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

Gill, Jennifer, Fontrier, Anna-Maria, Kyriopoulos, Dionysis and Kanavos, Panos (2019) Variations in external reference pricing implementation: does it matter for public policy? European Journal of Health Economics. ISSN 1618-7598

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Identification Number: 10.1007/s10198-019-01100-y

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was also used to supplement data in instances where information received from the systematic literature review was outdated or minimal.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.ConclusionThe 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.

Item Type: Article
Official URL: https://link.springer.com/journal/10198
Additional Information: © 2019 Springer-Verlag GmbH Germany
Divisions: Health Policy
Subjects: R Medicine > RA Public aspects of medicine
H Social Sciences > HB Economic Theory
JEL classification: I - Health, Education, and Welfare > I1 - Health > I10 - General
I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets
I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
Date Deposited: 11 Sep 2019 10:15
Last Modified: 13 Sep 2019 09:51
URI: http://eprints.lse.ac.uk/id/eprint/101586

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