In the current debate about lowering drug prices through a “Most Favored Nation” approach, Jens Grueger, Kristi Martin and Sean Sullivan review the experience with International reference pricing (IRP) in other parts of the world. When it was introduced in Europe, IRP led to short term cost savings. Prices subsequently converged towards those in Germany and France as the largest high-income countries, with delayed or no access in many other European countries, without sustainably reducing price levels.
The authors advise that while lowering drug prices for Americans is important, doing so through an IRP mechanism is ill-advised. Beyond short-term savings, it will lead to reduced access for patients in other parts of the world without sustainably lowering drug prices in the US. A more economically sustainable policy is to develop and implement health technology assessment bodies that formally review comparative clinical benefit and value for money consistent with US preferences and willingness to pay.