The impact of External Reference Pricing on the healthcare system : a hybrid simulation exploration of equitable drug access, affordability and availability

Kazakov, R and Howick, Susan and Morton, Alec (2021) The impact of External Reference Pricing on the healthcare system : a hybrid simulation exploration of equitable drug access, affordability and availability. In: EURO 2021, 2021-07-11 - 2021-07-14. (https://www.euro-online.org/media_site/reports/EUR...)

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Abstract

External reference pricing (ERP) regulation and its effects on equitable drug access, affordability and availability in the EU are explored using a hybrid scenario simulator. Two main counteracting behaviors are highlighted: one is connected to the goal of drug price regulators in using ERP to control medicine prices, while the other is connected to the drug suppliers counter behaviour to exploit or avoid the price regulation rules. This tactical game could result in undermining key health care objectives to provide equitable and affordable drug therapies to patients due to drug market entry delays, drug market exits or propagation of excessive drug pricing. The authors have developed a hybrid agent based and system dynamics scenario simulator to explore the effects of the ERP regulation. The construction of the hybrid simulation model was supported by the use of Resource Agent Maps, a novel qualitative modelling technique designed to analyse the interactive behaviour of agents and resources in a complex adaptive systems environment. The simulation results demonstrate that the intention of the ERP regulation to provide affordable medicine prices results in the counter effect of drugs overpricing or drugs unavailability. This brings forward to health care public agenda the question of how to maintain a balance between affordability and availability, and the challenge how to improve drug pricing regulation, in order to resolve this ethical problem and achieve balance.

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