Cross-national drug price comparisons with economic weights in external reference pricing in Germany

ABSTRACT

Background: Since 2012, the pharmaceutical reimbursement legislation in Germany has been applying external reference pricing that uses country-specific economic weights for foreign prices. However, the law does not specify technical details. Therefore, we develop a proposal on how national income weights can be taken into consideration.

Areas covered: We develop weighting schemes that draw on gross domestic product per capita and adjust for purchasing power parities and exchange rates. In a second step, we populate the weighting schemes with economic data as well as with the price data for a pharmaceutical product (abiraterone acetate). Weighting the price of abiraterone acetate by gross domestic product per capita indicates potential price differentials of up to 43 percentage points across European prices in the German basket.

Expert commentary: The weighting of foreign pharmaceutical prices by economic indicators, i.e. gross domestic product per capita, can capture economic differences across countries. It would also allow for differential Ramsey pricing which might foster innovation.

KEYWORDS:

• Pharmaceutical prices
• reference pricing
• innovation
• cross-country price comparisons
• health policy
• health insurance
• regulation

Acknowledgments

This paper was developed based on an article concerning external reference pricing that was published in German language [55]. The author would like to thank all anonymous reviewers and the editor for their very helpful comments. We also thank Pio Baake and Annika Herr, and many others, for their valuable contributions to an earlier version of this paper.

Declaration of interest

Jörg Mahlich and Jörn Sindern are employed by Janssen-Cilag, Germany. Moritz Suppliet received an honorarium from Janssen-Cilag, Germany. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

Reviewer disclosures

Peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Compliance with Ethical Standards

The authors received data and financial support from Janssen-Cilag, Germany. Jörg Mahlich and Jörn Sindern are employed by Janssen-Cilag, Germany. Moritz Suppliet received an honorarium from Janssen-Cilag, Germany. The conclusions and views presented in this article are not necessarily the conclusions and views of Janssen-Cilag, Germany. Jörg Mahlich, Jörn Sindern, and Moritz Suppliet declare that they have no further conflicts of interest.

Notes

1. In § 130b of the German Social Security Code (SGB V) it is specified that ‘the annual therapy costs of comparable medicinal products and the actual sales prices in other European countries should be weighted according to the respective sales and purchasing power parities.’

Additional information

Funding

The authors received data and financial support from Janssen-Cilag GmbH.