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Effects of Reference Pricing in Pharmaceutical Markets: A Review

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Author Info

  • Matteo Maria. Galizzi

    (Department of Economics, University of Brescia, Brescia, Italy)

  • Simone Ghislandi

    (ECONPUBBLICA, Department of Institutional Analysis, Bocconi University, Milan, Italy)

  • Marisa Miraldo

    (Healthcare Management Group, Imperial College Business School, Imperial College London, London, UK)

Abstract

This work aims to provide a systematic and updated survey of original scientific studies on the effect of the introduction of reference pricing (RP) policies in Organisation for Economic Co-operation and Development (OECD) countries. We searched PubMed, EconLit and Web of Knowledge for articles on RP. We reviewed studies that met the inclusion criteria established in the search strategy. From a total of 468 references, we selected the 35 that met all of the inclusion criteria. Some common themes emerged in the literature. The first was that RP was generally associated with a decrease in the prices of the drugs subject to the policy. In particular, price drops seem to have been experienced in virtually every country that implemented a generic RP (GRP) policy. A GRP policy applies only to products with expired patents and generic competition, and clusters drugs according to chemical equivalence (same form and active compound). More significant price decreases were observed in the sub-markets in which drugs were already facing generic competition prior to RP. Price drops varied widely according to the amount of generic competition and industrial strategies: brand-named drugs originally priced above RP values decreased their prices to a greater extent. A second common theme was that both therapeutic RP (TRP) and GRP have been associated with significant and consistent savings in the first years of application. A third general result is that generic market shares significantly increased whenever the firms producing brand-named drugs did not adopt one of the following strategies: lowering prices to RP values; launching new dosages and/or formulations; or marketing substitute drugs still under patent protection. Finally, concerning TRP, although more evidence is needed, studies based on a large number of patient-level observations showed no association between the RP policy and health outcomes.

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Bibliographic Info

Article provided by Springer Healthcare | Adis in its journal PharmacoEconomics.

Volume (Year): 29 (2011)
Issue (Month): 1 ()
Pages: 17-33

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Handle: RePEc:wkh:phecon:v:29:y:2011:i:1:p:17-33

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Web page: http://pharmacoeconomics.adisonline.com/

Related research

Keywords: Drug-cost; Formularies; Pricing; Reimbursement.;

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Cited by:
  1. Simone Ghislandi & Patrizio Armeni & Claudio Jommi, 2013. "The impact of generic reference pricing in Italy, a decade on," The European Journal of Health Economics, Springer, vol. 14(6), pages 959-969, December.
  2. Aki Kangasharju & Joni Hokkanen & Ismo Linnosmaa & Hannu Valtonen, 2012. "Generic substitution policy, prices and market structure: evidence from a quasi-experiment in Finland," Working Papers 35, Government Institute for Economic Research Finland (VATT).
  3. Lagravinese, Raffaele & Paradiso, Massimo, 2012. "Corruption and health expenditure in Italy," MPRA Paper 43215, University Library of Munich, Germany.
  4. Ghislandi, Simone, 2011. "Competition and the Reference Pricing Scheme for pharmaceuticals," Journal of Health Economics, Elsevier, vol. 30(6), pages 1137-1149.
  5. Livio Garattini & Katelijne Vooren, 2013. "Could co-payments on drugs help to make EU health care systems less open to political influence?," The European Journal of Health Economics, Springer, vol. 14(5), pages 709-713, October.

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