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Pricing of in-patent pharmaceuticals in the Middle East and North Africa: Is external reference pricing implemented optimally?

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Listed:
  • Kanavos, Panos
  • Kamphuis, Bregtje W.
  • Fontrier, Anna-Maria
  • Colville Parkin, Georgia
  • Saleh, Shadi
  • Akhras, Kasem S.

Abstract

In this paper we outline and compare pharmaceutical pricing policies for in-patent prescription pharmaceuticals with emphasis on external reference pricing (ERP) in eleven countries across the Middle East and North Africa (MENA) region and explore possible improvements in their pricing systems. Primary and secondary evidence was used to inform our analysis. Comparative analysis of ERP systems across countries followed an analytical framework distilling ERP into twelve salient features, while ERP system performance was benchmarked against a framework of best practice principles across (a) objectives and scope, (b) administration and operations, (c) methods used, and (d) implementation. Results suggest that ERP is the dominant pricing method for in-patent pharmaceuticals. Although several good practice cases were identified, none of the eleven countries satisfy all best practice principles. ERP basket sizes vary significantly and are commonly composed using geographical proximity and low-price countries as criteria. Nine countries do not use the mean or median prices, but resort to using the lowest. Exchange rate fluctuations are routinely used to arrive at price reductions in local currency. Significant opportunities exist for MENA countries to develop their ERP regimes to achieve greater compliance with best practice principles. Over the short-term, incremental changes could be implemented to several ERP salient features and can be achieved relatively easily, thereby enhancing the functionality and performance of national ERP systems. Countries in the region can also focus on the development of explicit value assessment systems, and minimize their dependence on ERP over the longer-term.

Suggested Citation

  • Kanavos, Panos & Kamphuis, Bregtje W. & Fontrier, Anna-Maria & Colville Parkin, Georgia & Saleh, Shadi & Akhras, Kasem S., 2020. "Pricing of in-patent pharmaceuticals in the Middle East and North Africa: Is external reference pricing implemented optimally?," Health Policy, Elsevier, vol. 124(12), pages 1297-1309.
    • Handle: RePEc:eee:hepoli:v:124:y:2020:i:12:p:1297-1309
    DOI: 10.1016/j.healthpol.2020.07.017
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    References listed on IDEAS

    as
    1. Jennifer Gill & Anna-Maria Fontrier & Dionysis Kyriopoulos & Panos Kanavos, 2019. "Variations in external reference pricing implementation: does it matter for public policy?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(9), pages 1375-1397, December.
    2. Gill, Jennifer & Fontrier, Anna-Maria & Kyriopoulos, Dionysis & Kanavos, Panos, 2019. "Variations in external reference pricing implementation: does it matter for public policy?," LSE Research Online Documents on Economics 101586, London School of Economics and Political Science, LSE Library.
    3. Håkonsen, Helle & Horn, Anne Marie & Toverud, Else-Lydia, 2009. "Price control as a strategy for pharmaceutical cost containment--What has been achieved in Norway in the period 1994-2004?," Health Policy, Elsevier, vol. 90(2-3), pages 277-285, May.
    4. Panos Kanavos & Anna-Maria Fontrier & Jennifer Gill & Olina Efthymiadou, 2020. "Does external reference pricing deliver what it promises? Evidence on its impact at national level," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(1), pages 129-151, February.
    5. Fontrier, Anna-Maria & Gill, Jennifer & Kanavos, Panos, 2019. "International impact of external reference pricing: should national policy makers care?," LSE Research Online Documents on Economics 100929, London School of Economics and Political Science, LSE Library.
    6. Anna-Maria Fontrier & Jennifer Gill & Panos Kanavos, 2019. "International impact of external reference pricing: should national policy-makers care?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(8), pages 1147-1164, November.
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