A paper in Value in Health by Grueger, Martin and Sullivan (2025) provides some lessons.
Together with widespread digitalization of drug compendia (price lists), IRP led to a rapid convergence of list prices across Europe. Although prices often spread ±50% from the average price for drugs first launched in the EU in 1997, this narrowed to ±20% for drugs launched in 2003 and has stayed within this range since. The mechanics of price referencing and its impact have been analyzed extensively.[Kanavos et al. 2020] Where countries implemented IRP, they achieved short-term price reductions and budget relief. The pharmaceutical industry reacted with the introduction of “list price corridors” anchored to prices achievable in high-income countries, specifically Germany and France. Although this narrowed the spread of list prices, there is no evidence that IRP reduced price levels across Europe. Smaller countries have less leverage in negotiations, and for less affluent countries the prices are often unaffordable…
Although the expectation was that IRP would reduce drug prices across the EU, it resulted in a bifurcation between countries that could afford and those that could not afford drugs. To overcome this, confidential net price agreements have become widespread.
Moreover, international reference pricing has lead to reduced access. EFPIA reports that when new drugs are launched only 29% are available and reimbursed across all European countries; 17% have limited availability due to a variety of restrictions or requirements to limit access to specific patient subgroups.
The paper then continues to describe on international reference pricing could be implemented in the US under the Most Favored Nation (MFN) policy. They claim that MFN could actually result in higher–rather than lower–drug prices in the US. To find out why the authors think this, you can read the full article here.
