Pricing of in-patent pharmaceuticals in the Middle East and North Africa: Is external reference pricing implemented optimally?

Panos Kanavos, Bregtje W. Kamphuis, Anna-Maria Fontrier, Georgia Colville Parkin, Shadi Saleh and Kasem S. Akhras

Health Policy, 2020, vol. 124, issue 12, 1297-1309

Abstract: In this paper we outline and compare pharmaceutical pricing policies for in-patent prescription pharmaceuticals with emphasis on external reference pricing (ERP) in eleven countries across the Middle East and North Africa (MENA) region and explore possible improvements in their pricing systems. Primary and secondary evidence was used to inform our analysis. Comparative analysis of ERP systems across countries followed an analytical framework distilling ERP into twelve salient features, while ERP system performance was benchmarked against a framework of best practice principles across (a) objectives and scope, (b) administration and operations, (c) methods used, and (d) implementation. Results suggest that ERP is the dominant pricing method for in-patent pharmaceuticals. Although several good practice cases were identified, none of the eleven countries satisfy all best practice principles. ERP basket sizes vary significantly and are commonly composed using geographical proximity and low-price countries as criteria. Nine countries do not use the mean or median prices, but resort to using the lowest. Exchange rate fluctuations are routinely used to arrive at price reductions in local currency. Significant opportunities exist for MENA countries to develop their ERP regimes to achieve greater compliance with best practice principles. Over the short-term, incremental changes could be implemented to several ERP salient features and can be achieved relatively easily, thereby enhancing the functionality and performance of national ERP systems. Countries in the region can also focus on the development of explicit value assessment systems, and minimize their dependence on ERP over the longer-term.

Keywords: External Reference Pricing; pharmaceutical policy; Middle East and North Africa; price regulation; cost containment; resource allocation (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:hepoli:v:124:y:2020:i:12:p:1297-1309

DOI: 10.1016/j.healthpol.2020.07.017

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