Objectives: This study aims to examine the impact of external price
referencing (EPR) on on-patent medicine prices, adjusting for other factors that
may affect price levels such as sales volume, exchange rates, gross domestic
product (GDP) per capita, total pharmaceutical expenditure (TPE), and size of
the pharmaceutical industry.
Methods: Price data of 14 on-patent products, in 14 European countries in
2007 and 2008 were obtained from the Pharmaceutical Price Information Service of
the Austrian Health Institute. Based on the unit ex-factory prices in EURO,
scaled ranks per country and per product were calculated. For the regression
analysis the scaled ranks per country and product were weighted; each country
had the same sum of weights but within a country the weights were proportional
to its sales volume in the year (data obtained from IMS Health). Taking the
scaled ranks, several statistical analyses were performed by using the program
"R", including a multiple regression analysis (including variables such as GDP
per capita and national industry size).
Results: This study showed that on average EPR as a pricing policy leads to
lower prices. However, the large variation in price levels among countries using
EPR confirmed that the price level is not only driven by EPR. The unadjusted
linear regression model confirms that applying EPR in a country is associated
with a lower scaled weighted rank (p=0.002). This interaction persisted after
inclusion of total pharmaceutical expenditure per capita and GDP per capita in
the final model.
Conclusions: The study showed that for patented products, prices are in
general lower in case the country applied EPR. Nevertheless substantial price
differences among countries that apply EPR could be identified. Possible
explanations could be found through a correlation between pharmaceutical
industry and the scaled price ranks. In conclusion, we found that implementing
external reference pricing could lead to lower prices.