The Challenges of Reference Pricing in Europe

This publication has been discontinued on December 21, 2011.

Introduction

Abstract

Introduction:

In 1989, the German government introduced reference pricing as a cost-containment strategy for the pharmaceutical industry' s high prices of drugs. Now, much of Europe employs reference pricing as a means to rein in the prices of prescription drugs. Pharmaceutical companies have been forced to decide whether to cut their prices in order to match reference prices, or maintain higher prices-thereby gambling that the money lost due to lower prescribing volumes will be more than offset by the money gained by the price. Meanwhile, patients have been caught in a web of new pricing systems that may be creating a two-class system of health care.

Get the Answers You Need to Shape Your Strategy:

• The German government recently began waiving patients' out-of-pocket payments on thousands of pharmaceutical products. Which category of drugs could be severely disadvantaged by these waivers?
• In 2004, Pfi zer denounced Germany' s GBA for including patent-protected medicines in “jumbo” reference pricing groups, thereby subjecting Sortis (atorvastatin) to reference prices. What pricing strategy did Pfi zer ultimately use to defend Sortis? What was the effect of Pfi zer' s strategy on Sortis' s market share?
• Regional governments in Italy have some discretion when deciding reimbursement terms for reference-priced medicines. Why has the Italian Drugs Agency recently expressed concern that some regions in Italy may be abusing their discretionary privilege?

Scope:

Germany: The three levels of reference pricing; off-patent and patent-protected drugs; the introduction of more aggressive reference prices; statins, sartans, and PPIs; incentives to undercut reference prices; 2007 price

adjustments; market impact and pricing trends; cumulative savings from reference pricing; penetration of reference-priced drugs into the German pharmaceutical market.

Netherlands: Pharmaceutical Reimbursement System (GVS); interchangeability; Annexes 1A and 1B; recommendations for reform from the Health Care Insurance Board (CVZ).

Spain: Conjuntos homogéneos; the 2004 suspension of reference pricing; implementation of a new reference pricing system in March 2007.

Italy: The 1994 Finance Act; price and reimbursement ceilings; regional governments; categorie terapeutiche omogenee; reimbursement ceilings for off-patent and patent-protected drugs.

France: The fi rst and second waves; radical reform; drugs exceeding reference price levels; the moderation of off-patent prices; impact on pharmaceutical expenditures.

Sidebars: Three featured discussions concerning the impact of generics competition and reference pricing on the German statin market; the consequences of reference price alignment; and German physicians' views on reference pricing.

Outlook: imposition of maximum reimbursement sums for costly drugs in Germany; projected savings in Spain; prospects for a more aggressive system in the Netherlands; regional variations in Italy; focus on generics dispensing rates in France; proposed introduction of reference pricing in the United Kingdom.

Table of Contents

• Executive Summary
  • Strategic Considerations
  • Stakeholder Implications
• Introduction
• Germany
  • Extension of Reference Pricing to Patent-Protected Drugs
  • A More Aggressive Reference Price Method
  • Incentives to Undercut Reference Prices
  • Price Adjustments in 2007
  • Market Impact
• Netherlands
• Spain
• Italy
• France
• Outlook and Implications for the Pharmaceutical Industry

Sidebars

• The Impact of Generics Competition and Reference Pricing on the German Statin Market-A Cautionary Tale
• To Cut or Not to Cut-The Pros and Cons of Reference Price Alignment
• German Physicians' Views on Reference Pricing-Lessons from the Statin Market

Tables

• 1. Out-of-Pocket Payments for Reference-Priced Drugs in Germany
• 2. Cumulative Savings from Reference Pricing in Germany, 1989-2007
• 3. Penetration of Reference-Priced Drugs into the German Pharmaceutical Market, 2004-2006
• 4. Drugs Exceeding Their Reference Prices in France (June 1, 2005)

Figures

• 1. Reference-Priced Drugs in Germany: Percentage of Drugs with Retail Prices Above, In Line With, and Below Their Respective Reference Prices (January 1, 2007)
• 2. Total Sales and Prescription Shares of Reference-Priced Drugs in the German Statutory Health Insurance Pharmaceutical Market, 1999-2005
• 3. Reference-Priced Drugs in Spain: Overall Relationship Between Drug Prices and Their Reference Prices
• A. Consumption of Statins in the German Statutory Health Insurance Market, 2001-2005
• B. Proton Pump Inhibitors in the German Statutory Health Insurance Pharmaceutical Market: Percentage Change in Price, Prescribing Volume, and Sales (2004-2005)
• C. Sartans in the German Statutory Health Insurance Pharmaceutical Market: Percentage Change in Price, Prescribing Volume, and Sales (2004-2005)
• D. Has Reference Pricing Created a Two-Class System for the Treatment of Dyslipidemia in Germany? (Physician Responses)
• E. Physician Views of Actions Taken by GKV Patients Prescribed Atorvastatin in 2005

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