OBJECTIVES: Many countries set prices of pharmaceuticals by referencing the average, or some other metric, of a number of other countries in Europe. The objective of this study was to examine the influence of International Reference Pricing (IRP) across major markets in Europe in terms of the level of price preservation, and to provide insight into the optimal launch strategies within these markets.

METHODS: We developed a 10-year Excel-based model accounting for recurring international price referencing across Europe. The frequency of referencing, the basket of countries referenced and the distribution mark-up on pharmacy purchasing prices were based on published data, supplemented by recent experiences of product launches. The optimal strategy for launch sequencing was determined by price maintenance and revenue maximisation.

RESULTS: With the varying duration of reimbursement processes across countries, strategies to delay product launch post marketing authorisation can directly affect the reimbursement price. Launches should commence in countries that utilise free pricing systems, which subsequently improves price setting in other reference countries downstream. Free pricing countries include Germany, the UK and Sweden. Countries employing a minimum or 90% of the lowest 3 prices within their basket, such as Spain, Bulgaria and Croatia, would need to be sequenced later to delay price erosion. Even when launching with exactly the same price across Europe, IRP was found to typically cause price erosion of up to 12% in some markets.

CONCLUSIONS: Pharmaceutical pricing models fit prices by optimising the order in which a product is launched across markets. IRP policies alongside regulatory policies form key factors to the planning and timing of launch sequences. Exploring IRP simulations is critical to maintaining optimal price and identifying launch sequence strategies, although price erosion is unavoidable and should not be prioritised over patient access.