International Health Care Systems Pharmaceuticals Public Policy

International Reference Pricing: Cross-country comparison

The price of pharmaceuticals are much higher in the U.S. than in other countries. Some policymakers have claimed that international reference pricing could be used to lower the cost of drugs in the U.S. For instance, the Lower Drug Costs Now Act (HR 3) proposed setting the maximum negotiated price Medicare would pay at 120% of the basket average of other developed countries. Further, these prices would be made available to the commercial health plans as well.

International reference pricing, however, has a long history and has been fairly widely adopted in a number of European countries. The exact mechanism through which international reference pricing is implemented, however, varies across countries.

A paper by Rand and Kesselheim (2021) conducts a landscape analysis of how different countries (and US proposals) have or have not used international reference prices to inform drug pricing. A helpful summary table from that paper is reproduced below.

Rand and Kesselheim (2021)

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