International Reference Pricing in the Context of U.S. Drug Policy

Abstract

<jats:title>Abstract</jats:title> <jats:p>International Reference Prices (IRP), also called External Reference prices (ERP), are widely used across developed nations. IRPs use the prices paid in other countries to either inform negotiations with the pharmaceutical industry or as a cap on market prices. We review the application of IRPs to cap the prices of negotiated outcome in the context of U.S. proposals to change the way prescription drug prices are established for the Medicare program. We examine the economic, political and administrative issues associated with the use of IRPs and we summarize the evidence on their impacts.</jats:p>