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How does external reference pricing work in developing countries: evidence from Iran.
Fatemeh Babaie1, Mohammad Hossein Motevalli1, Gholamhossein Mehralian2
1Department of Pharmacoeconomics and Pharma Management, School of Pharmacy, Shahid Beheshti University of Medical Sciences, Tehran, Iran.
Frontiers in Pharmacology
|July 6, 2023
Summary
External reference pricing (ERP) is a widely used medicine pricing policy. While effective in the short term, ERP alone is not perfect for ensuring fair pharmaceutical prices, suggesting complementary methods improve patient access.
Area of Science:
- Health Economics
- Pharmaceutical Policy
- Drug Pricing
Background:
- Governments utilize diverse pricing strategies to ensure medicine accessibility, availability, and affordability.
- External reference pricing (ERP) is a common, easily implemented policy across many countries.
- ERP's path dependency presents both advantages and disadvantages, complicating impact assessment.
Purpose of the Study:
- To evaluate the performance of external reference pricing (ERP) as a drug pricing tool in Iran.
- To analyze the impact of different reference country selections on ERP outcomes.
- To compare medicine prices in Iran with those in socioeconomically comparable reference countries.
Main Methods:
- A cross-sectional descriptive study was conducted.
- Iran's official reference country basket was supplemented with countries selected for socioeconomic comparability and data access.
- An empirical analysis compared prices of selected medicines in Iran against these reference countries.
Main Results:
- Prices of 57 medicines (69.2% of Iran's imported pharma market value) were analyzed.
- 49.1% of medicines were priced higher in at least one reference country.
- 21% of products showed higher average prices in Iran compared to the average in reference countries.
Conclusions:
- External reference pricing (ERP) offers a viable short-term solution for pharmaceutical pricing challenges.
- ERP is not a perfect standalone pricing tool; its effectiveness is acceptable but can be enhanced.
- Integrating ERP with other methods, like value-based pricing, can improve patient access to medicines in Iran.
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