Reference Pricing for Drugs: Is It Compatible with U.S. Health Care?

Reference pricing—in which insurers cover only the low-cost, benchmark drugs in a therapeutic class and patients pay the difference in price if they want higher-cost alternatives—is being used in Canada, Germany, and elsewhere in an attempt to control spending on prescription drugs. The technique has more commonly been used by insurers for such items as eyeglasses and wheelchairs, and its application to prescription drugs is relatively novel. A new study supported by The Commonwealth Fund explores arguments for and against reference pricing, and discusses how this approach might work in the United States.