Table 2.

Summary of evidence on the impact of ERP on key policy objectives.

Source: The authors based on the literature review findings and primary data collection

Endpoints	Issues	Overall evidence from primary and secondary sources	Countries with primary and secondary evidence	Quantifiable impact	Short- vs. long-term effect
(1)	(2)	(3)	(4)	(5)	(6)
Cost-containment	ERP can lead to health care system savings	European countries are introducing ERP to contain costs and increase healthcare savings. The evidence on the impact of ERP on savings varies across countries [1, 12, 16, 17, 19, 20]	Slovakia, Turkey, Greece, Switzerland	Slovakia, 2012: Eur €75 m Turkey, 2007: US$900 m-US$1bn	At least in the short-term, ERP can be used as a tool to control costs, whereas in the long-term its impact on cost-savings is uncertain [1, 19, 20]
	Extent of savings depends on the way ERP is implemented	The extent of healthcare savings depends largely on the way ERP is implemented. Frequent price revisions and consideration of transaction prices could result in higher sustained savings [1, 12, 20, 21]	All EU countries and Switzerland	‘Consideration of actual discounted prices’ ‘Frequent price revisions’
Price levels	ERP secures low pharmaceutical prices	There is a mixed evidence on the ability of ERP to secure low prices [4, 5, 15, 16, 19, 22–26, 28–31]	The Netherlands, Cyprus, Norway, Romania, Bulgaria, Greece, Slovakia, Moldova, China, Belgium, Brazil, Germany, Egypt, Spain, Estonia, France, Hungary, Italy, Latvia, Romania, The Russian Federation, Slovenia, South Africa, Qatar, Jordan	The Netherlands, between 2007 and 2008: 8% decrease of POM prices; Moldova, 2012: Pharmaceutical prices decreased by 3%; Bulgaria, 2014: Prices of reimbursed pharmaceuticals decreased between 4 and 75.4%; Greece, 2010: Pharmaceutical  prices decreased by an average of 9.5%	A limited number of studies consider long-term evidence when studying the impact of ERP on pharmaceutical prices. Therefore, whether ERP can or cannot continue to reduce prices over time is still unclear [1–8, 12, 25, 38, 39]
	ERP as a meaningful regulation to lower pharmaceutical prices both at launch and over time	Evidence has shown that ERP reference prices (which are based on list prices in basket countries), rather than actual transaction prices in the basket countries, lead to higher pharmaceutical price levels in countries implementing ERP and limit the opportunities for these countries to benefit from the transaction prices attained in individual countries [1, 2, 4–8, 15, 40]	All EU and OECD countries	N/A
	Pharmaceutical prices depend on ERP design	The extent of reduction in pharmaceutical prices depends largely on the design of the implemented ERP. Frequent price revisions, larger country baskets, 'wiser' basket country selection and the consideration of the average or the lowest prices in the basket when calculating the reference price, can lead to even more downward pressure on price levels [4, 6–8, 15, 21, 22, 26, 28, 30, 32, 33]	Croatia, Austria, Belgium, Cyprus, Denmark, Estonia, Germany, Iceland, Luxemburg, Poland, Greece, Latvia, Lithuania, Slovakia, Switzerland, Moldova, Hungary, Spain, Bulgaria, The Russian Federation	‘Larger basket’ ‘Basket country selection’ ‘Frequent price revisions’ ‘Calculation of reference price based on average or lowest prices in the basket’
	Pharmaceutical prices depend on prevailing market features	Pharmaceutical price levels correlate with country GDP per capita and can be affected by levels of market regulation, including ERP, and any economic pressure applied in the studied country [4, 5, 15, 37–39]	Norway, The Netherlands, Finland, Austria, Belgium, Spain, Greece, Portugal, Lithuania, Qatar	‘Lower GDP levels’ ‘Strict price regulations’ ‘Other fiscal concerns’
Drug use	Improved drug diffusion and use	There is mixed evidence on the impact of ERP on pharmaceutical diffusion and use. Some countries documented that ERP is not a sufficient condition for the diffusion and use of pharmaceuticals, whereas others supported that pharmaceuticals diffuse well with ERP [15]	Brazil, Egypt, France, Greece, Hungary, Latvia, Qatar, Slovakia, Spain, Bulgaria, Estonia, The Russian Federation, Italy, Jordan	N/A	There is no long-term evidence on whether ERP is a sufficient condition for improved diffusion and use of pharmaceuticals
Availability and launch delays	Market withdrawal	ERP may result in a general price decrease when one country reduces its price, suggesting that if the price generated becomes too low, manufacturers may withdraw from the market resulting in the product becoming unavailable [2, 3, 6, 15, 28, 36]	Bulgaria, Spain, Estonia, Romania, Slovakia, Poland, Greece, Latvia	Bulgaria: 200 products were withdrawn from the market in 2012	Short-term: In Bulgaria 200 products were withdrawn in 2012 Long-term: Within a 6 year period, 11 products among 7 EU countries were not launched by manufacturers in order to avoid expected low prices [6, 7, 25]
	Launch delays, launch sequencing or no launch	Companies may delay, sequence or withhold drug launches in countries with highly controlled prices at ex-factory level or in countries where price levels are considered low [1, 3–8, 15, 36]	Slovakia, Hungary, Germany, Belgium, Poland, Estonia, Spain, Romania, Bulgaria, Greece, Latvia	Belgium: systematic delay of dossier submission by companies in order to avoid the Belgian price Some companies tried to ignore the process or actively lobby for exemptions for their products; Slovakia: after a change in its country basket to include all EU Member States; Germany: had the highest availability among 15 European countries; 11 products among 7 EU countries were not launched by manufacturers in order to avoid expected low prices
Affordability	ERP leads to pharmaceutical prices in line with the purchasing ability of healthcare systems or patients	It has been noted that countries with high absolute price levels of pharmaceuticals, have low relative price levels (pharmaceutical prices divided by GDP per capita). Nevertheless, ERP policies (and the way ERP systems are designed) encourage higher prices in LICs, directly undermining affordability of pharmaceuticals in these countries. The majority of countries though experience affordability issues at least in some therapeutic classes [1, 2, 7, 15, 23, 44, 51]	Slovakia, Belgium, Brazil, Bulgaria, Spain, France, Greece, Hungary, The Russian Federation, South Africa, Jordan, Germany, Denmark, Ireland, Italy, Poland, Romania, Egypt, Qatar, Latvia, Estonia	Germany, Denmark, Ireland and Italy, have low relative price levels (pharmaceutical prices divided by GDP per capita); Poland, Romania and Bulgaria, pay relatively more compared to their GDP per capita; In Egypt, prices are high for the local population in relation to per capita income	There is no conclusive and/or empirical evidence that ERP undermines affordability over time
	Scope for increasing affordability	If reference prices are set based on some kind of affordability index which reflects national income levels, either through an average exchange rate or PPPs, affordability in LICs could be improved [1, 2, 44]	Egypt	N/A
Fairness/Social Welfare	ERP impacts social welfare	ERP and parallel trade had an effect on social welfare by increasing prices, therefore, undermining equitable and affordable patient access among EU citizens [6, 27, 40]	EU countries	‘Levelling of prices signifying less affordable pharmaceutical products’	There is no evidence on whether ERP in itself had an effect on social welfare; in combination with parallel trade, the use of ERP was associated with an effect on social welfare
	ERP impacts health system priorities	ERP might be primarily relying on pricing factors extrinsic to the health care system in which it operates and subsequently might neglect country-specific health system priorities [2, 3, 8, 46].	N/A	N/A
Microeconomic efficiency	ERP has an impact on efficient drug spending (through price revision)	ERP may potentially increase efficiency in terms of affordable prices, especially through frequent periodic price revisions of listed drugs [5]	Slovakia, Switzerland	Slovakia: ERP based on the arithmetic mean of the six lowest countries within EU 26 countries, resulted in a 25% reduction in pharmaceutical expenditure as proportion of total health care spending	Examples from the literature highlighted the short-term impact of ERP on efficient drug expenditure by lowering prices, although no conclusive evidence was found to assess whether the impact of ERP on social equity and welfare is short- or long-term [5]
	Contributes to stable share of drug spend as proportion of total health spend	ERP might have the ability to reduce the share of pharmaceutical expenditure in total health care spending [5]	Slovakia, Switzerland	Slovakia: ERP based on the arithmetic mean of the six lowest countries within EU 26 countries, resulted in a 25% reduction in pharmaceutical expenditure as proportion of total health care spending
	Containing costs while guaranteeing access to medicines	Evidence on the impact of ERP on efficiency in the context of cost-containment, while maximising accessibility is inconclusive [6]	N/A	N/A
Industrial policy	ERP impacts innovation and investment in R&D	ERP may discourage incremental innovation and investment in R&D through: (a) downward price convergence potentially leading to reduced revenues for pharmaceutical companies, (b) encouragement of parallel trade potentially leading to manufacturers’ investing in producing only marginal product modifications in order to avert the threat of parallel trade and (c) the ERP objectives or rules themselves, and the way they are implemented in different settings and which do not necessarily support industrial policy [3, 6, 15, 49, 51]	Slovakia, Germany, Hungary, Egypt, Spain, Latvia, The Russian Federation, South Africa, Qatar, Greece, Romania, Italy, Estonia	Poorly defined ERP rules in Germany render firms less able to profit from incremental innovation in drug discovery	Very limited evidence suggests that ERP might deter manufacturers from investing in R&D in the short-term [23]
	ERP influences manufacturing and/or R&D investment decisions	There is no clear evidence on the impact of pharmaceutical policy practices on industrial policy decisions in Europe due to the multiplicity of factors involved and the long causality chain linking non-regulated pricing to innovation [48]	N/A	N/A
	ERP offers scope for promoting innovation	ERP could indirectly incentivise innovation through favourable basket and other parameter definition. Innovation may be rewarded in the context of defining the basket of comparators (i.e. inclusion of countries that explicitly recognize value and the “value of innovation”) or in the context of adjusting prices frequently to reflect price adjustments in other settings [8]	Slovakia, Belgium, Brazil, Jordan	N/A

N/A not applicable, R&D research and development, EU European Union, ERP external reference pricing, GDP gross domestic product, m million, bn billion, OECD Organisation for Economic Co-operation and Development, LICs Low Income Countries, PPP Purchasing Power Parity, POM prescription-only medicine