Even doctors know it's pointless to spend money on name-brand medications.
A new study from the University of Chicago business school finds that pharmacists are much more likely to buy generic over-the-counter pain relievers than spend more money on name brands.
Store brand, generic OTC pain relievers almost always have the exact same dosages and active ingredients of their name-brand counterparts (the FDA makes sure of that). Even so, consumers have proven they still have a hard time passing up recognizable brands like Tylenol and Advil in favor of cheaper generics.
The study finds:
In a case study of headache remedies, we ﬁnd that college education, working in a healthcare occupation, and other proxies for product knowledge predict more purchases of private labels relative to brands. Pharmacists devote almost 90% of headache remedy purchases to private labels, against 71% for the average consumer. ... We conclude that a signiﬁcant share of the willingness to pay for brands in these categories would disappear in a world where consumers were fully informed.
The implication is that there's no reason for Tylenol and Advil to cost more money than off-brand equivalents except for the fact that they're brands and they spend a lot of money to advertise. It's the same deal as paying double for a box of name brand cereal when a generic storebrand box costs less and tastes about the same. You're paying more for advertising than quality.
Even though generic ("private label," or store brand) pain relievers account for 71% of the quantity of purchases, they only represent 49% of the dollars spent on OTC pain relievers, according to the study. They're significantly cheaper than the name-brand stuff.
Matt Yglesias at Slate writes: "One moral of the story is that advertising works. Nobody I know thinks advertising works on them or on anyone else. But it’s clear that even when marketers don’t have any meaningful information to convey about why you should buy their product, investments in branding nonetheless move purchasing decisions."
It's important to note that this same logic might not always apply to prescription pharmaceuticals and other types of medicine (this study primarily addresses headache remedies). But considering that so many pharmacists shun brand-name OTC pain relievers in favor of generics, this could be an obvious place for people to save money on a common household item.
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