UC Berkeley researchers have found through a new study that if patients are given a chance, they would in all cases go for cheaper prescription drugs – a finding that indicates that reference pricing could be effective in cost savings.
The study published in New England Journal of Medicine analyzed changes in prescriptions and pricing for 1,302 drugs in 78 therapeutic classes in the United States, before and after an alliance of private employers began using reference pricing. Implementation of reference pricing was associated with a 7 percent increase in prescriptions filled for the low-price reference drug within its therapeutic class, a 14 percent decrease in average price paid, and a 5 percent increase in consumer cost sharing, the study found.
The data suggest that reference pricing may be one instrument for influencing drug choices by patients and drug prices paid by employers and insurers. In the future, pharmaceutical firms that wish to charge premium prices may need to supply evidence of commensurately premium performance.
For those of you who are not aware, under the reference pricing strategy, the insurer or employer establishes its maximum contribution towards the price of therapeutically similar drugs and then the patient must pay the remainder out of pocket. The insurer/employer contribution is based on the price of the lowest-priced drug in the therapeutic class, called the reference drug. In theory, this policy would encourage patients to save money by selecting cheaper drugs that work just as well as their name-brand counterparts.
Lead author James C. Robinson, director of the Berkeley Center for Health Technology at the School of Public Health, said “If the patient chooses a cheap or moderately priced option, the employer’s contribution will cover most of the cost. However, if the patient insists on a particularly high-priced option, he or she will need to make a meaningful payment from personal resources.”