SM2 The Consequences of Greater Net Price Transparency for Innovative Medicines in Europe: Insights from a Multi-Agent Simulation Model

Abstract

Background: Price transparency of innovative medicines is a heavily debated topic and, despite no evidence suggesting that greater net price transparency (NPT) could benefit either the payers or the patients, it is believed by many stakeholders as a mechanism to promote competition and equity across markets. The aim of this study is to explore the effects of a policy requesting greater NPT in Europe on the achievable pharmaceutical pricing and access in different European countries. A computational multi-agent model representing the European country-level situation was developed to conduct counterfactual analyses of various NPT systems. In particular, the model considers only the case of manufacturers of in-patent pharmaceutical products acting as monopolists, hence not facing competition, when negotiating the price and reimbursement of new drugs. The results of the computational model indicate that lower-income markets could expect price increases under transparent conditions whereas higher-income markets could expect price decreases. A full NPT system encompassing higher- and lower-income European countries would not be viable as middle- and lower-income countries acting as rational economic agents would not give up their confidential agreement system with the pharmaceutical industry. A partial price transparency system could be a viable solution if entailing only the group of high-income countries committing to NPT and accepting a higher price than they could get in their present confidential rebate system, leaving all other countries free to opt for confidential discounts. Results from the computational model are fully in line with previous studies indicating an increasing imbalance between higher- and lower-income countries, with the latter likely to have to pay more for the same value that they get now. This goes against the spirit of Ramsey Pricing principles with which a mark-up would be implemented to countries featuring highly inelastic demand to ensure distributive justice amongst European markets.