International impact of external reference pricing: should national policy makers care?

Anna-Maria Fontrier, Jennifer Gill and Panos Kanavos

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Background: External reference pricing (ERP) is widely used to regulate drug prices. Although the literature has largely focused on the impact of ERP on a number of policy endpoints and its impact from a geographical perspective, a comparative study drawing on evidence from different settings does not exist to date. Methods: A systematic literature review was conducted on pre-defined endpoints on the impact of ERP across countries, such as price stability, price convergence and launch delays. Expert consultation was undertaken to analyse whether or not the international implications of ERP are considered during its design. Results: 46 studies were included in the analysis. Across countries, ERP may cause launch delays, price instability and lead to price convergence. However, these effects cannot be solely attributed to ERP, as there may be other factors at play, such as the size and the GDP of a country and other regulations in place, which can trigger these effects or reduce their effect. Nevertheless, the nature of ERP facilitates these unintended consequences and directly links them to it. Despite these cross-country implications being well known to decision-makers, they are not necessarily considered during the design of ERP. Conclusions: As the effects of ERP as a stand alone policy are very difficult to isolate in the presence of other regulatory measures implemented within countries and the presence of other extrinsic factors across countries, our findings are inconclusive. Still, there is an unquestionable unmet need related to the design of ERP systems to attain a positive impact internationally.

JEL-codes: I10 I11 I18 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2019-11-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in European Journal of Health Economics, 1, November, 2019, 20(8), pp. 1147 - 1164. ISSN: 1618-7598

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:100929

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