Evaluating pharmaceutical external reference pricing regulation in EU : a hybrid resource / agent modelling and simulation approach

Student thesis: Doctoral Thesis

Abstract

The aim of this research is to evaluate the impact of the pharmaceutical pricingregulation in the EU in relation to drugs access, affordability and availability. It alignswith the call of the Council of the European Union (2016) and corresponds also to the call regarding the need for use of dynamic simulation methods for the analysis of healthcare system interventions (Roberts 2015). The methodological approach of my research is related to application of a hybrid qualitative and quantitative system dynamics and agent-based simulation modelling. This approach is employed for the evaluation of the External Reference Pricing (ERP) regulation effect on equitable access, availability, and affordability of drugs on the cardiovascular pharmaceutical market in EU. The research is nested in a rich theoretical paradigm, capable of supporting the hybrid simulation modelling approach. This paradigm integrates the Resource-dependence Theory and Resource-based Theory, Behavioural Decision Theory, and Anticipatory Systems Theory. It fills practical, methodological and theoretical gaps in relation to the research topic. My PhD’s main contribution is connected to both methodological and practical aspects of developing a novel problem structuring method, Resource Agent Maps (RAM), and using that method for qualitative analysis and as a conceptual validation and hybridization procedure for designing a hybrid simulation evaluation of the ERP regulation effects. The ERP analysis demonstrates that applying a RAM approach can enable a comprehensiveevaluation (taking account of both resource-feedback and agent-based perspectives) ofthe ERP effect on drug equitable access, affordability and availability. In addition, theanalysis extends previous research on the ERP, helping to overcome previous limitations (Toumi et al., 2014, Vogler et al. 2015). Main insights from the ERP regulation evaluation are that the ERP alone has no effect on drug access delay (access criterion). On the contrary, it provides an attractive route for propagation of the highest price at the first country of launch to other referencing countries. Other factors like mandatory official price discounts can have effects on delays in local markets, which could interfere with the ERP tool set of rules. Also, ERP alone has no price decrease (affordability criterion) effect for on patent drugs or any drug in a monopolistic market. Price decrease is an effect mainly from local price competition intensity, which the ERP regulation transfers to other reference basket countries, depending on reference price calculation formula and reference country basket composition. ERP can have effect on drug market exits (availability criterion) for off patent innovative and generic medicines, depending on pharmaceutical firms’ pricing strategies and on the indirect effects of price competition, local prescribing regulation and parallel trade.
Date of Award22 May 2023
Original languageEnglish
Awarding Institution
  • University Of Strathclyde
SupervisorSusan Howick (Supervisor) & Alec Morton (Supervisor)

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