By NextBestFitInternational reference pricing
Cap U.S. prices at the median (or lowest) of peer countries.
Draft decision:RejectedConfidence: medium · not yet reviewed
Negotiation already uses international prices as a benchmark.
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This path
International reference pricing
Concrete changes if chosen
What would actually have to change in law, agencies, payment rules, or systems.
- Cap prices at the median of a basket of peer countries
- Require manufacturers to report foreign prices
Effects
Each effect has its own page: the evidence, the case that it is or isn't a real cost, and whom it affects.
What it fixes
- Brand-name drug prices far above production cost
An automatic cap based on peer-country prices uses prices those countries have already negotiated to limit domestic drug prices.
What it creates or worsens
- Depends on uncertain evidence or judgments
Reference pricing depends on foreign prices that exchange rates and confidential rebates make difficult to establish.
- Price limits can cause shortages, launch delays, or exits
Linking domestic price caps to foreign prices may lead manufacturers to raise prices abroad or delay launches there.
3 paths soften this
Price floors and supply guarantees for essential productsPrice limits can cause shortages, launch delays, or exitsChosenMonitor supply and adjust prices quicklyPrice limits can cause shortages, launch delays, or exitsChosenRequire timely U.S. launch as a condition of market accessPrice limits can cause shortages, launch delays, or exitsRejected
Who's affected
Who gains
- People with unaffordable deductibles or coinsurance
- Brand-name drug prices far above production cost: Market exclusivity sustains drug prices far above production cost.
- Uninsured people
- Brand-name drug prices far above production cost: Market exclusivity sustains drug prices far above production cost.
- Health insurers, brokers, and their shareholders
- Brand-name drug prices far above production cost: Market exclusivity sustains drug prices far above production cost.
- Taxpayers and public budgets
- Brand-name drug prices far above production cost: Market exclusivity sustains drug prices far above production cost.
- Price limits can cause shortages, launch delays, or exits: Low price limits reduce spending in the short term.
- People with ongoing or specialist care needs
- Brand-name drug prices far above production cost: An automatic cap based on peer-country prices uses prices those countries have already negotiated to limit domestic drug prices.
Who loses
- Drug and device makers
- Brand-name drug prices far above production cost: Market exclusivity supports high prices and shareholder returns.
- Pharmacy benefit managers and their pharmacies
- Brand-name drug prices far above production cost: High list prices generate rebates for benefit managers.
- People with ongoing or specialist care needs
- Price limits can cause shortages, launch delays, or exits: Low price limits may reduce access to products and services through shortages or exits.
Where it has been tried
- Canada (PMPRB), Japan: Use international reference baskets.
- Canada: In 2023, about 84% of Canadian patented-medicine sales were for drugs whose list prices exceeded the median in Canada's 11-country reference basket.