Review of the literature on reference pricing
This paper reviews the literature on reference pricing (RP) in pharmaceutical markets. The RP strategy for cost containment of expenditure on drugs is analyzed as part of the procurement mechanism. We review the existing literature and the state-of-the-art regarding RP by focusing on its economic effects. In particular, we consider: (1) the institutional context and problem-related factors which appear to underline the need to implement an RP strategy; i.e., its nature, characteristics and the sort of health care problems commonly addressed; (2) how RP operates in practice; that is, how third party-payers (the insurers/buyers) have established the RP systems existing on the international scene (i.e., information methods, monitoring procedures and legislative provisions); (3) the range of effects resulting from particular RP strategies (including effects on choice of appropriate pharmaceuticals, insurer savings, total drug expenditures, prices of referenced and non-referenced products and dynamic efficiency; (4) the market failures which an RP policy is supposed to address and the main advantages and drawbacks which emerge from an analysis of its effects. Results suggest that RP systems achieve better their postulated goals (1) if cost inflation in pharmaceuticals is due to high prices rather than to the excess of prescription rates, (2) when the larger is the existing difference in prices among equivalent drugs, and (3) more important is the actual market for generics.
|Date of creation:||Feb 1999|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.econ.upf.edu/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Abel-Smith, Brian & Mossialos, Elias, 1994. "Cost containment and health care reform: a study of the European Union," Health Policy, Elsevier, vol. 28(2), pages 89-132, May.
- Mark Johnston & Richard Zeckhauser, 1991. "The Australian Pharmaceutical Subsidy Gambit: Transmuting Deadweight Loss and Oligopoly Rents to Consumer Surplus," NBER Working Papers 3783, National Bureau of Economic Research, Inc.
- F. M. Scherer, 1993. "Pricing, Profits, and Technological Progress in the Pharmaceutical Industry," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 97-115, Summer.
- Zweifel, Peter & Crivelli, Luca, 1996. "Price Regulation of Drugs: Lessons from Germany," Journal of Regulatory Economics, Springer, vol. 10(3), pages 257-73, November.
- Robin Lindsey & Douglas S. West, 1999. "National Pharmacare, Reference-Based Pricing, and Drug R&D: A Critique of the National Forum on Health's Recommendations for Pharmaceutical Policy," Canadian Public Policy, University of Toronto Press, vol. 25(1), pages 1-27, March.
- Drummond, Michael & Jonsson, Bengt & Rutten, Frans, 1997. "The role of economic evaluation in the pricing and reimbursement of medicines," Health Policy, Elsevier, vol. 40(3), pages 199-215, June.
- Fattore, Giovanni & Jommi, Claudio, 1998. "The new pharmaceutical policy in Italy," Health Policy, Elsevier, vol. 46(1), pages 21-41, October.
- Paul van den Noord & Terje Hagen & Tor Iversen, 1998. "The Norwegian Health Care System," OECD Economics Department Working Papers 198, OECD Publishing.
- Schneeweiss, Sebastian & Schoffski, Oliver & Selke, Gisbert W, 1998. "What is Germany's experience on reference based drug pricing and the etiology of adverse health outcomes or substitution?," Health Policy, Elsevier, vol. 44(3), pages 253-260, June.
When requesting a correction, please mention this item's handle: RePEc:upf:upfses:362. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.