PHP48 - INTERNATIONAL REFERENCE PRICING OF PHARMACEUTICALS: APPLY LIBERALLY OR USE SPARINGLY?

Abstract

As part of an emerging literature on best practice in design and application of international reference pricing (IRP), different groups have issued divergent recommendations on the frequency with which this tool ought to be applied, ranging from regular to minimal use for price revisions. To understand which of these recommendations is in sync with current IRP use, an international analysis of IRP policy was conducted. Between January 2017 and May 2018, a review of pricing regulations was conducted across 64 countries. In cases where information gaps or ambiguities were identified, interviews were completed with payers, policymakers and pharmaceutical industry members. Qualitative and semi-quantitative analyses were conducted to characterize IRP use. When segmenting countries by frequency of IRP application, there is no clear majority. The largest segment (31.3%) applies IRP annually, a share only marginally larger than that which applies IRP only at launch (29.7%). Smaller segments apply IRP at longer (21.9%) or shorter (17.2%) intervals than once per year. No clear trend emerges in terms of correlation between frequency of IRP application and other country characteristics. A number of countries characterized as having mature policy frameworks were found to be actively debating, or have recently completed, changes to the time points at which IRP is applied. A relatively large share of countries reserve IRP for application at time of launch, typically relying on alternative mechanisms to manage pharmaceutical expenditure (including price cuts unrelated to IRP itself). In light of debates surrounding frequency of IRP application, this means there is considerable scope for international pricing dynamics to evolve, were more countries to move to application of IRP downstream of launch. At the same time, lack of a clear majority in terms of frequency of IRP use suggests establishing alignment on what constitutes “regular” versus “minimal” application may be difficult.