PHP30 - Is External Price Referencing an Appropriate Drug Policy from an Efficiency, Equity, and Quality Perspective?

Abstract

Different external price referencing (EPR) configurations are applied by countries worldwide. Depending on how EPR schemes are implemented, they may have varying effects on short- and long-run prices, market dynamics, key stakeholders, and other relevant endpoints. This research evaluated the merits and demerits of EPR from an efficiency, equity, and quality perspective. A theoretical and empirical analysis of the effectiveness of EPR was conducted, based on a systematic review of the literature and stakeholder interviews. As EPR has been most common in Europe, the study focused on this region. The systematic review identified 100 relevant articles. The articles were categorised according to study characteristics and four major themes were identified; these findings were confirmed by the interviewees. The evidence suggests that EPR schemes often generate disproportionate price levels in relation to national abilities to pay; this is likely due to the reliance on foreign list prices which do not reflect negotiated discounts. If manufacturers apply launch strategies to exert upward pressure on prices (e.g. launch delays or product withdrawals), it may also limit patient access to life-saving medicines. In addition, the bureaucratic complexity of many EPR schemes may undermine the objectives of EPR use (i.e. cost containment and macroeconomic efficiency). Finally, widespread EPR application may stifle pharmaceutical and biomedical innovation. A national pricing policy should provide an effective, predictable, transparent, and stable pricing environment for pharmaceutical products. It should internalise national priorities for health and industrial policy, including cost containment, employment, innovation, and trade promotion. EPR is associated with important short- and long-term issues. If EPR is going to continue to be applied by EU Member States and other countries, then it is necessary to establish guiding principles to govern EPR use across jurisdictions. Still, differential pricing and risk-sharing agreements may represent more sustainable policy options.