Research Synthesis: Institutions
v1.0 researched and written by Elise Erickson, edited by Suerie Moon, last updated June 2018
The literature regarding pricing institutions is thin.* Most of the literature looks at a specific aspect or function of an institution, rather than discussing the developments, achievements, organization or characterization of the institution as a whole and its impact on prices.
National pricing commission; specific institutions e.g. PBAC, CDR, NICE and pricing
Synthesis of the literature
Specialized institutions to manage medicines pricing have been established in some countries and regions, and several papers analyze these. For example, Adesina, Wirtz, and Dratler (2013) examined the impact of the creation of Mexico’s commission for price negotiation on antiretroviral (ARV) prices, and found ARV prices dropped by 38% on average after the first round of negotiations, but noted that this reduction cannot be credited fully to the commission. Also, Mexico continued to pay an average of six times more than similar countries for ARVs despite the commission. The authors suggest that forecasting and procurement process inefficiencies might have negatively impacted the negotiation process for the commission.
Gómez-Dantés et al. (2012) described Mexico’s Coordinating Commission for Negotiating the Price of Medicines and other Health Inputs (CCPNM), an agency created in 2008 for price negotiations for patented drugs on Mexico’s essential medicines list. The authors note the agency’s success in price negotiations, but also highlight major limitations such as: absence of appropriate indicators to mark the commission’s performance, coordination with other institutions, and sustainability concerns (political will, insufficient staff).
Australia’s Pharmaceutical Benefits Advisory Committee (PBAC) has been widely studied. Recently, Vitry and Shute (2018) described the funding and pricing policies for high-cost medicines listed by Australia’s Pharmaceutical Benefits Scheme (PBS). Turkstra et al. (2017) found that a medicine’s expected financial impact to the government is negatively associated with a PBAC recommendation. Others point more explicitly to PBAC’s limitations. For instance, Carter, Vogan, and Afzali (2016) highlighted PBAC’s use of ICER (incremental cost-effectiveness ratio) thresholds for decision-making, and the absence of community values considered in cost-effectiveness evaluations as two major limitations. Langley (2017) examined version 5.0 of the Guidelines for Preparing Submissions to PBAC, arguing that the guidelines do not meet scientific standards and discussing how the guidelines could be altered to reflect standard scientific practice. Lu et al. (2008) examined the balance between limited resources and community needs with regards to high-cost medicines in Australia, illustrating their concerns with rheumatoid arthritis.
Pricing institutions do not exist in a vacuum; rather, they can be impacted by other sectors such as trade. For instance, Harvey et al. (2004) discussed how the Australian-United States Free Trade Agreement (AUSFTA) had the potential to undermine Australia’s Pharmaceutical Benefits Scheme (PBS), thereby increasing the cost of medicines for Australian consumers, or delaying the entry of generics.
Research on pricing institutions in low and middle-income countries
Further research on the effectiveness of a pricing/procurement agency, such as impact on price or availability (similar to Adesina, Wirtz, and Dratler (2013) and Gómez-Dantés et al. (2012)), with particular emphasis on lessons learned
* For the purposes of this review, we have established three categories to describe the state of the literature: thin, considerable, and rich.
- Thin: There are relatively few papers and/or there are not many recent papers and/or there are clear gaps
- Considerable: There are several papers and/or there are a handful of recent papers and/or there are some clear gaps
- Rich: There is a wealth of papers on the topic and/or papers continue to be published that address this issue area and/or there are less obvious gaps
Scope: While many of these issues can touch a variety of sectors, this review focuses on medicines. The term medicines is used to cover the category of health technologies, including drugs, biologics (including vaccines), and diagnostic devices.
Disclaimer: The research syntheses aim to provide a concise, comprehensive overview of the current state of research on a specific topic. They seek to cover the main studies in the academic and grey literature, but are not systematic reviews capturing all published studies on a topic. As with any research synthesis, they also reflect the judgments of the researchers. The length and detail vary by topic. Each synthesis will undergo open peer review, and be updated periodically based on feedback received on important missing studies and/or new research. Selected topics focus on national and international-level policies, while recognizing that other determinants of access operate at sub-national level. Work is ongoing on additional topics. We welcome suggestions on the current syntheses and/or on new topics to cover.