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Money and Medicine The rationale for ERP is straightforward — to ensure that the maximum price paid for a drug is not excessive relative to its price in comparable countries. (Photo: Shutterstock)

External reference pricing that ties U.S. prescription drug costs to those in other countries may save money in the short term, but these savings would be difficult to sustain. The Commonwealth Fund reviewed published literature and technical reports to determine the viability of external reference pricing, or ERP.

“The impacts of ERP are difficult to isolate from those of concurrent pricing policies, and evidence on the durability of savings is mixed,” according to its report. “Industry strategies to `game’ ERP, such as delaying the launch of drugs in particular markets, are intended to keep prices high. While initial ERP savings in the United States could be substantial, pharmaceutical companies may employ similar tactics that could erode savings.

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