Review of the Literature on Reference Pricing

Universitat Pompeu Fabra Economics WP No. 362

49 Pages Posted: 21 Jul 1999

See all articles by Guillem López Casasnovas

Guillem López Casasnovas

Universitat Pompeu Fabra - Department of Economics and Business (DEB)

Jaume Puig-Junoy

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Date Written: February 1, 1999

Abstract

This paper reviews the literature on reference pricing (RP) in pharmaceutical markets. The RP strategy for cost containment of expenditure on drugs is analyzed as part of the procurement mechanism. We review the existing literature and the state-of-the-art regarding RP by focusing on its economic effects. In particular, we consider: (1) the institutional context and problem-related factors which appear to underline the need to implement an RP strategy, i.e., its nature, characteristics and the sort of health care problems commonly addressed; (2) how RP operates in practice, that is, how third party-payers (the insurers/buyers) have established the RP systems existing on the international scene (i.e., information methods, monitoring procedures and legislative provisions); (3) the range of effects resulting from particular RP strategies (including effects on choice of appropriate pharmaceuticals, insurer savings, total drug expenditures, prices of referenced and non-referenced products and dynamic efficiency; (4) the market failures which an RP policy is supposed to address and the main advantages and drawbacks which emerge from an analysis of its effects.

JEL Classification: H51, I18

Suggested Citation

López Casasnovas, Guillem and Puig-Junoy, Jaume, Review of the Literature on Reference Pricing (February 1, 1999). Universitat Pompeu Fabra Economics WP No. 362, Available at SSRN: https://ssrn.com/abstract=159230 or http://dx.doi.org/10.2139/ssrn.159230

Guillem López Casasnovas (Contact Author)

Universitat Pompeu Fabra - Department of Economics and Business (DEB) ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-3) 542 16 61 (Phone)
(34-3) 542 17 46 (Fax)

Jaume Puig-Junoy

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

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