Abstract:
OBJECTIVE:Several EU countries are determining reimbursement prices of pharmaceuticals by cross-referencing prices of foreign countries. Our objective is to quantify the theoretical cross-border spill-over effects of cross-reference pricing schemes on pharmaceutical prices in the former EU-15 countries. METHODS:An analytical model was developed estimating the impact of pharmaceutical price changes in Germany on pharmaceutical prices in other countries in the former EU-15 using cross-reference pricing. We differentiated between the direct impact (from referencing to Germany directly) and the indirect impact (from referencing to other countries that conduct their own cross-reference pricing schemes). RESULTS:The relationship between the direct and indirect impact of a price change depends mainly on the method applied to set reimbursement prices. When applying cross-reference pricing, the reimbursement price is either determined by the lowest of foreign prices (e.g. Portugal), the average of foreign prices (e.g. Ireland) or a weighted average of foreign prices (e.g. Italy). If the respective drug is marketed in all referenced countries and prices are regularly updated, a price reduction of 1.00 euro in Germany will reduce maximum reimbursement prices in the former EU-15 countries from 0.15 euros in Austria to 0.36 euros in Italy. DISCUSSION:On one side, the cross-border spill-over effects of price reductions are undoubtedly welcomed by decision makers and may be favourable to the healthcare system in general. On the other side, these cross-border spill-over effects also provide strong incentives for strategic product launches, launch delays and lobbying activities, and can affect the effectiveness of regulation. CONCLUSIONS:To avoid the negative effects of cross-reference pricing, a weighted index of prices from as many countries as possible should be used to determine reimbursement prices in order to reduce the direct and indirect impact of individual countries.
journal_name
Appl Health Econ Health Policyjournal_title
Applied health economics and health policyauthors
Stargardt T,Schreyögg Jdoi
10.2165/00148365-200605040-00005subject
Has Abstractpub_date
2006-01-01 00:00:00pages
235-47issue
4eissn
1175-5652issn
1179-1896pii
545journal_volume
5pub_type
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