Karine Lamiraud * , Konrade von Bremen*, Cam Donaldson**

The impact of information on patient preferences in different delivery patterns: a contingent valuation study of prescription versus OTC Karine Lamiraud*, Konrade von Bremen*, Cam Donaldson** *University of Lausanne, Institute of Health Economics and Management (IEMS), DEEP-HEC **Institute of Health and Society, Newcastle University, UK

3. Impact of information • Empirical studies (Donaldson & Schakley 1997; Lee et al 1998; Protière et al 2004) • Information about health attributes of the programmes • Inconsistent effects of additional information on WTP values INTRODUCTION 1. Background CV methods • Increasing interest in the use of CV for measuring WTP 2. Major concern • Influence of additional information (Tversky & Kahneman, 1981) The impact of the level of information on WTP may depend upon the delivery mechanism. This has not been assessed yet.

INTRODUCTION 2. Objectives • This study aims at assessing the impact of information on preferences in different delivery patterns (prescription versus OTC systems)

INTRODUCTION 3. Policy relevance • This investigation is driven by the fact that many countries have expanded efforts to move prescribed drugs onto OTC status • Previous works have focused on assessing the change in benefits using a consumer surplus approach based on observed demand curves (Ryan and Yule, 1990; Temin, 1983; Shih et al., 2002) • However, the methods employed were not able to test the susceptibility of benefits to the level of information • A CV approach is used

Outline • Theoretical background • WTP study • Empirical analysis Results  Conclusion

THEORETICAL FRAMEWORK 1. Theoretical framework Two simple uses of well-known economic theories help us derive two hypotheses • Agency and Information  “information hypothesis” • Demand theory and the impact of moving to OTC • “switching hypothesis”

THEORETICAL FRAMEWORK 2. Agency and Information • When visiting a doctor, the patient may mostly rely on the doctor’s knowledge • Opting for an OTC medicine requires full individual choice and self-administration « Information assumption »  The impact of information on WTP will be more significant in the OTC scenario than in the prescription one

A B C QOTC Qp O Number of consumers THEORETICAL FRAMEWORK 3. Demand theory • The figure depicts the demand curve for the case of a hypothetical drug • The cost of the drug is assumed to be fully borne by the consumer • We assume that POTC < Pp (Ryan and Yule, 1990) Cost

THEORETICAL FRAMEWORK 4. « Switching assumption » (S1)the total WTP is expected to be higher in the OTC scenario than in the prescription one (S2)more “0” answers are to be expected in the prescription scenario (S3) if zero “answers” are excludedWTP is expected to be higher in the prescription scenario Cost A B C QOTC Qp O Number of consumers

THEORETICAL FRAMEWORK 5. A test of the validity of the CV approach  Through basing our analyses on the assumptions arising from these theories, a useful (and new) test of the validity of the CV approach is thus provided

DATA 1. WTP Study These effects will be assessed within a study measuring patient preferences concerning a new class of drugs in influenza disease Neuraminidase Inhibitors (NAIs) • They offer symptom reduction by 1.5 days • Since their release, NAIs have been prescription drugs • Due to benign side effects, they might also qualify for OTC • A CV study was performed to compare preferences between both delivery systems. It took place in the French speaking part of Switzerland (winter 2001, summer 2001)

DATA 2. General information to all study participants All participants were first provided with some information on influenza as it was considered that respondents should have a comparable understanding of the disease • Influenza is in general a benign disease • Self-limited to 5-7 days • Symptoms = fever cough and runny nose with sudden appearance • Risk of complications for children, the old and frail, and chronically ill • Vaccination is available • Vaccination does not give a complete protection against influenza. • Big economic impact due to influenza • Pandemic outbreak can be disastrous to the country

DATA 3. Testing for informational effect Respondents were randomly assigned into basic or extended information Basic Information Extended Information • able to reduce symptom by 1.5 days • needs to be taken within 48 hours after onset of symptoms • side effects are very mild • not able to prevent/cure the flue • not active against cold • does not replace vaccination • is not active out of the period of influenza epidemics of about 4 months • able to reduce symptom by 1.5 days • needs to be taken within 48 hours after onset of symptoms • side effects are very mild

DATA 4. WTP questionnaires After being provided with some information all respondents were asked to imagine that they were affected by influenza and to answer 2 WTP questions framed into 2 scenarios • Second scenario • First scenario • How much are you willing to pay for a prescription drug which is able to reduce the duration of the flue by 1.5 days? • This drug is not reimbursed, the consultation would need to be paid for • How much are you willing to pay foran OTC drug which is able to reduce the duration of the flue by 1.5 days? • This drug can be bought without restriction in the pharmacy

DATA 5. Bidding ranges A payment card system was used to facilitate answers Frs 0 Frs. 1 - 20 Frs. 21 - 40 Frs. 41 - 60 Frs. 61 – 80 Frs. 81 - 100 Frs. 101 – 150 Frs. 151 - 250 Frs. 251 – 500. - Frs. 501 - 1'000 More thanFrs.1'000 • To exclude starting point bias the order of ranges was randomized (increasing or decreasing)

Outline • Theoretical background • WTP study • Empirical analysis Results  Conclusion

EMPIRICAL ANALYSIS 1. Overview of empirical strategy The empirical analysis aims at testing the information and switching hypotheses. We conducted 3 main analyses. • We examined the factors associated with WTP : - information level in the OTC and prescription scenario (I) - scenario (S1) • We examined consistency with S2 via the distribution of zero answers between both the OTC and prescription scenarios • We investigated the distribution of non zero answers between the OTC and the prescription scenario in order to test S3

EMPIRICAL ANALYSIS 2. Econometric model i The individual t The scenario (s = prescription vs OTC) The respondent’s true valuation for scenario t Information level (I = 0,1 ie extended vs basic) Explanatory factors (socio-demographic and health status variables….) • A finding that would be consistent with the “information” assumption • Based on S1, is expected to be positive and significant

EMPIRICAL ANALYSIS 3. Selection of covariates The selection of covariates included testing whether covariates had a different impact on WTP for the prescription and OTC drugs The following equality tests were then performed

EMPIRICAL ANALYSIS 4. Econometric estimation We fitted a random-effects interval censored regression model • Answers lie in intervals and are not point estimates The respondent’s true valuation known to lie within the interval defined by lower and upper thresholds • Answers might be correlated for a given individual Assumptions • Zero answers can be considered as very small WTP (]0,1]) • A lognormal conditional distribution for valuations is proposed ** log lie between log ta and log tb except for the first and last intervals *Cameron & James, 1986 ; * *Cameron & Huppert, 1989

RESULTS 1. The study population 1594 subjects were enrolled in the study

RESULTS 2. WTP descriptive statistics Willingness to Pay for influenza symptom reduction by 1.5 days • People receiving extended information were more willing to pay for the drug • However this tendancy is significant in the OTC scenario only (at a 10% level)

RESULTS 3. Econometric results Panel interval regression estimations over the full range of responses

RESULTS 4. Information impact An increased level of information: • pushes the WTP to upper levels in the OTC scenario • has no impact on the WTP for prescription medicine • When asking for medical advice, the patient relies on the doctor’s knowledge • When opting for OTC, the patient requires relevant information to make informed choices • This is in line with the “information assumption”

RESULTS 5. Other results the WTP increases Delivery patterns  the WTP increases when the drug is delivered OTC(S1) • when the participant answers the survey during the winter • with incomes (assuming education level is a proxy for income) • if respondents are risk averse (as expressed by being vaccinated) • the insurance coverage does not influence the WTP

RESULTS 6. Discussion (1) We must discuss the possibility that some people might have thought that the OTC drug had to be sold at a higher price for some reason • some costs can be avoided ? However, physicians value the OTC drug (not the prescription one) as much as the general population does (phsyisicans, however, do not face the same issues as time or money to get a prescription) • misunderstanding ? It is unlikely that the seriousness of the disease has been underestimated

RESULTS 9. Discussion (2): a sequence effect? The prescription form of the drug could have benefitted from a sequence effect (WTP is expected to be larger for the first good of a series of good, Payne et al 2000) Our methodology does not allow us to assess whether a sequence effect is present or not • However we claim that our findings are not affected by a sequence effect if there is one • If such an effect were present, our current results suggesting that the OTC version is preferred would even be reinforced

RESULTS 8. Discussion (3): protest zeros? We also checked whether some « 0 » answers could be attributable to protest zeros* A probit model was estimated on the subgroup of those who answered “0” to both scenarios • A bivariate probit model was run on the propensities to pay for a prescription and OTC drug Some people may not feel concerned or express aversion to contributing to a publicly funded health care system

RESULTS 8. Discussion (4): protest zeros? Probit model explaining zero answers to both scenarios • People declaring zero values to both scenarios cannot be regarded as protesters

CONCLUSION 1. Policy issue Our results: Welfare gains are associated with switching to OTC The benefits of switching to OTC status are likely to depend on the information level • For the kind of drug considered here (safe and easy to monitor), the requirement for patient decision making is the provision of comprehensive information

CONCLUSION 2. Validity of the CV approach • One important contribution of the study was to use the CV method to assess the benefits from OTC while previous studies were based on market behaviors of actual consumers • We provide a useful test of the validity of the CV approach given that all the results come out in line with predictions from the agency and demand theories

Karine Lamiraud * , Konrade von Bremen*, Cam Donaldson**