PHP12 Then and Now: The Evolution of International Reference Pricing Globally

Abstract

This study assesses the evolution of international reference pricing (IRP) across 34 countries, from 2006 to 2011. Its current influence on innovative drug pricing in the leading five European Union (EU) markets was also considered. An international reference pricing matrix was created and reviewed to see if the basket of countries referred by nations to price their pharmaceuticals had changed. Pharmaceutical prices were also used to review 2011 prices of five randomly selected innovative blockbuster molecules across EU-5 countries; the molecules in question were bevacizumab, adalimumab, etanercept, rosuvastatin and infliximab. The EU-5 markets lead the reference basket used by countries in their price setting process both in 2006 and 2011. Countries that reference these markets are varied and not limited to economically similar markets both within and outside the EU. While there have been additions and deletions, many countries have largely maintained their reference basket of countries. Since 2006, more emerging markets have become IRP prescribers. Unlike Brazil, and Turkey, which followed IRP prior to 2006 and exclusively use developed country prices to price their own products, the newer emerging market followers have also chosen to include neighbouring countries and/or economically similar country prices in their mechanism. A comparison of 2011 prices across the EU-5 markets showed less price variation between countries that followed IRP compared to those that followed free pricing, but prices were not necessarily lower. Countries using IRP still rely on EU-5 drug prices to price their medicines. However, new adopters of the mechanism are including similar and neighbouring countries to arrive at affordable rates and prevent parallel export. With more emerging markets rolling out IRP, it is notable that in the absence of a set formula that identifies the lowest prices, this technique is one of cost harmonization rather than cost containment.