Value in Health Study Shows International Reference Pricing in Europe Led to Reduced Access, Less Transparency, and Market Convergence Anchored to High-Income Countries
Lawrenceville, NJ, USA—September 3, 2025—Value in Health, the official journal of ISPOR—The Professional Society for Health Economics and Outcomes Research, announced today the publication of a new analysis suggesting that the Trump Administration's "Most-Favored Nation" approach to lowering US drug prices by referencing international prices may not achieve its intended goals, based on decades of experience with similar policies in Europe. The report, “Referencing Drug Prices of Other Countries May Not Sustainably Lower Prices in the United States: Lessons From Europe” was published in the September 2025 issue of Value in Health.
Led by researchers at the CHOICE Institute and Camber Collective, the commentary examines the outcomes of international reference pricing across European Union countries and finds that while such policies initially provided short-term budget savings, they ultimately led to price convergence around major high-income markets rather than sustainable price reductions.
“Similar to Germany and France, which are the anchor countries for Europe, the United States would become the anchor country for global price referencing," said author Jens Grueger, PhD, The CHOICE Institute, School of Pharmacy, University of Washington, Seattle, WA, USA. “Industry would seek to achieve list prices in designated reference countries within the range of US prices.”
Key findings from the European experience:
- List prices quickly converged to those of high-income markets like Germany and France, without evidence of reduced price levels across Europe
- Access to new medicines deteriorated in many EU countries; only 29% of new drugs are available and reimbursed across Europe for all approved patients, with 17% having limited availability
- Countries implemented confidential agreements (negotiated discounts, dynamic price volume agreements, pay for performance arrangements, and budget caps) to maintain access at lower net prices, undermining transparency goals
Although lowering drug prices for Americans is important, “doing so through an international price referencing mechanism is ill advised" the authors concluded. “A more economically sustainable policy is to develop health technology assessment bodies that formally review comparative clinical benefit and value for money. This approach would recognize and promote innovation as critical to population health. Existing US initiatives, including Medicare drug price negotiations and state Medicaid selective contracting, have already demonstrated success in achieving price reductions through value-based approaches.”
The impetus for the analysis was the Trump Administration’s Executive Order on May 12, 2025, instructing the Secretary of the Department of Health and Human Services to communicate “Most-Favored Nation” price targets to pharmaceutical manufacturers to bring prices in line with those in comparably developed countries.
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