reference pricing – Healthcare Economist

Most Favored Nation Drug Pricing in the U.S.: Comparing GENEROUS, GLOBE and GUARD

2026-01-072026-01-07Jason Shafrin

The Trump administration has introduced three most-favored-nation (MFN) drug pricing initiatives designed to link U.S. pharmaceutical costs to prices paid in economically comparable countries. Most-favored-nation pricing requires manufacturers to provide rebates when U.S. prices exceed those in reference nations—a direct response to the persistent gap between U.S. drug prices and those in other developed economies.…

MFN comes to Medicaid under the GENEROUS program

2025-11-13Jason Shafrin

Last week, CMS announced the GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model. The program basically is a ‘most favored nation’ style reference pricing based on net prices from developed countries. The program builds on the Medicaid Drug Rebate Program (MDRP). Specific details specified on the CMS website include: Participating manufacturers whose applications are accepted…

Is international reference pricing coming to the US?

2025-04-242025-04-24Jason Shafrin

Perhaps this is what President Trump is exploring. Reuters reports: Drugmakers have been warned that the Trump Administration is considering linking U.S. medicine prices to lower amounts paid by other developed countries, according to two company sources who called the option the pharmaceutical industry’s top concern.Both sources, who were not authorized to speak publicly, said…

Reference pricing in the US for COVID drugs?

2023-09-15Jason Shafrin

Perhaps according to a report from Stat News: A groundbreaking clause in a new deal between the Department of Health and Human Services and the pharmaceutical company Regeneron marks the first time the Biden administration has directly used its leverage to challenge drugmakers’ list prices, experts told STAT.The contract between Regeneron and the government requires…

International Reference Pricing for Cell and Gene Therapies

2022-05-31Jason ShafrinLeave a comment

In recent years, the US government has had a number of proposals which aim to lower drug prices by linking US drug prices to the prices in other developed countries. This process is known as international reference pricing (IRP). A paper by Sullivan et al. (2022) explains: Federal legislative proposals to address global pricing differences…

What will be the impact of adopting reference pricing in the US?

2021-09-202021-09-20Jason ShafrinLeave a comment

That is the question that a recent JAMA study–Mulcahy et al. (2021)–aim to answer. The authors use IQVIA MIDAS data to estimate sales price and volume in the US. These can can be used to estimate drug wholesale acquisition cost (WAC), but they ignore rebates. To account for rebates in the US they use SSR…

International Reference Pricing: List vs. Net Pricing issues

2021-04-23Jason ShafrinLeave a comment

Leah Rand and Aaron Kesselheim have an interesting commentary in Value in Health reviewing some of the challenges of implementing international reference pricing (IRP) in the U.S. IRP would set drug prices in the U.S. as no higher than a basket of drug prices in other developed countries. This issue is of particular interest due…

Does reference prices for imaging services work?

2020-04-16Jason ShafrinLeave a comment

Reference-based pricing seems like an attractive option. Basically, health insurers pay some amount (e.g., the lowest price, median price, average of lowest X prices) for a given service. If patients want a higher priced option, they must pay the difference. The approach assures patients have access to care but makes patients responsible if they don’t…

Why drug importation from Canada won’t work

2019-11-122019-11-12Jason Shafrin4 Comments

A number of politicians have called for the ability to import drugs from Canada and other developed countries. For instance, Bernie Sanders said: “I believe we should be able to import into the United States from Canada, and from other countries, FDA-approved medicine, which would substantially lower prices.” However, Canada does not want the U.S.…

How to do external reference pricing

2019-11-10Jason Shafrin1 Comment

Many European countries use external reference pricing (ERP) to help set their drug prices. External reference pricing caps the prices of drugs at some average or weighted average of the drug price in other countries. The comparison countries typically are either in close proximity or of similar GDP/capita level. The advantage of reference pricing is…