The 2004 Priority Medicines Report included a background paper on the “Approach to the Valuation and Pricing of Future Medicines” which particularly looked for approaches for low- and middle-income countries and proposed differential pricing as a possible way forward. The focus of this background paper is broader, as the impact of current pricing and reimbursement practices in Europe on pharmaceutical innovation will be discussed. In this
report, new developments are presented with regard to value assessments, pricing and reimbursement policies, processes and initiatives, and evidence about existing practices on whether they are able to enhance innovation will be assessed. The focus of this background paper will be on Europe. However, developments in the “rest of the world”, both other highincome and middle- and low-income countries will be considered as well. This background paper discusses three main themes: the first part of this paper discusses how value and innovation are determined in the context of European countries, and analyses how system and policy features could contribute to aligning different policy objectives. The second theme of this paper addresses how price and volume are managed in European countries. In the third part of this paper the different networks and infrastructures in Europe are discussed, including the way in which they could contribute to enhancing innovation. In the conclusion of this paper, a number of research priorities are identified that could enhance our knowledge of pricing and reimbursement policies and the way they could impact innovation.