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Reference Pricing Clauses In US COVID-19 Contracts Leave Drug Industry Vulnerable

 
• By Sarah Karlin-Smith

Innovation and price controls can coexist in the United States, COVID-19 contracts show. But drug pricing experts also acknowledge the unique circumstances of COVID-19 could make such contracts hard to replicate and argue that reference-pricing strategies may have limited ability to lower prices.

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COVID-19 vaccine contracts contain international reference pricing clauses • Source: Shutterstock

At least three pharmaceutical companies agreed to reference pricing language in US contracts for COVID-19 vaccines, with one company even accepting language that could give the government unilateral discretion to “determine a fair and reasonable price.”

Such contract clauses weaken some of the drug industry’s core arguments against the use of reference pricing and price controls,...

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