Reference pricing

Simulations may also be used to inform understanding of market dynamics and life cycle management and to aid in understanding the ways in which reference pricing and parallel trading may influence the best sequence of drug... 

Aaserud, M., Dahlgren, A. T., Kosters, J. P. et al. (2006). Pharmaceutical policies effects of reference pricing, other pricing, and purchasing policies. Cochrane Database Syst. Rev., 19(2), CD005979. 

Denmark None None Variable percentage rate of cost sharing (0-50%) applied on the basis of drug reference prices (RP). Drugs outside the MOH formulary are excluded from the coverage of die system... 

The greatest effectiveness of reference pricing as a public spending control mechanism is achieved in health care environments in which the problem of... 

Reference pricing was not introduced in Spain until December 2000. The fact that it is applied exclusively to bio-equivalent products leads, in the opinion of the authors, to the assumption that its effect on expenditure is limited, as a major market share is acquired by recently introduced drugs. The level at which the reference price is fixed is an important factor. For non-patented products, price competition should push the price towards the marginal cost, and therefore a reference price that is clearly higher than the cheapest generic could actually become a barrier to price competition in this case. 

Denmark Free prices and reference pricing that excludes most patented products... 

Italy Average prices of Germany, Spain, France and the UK, and reference pricing (RP) (proposal)... 

The purpose of this chapter is to present the main economic characteristics of reference pricing (RP) as a system for the public funding of pharmaceuticals financed by the public sector. The following sections deal with the definition and objectives of RP and analyse the features of the various reference pricing systems that are applied internationally. This is followed by a look at the justification for RP from the economic point of view. We then go on to analyse the impact of RP policies, especially with regard to expenditure, consumption and drag prices. In the final section we discuss what can be expected from the application of RP to the Spanish health system. 

Two mid-term objectives are closely related to the principal goal of RP. The first of them has to do with encouraging price competition, as it provides an incentive for companies to bring their prices close to the reference level. This is precisely one of the reasons why the European Commission5 recommends RP. The second mid-term objective concerns incentives, as it takes into account the cost-effectiveness ratio of prescription drags by increasing the financial responsibility of patients, which in turn may influence prescriber decisions. It is important to note that, unlike in traditional co-payment, under this system the patient s share of the cost of the product is avoidable if the patient and/or doctor select a product with a price that does not exceed the reference price. 

First, public financing systems based on reference prices show the following five basic features 6... 

Let RP be the reference price, CP the price paid by the consumer, EFP the selling price fixed by the laboratory, and k the co-payment rate. In this context, we can analyse two situations ... 

Zanunit-Lucia, J. and R. Dasgupta (1995), Reference pricing the European experience , Health Policy Review, St. Mary s Hospital Medical School paper no 10, London. 

Lopez-Casanovas, G. and J. Puig-Junoy (2000), Review of the literature on reference pricing , Health Policy, 54, 87-123. 

Danzon, P. (1998), Reference pricing theory and evidence , paper presented at the conference on the Effects of Reference Pricing of Medicines, 14-16 December, Universitat Pompeu Fabra, Barcelona. 

Woodfield, A., J. Fountain and P. Borren (1997), Money Medicines an Economic Analysis of Reference Pricing and Related Public-sector Cost-containment Systems for Pharmaceuticals with Special Reference to New Zealand, New Zealand Merck Sharp Dome. 

Maassen, B.M. (1998), Reimbursement of medicinal products the German reference price system - law, administrative practice and economics , Cuademos de Derecho Europeo Farmaceutico, 8, 69-100. 

Giuliani, G., G. Selke and L. Garattini (1998), The German experience in reference pricing , Health Policy, 44, 73-85. 

Danzon, P. and H. Liu (1997), Reference pricing and physician drug budgets the German experience in controlling pharmaceutical expenditures , Wharton School working paper, Philadelphia, PA. 

In some cases maximum payable amounts are fixed. Those countries that have introduced reference pricing (RP) require the user to meet the additional cost over the RP (Germany, Spain). 

For example, the pharmaceutical companies lowered their prices significantly in Germany when this country pioneered reference pricing in 1989.4... 

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