Pathways and Challenges

The US government supports drug innovation. It is therefore crucial that it distinguish between high-value and low-value innovation in purchasing expensive prescription drugs and medical devices and ensure the continued discovery of transformative drugs and that patient and taxpayer funds are not wasted.

The Asian Experience

Asia's pharmaceutical sector has experienced remarkable growth over the last two decades, with companies in the region producing bulk of the world's specialty generics, biologicals, and active pharmaceutical ingredients (APIs). The Asian pharma growth story has had several pillars for a strong and sustainable foundation that provided non-linear growth. This report introduces three models showing how Asian countries at different development stages - India, South Korea, and Singapore - have nurtured their own, self-sustaining pharmaceutical sectors.

Assessing the Consequences of External Reference Pricing for Global Access to Medicines and Innovation: Economic Analysis and Policy Implications

Background: External reference pricing (ERP) is used to set pharmaceutical prices to improve affordability, but its application may have negative consequences on patient access—thus, equity—across countries and on global innovation. With the United States contemplating ERP, negative effects could be magnified. Our aim: identify and quantify some major consequences of ERP. Research design, methods: Besides relying on databases and ERP modelling, we developed a heart failure case study. 4-step approach: 1) review ERP policies; 2) establish worldwide “price corridor”; 3) quantify patient access and health outcomes impact by ERP; 4) estimate ERP impact on innovation.

Results: Our ERP referencing analysis highlights its perverse effects especially in lower-income countries. As counterstrategies to protect their revenues, manufacturers often implement tight list price corridors or launch avoidance/delays. Consequences include suboptimal patient access—hence, worse outcomes—illustrated by our case study: 500,000 + QALYs health loss. Additionally, the ensuing revenue reduction would likely cause innovation loss by one additional medicine that would have benefitted future patients.

Conclusion: This research provides key insights on potential unintentional consequences of medicine price setting by ERP worldwide and under a new proposal for the United States. Our results can inform stakeholder discussions to improve patient access to innovative medicines globally.