. P. Carey School of Business at Arizona State University shows consumers believe prices for lifesaving products are based on need and not profit. Therefore, they often assume their risk of getting a serious illness is higher when the medicine is less expensive, and they’re also more likely to plan to get the treatment, including flu shots.
“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 Assistant Professor Adriana Samper of the W. P. Carey School of Business. “Nobody wants anyone to die because they didn’t have the resources to cover the treatment. Therefore, they believe communal pricing (based on need), rather than the normal market pricing for other goods, applies in these situations. They expect medicine for a serious illness to be inexpensive.”
Samper’s new marketing study, co-authored with Assistant Professor Janet Schwartz of Tulane University, will appear in the April edition of the Journal of Consumer Research. In a series of experiments, the researchers demonstrated several interesting points about medication pricing, and those points held true, even if insurance — not the consumer — was going to pay for the treatments.
In the first experiment, participants in an online study were asked to evaluate 10 products and services based on whether they were priced for “communal” purposes or market value. Vaccines, doctor’s visits and drugs used to prevent serious illnesses all ranked as being driven by communal pricing, while items like tax-preparation services, restaurant menu items and home electronics all ranked as market-driven.
In the next experiment, online participants were asked about a fictitious cream described as either preventing skin cancer or preventing age spots. The cream was also offered at a low price of $25 or a high price of $250. Price had no effect on attitudes toward the cosmetic cream, but when the skin-cancer treatment was only $25, respondents believed they needed it more — that they were at higher risk for the disease.
“We see the same thing for a flu shot,” says Samper. “People are more concerned about getting the disease and addressing prevention if the vaccine is cheaper. That’s an important note for health officials during our especially tough flu season right now.”
A third experiment showed participants an ad for the same cream, with the same image, but slightly different versions of text, again reflecting whether the cream was for skin-cancer prevention or cosmetic purposes. The two different price points were offered in each case. Consumers were much more likely to keep reading the ad and planned to pursue the treatment in the case where the cream was for skin cancer and the price was lower. This happened even when insurance was going to pay for the cream at either price.
“This implies a possible problem with the recent push for price transparency,” adds Samper. “In some cases, high prices may signal lower self-risk, and people may not think it’s important to get needed treatments just because the cost is high.”
In the last experiment, the researchers tested the effects of different types of messages meant to encourage people to get flu shots. They used the two prices again and also varied whether the flu’s consequences were described as self-focused — such as missing work or paying medical bills if you got the flu — or societally-focused — such as getting other people sick or hurting economic productivity with the flu’s spread. Very clearly, individuals again increased their assumption of risk and intentions to get the vaccine in response to lower price, but only when the message focused on personal consequences of the flu.
“Therefore, public health officials should take note: Ads emphasizing the protection of other people do not appear to convince people to get vaccinated,” say Samper. “People respond best to messages that emphasize how illness will personally affect them.”
The full study can be found at http://www.jstor.org/stable/info/10.1086/668639.