International Reference Pricing: impact of changing the basket of reference countries on ability to reference and on drug launch prices in 6 markets

Abstract

Objectives: To examine the impact of changing the basket of reference countries on ability to reference and on pharmaceutical launch prices in 6 markets, which approved International Reference Pricing (IRP) reference country basket changes in 2019. Methods: Pre- and postreform IRP regulations in Austria, Bulgaria, Croatia, Canada, The Netherlands, and North Macedonia were examined. Policy-makers’ objectives in pursuing basket reform were identified from public statements and—when unavailable—through primary research. IRP rules were applied strictly to calculate, using PharmOnLine International (POLI) data, the maximum allowed price (MAP) at launch of new chemical/molecular entity presentations—first priced in 2018 and subject to IRP—under the old and the new basket. Results: Bulgaria and The Netherlands would each lose ability to price 1 new chemical/molecular entity presentation under IRP because of the reform, with the other countries unaffected. Consistent with policy-makers’ expectations, launch prices would not be significantly affected in Austria (−0.45%), Bulgaria (0%), and Croatia (0%). Canada and The Netherlands, which targeted price reductions, would have had 39.19% and 2.16% lower average MAP across the sample, respectively. North Macedonian authorities did not reveal price rises as their objective in primary research, but the MAP at launch would have been 30.48% higher on average under the new basket. Conclusions: This study demonstrates IRP's complexity and confirms that policy-makers need an in-depth understanding of IRP rules to adequately predict basket-change impact on prices. The pre-assessment undertaken by policy-makers in markets, whose basket reform outcome aligned with expectations, provides valuable lessons for other countries.