International Reference Pricing Implementation Challenges

Tying drug prices to those in other developed countries may be a useful strategy for lowering US prescription drug spending, but international reference pricing may not be ideal, according to researchers from the Vanderbilt University School of Medicine. 

The JAMA Network Open study published last week uncovered several challenges to international reference pricing using France’s drug approval and pricing system and novel cholesterol-lowering drugs as a case study.

HHS’ proposed International Pricing Index for physician-administered drugs includes the concept of linking US drug prices to those in other developed countries. The department intends for the savings from this approach to be large because of the overpayment of prescription drugs in the US compared to similar countries. 

Some health systems in developed countries use cost-effectiveness analysis to determine a drug’s fair market price. But the analysis may not be useful for the US due to the possible lack of products and formularies when determining cost-effective prices in international health systems.

Delays in establishing prices in indexed countries could limit the timeliness of information for US payers and may lead to fluctuations in price, researchers found. And an increase in price among five international health systems could increase prices in the US as well. 

While US drug products are used interchangeably, France uses an indication-specific reimbursement schedule, which makes the differences in reimbursement unpredictable. 

For example, in July and August 2015, the FDA approved the PCDK9 inhibitors alirocumab and evolocumab for patients with noncontrolled atherosclerotic cardiovascular disease or familial hypercholesterolemia. But at the time of the launch, the Institute for Clinical Economic Review (ICER), a US-based organization, found that PCSK9 inhibitors were not cost-effective at their original prices. 

Specifically, the initial price should have been reduced by nearly 60 percent to be considered affordable and cost-effective. PCSK9 inhibitor requirements resulted in uptake below 50 percent among those with prescriptions due to prior authorization and high out-of-pocket costs, the study stated.

Similarly, France’s National Security Agency of Medicine and Health Products also approved evolocumab and alirocumab during the same time the US did. 

A newly approved drug in France receives an evaluation of its effectiveness, side effects, importance relative to other medications, and therapeutic value (ASMR) before price reimbursement levels are determined. The Transparency Commission in France assigns each drug a service medical rendu (SMR) which determines the level of reimbursement.

SMR assignments result in reimbursement rates of 65 percent, 30 percent, 15 percent, and 0 percent of the drug’s price, respectively. And the Commission also authorized a vital SMR rating strictly for the most severe cases of atherosclerotic disease, primary hyperlipidemia, and familial hypercholesterolemia for both drugs. 

Because utilization is restricted, uptake in France remains low. However, uptake for approved indications is not limited, and out-of-pocket costs may only be burdensome for those without supplemental health insurance. 

Additionally, ASMR is used to set the price of related medications, expected sales volume, and the drug’s indication to negotiate a fair price with the manufacturer, the report highlighted. The negotiations allow for successful collaboration between the Economic Committee of Medical Products and LEEM, which represents 95 percent of pharmaceutical companies in France. 

The finalized price and drug rates are then approved by the French Ministry of Health. 

US patients are able to purchase these drugs nearly 2 years prior to French patients, an average of 200 to 250 days for branded drugs, and longer for specialty drugs. 

The goal of decreasing US drug prices to those in other countries is possible, but there are also limitations to importing prices from other countries. 

“We recommend the US invest in our own value-based price assessments. This investment could include greater engagement with or expansion of nonpartisan nongovernmental partnerships as two possible avenues,” researchers emphasized.