No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
The implications of external price referencing on pharmaceutical list prices in Europe
Abstract
External price referencing (EPR) is a frequently applied cost-containment measure to control pharmaceutical prices. This study aims to determine the implications of EPR on ex-factory pharmaceutical prices in European countries. Prices of 21 pharmaceuticals and 17 non-pharmaceutical services were collected with a survey and price corridors were defined in 7 countries. To increase the sample size for further analysis, pharmaceutical prices were retrieved from EURIPID database for 8 additional countries. Regression analyses were applied to evaluate explanatory variables on pharmaceutical list prices including EPR components, GDP per capita, and population size in 15 European countries. Price corridor was narrower for pharmaceuticals compared to non-pharmaceutical services. In univariate regression analysis, higher GDP per capita and population size were associated with higher prices, and taking lowest price from referenced basket of countries was associated with lower prices. In multiple regression analysis, GDP per capita, population size and number of countries referencing a country had modest, but significant association with prices. Findings indicate small price variation for pharmaceuticals that points towards the occurrence of price-convergence. The relatively minor association of EPR with pharmaceutical list prices could be explained by manufacturers’ compensatory mechanisms including confidential price reductions and discounts while maintaining high list prices in countries with strong price-control measures or delayed product launch in countries with traditionally lower prices. Consequently, EPR cannot be directly associated with narrow European price corridor, and lower income countries still have slightly lower list prices.
... Some studies showed that the introduction and implementation of EPR has contributed to lower medicine prices and/or savings in public budgets (19)(20)(21)(22)(23)(24). Other research, however, pointed to the inferiority of EPR's ability as cost-containment tool compared to other pricing policies, such as value-based pricing, or showed inconclusive results (25)(26)(27)(28). ...
... It has been highlighted in literature (28,(35)(36)(37) and in policy debate that the cost-containment capacity of EPR is strongly impaired by referencing to 'fake prices' (38) since the real prices are not known due to the con dential character of discounts and managed-entry agreements. Both scenarios of this study that considered discounts con rmed the loss of savings opportunities given the non-consideration of discounted prices in other countries. ...
Background: Several governments apply the policy of external price referencing (EPR), which considers the prices of a medicine in one or more other countries for the purpose of setting the price in the own country. Different methodological choices can be taken to design EPR. The study aimed to analyse whether, or not, and how changes in the methodology of EPR can impact medicine prices.
Methods: The real-life EPR methodology as of Q1/2015 was surveyed in all European Union Member States (where applicable), Iceland, Norway and Switzerland through a questionnaire responded by national pricing authorities. Different scenarios were developed related to the parameters of the EPR methodology. Discrete-event simulations of fictitious prices in the 28 countries of the study that had EPR were run over 10 years. The continuation of the real-life EPR methodology in the countries as surveyed in 2015, without any change, served as base case.
Results: In most scenarios, after ten years, medicine prices in all or most surveyed countries were – sometimes considerably – lower than in the base case scenario. But in a few scenarios medicine prices increased in some countries. Consideration of discounts (an assumed 20% discount in five large economies and the mandatory discount in Germany, Greece and Ireland) and determining the reference price based on the lowest price in the country basket would result in higher price reductions (on average -47.2% and -34.2% compared to the base case). An adjustment of medicine price data of the reference countries by purchasing power parities would lead to higher prices in some more affluent countries (e.g. Switzerland, Norway) and lower prices in lower-income economies (Bulgaria, Romania, Hungary, Poland). Regular price revisions and changes in the basket of reference countries would also impact medicine prices, however to a lesser extent.
Conclusions: EPR has some potential for cost-containment. Medicine prices could be decreased if certain parameters of the EPR methodology were changed. If public payers aim to apply EPR to keep medicine prices at more affordable levels, they are encouraged to explore the cost-containment potential of this policy by taking appropriate methodological choices in the EPR design.
... Some studies showed that the introduction and implementation of EPR has contributed to lower medicine prices and/or savings in public budgets [19][20][21][22][23][24]. Other research, however, pointed to the inferiority of EPR's ability as cost-containment tool compared to other pricing policies, such as value-based pricing, or showed inconclusive results [25][26][27][28]. ...
... It has been highlighted in literature [28,[35][36][37] and in policy debate that the cost-containment capacity of EPR is strongly impaired by referencing to 'fake prices' Table 2 Parameters of the EPR methodology in the studied EPR-applying countries, 2015 a In bracket the number of minimum reference countries that are required in legislation to determine an EPR benchmark price b 3 (Croatia) and 4 (Cyprus) defined reference countries, respectively, out of a pool of 5 (Croatia) and 10 (Cyprus) reference countries, as data of alternative reference countries are considered in the case of non-availability of data in the primary 3 or 4 reference countries c According to legislation, Germany can consider mandatory and confidential discounts of prices in other countries, but this is not applied in practice. Furthermore, Germany has the legal mandate to weight the price data by estimated yearly turnover of the medicine (information to be provided by the pharmaceutical company) and by purchasing power parities (PPP). ...
Background
Several governments apply the policy of external price referencing (EPR), which considers the prices of a medicine in one or more other countries for the purpose of setting the price in the own country. Different methodological choices can be taken to design EPR. The study aimed to analyse whether, or not, and how changes in the methodology of EPR can impact medicine prices.
Methods
The real-life EPR methodology as of Q1/2015 was surveyed in all European Union Member States (where applicable), Iceland, Norway and Switzerland through a questionnaire responded by national pricing authorities. Different scenarios were developed related to the parameters of the EPR methodology. Discrete-event simulations of fictitious prices in the 28 countries of the study that had EPR were run over 10 years. The continuation of the real-life EPR methodology in the countries as surveyed in 2015, without any change, served as base case.
Results
In most scenarios, after 10 years, medicine prices in all or most surveyed countries were—sometimes considerably—lower than in the base case scenario. But in a few scenarios medicine prices increased in some countries. Consideration of discounts (an assumed 20% discount in five large economies and the mandatory discount in Germany, Greece and Ireland) and determining the reference price based on the lowest price in the country basket would result in higher price reductions (on average − 47.2% and − 34.2% compared to the base case). An adjustment of medicine price data of the reference countries by purchasing power parities would lead to higher prices in some more affluent countries (e.g. Switzerland, Norway) and lower prices in lower-income economies (Bulgaria, Romania, Hungary, Poland). Regular price revisions and changes in the basket of reference countries would also impact medicine prices, however to a lesser extent.
Conclusions
EPR has some potential for cost-containment. Medicine prices could be decreased if certain parameters of the EPR methodology were changed. If public payers aim to apply EPR to keep medicine prices at more affordable levels, they are encouraged to explore the cost-containment potential of this policy by taking appropriate methodological choices in the EPR design.
... Some studies showed that the introduction and implementation of EPR has contributed to lower medicine prices and/or savings in the public budgets (19)(20)(21)(22)(23)(24). Other research, however, pointed to the inferiority of EPR's ability as cost-containment tool compared to other pricing policies, such as valuebased pricing, or showed inconclusive results (25)(26)(27)(28). ...
... It has been highlighted in literature (28,(34)(35)(36) and policy debate that the cost-containment capacity of EPR is strongly impaired by the referencing to 'fake prices' (37) since the real prices are not known due to the confidential character of discounts and managed-entry agreements. Both scenarios of this study that considered discounts confirmed the loss of saving opportunities due to the discounted prices in other countries. ...
Background: Several governments apply the policy of external price referencing (EPR), which considers the prices of a medicine in one or more other countries for the purpose of setting the price in the own country. Different methodological choices can be taken to design the EPR policy. The study aimed to analyse whether, or not, and how changes in the methodology of EPR can impact medicine prices.
Methods: The real-life EPR methodology as of Q1/2015 was surveyed in all European Union Member States, Iceland, Norway and Switzerland through a questionnaire responded by national pricing authorities. Different scenarios were developed related to the parameters of the EPR methodology. Discrete-event simulations of fictitious prices in the 28 countries of the study that had EPR in place were run for a period of 10 years. The continuation of the real-life EPR methodology in the countries as surveyed in 2015, without any change, served as base case.
Results: Consideration of discounts (an assumed 20% discount in five large economies and the mandatory discount in Germany, Greece and Ireland) and determining the reference price based on the lowest price in the country basket would result in higher price reductions (on average -47.2% and -34.2% compared to the base case). An adjustment of medicine price data of the reference countries by purchasing power parities would lead to higher prices in some more affluent countries (e.g. Switzerland, Norway) and lower prices in lower-income economies (Bulgaria, Romania, Hungary, Poland). Regular price revisions and changes in the basket of reference countries would also impact medicine prices, however to a lesser extent.
Conclusions: EPR has some potential for cost-containment. Medicine prices could be decreased further if certain parameters of the EPR methodology were changed. If public payers aim to apply EPR to keep medicine prices at more affordable levels, they are encouraged to explore the cost-containment potential of this policy and to take appropriate methodological choices in the design of EPR.
... In the absence of ERP, pharmaceutical companies have a greater incentive to price their medicines affordably so that they are accessible to all (Elek et al., 2017). However, the existence of ERP could threaten pharmaceutical innovations, causing pharmaceutical companies to make price-volume agreements, tighten their international pricing corridor, or even withdraw their product or delay their launches, resulting in inequity in patient access (Csanádi et al., 2018;Incze et al., 2022). ...
Introduction: Governments apply different pricing policies to ensure public accessibility, availability, and affordability of medicines. In this way, external reference pricing (ERP) because of its easy implementation is used widely across countries. However, ERP is completely path dependent, and it would both bring pros and cons, related to its implementing strategy which makes understanding of its impact in different countries challenging. In this study, we examine the performance of the ERP approach in Iran as a pricing tool.
Method: We conducted a cross-sectional descriptive study. Although Iran officially uses a reference country basket for ERP, in this study, we use different reference countries based on socioeconomic comparability, access to their price data, medicine pricing approaches, and pharmaceutical expenditure to examine the effect of reference countries as well as the method performance. Then, an empirical study was applied to a list of selected samples of medicines in the Iranian market to compare their price with our new reference countries. Then, we discuss the performance of ERP process based on the real prices in the Iranian pharmaceutical market.
Result: The prices of 57 medicines, which contain about 69.2% of the imported Iran pharma market in value, were compared with their prices in selected reference countries. It was found that 49.1% of prices were more expensive in at least one of the reference countries, and in 21% of products, the average price in Iran was higher than the average price in reference countries.
Conclusion: Achieving efficient and fair pricing of pharmaceuticals between and within countries is still a complex conceptual and policy problem that ERP in short term can handle. ERP cannot be considered a perfect tool for pricing alone, although its effectiveness is acceptable. It is expected that using other pricing methods alongside the ERP will improve patients’ access to medicines. In Iran, we use value base pricing as the main pricing method for every new molecule. Then, we use other methods such as ERP as a complementary method.
... Until such consensus can be reached, full price transparency may lead to free ridership on pharmaceutical prices in LICs by other countries, including HICs (69,70). In the light of widespread use of ERP across the European pharmaceutical pricing environment, it is important to understand that lower prices can be achieved in LICs if a country can prevent its pharmaceutical prices being referenced by other countries compared with the strategy of referencing more countries, and thereby strengthening its own ERP system (71). This is the main reason some policymakers in LICs and multinational pharmaceutical companies advocate implementation of confidential price reductions for high-priced medicines, on the grounds that it has the potential to increase patient access (72). ...
Established in 2020, the Oslo Medicines Initiative (OMI) is a collaboration between the WHO Regional Office for Europe, the Norwegian Ministry of Health and Care Services and the Norwegian Medicines Agency. The OMI aims to provide a neutral platform for the public and the private sectors to jointly outline a vision for equitable and sustainable access to and affordability of effective, novel and high-priced medicines. In line with the Regional Office's European Programme of Work 2020-2025-"United Action for Better Health", equitable and sustainable access to quality medicines is critical for universal health coverage and for achieving the Sustainable Development Goals. The OMI provides a strong focus on equity and on leaving no one behind, and is underpinned by three pillars; solidarity, transparency and sustainability. The OMI has commissioned a series of technical reports to summarize relevant evidence and provide policy considerations as a basis for discussion to inform its work. These reports are also in line with the implementation of World Health Assembly resolutions, in particular, resolution WHA 72.8 on improving the transparency of markets for medicines, vaccines, and other health products. Abstract Lower-income countries (LICs) in the WHO European Region generally have poorer health status and more limited resources than higher-income countries. This creates pressing issues when making decisions on financing high-priced medicines. The market access strategies for innovative medicines in LICs usually follow the low-volume, high-price business model, which does not guarantee access for all potentially eligible patients. If the political will to make changes exists, however, several policy tools could be used that may improve patient access to these medicines. This technical report describes specific constraints of LICs related to public financing of high-priced medicines, and summarizes policy considerations to improve access to high-priced medicines in LICs in three areas, including price-control mechanisms, tools to increase the negotiation power of health-care payers and tools to facilitate appropriate prescribing.
... In a dynamic global marketplace, a narrow price corridor can have inconsistent, inefficient, and inequitable consequences for countries with different economic status. Across countries, ERP raises the bottom of the pricing corridor, thereby using more of the limited healthcare budgets of lower-income countries, while lowering the top of the corridor, thus allowing the "free-riding" of higher-income countries on the willingness of pharmaceutical companies to adjust drug prices to local purchasing power in lower-income countries (Csanádi et al., 2018;Holtorf et al., 2019). Untenable price levels in lower income countries (Young et al., 2017) can also result in public cost containment policies including both price and volume control measures (Elek et al., 2017;Inotai et al., 2020) while higher income countries seem to provide relatively equal access to essential treatments (Morgan et al., 2017). ...
Background: External reference pricing (ERP) is used to set pharmaceutical prices to improve affordability, but its application may have negative consequences on patient access—thus, equity—across countries and on global innovation. With the United States contemplating ERP, negative effects could be magnified. Our aim: identify and quantify some major consequences of ERP. Research design, methods: Besides relying on databases and ERP modelling, we developed a heart failure case study. 4-step approach: 1) review ERP policies; 2) establish worldwide “price corridor”; 3) quantify patient access and health outcomes impact by ERP; 4) estimate ERP impact on innovation.
Results: Our ERP referencing analysis highlights its perverse effects especially in lower-income countries. As counterstrategies to protect their revenues, manufacturers often implement tight list price corridors or launch avoidance/delays. Consequences include suboptimal patient access—hence, worse outcomes—illustrated by our case study: 500,000 + QALYs health loss. Additionally, the ensuing revenue reduction would likely cause innovation loss by one additional medicine that would have benefitted future patients.
Conclusion: This research provides key insights on potential unintentional consequences of medicine price setting by ERP worldwide and under a new proposal for the United States. Our results can inform stakeholder discussions to improve patient access to innovative medicines globally.
... Nevertheless, the empirical evidence is mixed as to whether prices of medicines do differ across countries, and if so, whether such differences can be explained by income levels [16,17]. The extended use of external reference pricing, whereby prices in one country can depend on prices in countries elsewhere, could, at least theoretically, drive to uniform prices. ...
... The adoption of some MEAs may even be detrimental to the introduction of innovative therapies in lower-income settings. International (external) price referencing has been criticized for leading to higher drug prices in lower-income countries and for not delivering adequate solutions in cases where the referenced countries are themselves using MEAs (thereby concealing the actual price they pay for drugs) [12,90]. More research is needed to identify which MEAs are currently being applied, to what extent certain MEAs are more or less feasible in lower-income settings, and how barriers for their implementation could be overcome. ...
The reimbursement of expensive, innovative therapies poses a challenge to healthcare systems. This study investigated the feasibility of managed entry agreements (MEAs) for innovative therapies in different settings and combinations. First, a systematic literature review included studies describing used or conceptual agreements between payers and manufacturers (i.e., MEAs). Identical and similar MEAs were clustered and data were extracted on their benefits and limitations. A feasibility assessment was performed for each individual MEA based on how it could be applied (financial/outcome-based), on what level (individual patients/target population), in which payment setting (centralized pricing and reimbursement authority yes/no), for what type of therapies (one-time/chronic), within what payment structures, and whether combinations with other MEAs were feasible. The literature search ultimately included 82 papers describing 117 MEAs. After clustering, 15 unique MEAs remained, each describing one or multiple similar agreements. Four of those entailed payment structures, while eleven entailed agreements between payers and manufacturers regarding price, usage, and/or evidence generation. The feasibility assessment indicated that most agreements could be applied throughout the different settings that were assessed and could be applied in different payment structures and in combination with multiple other agreements. The potential to combine multiple agreements leads to a multitude of different reimbursement mechanisms that may manage the price, usage, payment structure, and additional conditions for an innovative therapy. This overview of the feasibility of combinations of MEAs can help decision-makers construct a reimbursement mechanism most suited to their preferences, the type of therapy under evaluation, and the applicable healthcare system.
... Therefore, the mechanism is not to be claimed to be competitive with another pricing method, and it does not neglect the remarkable hypotheses hidden in the represented price of drugs. The possibility of using discount for offering lower prices has already been mentioned in other papers such as the study by (Csanádi et al., 2018). Another important subject regarding the possibility of domestic production of brand drugs is the value of the license. ...
... External Reference Pricing (ERP) or external price referencing mechanisms, based on comparison of drug prices between countries do not seem to adequately address the pressing issues with high-cost innovative medicines. This is especially true when confidential price agreements are made in several countries, while ERP systems will be based on the publicly available prices only [76]. ...
Introduction: Lower income European countries have a worse health status and less funds for health care compared to Western Europe. Despite their limited human and financial capacities for conducting Health Technology Assessment (HTA), the need for evidence-based decision-making is growing. Two main approaches emerged as potential solutions: joint clinical assessments on the European level, and simplified procedures relying on the judgements of well-established HTA agencies of Western countries.
Areas covered: Based on considerations of transferability, the European Network for Health Technology Assessment (EUnetHTA) was built up to harmonize HTA methodologies across the European Union, and to develop an HTA Core Model by focusing on joint production of relative effectiveness assessment, which can be used as a basis for national value assessments. The second approach has been suggested in various forms without considering transferability issues.
Expert Opinion: Joint clinical assessments reduce duplication of efforts based on appropriate scientific rationale. On the other hand, recent examples show that relying on judgements of HTA agencies from wealthier countries with potentially different health care priorities can lead to suboptimal allocation decisions. In the short term, some stakeholders may benefit from ignoring transferability, but it will ultimately lead to limited access in other disease areas.
... The same could be said for international reference pricing policies. It is our understanding that there is neither strong evidence supporting nor contradicting whether there has been convergence in the price of medicines over the last couple of decades, as different studies show conflicting views [43,45,[47][48][49][50]. ...
At the 2019 World Health Assembly, a significant new resolution was agreed by most countries to start publicly sharing information on the real net prices they pay for medicines in their health systems. The resolution also includes provisions for countries to support other transparency activities. However, an additional proposal to require pharmaceutical companies to submit information on their internal sales figures, internal research and development costs, clinical trial costs and marketing costs for each individual medicine as a condition of registration, and for governments to publish this, was not agreed. Pressure for coordinated international action to increase the transparency of medicine prices and costs has been building for some time, as confidential discounts and rebates on prices of medicines are common. We argue that while it is possible that stakeholders may benefit to some extent from greater transparency on prices, several important policy and economic issues need to be carefully considered. Such transparency, combined with widespread use of international reference pricing, might undermine companies’ differential pricing strategies, which are important in fostering wider access to medicines in low- and middle-income countries in particular, noting that access to medicines issues can occur in high-income countries as well. Moreover, there is a further risk that these types of proposals will lead to price fixing, less competition and higher prices than might otherwise be the case. The lack of any commitments in the resolution to greater transparency in payer decision-making processes also risks undermining the credibility of the resolution. The resolution and further transparency measures could have the potential to undermine patient access to medicines in the developing world, lead to higher prices in some markets and compromise long-term development of new medicines for future generations.
... In order to control drug prices Romania introduced external price referencing (EPR) in 2009 [9] . EPR is used to determine the list price for all prescription drugs by referenc-ing 12 European countries and taking the lowest price from the basket [10] . In 2018 there were four reimbursement levels for the publicly funded medicines: 100% 90%, 50% and 20% set by the Ministry of Health. ...
Health Technology Assessment (HTA) is a complex approach increasingly used worldwide to make transparent and evidence-based reimbursement decisions for health technologies. This study aims to describe the present environment and future prospects of HTA implementation in Romania based on the opinion of a wide range of national stakeholders. A survey was conducted using a questionnaire already applied previously to design HTA roadmaps for middle-income countries. Survey responses were collected from two sites. First, responses were collected among the participants of the National Conference of Pharmacoeconomics and Health Management in October 2017 at Brasov. Second, a purposive sampling was applied to contact HTA professionals from public organizations from October 2017 to February 2018. According to the respondents there is need for HTA capacity building by establishing postgraduate trainings in Romania. The funding for HTA should be a delicate balance between public and private resources. A national HTA body with the involvement of academic institutions was the preferred organizational structure. Results indicate that the quality assurance tools such as a methodological guideline or a critical appraisal checklist should be applied and the HTA process should be transparent. Respondents emphasized the importance of using primarily local data in certain categories for developing HTA evidence for decision-making. Our study indicates the need to improve the educational and methodological framework of HTA activities and to consider the transferability of international evidence in Romania, which can contribute to improve the efficiency of the health system.
... Similarly, for drugs available on the PDL in some countries but not in others (typically smaller, poorer markets), the question is less of need but of the country's ability to pay and the industry's interest in launching their products. In a context of international reference pricing, it may be more advantageous for some companies to provide some products via potentially opaque alternative schemes than to have a low list price [51]. This, again, points to the importance of governance and equity questions in alternative access schemes. ...
European governments employ sophisticated health technology assessment and regulatory procedures to identify which pharmaceuticals to fund publicly. However, there are persisting demands from patients for those drugs excluded from positive reimbursement lists, leading to the emergence of what are here termed "alternative access schemes". This paper presents a purposive review of these schemes based on available scholarly and grey literature, illustrated with real-world examples from recent practice. It puts forward an original typology of alternative access schemes based on their marketing authorization (regulation) and reimbursement (redistribution) status. We describe the complex, multidimensional policy trade-offs between the principles of patient freedom of choice, clinical autonomy, encouragement of innovation, evidence-informed decisions on safety and quality, access to treatment, and financial sustainability, involved in marketing authorization and reimbursement decisions. We discuss the ways in which alternative access schemes differ and conclude that our typology can illuminate salient policy dilemmas raised by alternative access schemes in national drug reimbursement systems.
This report highlights the substantial impact of commercial determinants on noncommunicable diseases (NCDs) in the WHO European Region. Nearly 7500 deaths per day in the Region are attributed to commercial determinants, such as tobacco, alcohol,processed food, fossil fuels and occupational practices. These commercial products and practices contribute to 25% of all deaths in the Region. The report’s chapters systematically explore various facets of how commercial interests exacerbate NCDs and key strategies used by commercial actors to negatively influence NCD-related policies at the national and international level. The reportalso provides selected case studies from the Region to illustrate key strategies and outcomes of industry influence on health policies.The report then calls for urgent and coordinated action to address the commercial determinants of NCDs. It advocates for building coalitions based on the values of equity, sustainability, and resilience. Public health actors are urged to develop competencies in economic and legal frameworks, enforce transparency, and manage conflicts of interest effectively. The report underscores the need for robust financial reforms and strict regulation to curb industry power and protect public health. By implementing these strategies, the Region can accelerate progress towards global NCD targets and Sustainable Development Goals by 2030.
This report highlights the substantial impact of commercial determinants on noncommunicable diseases (NCDs) in the WHO European Region. Nearly 7500 deaths per day in the Region are attributed to commercial determinants, such as tobacco, alcohol, processed food, fossil fuels and occupational practices. These commercial products and practices contribute to 25% of all deaths in the Region. The report's chapters systematically explore various facets of how commercial interests exacerbate NCDs and key strategies used by commercial actors to negatively influence NCD-related policies at the national and international level. The report also provides selected case studies from the Region to illustrate key strategies and outcomes of industry influence on health policies. The report then calls for urgent and coordinated action to address the commercial determinants of NCDs. It advocates for building coalitions based on the values of equity, sustainability, and resilience. Public health actors are urged to develop competencies in economic and legal frameworks, enforce transparency, and manage conflicts of interest effectively. The report underscores the need for robust financial reforms and strict regulation to curb industry power and protect public health. By implementing these strategies, the Region can accelerate progress towards global NCD targets and Sustainable Development Goals by 2030.
Data exclusivity is a form of intellectual property (IP) protection that restricts competition by preventing generic firms from relying on originator test results to win regulatory approval. It is a TRIPS-Plus intellectual property provision often required by Free Trade Agreements (FTAs). This study analyses the impact of data exclusivity on aggregated pharmaceutical import prices in a set of 16 countries that enacted data exclusivity as required by FTAs, and six comparator countries that had not introduced this type of IP protection. It uses a difference in differences methodology appropriate for datasets in which treatment occurs at different periods, and in which treatment affects are heterogeneous over time. Between 1996 and 2014, pharmaceutical import prices were 14–20% higher on average in countries that had enacted data exclusivity than those that had not. Since these laws only applied to products entering the market after their enactment, their impact took time to become apparent. It eventually became quite large. The first statistically significant difference in prices occurred seven years after countries introduced data exclusivity. Nine years after these changes, the price differences averaged 175–210%.
Health care accounts for a substantial amount of government spending and is one of the most vulnerable sectors of theeconomy. Having a significant role to play in saving lives, health care services are very valuable to customers, and without appropriatecontrol, the price of such services can be very high. Due to this, the government oversees a significant portion of healthcare costs andenacts special pricing controls. In this paper, exclusive domestic production of licensed brand drugs is studied by forming acooperative strategy between a domestic manufacturer and a foreign licensor. This strategy increases the manufacturer's income; as aresult, the government also expects discounts from the cooperative firm. A Nash bargaining solution based on cooperative gametheory is proposed to model the related pricing negotiations between partners. A real-life pharmaceutical company case study isapplied to the proposed model. The cooperative strategy indicates that the market share of the licensor in the local market and thereturn on capital of the local licensee manufacturers positively affect the equilibrium price at a lower price than the new equilibriumprice, the foreign company will not benefit from the coalition significantly and will not have any incentive for it.
Objectives
Through the years, assessing the value for money or cost-effectiveness of treatments has become increasingly important. In this context, the price regulations have become stricter in Turkey in contrast to regulations on pharmacoeconomic (PE) assessments. Considering lack of guidelines on PE evaluations, an urgent need arises for pharmacoeconomic regulations in Turkey.
Methods
In this study, we conducted a scoping review on pharmacoeconomic guidelines with specific interest for Turkey's reference countries. Our search covered PubMed, Web of Science, and Cochrane databases, without date restriction. In addition, to provide further background for recommendations on pharmacoeconomic guidelines, a brief review of the Turkish medicines’ reimbursement system and those in reference countries was conducted, in the framework of the respective healthcare systems, explicitly considering the “Health Systems in Transition” series published by World Health Organization. The comparison tool and relevant databases of the International Society for Pharmacoeconomics and Outcomes Research were also reviewed.
Results
After selection, 6 relevant publications were included in this review. Regarding review on reimbursement regulations in reference countries, only Greece came out as having no formal PE guidelines.
Conclusions
The set of recommended PE guidelines for Turkey were therefore based on France, Portugal, Spain, and Italy's guidelines and literature data. Our recommended set of guidelines can form the basis for further discussion and help determining the final set for formal embedding in the Turkish regulatory procedure for reimbursement of drugs.
Public Interest Summary
Through the years, assessing the value for money or cost-effectiveness of treatments has become important. Therefore, the price regulations have become stricter in Turkey in contrast to regulations on pharmacoeconomic (PE) assessments. Since an urgent need arises for pharmacoeconomic regulations in Turkey, we conducted a scoping review on PE guidelines with specific interest for Turkey's reference countries. Our search covered three comprehensive databases. In addition, to conduct a widen research on country specific reimbursement systems and other relevant publications. After selection of articles, 6 relevant publications were included in this review. Since, only Greece came out as having no formal PE guidelines, the set of recommended PE guidelines for Turkey were therefore based on other four countries’ guidelines and literature data. Our recommended set of guidelines can form the basis for further discussion and help determining the final set for Turkish regulatory procedure for reimbursement of drugs.
The aim of the current study was to compare pricing methodologies at the manufacturer, wholesale, and retail levels, and to estimate the price differences of AT1-receptor blockers (sartans), Angiotensin-converting enzyme (ACE)—inhibitors, and their fixed-dose combinations (FDCs) in four countries using similar methodologies: Slovakia, Greece, Bulgaria, and Romania (SK, GR, BG, and RO, respectively). The methodologies for manufacturer, wholesale, and retail price establishment have been compared using nationally implemented rules. Overlapping trademarks were established retrospectively on the manufacturer and retail levels in November 2017. The average price per tablet, percentage of price deviation, and statistically significant differences were calculated. The selected countries apply external reference pricing at the manufacturer level. A wide variation in the number of referent countries was observed (from 12 to 27). Despite the use of a regressive scale for price calculation, large variations between margins and value-added tax (VAT) are established, thus leading to different final medicine prices. This study found that medicine prices were lower in RO than in other selected countries. It was caused by the fact that 15 products had the lowest manufacturer price and 14 products had the lowest retail price in RO. Results of Kruskal–Wallis test showed that there were no significant differences between prices per tablet on the manufacturer and retail levels. In the group of fixed-dose combinations, ramipril/hydrochlorothiazide, and irbesartan/hydrochlorothiazide showed more than 100% deviation. The prices of cardiovascular medicines differed within the observed countries. The differences in pricing methodologies (e.g., margins, VAT) at the national level did not significantly affect retail prices, as a low manufacturer price usually leads to a low retail price.
This study aims to analyze the trends of post-listing price changes for new drugs listed from 2007, when the health technology assessment (HTA) was introduced in South Korea, until 2017. We analyzed 135 products that have undergone price cuts. These products were analyzed by their respective review pathways, namely, pharmaco-economic study (PE), weighted average price (WAP), and the without a cost-effectiveness (CE) pathway. Prices were discounted faster in PE than in WAP (p = 0.002 in a comparison between PE and WAP). In addition, the median discount rate of the first price cut was 5.0% (range: 0.1–20.0) for PE, 3.0% (range: <0.1–30.0) for WAP, and 5.0% (range: 0.6–10.9) without a CE pathway. The median cumulative discount rate of PE and WAP showed that the PE pathway products’ discount rates were higher: 10.4% for PE and 6.0% for WAP (p = 0.025 for comparison between PE and WAP). It is necessary to discuss the practical effects of the price-cutting system from a myriad of perspectives, including insurance finance, the value of new drugs, and the accessibility of new drugs to patients.
This article discusses pharmaceutical pricing and reimbursement policies in European countries with regard to their ability to ensure affordable access to medicines. A frequently applied pricing policy is external price referencing. While it provides some benchmark for policy-makers and has been shown to be able to generate savings, it may also contribute to delay in product launch in countries where medicine prices are low. Value-based pricing has been proposed as a policy that promotes access while rewarding useful innovation; however, implementing it has proven quite challenging. For high-priced medicines, managed-entry agreements are increasingly used. These agreements allow policy-makers to manage uncertainty and obtain lower prices. They can also facilitate earlier market access in case of limited evidence about added therapeutic value of the medicine. However, these agreements raise transparency concerns due to the confidentiality clause. Tendering as used in the hospital and offpatent outpatient sectors has been proven to reduce medicine prices but it requires a robust framework and appropriate design with clear strategic goals in order to prevent shortages. These pricing and reimbursement policies are supplemented by the widespread use of Health Technology Assessment to inform decision-making, and by strategies to improve the uptake of generics, and also biosimilars. While European countries have been implementing a set of policy options, there is a lack of thorough impact assessments of several pricing and reimbursement policies on affordable access. Increased cooperation between authorities, experience sharing and improving transparency on price information, including the disclosure of confidential discounts, are opportunities to address current challenges.
External price referencing (EPR) is applied more and more frequently worldwide by payers to control pharmaceutical prices. Together with the parallel trade of pharmaceuticals, EPR may result in lower pharmaceutical prices in higher-income countries and higher prices in lower-income countries, which implies that pharmaceutical expenditure grows more rapidly in the latter than in the former group. Our objective was to assess this hypothesis. We used hierarchical linear models on country-level panel data to show that—after controlling for compounding factors such as GDP, the proportion of the old-age population or life expectancy—the annual growth rate of pharmaceutical expenditure was 2.1% points larger in the lower- than in the higher-income members of the European Union between 2000 and 2008. This difference in trends became non-significant (0.6% points) after the onset of the global economic crisis. There was no significant difference between lower- and higher-income countries in the growth rate of non-pharmaceutical health expenditure in either period. Our results indirectly support the presence of price convergence of pharmaceuticals among European countries, and EPR and parallel trade may provide a reasonable explanation to the observed trend difference of pharmaceutical expenditure in the two groups of countries between 2000 and 2008. This higher growth rate of pharmaceutical expenditure put extra burden on public health care budgets in lower-income countries and resulted in disproportionately more cost-containment measures compared to higher-income countries after 2008. It remains to be seen whether the disappearance of the difference in trend growth rates due to special health policy interventions in countries with economic difficulties is temporary or permanent.
Introduction:
New hepatitis C virus (HCV) medicines have markedly improved treatment efficacy and regimen tolerability. However, their high prices have limited access, prompting wide debate about fair and affordable prices. This study systematically compared the price and affordability of sofosbuvir and ledipasvir/sofosbuvir across 30 countries to assess affordability to health systems and patients.
Methods and findings:
Published 2015 ex-factory prices for a 12-wk course of treatment were provided by the Pharma Price Information (PPI) service of the Austrian public health institute Gesundheit Österreich GmbH or were obtained from national government or drug reimbursement authorities and recent press releases, where necessary. Prices in Organisation for Economic Co-operation and Development (OECD) member countries and select low- and middle-income countries were converted to US dollars using period average exchange rates and were adjusted for purchasing power parity (PPP). We analysed prices compared to national economic performance and estimated market size and the cost of these drugs in terms of countries' annual total pharmaceutical expenditure (TPE) and in terms of the duration of time an individual would need to work to pay for treatment out of pocket. Patient affordability was calculated using 2014 OECD average annual wages, supplemented with International Labour Organization median wage data where necessary. All data were compiled between 17 July 2015 and 25 January 2016. For the base case analysis, we assumed a 23% rebate/discount on the published price in all countries, except for countries with special pricing arrangements or generic licensing agreements. The median nominal ex-factory price of a 12-wk course of sofosbuvir across 26 OECD countries was US37,729 in Japan to US101,063 and PPP118,754) were at least 1.09 and 1.63 times higher, respectively than in the US (PPP72,765). Based on PPP-adjusted TPE and without the cost of ribavirin and other treatment costs, treating the entire HCV viraemic population with these regimens at the PPP-adjusted prices with a 23% price reduction would amount to at least one-tenth of current TPE across the countries included in this study, ranging from 10.5% of TPE in the Netherlands to 190.5% of TPE in Poland. In 12 countries, the price of a course of sofosbuvir without other costs was equivalent to 1 y or more of the average annual wage of individuals, ranging from 0.21 y in Egypt to 5.28 y in Turkey. This analysis relies on the accuracy of price information and infection prevalence estimates. It does not include the costs of diagnostic testing, supplementary treatments, treatment for patients with reinfection or cirrhosis, or associated health service costs.
Conclusions:
Current prices of these medicines are variable and unaffordable globally. These prices threaten the sustainability of health systems in many countries and prevent large-scale provision of treatment. Stakeholders should implement a fairer pricing framework to deliver lower prices that take account of affordability. Without lower prices, countries are unlikely to be able to increase investment to minimise the burden of hepatitis C.
Hungary and Poland are currently facing budgetary
pressures to reduce health and pharmaceutical spending. However, they still must ensure that valuable innovative medicines are made available to patients. Risk-sharing schemes (RSSs) are a mechanism to achieve access, particularly for high-cost innovative medicines that payers might be reluctant to fund because of uncertainty
around their cost-effectiveness in real life. RSSs can be designed to distribute financial risks, risks relating to health outcomes or a combination of both. Due to fiscal imperatives and complexities linked to the implementation of health outcome-based schemes, both countries have focused mainly on financial RSSs.
Background and objectives
External reference pricing (ERP) is a price regulation tool widely used by policy makers in the European Union (EU) Member States (MS) to contain drug cost, although in theory, it may contribute to modulate prices up and down. The objective of this article was to summarise and discuss the main findings of part of a large project conducted for the European Commission (‘External reference pricing of medicinal products: simulation-based considerations for cross-country coordination’; see www.ec.europa.eu/health/healthcare/docs/erp_reimbursement_medicinal_products_en.pdf) that aimed to provide an overview of ERP systems, both on processes and potential issues in 31 European countries (28 EU MS, Iceland, Norway, and Switzerland).
Methods
A systematic structured literature review was conducted to identify and characterise the use of ERP in the selected countries, to describe its impact on the prices of pharmaceuticals, and to discuss the possible cross-country coordination issues in EU MS. This research was complemented with a consultation of competent authorities’ and international organisations’ representatives to address the main issues or uncertainties identified through the literature review.
Results
All selected countries applied ERP, except the United Kingdom and Sweden. Twenty-three countries used ERP as the main systematic criterion for pricing. In the majority of European countries, ERP was based on legislated pricing rules with different levels of accuracy. ERP was applied either for all marketed drugs or for specific categories of medicines; it was mainly used for publicly reimbursed medicines. The number of reference countries included in the basket varied from 1 to 31. There was a great variation in the calculation methods used to compute the price; 15 countries used the average price, 7 countries used the lowest price, and 7 countries used other calculation methods. Reported limitations of ERP application included the lack of reliable sources of price information, price heterogeneity, exchange rate volatility, and hidden discounts. Spill-over effect and downward price convergence have often been mentioned as ERP's consequences leading to pricing strategies from pharmaceutical companies.
Conclusion
While ERP is widely used in Europe, processes and availability of price information vary from one country to another, thus limiting ERP implementation. Furthermore, ERP spill-over effect is a major concern of pharmaceutical firms leading to implementation of the so-called ‘launch sequence strategies’.
External price referencing (EPR) is applied frequently to control pharmaceutical prices. Our objective was to analyse how EPR is used in Middle Eastern (ME) countries and to compare the price corridor for original pharmaceuticals to non-pharmaceutical services not subjected to EPR.
We conducted a survey on EPR regulations and collected prices of 16 patented pharmaceuticals and 14 non-pharmaceutical services in seven Middle Eastern (ME) countries. Maximum and minimum prices of each pharmaceutical and non-pharmaceutical technology were compared to mean prices in the countries studied by using market exchange rates. Influencing factors of pharmaceutical prices were assessed by multivariate linear regression analysis.
The average price corridor is narrower for pharmaceuticals (-39.8%; +35.9%) than for outpatient and hospital services (-81.7%; +96.3%).
Our analysis revealed the importance of population size and EPR implementation on drug price levels; however, EPR results in higher pharmaceutical prices in lower-income countries compared to non-pharmaceutical services.
Given the high costs of innovative new drugs, most European countries have introduced policies for price control, in particular value-based pricing (VBP) and international reference pricing. The purpose of this study is to describe how profit-maximizing manufacturers would optimally adjust their launch sequence to these policies and how VBP countries may best respond. To decide about the launching sequence, a manufacturer must consider a tradeoff between price and sales volume in any given country as well as the effect of price in a VBP country on the price in international reference pricing countries. Based on the manufacturer’s rationale, it is best for VBP countries in Europe to implicitly collude in the long term and set cost–effectiveness thresholds at the level of the lowest acceptable VBP country. This way, international reference pricing countries would also converge towards the lowest acceptable threshold in Europe.
This paper analyzes pharmaceutical pricing between and within countries to achieve second-best static and dynamic efficiency. We distinguish countries with and without universal insurance, because insurance undermines patients' price sensitivity, potentially leading to prices above second-best efficient levels. In countries with universal insurance, if each payer unilaterally sets an incremental cost-effectiveness ratio (ICER) threshold based on its citizens' willingness-to-pay for health; manufacturers price to that ICER threshold; and payers limit reimbursement to patients for whom a drug is cost-effective at that price and ICER, then the resulting price levels and use within each country and price differentials across countries are roughly consistent with second-best static and dynamic efficiency. These value-based prices are expected to differ cross-nationally with per capita income and be broadly consistent with Ramsey optimal prices. Countries without comprehensive insurance avoid its distorting effects on prices but also lack financial protection and affordability for the poor. Improving pricing efficiency in these self-pay countries includes improving regulation and consumer information about product quality and enabling firms to price discriminate within and between countries. © 2013 The Authors. Health Economics published by John Wiley & Sons Ltd.
This paper analyzes determinants of ex-manufacturer prices for originator and generic drugs across countries. We focus on drugs to treat HIV/AIDS, TB, and malaria in middle and low-income countries (MLICs), with robustness checks to other therapeutic categories and the full income range of countries. We examine the effects of per capita income, income dispersion, competition from originator and generic substitutes, and whether the drugs are sold to retail pharmacies versus tendered procurement by non-government organizations.
The cross-national income elasticity of prices is 0.27 across the full income range of countries but is 0.0–0.10 between MLICs, implying that drugs are least affordable relative to income in the lowest income countries. Within-country income inequality contributes to relatively high prices in MLICs. Although generics are priced roughly 30% lower than originators on average, the variance is large. Additional generic competitors only weakly affect prices, plausibly because generic quality uncertainty leads to competition on brand rather than price. Tendered procurement that imposes quality standards attracts multinational generic suppliers and significantly reduces prices of originator and generic drugs, compared with their respective prices to retail pharmacies. ©2013 The Authors. Health Economics Published by John Wiley & Sons Ltd.
Pharmaceutical companies adjust the pricing strategy of innovative medicines to the imperatives of their major markets. The ability of payers to influence the ex-factory price of new drugs depends on country population size and income per capita, among other factors. Differential pricing based on Ramsey principles is a 'second-best' solution to correct the imperfections of the global market for innovative pharmaceuticals, and it is also consistent with standard norms of equity. This analysis summarizes the boundaries of differential pharmaceutical pricing for policymakers, payers and other stakeholders in lower-income countries, with special focus on Central-Eastern Europe, and describes the feasibility and implications of potential solutions to ensure lower pharmaceutical prices as compared to higher-income countries. European stakeholders, especially in Central-Eastern Europe and at the EU level, should understand the implications of increased transparency of pricing and should develop solutions to prevent the limited accessibility of new medicines in lower-income countries.
This paper presents and evaluates pharmaceutical policies in the EU aimed at the rational use of medicines and at keeping pharmaceutical spending under control. Policy makers are growing more aware that by regulating pharmaceutical markets correctly, considerable savings can be achieved without compromising the quality of care. Specifically, the paper makes the case that, by following numerous best-practices in pharmaceutical sector regulations, the value for money of pharmaceutical consumption could be substantially increased. Appropriate regulations can be relevant for pricing, reimbursement, market entry and expenditure control, as well as specific policies targeted at the distribution chain, physicians and patients.
This study aims to examine the impact of external price referencing (EPR) on on-patent medicine prices, adjusting for other factors that may affect price levels such as sales volume, exchange rates, gross domestic product (GDP) per capita, total pharmaceutical expenditure (TPE), and size of the pharmaceutical industry.
Price data of 14 on-patent products, in 14 European countries in 2007 and 2008 were obtained from the Pharmaceutical Price Information Service of the Austrian Health Institute. Based on the unit ex-factory prices in EURO, scaled ranks per country and per product were calculated. For the regression analysis the scaled ranks per country and product were weighted; each country had the same sum of weights but within a country the weights were proportional to its sales volume in the year (data obtained from IMS Health). Taking the scaled ranks, several statistical analyses were performed by using the program "R", including a multiple regression analysis (including variables such as GDP per capita and national industry size).
This study showed that on average EPR as a pricing policy leads to lower prices. However, the large variation in price levels among countries using EPR confirmed that the price level is not only driven by EPR. The unadjusted linear regression model confirms that applying EPR in a country is associated with a lower scaled weighted rank (p=0.002). This interaction persisted after inclusion of total pharmaceutical expenditure per capita and GDP per capita in the final model.
The study showed that for patented products, prices are in general lower in case the country applied EPR. Nevertheless substantial price differences among countries that apply EPR could be identified. Possible explanations could be found through a correlation between pharmaceutical industry and the scaled price ranks. In conclusion, we found that implementing external reference pricing could lead to lower prices.
This Perspective describes (a) the current situation, (b) challenges and initiatives, (c) and formulates recommendations to valorize and create access to innovative medicines in the EU. We are currently still far away from optimal assessment of value for money in the EU. On the one hand, valorizing innovative medicines involves a local appraisal by health technology assessment (HTA) bodies and competent authorities about the value for money, the budget impact, and the local medical need that can be filled with new medicines. Therefore, local priorities and national health care policy environments should be reflected in the processes and criteria used for assessing value for money and ultimately for reimbursement decisions. On the other hand, a pan-European assessment of both relative effectiveness and medical need (including general ethical and social considerations) should be envisaged in order to feed part of the data needed for the local decisions in an efficient way. This could be the task of the European Medicines Agency, HTA bodies, and competent authorities together.
Market Access Agreements (MAA) between pharmaceutical industry and health care payers have been proliferating in Europe in the last years. MAA can be simple discounts from the list price or very sophisticated schemes with inarguably high administrative burden.
We distinguished and defined from the health care payer perspective three kinds of MAA: Commercial Agreements (CA), Payment for Performance Agreements (P4P) and Coverage with Evidence Development (CED). Apart from CA, the agreements assumed collection and analysis of real-life health outcomes data, either from a cohort of patients (CED) or on per patient basis (P4P). We argue that while P4P aim at reducing drug cost to payers without a systematic approach to addressing uncertainty about drugs' value, CED were implemented provisionally to reduce payer's uncertainty about value of a medicine within a defined time period.
We are of opinion that while CA and P4P have a potential to reduce payers' expenditure on costly drugs while maintaining a high list price, CED address initial uncertainty related to assessing the real-life value of new drugs and enable a final HTA recommendation or reimbursement and pricing decisions. Further, we suggest that real cost to health care payers of drugs in CA and P4P should be made publicly available in a systematic manner, to avoid a perverse impact of these MAA types on the international reference pricing system.
The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.
All 28 EU member states except Sweden and the UK apply international reference pricing (IRP), international price comparison, external reference pricing or cross-reference pricing. The attractiveness of using prices of other countries as a benchmark for decisions within a national price control is obvious. Alternative models for price and reimbursement decision making such as value-based pricing (VBP), i.e. cost-effectiveness analyses, are more complicated. However, IRP provides incentives for stakeholders to take action not in line with optimal (welfare-maximizing) pricing. IRP is costly for two reasons. First, manufacturers are incentivised to limit or delay access to new innovative treatments in countries with small markets and/or a low income, which can be costly in terms of loss of health. Second, all countries also experience a loss of welfare (health) because IRP reduces the opportunities for differential pricing (Ramsey pricing), i.e. using the fact that the ability and willingness to pay differs between countries. Thus, IRP results in less sales revenue to finance research and development of new innovative drugs. We can now observe that payers and manufacturers are engaged in different types of risk-sharing schemes, price-volume negotiations, payback arrangements, confidential discounts, coverage with evidence developments, etc., all with the purpose of returning to the old model of price discrimination and Ramsey pricing. Shortly, real prices for use in IRP systems will cease to exist and, thus, we expect to soon see the end of IRP, a new system for price discrimination and an increasing demand for VBP.
Managed entry agreements are a set of instruments used to reduce the impact of uncertainty and high prices when introducing new medicines. This study develops a conceptual framework for these agreements and tests it by exploring variations in their implementation in Belgium, England, the Netherlands and Sweden and over time as well as their governance structures. Using publicly available data from HTA agencies and survey data from the European Medicines Information Network, a database of agreements implemented between 2003 and 2012 was developed. A review of governance structures was also undertaken. In December 2012 there were 133 active MEAs for different medicine-indications across the four countries. These corresponded to 110 unique medicine-indications. Over time there has been a steady growth in the number of agreements implemented, with the highest number in the Netherlands in 2012. The number of new agreements introduced each year followed a different pattern. In Belgium and England it increased over time, while it decreased in the Netherlands and fluctuated in Sweden. Only 18 (16%) of the unique medicine-indication pairs identified were part of an agreement in two or more countries. England uses mainly discounts and free doses to influence prices. The Netherlands and Sweden have focused more on addressing uncertainties through coverage with evidence development and, in Sweden, on monitoring use and compliance with restrictions through registries. Belgium uses a combination of the above. Despite similar reasons being cited for managed entry agreements implementation, only in a minority of cases have countries implemented an agreement for the same medicine-indication; when they do, a different agreement type is often implemented. Differences in governance across countries partly explain such variations. However, more research is needed to understand whether e.g. risk-perception and/or notion of what constitutes a high price differ between these countries.
This paper analyzes the timing decisions of pharmaceutical firms to launch a new drug in countries involved in international reference pricing. We show three important features of launch timing when all countries reference the prices in all other countries and in all previous periods of time. First, there is no withdrawal of drugs in any country and in any period of time. Second, there is no strict incentive to delay the launch of a drug in any country. Third, whenever the drug is sold in a country, it is also sold in all countries with larger willingness to pay. We then show that the three results do not hold when the countries only reference a subset of all countries. The first two results do not hold when the reference is on the last period prices only.
Background
The only rationale for using biosimilar drugs is for cost saving. The market development for biosimilar drugs will therefore depend on the degree to which cost saving measures are required by nations, medical insurers and individuals, and the absolute savings that could be gained by switching from original drugs. This paper is designed to discover the degree to which financial constraints will drive future health spending, and to discover if legal or safety issues could impact on any trend.
Methods
A structured literature search was performed for papers and documents up to 13 March, 2011. Where multiple sources of data were available on a topic, data from papers and reports by multinational or national bodies were used in preference to data from regions or individual hospitals.
Results
Almost all health systems face current significant cost pressures. The twin driver of increasing cancer prevalence, as populations’ age and cancer medicine costs rising faster than inflation, places oncology as the most significant single cost problem. For some countries, this is predicted to make medicine unaffordable within a decade. Most developed countries have planned to embrace biosimilar use as a cost-control measure. Biosimilar introduction into the EU has already forced prices down, both the price of biosimilar drugs and competitive price reductions in originator drugs. Compound annual growth rates of use have been predicted at 65.8% per year.
Conclusions
Most developed countries have planned to embrace biosimilar use as a major cost-control measure. Only legal blocks and safety concerns are likely to act against this trend. For centralized healthcare systems, and those with a strong tradition of generic medicine use, biosimilar use will clearly rise with predictions of more than 80% of prescriptions of some biologic drugs within one year of market entry in the USA. Delaying the implementation of such programs, however, risks a real crisis in healthcare delivery for many countries and hospitals which few can now afford.
This study aimed to provide an up-to-date description as well as comparative analysis of the national characteristics of pharmaceutical external price referencing (EPR) in Europe.
Review of the country-specific PPRI (Pharmaceutical Pricing and Reimbursement Information) Pharma Profiles written by representatives of the PPRI Network. The Profiles were analysed according to predefined criteria.
Of 28 analysed European countries 24 applied EPR in 2010. The majority of countries have statutory rules to implement EPR. Most countries had less than 10 countries in their reference baskets. Higher income countries tend to include higher income countries in their basket, whereas lower income countries refer to lower income countries. Taking the average price of all countries in the basket as the basis to calculate the national price was the most common strategy (n=8). The methodology of EPR has changed in most European countries over the past 10 years (n=19).
EPR is a widely used pricing policy in Europe and is still actively used as well as adjusted by national authorities. However, we still see room for improvement by implementing more detailed legislations in terms of the revision of prices and by identifying alternative countries in case a product is not on the market. We also see the need for formal information sharing (e.g. congresses dedicated to pricing strategies and systems) with other public pricing authorities to learn about the different EPR methodologies as well as the national experiences. These congresses might also give room to better understand national pricing methods including discussions on possible limitations of these pricing methods.
This paper investigates the determinants of the prices of branded prescription medicines across different regulatory settings and health care systems, taking into account their launch date, patent status, market dynamics and the regulatory context in which they diffuse. By using volume-weighted price indices, this paper analyzes price levels for a basket of prescription medicines and their differences in 15 OECD countries, including the United States and key European countries, the impact of distribution margins and generic entry on public prices and to what extent innovation, by means of introducing newer classes of medicines, contributes to price formation across countries. In doing so, the paper seeks to understand the factors that contribute to the existing differences in prices across countries, whether at an ex-factory or a retail level. The evidence shows that retail prices for branded prescription medicines in the United States are higher than those in key European and other OECD countries, but not as high as widely thought. Large differences in prices are mainly observed at an ex-factory level, but these are not the prices that consumers and payers pay. Cross-country differences in retail prices are actually not as high as expected and, when controlling for exchange rates, these differences can be even smaller. Product age has a significant effect on prices in all settings after having controlled for other factors. Price convergence is observed across countries for newer prescription medicines compared with older medicines. There is no evidence that originator brand prices fall after generic entry in the United States, a phenomenon known as the 'generics paradox'. Finally, distribution and taxes are important determinants of retail prices in several of the study countries. To the extent that remuneration of the distribution chain and taxation are directly and proportionately linked to product prices this is likely to persist over time.
We analyze the effect of price regulation on delays in launch of new drugs. Because a low price in one market may ‘spill-over’ to other markets, through parallel trade and external referencing, manufacturers may rationally prefer longer delay or non-launch to accepting a relatively low price. We analyze the launch in 25 major markets, including 14 EU countries, of 85 new chemical entities (NCEs) launched between 1994 and 1998. Each NCE's expected price and market size in a country are estimated using lagged average price and market size of other drugs in the same (or related) therapeutic class. We estimate a Cox proportional hazard model of launch in each country, relative to first global launch.
Only 55% of the potential launches occur. The US leads with 73 launches, followed by Germany (66) and the UK (64). Only 13 NCEs are launched in Japan, 26 in Portugal and 28 in New Zealand. The results indicate that countries with lower expected prices or smaller expected market size have fewer launches and longer launch delays, controlling for per capita income and other country and firm characteristics. Controlling for expected price and volume, country effects for the likely parallel export countries are significantly negative. Copyright
Several EU countries are determining reimbursement prices of pharmaceuticals by cross-referencing prices of foreign countries. Our objective is to quantify the theoretical cross-border spill-over effects of cross-reference pricing schemes on pharmaceutical prices in the former EU-15 countries.
An analytical model was developed estimating the impact of pharmaceutical price changes in Germany on pharmaceutical prices in other countries in the former EU-15 using cross-reference pricing. We differentiated between the direct impact (from referencing to Germany directly) and the indirect impact (from referencing to other countries that conduct their own cross-reference pricing schemes).
The relationship between the direct and indirect impact of a price change depends mainly on the method applied to set reimbursement prices. When applying cross-reference pricing, the reimbursement price is either determined by the lowest of foreign prices (e.g. Portugal), the average of foreign prices (e.g. Ireland) or a weighted average of foreign prices (e.g. Italy). If the respective drug is marketed in all referenced countries and prices are regularly updated, a price reduction of 1.00 euro in Germany will reduce maximum reimbursement prices in the former EU-15 countries from 0.15 euros in Austria to 0.36 euros in Italy.
On one side, the cross-border spill-over effects of price reductions are undoubtedly welcomed by decision makers and may be favourable to the healthcare system in general. On the other side, these cross-border spill-over effects also provide strong incentives for strategic product launches, launch delays and lobbying activities, and can affect the effectiveness of regulation.
To avoid the negative effects of cross-reference pricing, a weighted index of prices from as many countries as possible should be used to determine reimbursement prices in order to reduce the direct and indirect impact of individual countries.
Pharmaceutical markets and insurance worldwide (Advances in health economics and health services research), 22
- P P Barros
Barros PP. Pharmaceutical policies in European countries. In: Dor A, editor.
Pharmaceutical markets and insurance worldwide (Advances in health economics and health services research), 22. Emerald Group Publishing Limited;
2010. p. 3-27.
External reference pricing of medicinal products: simulation-based considerations for crosscountry coordination
- M Toumi
- C Rémuzat
- A L Vataire
- D Urbinati
Toumi M, Rémuzat C, Vataire AL, Urbinati D. (2013) External reference
pricing of medicinal products: simulation-based considerations for crosscountry coordination. European Commission report. European Union. Available at: http://ec.europa.eu/health/systems _ performance _ assessment/docs/erp _
reimbursement _ medicinal _ products _ en.pdf (accessed: November 2016)
The implications of external price referencing on pharmaceutical list prices in Europe
- M Csanádi
Please cite this article as: M. Csanádi et al., The implications of external price referencing on pharmaceutical list prices in Europe, Health
Policy and Technology (2018), https://doi.org/10.1016/j.hlpt.2018.07.005
JID: HLPT
[m5G; August 14, 2018;16:44 ]
WHO/HAI Project on Medicine Prices and Availability. Review series on pharmaceutical pricing policies and interventions. Working paper 1: external reference pricing
- J Espin
- J Rovira
- A O De Labry
Espin J, Rovira J, de Labry AO. (2011) WHO/HAI Project on Medicine Prices and
Availability. Review series on pharmaceutical pricing policies and interventions. Working paper 1: external reference pricing. Available at: http://haiweb.
org/wp-content/uploads/2015/08/ERP-final-May2011a1.pdf (Accessed: November 2016)
Study on enhanced cross-country coordination in the area of pharmaceutical product pricing
- S Vogler
- L Lepuschütz
- P Schneider
- V Stühlinger
Vogler S, Lepuschütz L, Schneider P, Stühlinger V. (2015) Study on
enhanced cross-country coordination in the area of pharmaceutical
product pricing. European Commission report. European Union. Available at: http://ec.europa.eu/health/systems _ performance _ assessment/docs/
pharmaproductpricing _ frep _ en.pdf (Accessed: November 2016)
- P Schneider
- C Habl
- Euripid -Best
Schneider P, Habl C. EURIPID -Best Practice Report on External Reference Pricing (ERP) Available at. (Accessed: April 2018) http://metaweb.hu/wp-content/
uploads/Euripid _ BestPracticeReport _ final _ Feb2017.pdf.
Short-and Long-Term Effects of Value-Based Pricing vs. External Price Referencing Available at
- P Kanavos
- E Nicod
- J Espin
- S Van Den Aardweg
Kanavos P, Nicod E, Espin J, van den Aardweg S. Short-and Long-Term
Effects of Value-Based Pricing vs. External Price Referencing Available at.
(Accessed: November 2016) http://whocc.goeg.at/Literaturliste/Dokumente/
FurtherReading/Short-%20and%20long-term%20effect%20of%20value-based%
20pricing.pdf.
Implications of external price referencing of pharmaceuticals in Middle East countries
- Z Kaló
- I Alabbadi
- Al Ahdab
- O G Alowayesh
- M Elmahdawy
- M Al-Saggabi
- A H Tanzi
- V L Al-Badriyeh
- D Alsultan
- H S Ali
- F M Elsisi
- G H Akhras
- K S Vokó
- Z Kanavos
Kaló Z, Alabbadi I, Al Ahdab OG, Alowayesh M, Elmahdawy M, Al-Saggabi AH, Tanzi VL, Al-Badriyeh D, Alsultan HS, Ali FM, Elsisi GH, Akhras KS,
Vokó Z, Kanavos P. Implications of external price referencing of pharmaceuticals in Middle East countries. Expert Rev Pharmacoecon Outcomes Res
2015;15(6):993-8.