The findings strongly suggest that the methodological design of the EPR policy has an impact on the intended outcomes, i.e. the medicine prices in the own country. In particular, the simulations run in this study point to considerable relevance of some of the parameters of the EPR methodology and thus the findings add to a few studies that suggested EPR’s ability of reduce medicine prices (19–24).
It has been highlighted in literature (28, 34–36) and policy debate that the cost-containment capacity of EPR is strongly impaired by the referencing to ‘fake prices’ (37) since the real prices are not known due to the confidential character of discounts and managed-entry agreements. Both scenarios of this study that considered discounts confirmed the loss of saving opportunities due to the discounted prices in other countries. Even the scenario that only took into account statutory (thus published) discounts highlighted important price-reducing potentials. As the consideration of published discounts would not imply any breach of confidentiality, an EPR-applying country could implement it rather swiftly. In fact, since its medicine pricing reform of 2017 price data reduced by statutory discounts are taken into consideration in Austria (38). Another technical option for governments to account for discounts could be to follow the example of scenario 5 and to assume a ‘reasonable’ discount. At political level, a debate on price transparency is on-going, as evidenced by the ‘WHO Transparency Resolution’ adapted by the World Health Assembly in May 2019 that calls for disclosure of net prices as well as research and development costs for medicines and vaccines (39).
Referencing to the minimum will likely drive prices down, and this was, not surprisingly, confirmed by the simulation results. The base case scenario included some European countries that calculated their reference price based on the average of the prices in the reference countries, and particularly for these countries, major decreases compared to the base case were seen. However, it can be discussed whether, or not, a policy of a ‘race to the bottom’ is an intended objective of EPR that is a pricing policy usually applied for new medicines. As an alternative, opportunities for savings could rather be achieved from off-patent medicines, as evidence on the price-reducing character of generic competition (40–44) and of tendering (45–49) is available.
The selection of the reference countries is a key decision point in the design of EPR. The WHO Guideline on Country Pharmaceutical Pricing Policies recommends choosing reference countries based on economic status, pharmaceutical pricing systems in place, the publication of actual versus negotiated or concealed prices, exact comparator products supplied, and similar burden of disease (17). There are two major choices to make: the size of the basket and the countries included. With regard to the latter, it is common sense that a focus on lower-priced reference countries will eventually lead to lower prices. There is, however, the risk that particularly in the beginning price setting might be difficult because medicines might not have a price and be marketed in lower-priced countries due to strategic launches of pharmaceutical companies in response to the widespread use of EPR (32, 50, 51). Thus, countries, particularly those referring to lower-priced countries, are advised to have a mechanism in place which ensures finalising price setting even in early phases (e.g. alternative countries) and provides for regular price reviews to benefit from price decreases in the reference countries over the years (see also findings of scenario 7) (18). As a related aspect, it has to be decided whether, or not, there is a need to have large country baskets. This has also to be seen in connection with the resources required for surveying medicine price data to perform EPR, which can be substantial in case of large country baskets (52). In any case, the study findings confirm the importance of a strategic selection of the reference countries: a well-chosen small country basket is not only less resource-intensive but may also achieve lower prices. Indeed, the simulations showed that most countries would pay higher prices (increases by 20% in several cases) if they used a larger basket (scenario 2). The fact that the four countries’ basket (scenario 1) did not translate in substantial price decreases compared to the base case suggests that several of the countries apply a basket that appears to serve well their objectives.
EPR has been criticised for failing to deliver equity since it does not consider the different income levels of the reference countries (27, 53). As a solution, differential pricing – a policy in which medicine prices are set in line with the countries’ economic status – has been proposed (54–57). Usually, differential pricing and EPR are considered as a mutually exclusive policy options. However, in the authors’ perception, this is not necessarily the case. For instance, the prices in the reference countries could be weighted by indicators that reflect the economic situation of these countries (e.g. gross domestic product, PPP). The simulation scenario that was run on PPP-adjusted prices (scenario 6) showed lower prices for lower-income countries but also an increased burden due to higher prices for higher-income countries. While accounting for countries’ income would contribute to more equity and fairness, such an approach may still not be politically acceptable for high-income countries that are meanwhile increasingly struggling with the affordability of medicines.
The authors acknowledge that the study has some limitations. For simplicity, EPR was assumed to be the sole pricing policy in the EPR-applying countries while, in practice, further policies may be used. No scenario of weighting the price data by volume was run because these data were not available. In practice, governments frequently lack consumption data of the other countries. A possibility could be a weighting by volume data of the own country, but even these data are not always completely accessible in some countries (e.g. in countries with a fragmented health care system, such as Austria and Germany, aggregated consumption data for the hospital sector are missing), and they lack in particular for newly launched medicines.
The analysis only focused on the outcome indicator of medicine prices. Pharmaceutical prices are indeed a major determinant with regard to affordable and equitable access to medicines (2) because in solidarity-based systems such as those of the studied countries lower prices allow the public payers to treat more patients for the same amount spent. Nonetheless, while pursuing a cost-containment approach governments are reminded that pharmaceutical expenditure is the result of price and volume components. Thus, even if prices were decreased, expenditure may grow due to increases in consumption (19). The latter may result from adjustments of previous under-use as well as possible over-use or inappropriate use.
In addition, there might be further pharmaceutical policy objectives that a government may want to achieve, e.g. to support local industry, to incentivise research-oriented pharmaceutical industry to invest in research and development or to ensure that the same price for a medicine is charged in all pharmacies throughout the whole country. Other pharmaceutical (pricing) policies might be more appropriate to reach these objectives. In addition, a government might like to achieve a mix of objectives, and this requires a mix of pharmaceutical policies.
Finally, taking a broader, more global health system perspective, spillover effects of EPR that impact access in other countries (e.g. launch delays) have to be acknowledged (11, 50, 51).