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Reference Pricing in Azerbaijan: Structure, Process and Key Implications for Pharmaceutical Market Access

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Reference pricing is the central mechanism used by Azerbaijan’s Ministry of Health (MoH) and the Tariff Council to regulate medicine prices. The system ensures transparency, affordability and alignment with international price levels, while creating predictable conditions for pharmaceutical manufacturers entering the Azerbaijani market.

This article provides a detailed overview of how reference pricing works, how prices are calculated and approved, and what companies should expect when launching or registering medicines in Azerbaijan.

1. Regulatory Framework and Authorities

Reference pricing in Azerbaijan is governed by several key public bodies:

Ministry of Health (MoH) / Analytical Expertise Center (AEC)

  • Evaluates registration dossiers

  • Verifies pricing documentation

  • Provides recommendations for regulatory approval

Tariff Council of the Republic of Azerbaijan

  • Final authority for the approval of medicine prices

  • Publishes the official list of regulated wholesale and pharmacy prices

State Service for Antimonopoly and Consumer Market Control

  • Oversees compliance with pricing rules

  • Monitors behavior of wholesalers and pharmacies

Since 2015, Azerbaijan has operated a fully regulated pricing system, covering both prescription (Rx) and most over-the-counter (OTC) medicines.

2. Core Principle of Reference Pricing

Azerbaijan applies an External Reference Pricing (ERP) methodology:

the price of a medicine is determined by comparing its price with the prices in a defined basket of reference countries.

Reference Country Basket

Although periodically updated, the basket commonly includes a broad mix of EU countries and regional markets, such as:

  • France, Germany, Italy, Spain

  • United Kingdom

  • Greece, Portugal, Poland, Hungary, Bulgaria, Romania

  • Additional neighboring markets may be reviewed depending on dossier justification

Main Pricing Rule

Azerbaijan establishes the maximum wholesale and pharmacy selling prices based on the country of manufacture and ERP analysis. Prices are adjusted for:

  • Manufacturer’s ex-factory price

  • International logistics and customs considerations

  • National wholesale and retail margins, calculated according to Cabinet of Ministers Decree №209 (June 3, 2015)

This creates a clear, formula-driven pricing structure with minimal room for variation.

3. Price Calculation Method

Step 1 — Manufacturer Price Verification

The Marketing Authorization Holder (MAH) submits:

  • Ex-factory price certificates

  • Invoices or declarations from reference countries

  • CPP or proof of registration/marketing (where applicable)

Step 2 — ERP Benchmarking

The Tariff Council evaluates:

  • The lowest available price in the reference basket

  • Prices for identical strengths, pharmaceutical forms and pack sizes

  • Whether the product is marketed or only registered—a critical factor for the Recognition Procedure

Step 3 — Setting National Prices

Wholesale margin - Calculated as per Cabinet of Ministers Decree №209, based on ex-manufacturer price

Retail margin- Calculated as per Cabinet of Ministers Decree №209, based on ex-wholesaler price

VAT - 18% VAT applied

This results in a transparent, standardized pricing formula, ensuring that all market players operate under identical rules.

Step 4 — Tariff Council Approval

The Tariff Council:

  • Confirms the final maximum selling price

  • Publishes it on the official Tariff Council portal

  • Makes the price binding for all pharmacies, distributors and wholesalers

4. Price Revisions & Re-Evaluations

Azerbaijan may revise or re-evaluate prices in the following cases:

  • Exchange rate fluctuations exceeding official thresholds

  • Manufacturer request for upward or downward correction (rare and strictly justified)

  • Emergence of new reference country pricing data

  • Changes in packaging, pack size or pharmaceutical form

  • Recognition procedure dossiers requiring alignment with EU-marketed packs and prices

 

5. Implications for Pharmaceutical Companies

Advantages

  • Predictability: Clear, rule-based pricing environment

  • Transparency: ERP methodology minimizes subjectivity

  • Market trust: Regulated pricing prevents excessive retail markups

  • Equal competition: Uniform rules for all market entrants

Challenges

  • Lowest-price rule may significantly restrict margins

  • If the product is not marketed in the manufacturing country, the Recognition Procedure becomes impossible—a frequent issue for EMA-approved but non-launched products

  • Limited flexibility to adjust prices based on clinical value, innovation or unmet medical need

  • Packaging and labeling challenges when the home market does not commercialize the product

 

Reference pricing in Azerbaijan creates a transparent and predictable environment for pharmaceutical manufacturers, but it also requires careful planning and accurate documentation. Companies must understand the ERP methodology, the lowest-price rule, pack requirements and regulatory pathways to ensure successful market access.

Manufacturers who prepare early and collaborate with experienced local partners can navigate the system efficiently and ensure timely, sustainable access for patients.

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