Only a few larger countries, such as the EU4, UK or similar, go through the process of a benefit assessment: the likely benefit of a new drug is evaluated and this evaluation forms the basis for subsequent reimbursement price negotiations.
The vast majority of countries around the world make things easier for themselves: they ask the manufacturer to quote the prices of a number of defined reference countries and use these to determine prices in their own country. The regulations are just as varied as the country baskets: as a rule, at least 5, and often 20 to 30, comparator countries are named, and the prices are seldom set according to the average, but are usually oriented toward the lower end of the range.
Often, it is not only neighboring countries or countries in one’s own region that are used. The reference countries can also be located on other continents.
This International Price Referencing is usually abbreviated as “IRP” or “IPR”.
In the practice of price setting, this can mean, for example, that a country defines the average of the cheapest 3 prices from a fixed basket of 10 countries as the reimbursement price by default – this process is repeated at fixed intervals (e.g. annually). The country baskets themselves are certainly adjusted again and again in order to achieve the desired goal – usually the most favorable drug price possible. That this sets in motion a constant downward spiral in the case of mutual referencing should be clear to everyone on closer consideration. However, this can be significantly influenced by a skilful approach and, if necessary, by skipping particularly critical markets.
Currency volatility also plays an important role in this context, as it may have a lasting effect on otherwise constant prices by means of IPR. This should definitely also be kept in mind!
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