OBJECTIVES: The purpose of the study was to compare and contrast reference pricing with health technology assessment (HTA) as alternative strategies for obtaining value for money from pharmaceuticals. METHODS: The study focussed on decisions about the initial price and reimbursement status of innovative drugs. Four countries were studied: Germany, The Netherlands, Sweden and the United Kingdom. These countries have operated one, or both, of the two policies at certain points in time, sometimes in parallel. Drugs in four groups were considered: cholesterol-lowering agents, insulin analogues, biologics for rheumatoid arthritis and atypicals for schizophrenia. RESULTS: Where reference pricing schemes were in operation, all the drugs obtained reimbursement. In addition, all the drugs in the same group were placed in the same cluster. Prices were also similar, with the exception of cholesterol-lowering agents, where some generic agents were available. Where technology assessments had been performed, the use of some drugs (e.g. insulin analogues) was restricted more than the licensed indication. On occasions, technology assessments were used to assess whether a premium price was justified for a given product. CONCLUSION: Compared with HTA, reference pricing is a relatively blunt instrument for obtaining value for money from pharmaceuticals. It may have a role alongside HTA, in making reimbursement decisions about those drugs which, because of resource constraints, cannot be subjected to a technology assessment.