OBJECTIVES: External Reference Pricing (ERP) may be used formally or informally to set ex-factory and retail prices; at launch or during product life cycle on a regular basis; as the primary criterion for price setting, price revision and/or as the sole or as one of many inputs used to inform the pricing decision. ERP seems relatively intuitive and easy as compared to other more rigorous approaches to setting prices. Hence, it is increasingly introduced in developing countries. However, even in developed healthcare systems, ERP comes along with some challenges. With insufficient infrastructure or legal frameworks, ERP policies in developing countries must aim to minimize disturbances and to maximize access to effective therapies.

We reviewed public and academic sources for identifying impact of ERP policies and best practices with the aim to extrapolate how developing countries could adopt such policies.

METHODS: The literature and grey sources were screened for current practices, challenges, and potential best practices for using ERP in developing countries.

RESULTS: Twenty-six publications and public reports were included in the review. Key variation in ERP practices relate to the scope (type of products), the number and choice of reference countries, the computation rules and price definitions, the frequency, and stringency of applying ERP. Publications on impact are scarce and of limited academic rigidity. ERP-policies are usually created country by country, often not fully considering the country’s healthcare priorities and objectives. Within the reference countries, prices seem to converge towards the middle range. Low price countries may experience launch delays, higher prices, and higher vulnerability to indirect effects.

CONCLUSIONS: When introducing ERP in developing countries, policy makers should choose robust referencing frameworks including clear processes and definitions. The overriding goal of ERP should be to inform and serve as a benchmark for pricing decisions.