International Reference Pricing (IRP): Foundations, Shifts, And What To Do Next

By David Ringger, Ph.D., Director, Global Market Access & Pricing; and Diane Smith, Ph.D., Director, Reimbursement & Policy Insights

International Reference Pricing (IRP) has long served as a cornerstone policy tool for governments seeking to control pharmaceutical costs, improve affordability, and expand patient access to medicines. By benchmarking drug prices against those in other countries, IRP enables payers to anchor pricing decisions within a global context. Its adoption accelerated in the European Union (E.U.) following the establishment of the European Medicines Agency in 1995, alongside the growth of parallel trade, which further interconnected national pricing systems.

Today, IRP is deeply embedded in global pricing frameworks, with more than 75 countries relying on it in some form. However, the policy is once again under heightened scrutiny. A wave of reforms aimed at mitigating some of IRP’s unintended consequences—such as launch delays, price convergence, and reduced incentives for innovation—has prompted renewed debate. At the same time, several markets are experimenting with alternative pricing and reimbursement models designed to increase flexibility and better reflect local value assessments.

This renewed attention is further intensified by policy developments in the United States (U.S.), including the introduction of a Most Favored Nation (MFN) model, which draws directly on international price comparisons. As some countries reconsider or move away from traditional IRP approaches, stakeholders across the healthcare ecosystem are reevaluating a fundamental question: how does reference pricing truly impact affordability, patient access, and the long-term sustainability of pharmaceutical innovation?