2 Reasons Consumers Can't Help But Waste Money On Brand-Name Drugs
It didn't matter that there were plenty of generic and store-brand varieties to fill the gap. Somehow, people had it in their heads that brand names were simply better.
“The generic version at CVS isn’t quite the same,” an eBay user who sells Excedrin told the New York Post. “Like comparing a steak from T.G.I. Friday’s to Peter Luger’s.”
But he's wrong. Not only are these other brands a better bargain than Excedrin––Walmart sells its 100-count Equate brand for $3 and Walgreens sells a version for about $9, according to Consumer Reports––but they contain the exact same ingredients. Federal law dictates as much, and the U.S. Food & Drug Administration is tasked with making sure stores comply.
For some reason, however, even science isn't enough to convince consumers not to spend more for the same product. It's the kind of irrational behavior behavioral economics expert Dan Ariely analyzes in his book "Predictably Irrational."
"The truth is that [name-brand drugs] run on the power of suggestion. They are effective because people believe in them," Ariely writes. "You see your doctor and you feel better. You pop a pill and you feel better. And if your doctor is a highly acclaimed specialist, or your prescripton is for a new wonder drug of some kind, you feel even better."
There are two factors driving us to believe that the store brand version of Excedrin is somehow less powerful than the name brand stuff, he says.
Belief. Just as patients believe a pill can work wonders because their friend or coworker raves about them, we're more likely to believe in a certain drug if it's widely known and trusted. "Even a doctor's enthusiasm for a particular treatment or procedure may predispose us toward a positive outcome," Ariely says. "Branding, packaging, and the reassurance of the caregiver can make us feel better."
Conditioning. If you've been taking Excedrin or any type of drug for an extended period of time and find relief, you'll condition yourself to expect relief from that particular treatment. "The body builds up expectancy after repeated experiences and releases various chemicals to prepare us for the future," Ariely says. That expectation is difficult to remove or re-associate with another product.
The only way to change your behavior is to adjust the way you think about pain relief, Ariely suggests.
"Consumers who stop to reflect about the relationship between price and quality are far less likely to assume that a discounted drink is less effective...These results not only suggest a way to overcome the relationship between price and the placebo effect but also suggest that the effect of discounts is largely an unconscious reaction to lower prices."