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Reference pricing for drugs

Reference pricing for drugs

That certain drugs are interchangeable in terms of their health benefits is the idea behind "reference pricing," in which officials judge the therapeutic effectiveness of drugs within a disease group and reimburse based on the least expensive option.

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Reference pricing for drugs
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That certain drugs are interchangeable in terms of their health benefits is the idea behind "reference pricing," in which officials judge the therapeutic effectiveness of drugs within a disease group and reimburse based on the least expensive option. Reference pricing is supposed to save money for governments and patients. Those who want the more expensive brands can pay the difference between the cost of those drugs and the lower reimbursement, but that might amount to tens or even hundreds of dollars per week. The cost could be huge for the pharmaceutical industry as well, reaching $30 billion to $35 billion in lost profits over the next three to four years, according to analysis by Bain & Company. In effect, reference pricing allows payers to impose generic prices on drugs still under patent protection. That power will change the pharmaceutical landscape.

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