Can Reference Pricing Help Curb Rising U.S. Drug Costs?


Implemented in Germany and now being piloted in the United States, reference pricing is an emerging health benefit design that offers a way to price pharmaceuticals based on evidence of clinical effectiveness. It sets a ceiling for what an insurer or employer will contribute toward the cost of prescription drugs — particularly those that have therapeutic equivalents with widely varying prices — but doesn’t exclude any drugs from coverage.

In a new Commonwealth Fund issue brief, UC Berkeley health economist James C. Robinson describes how reference pricing is being applied in the U.S. and compares it to more conventional pharmaceutical benefit designs, such as tiered formularies and coinsurance. The idea behind reference pricing, Robinson says, is that “patients should have low-cost access to low-priced products within each therapeutic class,” as well as “low-cost access to high-priced products whose superior clinical performance justifies the higher price.” Patients preferring more-expensive drugs that aren’t based on a special need pay the difference in price.

Read the brief to learn about the prerequisites for effective referencing pricing, and what it would take for this benefit design to take hold in the U.S.

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