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

Does external reference pricing deliver what it promises? Evidence on its impact at national level

“…The role of ERP in these countries was found to range from "supportive" to "main method" in price setting [9]. Evidence on the frequency of price revisions showed that many countries revise their reference prices based on reasons such as availability of new evidence for specific pharmaceuticals or on specific agreements made at national level; a third of the countries use ERP at launch only, while others do not have a clear structure for price revisions and price recalculations may take place, for instance, every 6 months or at manufacturers' request [9]. The majority of the countries of interest select reference countries based on geographical proximity, while others take into consideration GDP levels.…”

“…The majority of the countries of interest select reference countries based on geographical proximity, while others take into consideration GDP levels. The size of the basket may vary from very small (up to five countries) to very large (more than 25 countries) [9]. These features are summarised in Figs.…”

“…Again, frequent price revisions, the basket size and the formula used to calculate reference prices can determine the extent of price reductions observed within countries. A study in the same series discusses how ERP is implemented and the variations observed in the ERP design across countries [9]. Other aspects of the market can have an impact on price levels, such as country income level, the health needs of the population and overall healthcare costs.…”

“…The introduction or reform of ERP seemed to be associated with price reductions in a variety of settings, including the Netherlands (pharmaceutical average price level declining by 8% between 2007 and 2008) [23], Cyprus (based on a simulation exercise testing the effects of a likely ERP introduction, after identifying Cyprus as a "high-price" country for pharmaceuticals) [24], Norway (where it has been regarded as very successful since 2009, resulting in considerable and predictable price reductions) [25], Moldova (where the 2010 reform of ERP, setting ex-manufacturer prices equal to the average price of the three lowest prices in the basket, lowered prices by 3% in 2011) [26], Romania (where the prices of prescription pharmaceuticals were found to be low compared to the EU average due to the 7Other(8), (9) Country of origin of the product (10) Table 3 Overall direction and quality of evidence from the literature on the impact of ERP at national level. Source: Synthesis and assessment by the authors based on primary and secondary data collection a Regarding the direction of impact of ERP, the "+" sign indicates that ERP contributes to achieving the stated goal(s); the "−" sign indicates that it does not contribute to achieving the stated goals.…”

“…In the majority of cases, ex-factory prices are used to inform pricing decisions and pricing authorities rely mostly on list prices rather than transaction prices to do so [1][2][3][4][5][6][7]. The method used to calculate the reference price usually differs across countries; often, the lowest in the basket is used but it is not uncommon to use the average or the median [2,3,[5][6][7][8][9]. The number of countries considered in the basket as well as the frequency of price revisions also varies across countries.…”