Reference Pricing

Definition

Health Economics

  • A reimbursement mechanism (usually for pharmaceuticals) whereby a third party payer or insurer determines the maximum price at which it will reimburse the supplier (the reference price). The consumer pays the difference between the reference price and the market price. The reference price is often set at the price of the lowest priced product in the therapeutic group or is the weighted average of the lowest prices in the market. The market prices are set at the discretion of the supplier.
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