Variations in external reference pricing implementation: does it matter for public policy?

Jennifer Gill (), Anna-Maria Fontrier, Dionysis Kyriopoulos and Panos Kanavos
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Jennifer Gill: Cowdray House, London School of Economics and Political Science
Anna-Maria Fontrier: Cowdray House, London School of Economics and Political Science
Dionysis Kyriopoulos: Cowdray House, London School of Economics and Political Science
Panos Kanavos: Cowdray House, London School of Economics and Political Science

The European Journal of Health Economics, 2019, vol. 20, issue 9, No 8, 1375-1397

Abstract: Abstract Background External reference pricing (ERP) seeks to rationalize prices and contain costs using foreign prices as a reference for the determination of domestic prices and is often used as the starting point for the facilitation of negotiations between health authorities and pharmaceutical manufacturers. Methods A systematic literature review was used to identify characteristics of ERP implementation across 29 countries. Primary data collection, in the form of surveys directed at key stakeholders, was also used to supplement data in instances where information received from the systematic literature review was outdated or minimal. Findings from the systematic literature review and primary evidence from key stakeholders were bench-marked against 14 best practice principles inherent to an optimal ERP system. Results Significant heterogeneity in ERP implementation across countries was identified. Country basket size, pricing calculation, and frequency of price revisions varied between countries. Belgium, France, and South Africa were more likely to adhere to the best practice principles, whilst Bulgaria, Hungary, and Romania had the most instances of non-adherence. Conclusion The observed heterogeneity has policy implications for governments including globally declining pharmaceutical prices, launch delays in lower income countries, reduced incentive for continued R&D, and reduced access to medicines. Overcoming this issue to ensure that ERP is beneficial to all stakeholders will require a focus on developing sustainable, transparent, simple, and stable systems using a set of key guidelines that should maximize the benefits of the pricing policy.

Keywords: External reference pricing; Pharmaceutical policy; Regulation of pharmaceuticals; Systematic review; Expert consultation (search for similar items in EconPapers)
JEL-codes: I I1 I10 I11 I18 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10198-019-01100-y

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