Presentation (CTI)

OBJECTIVES: The United States is a major market for innovative drugs, with prices 2.78 times higher than in 33 other OECD nations, according to a 2024 RAND report. Some argue these high prices drive global pharmaceutical innovation. International Reference Pricing (IRP) was proposed under the Trump administration to reduce US drug prices by referencing prices in select high-income countries. However, no IRP policy has been enacted to date and its future implementation remains uncertain. The objectives of this research are to assess the potential impacts and challenges of implementing IRP in the US and extract relevant lessons from Europe's experience.
METHODS: A multi-pronged approach consisting of a targeted literature review, case study analysis of IRP implementation in Europe and a survey of pharma and biotech pricing professionals was conducted.
RESULTS: A targeted literature review revealed a consensus that IRP could yield significant savings in US drug spending, with one analysis estimating a 52% discount on national US net prices for certain drugs. Manufacturers view the implementation of IRP in the US as somewhat unlikely. Key barriers to implementation include industry opposition, administrative burden such as delays in market approvals and concerns IRP could reduce investment in innovation. Lessons from the EU’s experience with IRP include careful selection of reference countries, frequency, of price revisions and the integration of IRP with other pricing tools such as health technology assessment (HTA) or value-based pricing.
CONCLUSIONS: The implementation of IRP in the US would be complex. Given the size of the US market and its impact on global pharmaceutical sales, IRP might lead to increased drug prices in other countries, as manufacturers attempt to compensate for potential revenue losses. Thus, US policymakers should consider the global consequences of IRP, with some suggesting value-based pricing may be a more appropriate alternative to curb drug spending.