How does external reference pricing work in developing countries: evidence from Iran

Introduction: Governments apply different pricing policies to ensure public accessibility, availability, and affordability of medicines. In this way, external reference pricing (ERP) because of its easy implementation is used widely across countries. However, ERP is completely path dependent, and it would both bring pros and cons, related to its implementing strategy which makes understanding of its impact in different countries challenging. In this study, we examine the performance of the ERP approach in Iran as a pricing tool.Method: We conducted a cross-sectional descriptive study. Although Iran officially uses a reference country basket for ERP, in this study, we use different reference countries based on socioeconomic comparability, access to their price data, medicine pricing approaches, and pharmaceutical expenditure to examine the effect of reference countries as well as the method performance. Then, an empirical study was applied to a list of selected samples of medicines in the Iranian market to compare their price with our new reference countries. Then, we discuss the performance of ERP process based on the real prices in the Iranian pharmaceutical market.Result: The prices of 57 medicines, which contain about 69.2% of the imported Iran pharma market in value, were compared with their prices in selected reference countries. It was found that 49.1% of prices were more expensive in at least one of the reference countries, and in 21% of products, the average price in Iran was higher than the average price in reference countries.Conclusion: Achieving efficient and fair pricing of pharmaceuticals between and within countries is still a complex conceptual and policy problem that ERP in short term can handle. ERP cannot be considered a perfect tool for pricing alone, although its effectiveness is acceptable. It is expected that using other pricing methods alongside the ERP will improve patients’ access to medicines. In Iran, we use value base pricing as the main pricing method for every new molecule. Then, we use other methods such as ERP as a complementary method

Resource allocation and purchasing arrangements to improve accessibility of medicines: Evidence from Iran

Objective: The aim of this study was to review the current methods of pharmaceutical purchasing by Iranian insurance organizations within the World Bank conceptual framework model so as to provide applicable pharmaceutical resource allocation and purchasing (RAP) arrangements in Iran. Methods: This qualitative study was conducted through a qualitative document analysis (QDA), applying the four-step Scott method in document selection, and conducting 20 semi-structured interviews using a triangulation method. Furthermore, the data were analyzed applying five steps framework analysis using Atlas-ti software. Findings: The QDA showed that the purchasers face many structural, financing, payment, delivery and service procurement and purchasing challenges. Moreover, the findings of interviews are provided in three sections including demand-side, supply-side and price and incentive regime. Conclusion: Localizing RAP arrangements as a World Bank Framework in a developing country like Iran considers the following as the prerequisite for implementing strategic purchasing in pharmaceutical sector: The improvement of accessibility, subsidiary mechanisms, reimbursement of new drugs, rational use, uniform pharmacopeia, best supplier selection, reduction of induced demand and moral hazard, payment reform. It is obvious that for Iran, these customized aspects are more various and detailed than those proposed in a World Bank model for developing countries