How Do Price Sensitivity and Information Barriers Impact the Adoption of Naloxone?

The study explores how price sensitivity and information barriers affect naloxone uptake through an online purchasing platform. Researchers conducted a randomized controlled trial across 2,204 U.S. counties, varying advertisements, price reductions, and stigma-reducing messages. They found that advertising alone increased website visits but did not significantly boost purchases unless combined with a price reduction. When naloxone was discounted from $110 to $20, sales increased by 167% and the estimated price elasticity of demand was −1.3. Messages about stigma and discretion had no significant effect on purchases, highlighting cost as the primary barrier to naloxone acquisition.

Full Citation and Link to Article

Jacobson, Mireille, and David Powell. "Price Sensitivity and Information Barriers to the Take-Up of Naloxone." American Economic Journal: Economic Policy, vol. 16, no. 4, 2024, pp. 463–490. DOI: 10.1257/pol.20230135.

Extended Summary

Central Research Question

The study investigates how price sensitivity and information barriers impact the uptake of naloxone, a life-saving opioid overdose reversal drug. Despite the importance of naloxone access in addressing the opioid crisis, take-up remains low, particularly among individuals who are at high risk of overdose or their close contacts. The research explores whether advertising, price reductions, and messages aimed at reducing stigma influence naloxone purchases. Specifically, the study examines how reducing the price from $110 to $20 affects demand and whether messages emphasizing discretion or the ability to purchase for others impact purchasing behavior.

Previous Literature

The study builds on prior research exploring barriers to naloxone access, including legal and structural challenges. Previous work highlights that despite regulatory efforts to make naloxone more widely available, many pharmacies do not stock it or still require prescriptions, creating additional hurdles. Cost is another significant barrier, as naloxone prices have risen sharply in recent years, and out-of-pocket expenses can be prohibitive for uninsured individuals. Studies have also identified stigma as a deterrent to naloxone uptake, with potential buyers reluctant to request the medication due to fears of judgment.

Research on pharmaceutical advertising has generally found that it can increase demand, particularly for prescription drugs. However, most studies focus on direct-to-consumer television advertising rather than online ads. Some studies suggest that online ads may be less effective, particularly when targeted at consumers who are already searching for the product. This study contributes to the literature by providing experimental evidence on the effectiveness of online advertising and price reductions in driving naloxone purchases.

Data

The study utilizes data from a randomized controlled trial (RCT) conducted in partnership with Script Health, an online naloxone retailer licensed to sell and distribute naloxone by mail across multiple states. Between April 22, 2020, and February 22, 2021, advertisements were randomized across 2,204 counties in 38 states. The study examines website visits and naloxone purchases as key outcomes, drawing on Google Ads data and purchase records from Script Health.

Counties were assigned to one of five treatment arms:

1. Control group (no ads)

2. Base ad, $110 price – An ad displaying naloxone availability at the full price of $110

3. Base ad, $20 price – An ad displaying naloxone availability at a discounted price of $20

4. Information/stigma ad, $110 price – An ad emphasizing that naloxone could be purchased discreetly and for a friend or loved one, while showing the full price

5. Information/stigma ad, $20 price – The same message as the information/stigma ad, but displaying a discounted price of $20

The primary outcomes analyzed include website visits (site users), purchases, and coupon usage. The study also examines whether buyers intended to purchase naloxone for themselves or others.

Methods

The study employs a Poisson regression model to estimate the impact of advertising and price reductions on naloxone purchases. The model examines the expected number of purchases based on treatment group assignment while controlling for county-level characteristics such as urbanicity, opioid overdose rates, and demographic factors.

To assess the price sensitivity of naloxone demand, the study calculates price elasticity of demand, which measures how changes in price affect quantity purchased. A key challenge in estimating elasticity is that some buyers may have been exposed to a discounted price but made purchases in a county assigned to a different treatment group. To address this, the study estimates the probability that a purchase was made in a county where a coupon was seen and adjusts the elasticity calculation accordingly.

Findings/Size Effects

The results demonstrate that advertising alone increased website visits but did not significantly boost naloxone purchases unless combined with a price reduction. The findings on price sensitivity were particularly strong:

• Website visits increased in all counties receiving advertisements, with site users increasing by 95% overallcompared to control counties.

• Price reductions drove purchases. When naloxone was discounted from $110 to $20, sales increased by 167%.

• The estimated price elasticity of demand was -1.3, indicating that demand for online naloxone is highly price-sensitive.

• Messages emphasizing discretion and the ability to purchase for others had no significant effect on purchases. The information/stigma ads did not lead to increased website visits or purchases beyond the effect of price reductions alone.

• The effect of price reductions was stronger for individuals purchasing naloxone for themselves rather than for others. This suggests that individuals buying naloxone for personal use are particularly sensitive to cost.

Despite the increase in online naloxone purchases in response to lower prices, it is unclear whether these purchases represent entirely new demand or if they displace purchases that would have otherwise occurred at pharmacies. Since online sales remain relatively low, the authors argue that crowd-out effects on pharmacy purchases are likely minimal.

Conclusion

This study provides strong evidence that price is the primary barrier to naloxone uptake in an online setting. While advertising increased website traffic, only price reductions meaningfully boosted sales. Messages aimed at reducing stigma or emphasizing discretion did not lead to additional purchases, suggesting that cost remains a more significant obstacle than social concerns in this setting.

The findings have important policy implications. Given the high price elasticity of demand, subsidizing naloxone purchases could substantially increase access. The study also highlights a potential downside of making naloxone available over-the-counter (OTC): while OTC status eliminates the need for a prescription, it may increase out-of-pocket costs for insured individuals if insurance no longer covers the medication.

Overall, the study contributes to the broader discussion on improving access to life-saving medications by emphasizing the critical role of affordability in shaping consumer behavior. Future research could explore whether similar patterns hold for other harm-reduction interventions and whether reducing administrative burdens could further facilitate naloxone uptake.