Part 2
REVIEW ARTICLE
How Can Pricing and Reimbursement Policies Improve Affordable Access to Medicines? Lessons Learned from European Countries
Sabine Vogler1 • Valérie Paris2 • Alessandra Ferrario3 • Veronika J. Wirtz4 •
Kees de Joncheere5 • Peter Schneider1 • Hanne Bak Pedersen6 • Guillaume Dedet6 •
Zaheer-Ud-Din Babar7
Published online: 6 January 2017
� Springer International Publishing Switzerland 2017
Abstract This article discusses pharmaceutical pricing
and reimbursement policies in European countries with
regard to their ability to ensure affordable access to
medicines. A frequently applied pricing policy is exter-
nal price referencing. While it provides some benchmark
for policy-makers and has been shown to be able to
generate savings, it may also contribute to delay in
product launch in countries where medicine prices are
low. Value-based pricing has been proposed as a policy
that promotes access while rewarding useful innovation;
however, implementing it has proven quite challenging.
For high-priced medicines, managed-entry agreements
are increasingly used. These agreements allow policy-
makers to manage uncertainty and obtain lower prices.
They can also facilitate earlier market access in case of
limited evidence about added therapeutic value of the
medicine. However, these agreements raise transparency
concerns due to the confidentiality clause. Tendering as
used in the hospital and offpatent outpatient sectors has
been proven to reduce medicine prices but it requires a
robust framework and appropriate design with clear
strategic goals in order to prevent shortages. These
pricing and reimbursement policies are supplemented by
the widespread use of Health Technology Assessment to
inform decision-making, and by strategies to improve the
uptake of generics, and also biosimilars. While European
countries have been implementing a set of policy
options, there is a lack of thorough impact assessments
of several pricing and reimbursement policies on
affordable access. Increased cooperation between
authorities, experience sharing and improving trans-
parency on price information, including the disclosure of
confidential discounts, are opportunities to address cur-
rent challenges.
Kees de Joncheere–Retired.
Electronic supplementary material The online version of this article (doi:10.1007/s40258-016-0300-z) contains supplementary material, which is available to authorized users.
& Sabine Vogler [email protected]
1 WHO Collaborating Centre for Pharmaceutical Pricing and
Reimbursement Policies, Pharmacoeconomics Department,
Gesundheit Österreich GmbH (Austrian Public Health
Institute), 1010 Vienna, Austria
2 Health Division, Organisation for Economic Co-operation
and Development (OECD), 75116 Paris, France
3 LSE Health and Department of Social Policy, London School
of Economics and Political Science, LondonWC2A 2AE, UK
4 Department of Global Health, Boston University School of
Public Health, Boston, MA 02118, USA
5 Essential Medicines and Health Products Department (EMP),
World Health Organization (WHO), 1211 Geneva 27,
Switzerland
6 World Health Organization (WHO) Regional Office for
Europe, Copenhagen 2100, Denmark
7 School of Pharmacy, Faculty of Medical and Health Sciences,
University of Auckland, Private Mail Bag, 92019 Auckland,
New Zealand
Appl Health Econ Health Policy (2017) 15:307–321
DOI 10.1007/s40258-016-0300-z
Key Points for Decision Makers
European countries apply different pharmaceutical
pricing and reimbursement policies.
These policies are frequently assessed against their
financial consequences and their ability to contain
costs but less so in terms of access to medicines.
Policies should be accompanied by regular
evaluations, facilitated by the use of the appropriate
methodology and access to the relevant data.
There appears to be a need for additional changes
beyond traditional pharmaceutical pricing and
reimbursement policies. Collaborative approaches
(e.g. between countries or between regulatory
authorities, pricing and reimbursement agencies) and
more transparency in terms of real medicine prices,
R ? D costs and medicines in the pipeline are
considered as possible pathways for the future.
1 Introduction
In recent years, access to essential medicines has become an
issue even in the wealthiest parts of Europe. In particular,
the proliferation of high-priced medicines has pushed the
issue of access to new medicines high on the policy agenda
of all European countries, including in high-income econo-
mies [1–4]. At the same time, pharmaceutical spending is
rising again, boosted in 2014 by the entry of new hepatitis C
treatments [5]. Apart from prices, payers are increasingly
concerned that some of these high-priced medicines only
deliver limited therapeutic-added benefits to patients [6–8].
While in most European countries all residents benefit
from comprehensive coverage of healthcare costs, includ-
ing costs related to medicines [9], and a major part of
spending on medicines comes from public progammes,
there is considerable variation in public funding on
medicines between countries [10]. In addition, important
variation in access to medicines exists between European
countries, in particular between Western and Eastern
countries. This is due to differences in marketing of
medicines and their inclusion in national reimbursement
lists, the country’s gross domestic product, government
expenditure on health, and also due to medicine prices and
utilisation (for further information on differences between
countries related to availability [11–14], prices [5, 15–22]
and utilisation [23–30] of medicines see Appendix A1 in
the Supplementary Materials).
This article provides a critical discussion of selected
pharmaceutical reimbursement and pricing policies used in
European countries and their ability to ensure affordable
access to medicines. In line with existing frameworks
[31–34], availability (marketing of a medicine in national
markets) and indicators such as inclusion of medicines in
reimbursement, public spending and medicine prices are
considered as key determinants for affordable access to
medicines. This understanding of affordable access to
medicines also fits within the Universal Health Coverage
and access to medicines target under Sustainable Devel-
opment Goal 3 on Good Health [35].
Over the last three decades a number of initiatives have
been developed to better characterise and measure the situa-
tion in countries and globally on the access to and regulation
and use of medicines. These initiatives were developed in
collaboration with numerous international and national
organisations, academia and experts, and fed with country
experiences and often consolidated in WHO documents and
guidelines [36]. They normally contain a set of structure,
process, output and outcome indicators. In parallel many
countries developed and used their own set of indicators to
more specifically measure their national situation. The latest
effort has been the development of a set of 100 indicators,
jointly by WHO and the World Bank, to monitor progress on
UHC, and this also contains some indicators across disease
programmes as well as health system development [37].
The presented findings are based on an iterative search
of the published and grey literature, using the bibliographic
database PubMed, alongside Google Scholar and reviewing
reference lists of flagship reports (e.g. a WHO Euro report
on access to new medicines [3] and the WHO Priority
Medicines for Europe and the World Report, with the
background chapter on pricing and reimbursement [11]).
The literature search was complemented by input from co-
authors, all expert on the topic. Key search terms were the
names of the pricing and reimbursement policies, as listed
in the WHO report on access to new medicines [3]; sear-
ches were run between 25 May and 26 June 2016. When
co-authors learned about relevant updated literature that
was published later, this was also included in the first draft
and revised paper. In order to have access to up-to-date
information about policies in Europe that might not have
been covered in the literature, we included descriptive
information about the existence of the discussed policies in
Europe as of 2016 based on information obtained from
policy surveys done with representatives of compentent
authorities involved the Pharmaceutical Pricing and
Reimbursement Information (PPRI) network.
To keep the review focused, this paper focuses on key
policies out of the larger menu of pharmaceutical pricing
and reimbursement policies, as described in the literature
[3, 18, 38]. Policies included were those that have com-
monly been applied in European countries for several
years, some of which (e.g. health technology assessment
308 S. Vogler et al.
and external price referencing) have also been intensively
discussed in literature. In addition, recently introduced
policies (e.g. managed-entry agreements and horizon
scanning) that have been seen as major policy options in
the menu of policies for high-priced medicines are included
[3]. For definitions of key policies used see Table 1.
2 Health Technology Assessments to Inform Pricing and Reimbursement Policies
In Europe, decisions about reimbursement of medicines are
taken at the national level. These are often implemented
through positive or negative lists, even in health systems
with competing health insurers such as The Netherlands or
Switzerland. Patients usually have to contribute to the costs
of outpatient medicines; however, various mechanisms exist
to protect patients from excessive out-of-pocket payments
[9]. Typically, marketing authorisation holders have to file
an application if they want their medicine to be included in
the positive list of reimbursed medicines. European
countries use one of the following processes to make
reimbursement and pricing decisions: In some countries,
health technology assessment (HTA) is used to inform
reimbursement and/or pricing decisions (e.g. France, Italy,
the Czech Republic, Switzerland). In other countries, HTA
(and appraisal) results in a decision to reimburse a new
product (with or without restrictions) or to reject funding
(e.g. England, Sweden and Norway; see Appendix A2 in the
Supplementary Materials on different models).
In many European countries, HTA is used either sys-
tematically for all new medicines or only for those raising
specific problems such as high prices, uncertain clinical
benefits or high budget impact. There are usually more than
one or two HTA institutions per country (for an overview
see WHO report [3]). HTA is focused on the assessment of
clinical benefits but may also include economic aspects. It
determines the therapeutic value of a medicine, the added
therapeutic value in comparison to existing treatments, and
frequently its cost-effectiveness. Medicines which are more
effective than existing comparators can get a higher price,
while others tend to be priced at a similar or lower level.
Table 1 Policy Definitions
Policy Definition
Health technology assessment (HTA) A multidisciplinary process that summarises information about the medical, social, economic and
ethical issues related to the use of health technology in a systematic, transparent, unbiased, robust
manner. Its aim is to inform the formulation of safe, effective health policies that are patient-focused
and seek to achieve best value
External price referencing Practice of using the price(s) of a medicine in one or several countries in order to derive a benchmark or
reference price for the purposes of setting or negotiating the price of a medicine in a given country
Synonyms: external reference pricing, international price referencing, international price
benchmarking, international price comparisons
Parallel trade The act of importing pharmaceuticals into one country (the ‘import’ country) from another (the ‘export’
country) and placing them on the market outside the formal channels authorised by the product’s
manufacturer or licensed distributors
Value-based pricing (VBP) Setting a price according the added therapeutic value of a new product by comparison with existing
treatments
In a broad sense, VBP means that activities should be oriented, organized or funded to maximize health
benefits for patients and societies. Thus, it proposes to link payments for health services, including
medicines, to evidence-based assessments of value for patients, their relatives and society as a whole
Managed-entry agreement (MEA) An arrangement between a manufacturer and payer/provider that enables access to (coverage/
reimbursement of) a health technology subject to specified conditions. These arrangements can use a
variety of mechanisms to address uncertainty about the performance of technologies or to manage the
adoption of technologies in order to maximize their effective use, or limit their budget impact
Tendering Any formal and competitive procurement procedure through which tenders (offers) are requested,
received and evaluated for the procurement of goods, works or services, and as a consequence of
which an award is made to the tenderer whose tender/offer is the most advantageous
Reference price system Identical or similar medicines are clustered and are reimbursed up to a certain limit
Generic substitution Practice of substituting a medicine, whether marketed under a trade name or generic name (branded or
unbranded generic), with a less expensive medicine (e.g. branded or unbranded generic), often
containing the same active ingredient(s)
International non-proprietary name
(INN) prescribing
Requirements for prescribers (e.g. physicians) to prescribe medicines by its INN, i.e. the active
ingredient name instead of the brand name
Definitions are based on the glossaries of the WHO Collaborating Centre for Pharmaceutical Pricing and Reimbursement Policies and of the
OECD
Lessons from Pricing and Reimbursement Policies in Europe 309
Medicines used in the treatment of very severe diseases
and/or orphan diseases without treatment alternatives are
very often accepted for reimbursement even though they do
not meet the cost-effectiveness threshold [39]. This sug-
gests that cost-effectiveness is not the only criteria taken
into account by decision makers and also that the negoti-
ation power of payers is very limited in such cases.
HTA is a tool to support prioritisation, with the aim of
helping policy-makers obtain better value for money. This
would arguably ensure a more rational and targeted
investment of funds, thus contributing to access to cost-
effective medicines. A study that compared HTA and
internal price referencing suggested that HTA appears to be
the superior strategy for obtaining value for money because
it addresses both price and appropriate indications for the
use of the medicine and the relation between additional
value and additional costs [40]. Overall, no clear pattern of
the impact of HTA on prices could be determined [41].
Still, policy-makers consider HTA as one of the two key
tools (the other one being managed-entry agreements) to
deal with new high-priced medicines [42].
3 Selected Pricing and Reimbursement Policies
Most European countries regulate the prices of medicines
via a mix of instruments, applied to different market seg-
ments (outpatient/inpatient medicines, onpatent/offpatent,
innovative/medicines with no added therapeutic value,
etc.). Even though all these instruments have advantages
and drawbacks that are described below, it is difficult to
isolate the impact of any single policy on availability and
affordability of medicines since countries typically use
several of these policies simultaneously.
3.1 External Price Referencing
All but two (Sweden, UK) EU member states refer to the
price in other countries to set the price of medicines in their
own country, a practice known as external price referencing
(EPR). EPR is also used in other European countries (e.g.
Norway, Iceland, Switzerland and Turkey) [43]. However,
the scope, relevance and methodological design vary across
countries. In Denmark, for instance, EPR only applies in the
hospital sector. In Germany, EPR exists in the legislation but
is not used in practice [43]. EPR is typically applied to
regulate the price of new products, less often in offpatent
markets. This international price comparison offers a refer-
ence, or benchmark, for policy-makers, to understand where
the prices proposed by the pharmaceutical industry for their
country are relatively ranked. The price information
achieved through EPR is frequently seen as a starting point
for public payers to further negotiate and conclude
agreements to reach a more acceptable and somewhat
affordable price that will be funded.
The Organisation for Economic Co-operation and
Development (OECD) described EPR as a policy that is
‘‘readily gameable by the pharmaceutical industry and—
by reducing firms’ willingness to price to market—
contributes to access and affordability problems’’ [44].
EPR incentivises marketing authorisation holders to
launch medicines first in countries with higher prices,
and delay, or not to launch, in lower-priced countries.
This is in order to not reduce the medicine’s interna-
tional reference price [38, 45–53]. Countries with lower
prices or lower market volume were found to have fewer
medicines available and longer delays in medicine
launches [48, 54, 55]. Pharmaceutical companies have
systematically delayed dossier submissions in Belgium
in order to avoid the lower Belgian prices affecting other
European countries [56]. While studies highlighted the
ability of EPR to negatively impact the availability of
medicines on the market, it remains difficult to isolate
the impact of EPR from other factors, such as ‘parallel
trade’ (see Table 1), which is a legal practice within the
EU [49, 57] or pricing regulation in Germany and Italy
that allow free pricing for some medicines in the first
year to improve earlier market access in their country,
but thus signal a high price to other EPR-applying
countries. Overall, available literature on the impact of
EPR is limited [41, 48]. Evaluations focused on cost-
containment, showing how EPR was able to contribute
to savings under specific conditions [21, 58–61], whereas
aspects such as availability and uptake have not been
sufficiently addressed. One study showed that, using a
limited sample of new patented medicines, EPR-apply-
ing countries had, in general, lower list prices than
countries not using EPR [60].
To mitigate the negative impact of EPR (and parallel
trade) on availability in lower-income countries in Europe,
it has been argued that public payers could keep a high ‘list
price’ and get confidential discounts through product-
specific agreements [46, 62]. This would allow the phar-
maceutical industry to provide medicines at lower prices to
low-income countries without negatively impacting the
average reference price. While confidential arrangements
(frequently subsumed under the umbrella term of managed-
entry agreements (MEA), see below) have increasingly
been used, also by higher-income countries as an instru-
ment to ensure affordable access to medicines [3, 63], there
is no evidence that access has improved in lower-income
countries since they continue to experience delayed and
limited availability. On the negative side, confidential
discounts and rebates are blurring the price transparency of
the market, and they limit the ability of payers to determine
what a ‘reasonable and fair’ price would be.
310 S. Vogler et al.
3.2 Value-Based Pricing
Value-based pricing (VBP) consists of setting a price
according the added therapeutic value of a new product
through comparison with existing treatments. Seeking to
pay for medicines in relation to the ‘value’ they bring to
their own health system and society has been considered
one approach to ensure value in pharmaceutical spending
(static efficiency) and to send appropriate signals to com-
panies for further investments in research and development
(R&D; dynamic efficiency) [44].
In a narrow approach, VBP (in the context of the Eng-
lish National Health Service (NHS)) is defined as ‘[the
price] that ensures that the expected health benefits [of a
new technology] exceed the health predicted to be dis-
placed elsewhere in the NHS, due to their additional cost’
[64]. It thus relies on cost-effectiveness analysis and the
setting of an ICER threshold beyond which a new medicine
is not funded. Sweden has such a ‘real’ VBP system.
Introduced in 2002, pricing and reimbursement processes
are completely integrated, and eligibility for reimburse-
ment is assessed against three criteria: the human value
principle to guard against discrimination of individuals, the
need and solidarity principle that gives priority to those in
greatest need, and the cost-effectiveness principle [11, 65].
Applying a broader approach, any policy linking the price
of a medicine to its added therapeutic value can be considered
within the category of value-based pricing. With such a defi-
nition, many European countries use such policies [3, 39].
However, value-based pricing has proven difficult to
implement, especially in therapeutic areas where no alter-
native treatment is available and patients suffer from severe
life-threatening or debilating disease, such as oncology or
rare diseases. In such cases, payers face a strong public
pressure and often accept paying high prices for limited
clinical benefits. To some extent, it can be argued that the
value of such products cannot be reduced to clinical ben-
efits and some analysts have developed frameworks to take
other criteria into account, such as the absence of alterna-
tive treatments for orphan diseases for instance [66].
However, such frameworks do not provide any simple rule
to set the price of a new medicine.
A major argument for using a value-based pricing policy
is that it might create an incentive for the development of
products that generate more added value [11, 65]. It could
also support a new approach of policy-makers to signal more
explicitly their priorities regarding which medicines would
be reimbursed if they are developed as proposed in the
WHO Priority Medicines for Europe and the World Study in
2004 [67]. Currently, the pharmaceutical policy framework
appears to be supply-driven, and a more pro-active approach
has been suggested [68, 69]. In principle, medicines with
perceived high value are likely to obtain higher prices,
providing a reward for innovation, which might explain the
preference of the pharmaceutical industry for this policy
[70]. However, VBP also presents opportunities to the
pharmaceutical industry for ‘gaming’, in particular related to
the choice of the comparator and the threshold [53]. For
instance, a manufacturer will try to avoid a genericised
molecule as a comparator, even if this means positioning
their product as a second- or third-line therapy. In such a
case, the population target will be smaller but the price
premium will be set in relation to the price of an on-patent
medicine. In addition, where an explicit cost-effectiveness
threshold is published, marketing authorisation holders tend
to price up to the threshold [71].
It has been argued that VBP would encourage access to
needed medicines, in line with the prioritisation of policy-
makers. Still, it can also result in limited, or delayed,
access due to the resource-intensive and time-intensive
character of underlying value assessments, and discussions
between the authority and the manufacturer on different
perceptions of value [53]. Until now, VBP has been pro-
posed as a logical and fair policy to promote access as well
as reward useful innovation; however, implementing this
policy has proven very challenging.
3.3 Managed-Entry Agreement
European countries have increasingly been using MEAs
to deal with high-priced medicines and uncertainty around
the medicine’s value [3]. These agreements take many
forms such as simple confidential discounts and price–
volume agreements in financial-based schemes (non-
health-outcome-based schemes). These also include more
sophisticated performance-based (or health-outcome-
based) schemes, where the final price of a product is
linked to health outcomes observed in real life. Perfor-
mance-based schemes include outcome guarantees (i.e. an
agreement where the manufacturer provides rebates,
refunds or price adjustments if the product fails to meet
the agreed outcome target), coverage with evidence
development (i.e. reimbursement where additional data
gathered in the context of clinical care would further
clarify the impact of the medicines, and patient eligibility
linked to patient registries to measure post-marketing
clinical outcomes).
In some countries, the existence of such agreements is
not disclosed to the public (e.g. in France), while in others
the existence and the content of the agreements is public
(e.g. Scotland, England and Belgium). In all cases, the final
discount to payers is unknown. The EMINet survey of
2013 [72] confirmed other research [73–75] that MEAs
were particularly used for specific (high-priced) indications
such as cancer, and that some European countries (e.g.
Italy and the UK) used them at a much higher scale than
Lessons from Pricing and Reimbursement Policies in Europe 311
others. It also showed that most countries opted for finan-
cial MEAs, which are easier to handle than performance-
based MEAs [76]. Since that study, more MEAs have been
implemented for new products, and even European coun-
tries (e.g. Bulgaria and Romania) that had not applied them
before started to use them [3, 77].
For patients and the pharmaceutical industry, MEAs are
an opportunity to facilitate early market access to medici-
nes, even if added therapeutic value has not yet been fully
proven. They also allow for price discrimination without
changing list prices. For policy-makers, MEAs are a tool to
manage uncertainty [78] and obtain lower prices than the
list prices; how much lower is unknown as the prices are
confidential. When performance-based MEAs have been
set up, together with patients registries, for instance, this
allows collecting real-life clinical data that are needed to
assess the treatment effect and take a more sound decision
based on more robust evidence. Still, even if updated data
may urge for a discontinuation of funding (at high prices)
of a medicine under a MEA, it might be difficult in reality
to implement it if expectations of patients have been cre-
ated [79]. Due to public pressure, funding may be contin-
ued, as observed in the cases of agalsidase alfa and
agalsidase beta for Fabry disease and alglucosidase alfa for
Pompe disease in The Netherlands [80].
The confidentiality of MEAs is a major drawback, par-
ticularly given the widespread use of EPR. As a result,
European countries refer to the official list price of a high-
priced medicine that is under MEA in several countries. It
was argued that by opting for MEA payers implicitly
accepting high (list) prices [81].
Despite continuously wide-spread use of MEAs, there is
some [82], but comparably little, knowledge about their
functioning and results in terms of improving affordability
and access.
3.4 Tendering
In Europe, tendering has traditionally been applied in the
hospital sector, at the level of individual hospitals and
hospital groups, or through voluntary pooling of regional
procurement at national level by procurement agencies (in
Denmark and Norway) acting on behalf of all public
hospitals [83–85]. In the outpatient offpatent sector, some
European countries (e.g. Germany, The Netherlands,
Slovenia and Romania) have implemented tender systems
and auction elements to enhance competition (cluster-
tendering) and thus achieve lower medicine prices
[86–88].
National procurement agencies in Denmark (AMGROS)
and Norway (LIS) have been reporting efficiency gains and
lower prices through their centralised hospital tendering
compared to other countries [83–85]. This is in part
attributed to the shift of the balance of power in favour of
the national procurement agency that procures for a much
larger market as well as use of new types of tendering
procedures.
Tendering in the outpatient sector has also proven its
ability to considerably reduce prices through competition
[88–90]. Concerns have been raised that, if tender
pushed prices too low, the sustainability of the generic
industry would suffer, and some companies could with-
draw from the market, thus reducing competition in the
longer term [91]. However, a recent study did not find
any evidence Dutch offpatent market that tendered
medicines would be more affected by shortages than
non-tendered medicines [88]. Still, in case of shortages
of tendered medicines, alternative medicines might also
not be …