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International impact of external reference pricing: should national policy-makers care?

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Abstract

Background

External reference pricing (ERP) is widely used to regulate drug prices. Although the literature has largely focused on the impact of ERP on a number of policy endpoints and its impact from a geographical perspective, a comparative study drawing on evidence from different settings does not exist to date.

Methods

A systematic literature review was conducted on pre-defined endpoints on the impact of ERP across countries, such as price stability, price convergence and launch delays. Expert consultation was undertaken to analyse whether or not the international implications of ERP are considered during its design.

Results

46 studies were included in the analysis. Across countries, ERP may cause launch delays, price instability and lead to price convergence. However, these effects cannot be solely attributed to ERP, as there may be other factors at play, such as the size and the GDP of a country and other regulations in place, which can trigger these effects or reduce their effect. Nevertheless, the nature of ERP facilitates these unintended consequences and directly links them to it. Despite these cross-country implications being well known to decision-makers, they are not necessarily considered during the design of ERP.

Conclusions

As the effects of ERP as a stand alone policy are very difficult to isolate in the presence of other regulatory measures implemented within countries and the presence of other extrinsic factors across countries, our findings are inconclusive. Still, there is an unquestionable unmet need related to the design of ERP systems to attain a positive impact internationally.

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Acknowledgements

We are grateful to Mackenzie Mills, Nicola Boekstein, Olina Efythimiadou, Erica Visintin, David Taylor and two anonymous referees for valuable comments and suggestions. We would also like to thank Ibrahim Abbadi, Jakub Adamski, Daoud Al-Badriyeh, Diāna Arāja, Anya Bazhenova, Tatyana Benisheva, Irina Cleemput, Nevine Elnahass, Jaime Espin, Zoltán Kalo, Chara Kani, Gabor Lengyel, Vlad Mixich, Anban Pillay, Valentina Rupel, Marisa Santos, Tomas Tesar, Joice Valentim and Kärt Veliste for their personal input. This paper was undertaken in the context of the LSE Health-Medical Technology Research Group Pharmaceutical Regulation programme. All outstanding errors remain our own.

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  1. Department of Health Policy and LSE Health- Medical Technology Research Group, London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, UK

    Anna-Maria Fontrier, Jennifer Gill & Panos Kanavos

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  1. Anna-Maria Fontrier
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  2. Jennifer Gill
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Correspondence to Anna-Maria Fontrier.

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Fontrier, AM., Gill, J. & Kanavos, P. International impact of external reference pricing: should national policy-makers care?. Eur J Health Econ 20, 1147–1164 (2019). https://doi.org/10.1007/s10198-019-01083-w

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