Cover: Association of Reference Pricing with Drug Selection and Spending

Association of Reference Pricing with Drug Selection and Spending

Published in: New England Journal of Medicine, Volume 377, Number 7, pages 658-665. doi: 10.1056/NEJMsa1700087

Posted on Sep 28, 2017

by James C. Robinson, Christopher M. Whaley, Timothy T. Brown


In the United States, prices for therapeutically similar drugs vary widely, which has prompted efforts by public and private insurers to steer patients toward the lowerpriced options. Under reference pricing, the insurer or employer establishes a maximum contribution it will make toward the price of a drug or procedure, and the patient pays the remainder.


We used difference-in-differences multivariable regression methods to analyze changes in prescriptions and pricing for 1302 drugs in 78 therapeutic classes in the United States, before and after implementation of reference pricing by an alliance of private employers. We assessed trends for the study group relative to those for an employee group that was not subject to reference pricing. The study included 1,122,741 prescriptions that were reimbursed during the period from 2010 through 2014.


Implementation of reference pricing was associated with a higher percentage of prescriptions that were filled for the lowest-priced reference drug within its therapeutic class (difference in probability, 7.0 percentage points; 95% confidence interval [CI], 4.0 to 9.9), a lower average price paid per prescription (-13.9%; 95% CI, -23.8 to -2.7), and a higher rate of copayment by patients (5.2%; 95% CI, 0.2 to 10.4) than in the comparison group. During the first 18 months after implementation, spending for employers was $1.34 million lower and the amount of copayments for employees was $0.12 million higher than in the comparison group.


Implementation of reference pricing was associated with significant changes in drug selection and spending for a population of patients covered by employment-based insurance in the United States.

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