What international reference pricing is
International reference pricing (IRP), also called external reference pricing (ERP), is the practice of using the price of a medicine in one or more other countries to set or negotiate its price at home. The country that refers to others defines a basket of reference countries, a price level to compare (usually ex-factory or pharmacy purchase price), and a rule for turning the basket into a number: the lowest price, the average, or an average of the lowest few.[1]
It is widely used. A review prepared from a study for the European Commission covered 31 countries (the then 28 EU Member States, Iceland, Norway and Switzerland). All applied ERP except the United Kingdom and Sweden, and 23 used it as the main systematic criterion for pricing. Baskets ranged from 1 to 31 countries; 15 countries used the average price, 7 the lowest price and 7 other methods (Rémuzat et al., 2015). The details have changed since, but the structure of the problem has not.[2]
How baskets and calculation rules differ
Each system has its own basket, price level, exchange-rate convention and revision cycle. The examples below are taken from the current legal or official texts of each country.
| Country | Basket | Rule |
|---|---|---|
| Romania | 12 countries: Austria, Belgium, Bulgaria, Czech Republic, Germany, Greece, Hungary, Italy, Lithuania, Poland, Slovakia, Spain | Producer price at or below the lowest price of the same medicine (Order 368/2017, as amended); recalculated annually |
| Ireland | 13 Nominated States: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden | For new medicines, the HSE has regard to prices in the Nominated States where the medicine is available; on-patent prices are realigned, downwards only, to the basket average (Framework Agreement 2026 to 2029)[3] |
| Norway | 9 countries: Sweden, Finland, Denmark, Germany, UK, Netherlands, Austria, Belgium, Ireland | Maximum pharmacy purchase price set at the mean of the three lowest market prices, converted at a six-month mean exchange rate |
| Netherlands | 4 countries: Belgium, France, Norway, UK | Maximum price based on the average of reference country prices, where at least two have a price; reviewed at least twice a year |
Two features matter most in practice. First, rules differ in direction: a lowest-price rule transmits any single low price, while an average dilutes it. Second, revision cycles mean a price is not fixed at launch. Ireland realigns on-patent prices on set dates, and Norway and Romania reassess prices periodically, so a later launch at a lower price elsewhere can pull an existing price down.
List price, net price and confidential discounts
Reference pricing works on published prices. A study of high-cost originator medicines in 16 European countries noted that actual paid prices are likely to be lower because of confidential discounts and similar funding arrangements, while pricing authorities refer to the higher undiscounted prices (Vogler et al., 2016).[4]
This is why confidential agreements are so common. In England a confidential patient access scheme discount often closes the gap to cost-effectiveness at NICE; in Ireland and many other markets, rebates and managed entry agreements play a similar role. The list price protects the reference network; the net price meets the payer's value judgement. Both need to be planned together, and the structure of the agreement matters as much as the headline number.
Launch sequencing, price corridors and the IRP matrix
Because prices travel, the order of launch is a pricing decision. A launch in a country that is widely referenced, or that sets a low price, can lower achievable prices elsewhere. The 2015 review describes this spill-over effect and the launch sequence strategies it prompts.
An IRP matrix sets out which countries reference which, with each rule and revision date. From it, a price corridor can be defined: the band of list prices within which launches in different markets can sit without triggering unwanted cuts. A sequence that looks attractive for early revenue can lose value in the markets that follow, and some countries may be better served by a later launch with a stronger evidence package.
The EU HTA Regulation does not change this. Joint clinical assessment covers relative clinical effectiveness; pricing and reimbursement remain national. See EU JCA dossiers.
Why US MFN pricing raises the stakes
US most-favoured-nation (MFN) policy references prices in other wealthy countries, which can include the UK, Ireland and several EU Member States. A European list or net price can therefore set a benchmark in the largest market. European reference pricing and US exposure are now one analysis, not two. Our MFN pricing service covers the US models in detail.
What we deliver
- IRP matrix for your target markets: baskets, price levels, rules, exchange-rate conventions and revision cycles, from official sources
- Simulation of how a launch price in one country flows through referencing countries over time
- Launch sequencing scenarios and price corridors, with US MFN exposure included where relevant
- List versus net price analysis, and assessment of confidential discount and managed entry options
- Threshold and value-based price analysis from cost-effectiveness models, so the price can be defended in HTA
- Briefings for pricing, market access and leadership teams
What to get right
- Current rules: baskets and calculation methods change, sometimes with each new framework agreement, so work from the latest official texts.
- Like-for-like price levels: compare ex-factory with ex-factory, and apply mandatory adjustments before drawing conclusions.
- A dynamic view: periodic revisions mean a launch price is the start of a path, not an end point.
- Pricing and HTA together: a list price chosen for the reference network still needs a net price that the HTA evidence can support.
- The US connection: under MFN, European pricing decisions can have consequences across the Atlantic.
Why Evidaxia
We work where pricing and HTA meet. We have delivered MFN pricing work and built cost-effectiveness models for NICE and NCPE, where the confidential price often decides the outcome. Hasan Bari, our Founder and Managing Director, is a former NICE HTA Technical Lead and Analyst. We provide pricing and health economic analysis, not legal advice, and work alongside your legal advisers where needed.
References
- Rémuzat C, Urbinati D, Mzoughi O, El Hammi E, Belgaied W, Toumi M. Overview of external reference pricing systems in Europe. J Mark Access Health Policy. 2015;3:27675. doi:10.3402/jmahp.v3.27675 Available from: https://doi.org/10.3402/jmahp.v3.27675
- Direktoratet for medisinske produkter (DMP). Maximum price (Norway) [Internet]. Oslo: Direktoratet for medisinske produkter (DMP); [date unknown] [cited 2026 Oct]. Available from: https://www.dmp.no/en/public-funding-and-pricing/pricing-of-medicines/maximum-price
- Department of Health, Health Service Executive and Irish Pharmaceutical Healthcare Association. Framework Agreement on the Supply and Pricing of Medicines 2026-2029 [Internet]. Dublin: Government of Ireland; 2026 [cited 2026 Oct]. Available from: https://assets.gov.ie/static/documents/84296242/IPHA_FASPM_Agreement.pdf
- Vogler S, Zimmermann N, Babar ZU. Price comparison of high-cost originator medicines in European countries. Expert Rev Pharmacoecon Outcomes Res. 2017;17(2):221-30. doi:10.1080/14737167.2016.1223543 Available from: https://doi.org/10.1080/14737167.2016.1223543
Sources reviewed October 2026. Methods and procedures change; check the latest agency guidance before submission.