The Trump administration is not the first government to explore the use of international price referencing to force drug prices down. This usually involves the institution of a price ceiling based on an average price for the same drug in a “basket” of other countries. The basket is supposed to consist of countries with similar income levels, but oftentimes that’s not actually the case. That’s just one of the many problems with international price referencing laws.
By declaring that referencing baskets contain countries with similar income levels, even if that’s incorrect, these governments implicitly accept the notion that prices can and perhaps should be different in lower-income countries than in higher-income countries. In my recent article in Pharmaceutical Executive, I analyze the relationship between country per capita income and drug pricing, and discuss how accepting lower prices in low-income countries may benefit everyone, including patients in high-income countries. Read the full article to learn more.