Pharmaceutical Pricing and Market Access of Medicine Products in Finland

Medicine price formation in ambulatory care

Medicine price components are the wholesale price, the pharmacy margin and taxes. The prices of ambulatory prescription medicines are same in every pharmacy in Finland and the medicinal decree and government act sets the statutory medicine price list, which defines the retail price based on the wholesale price (Table 1). Price formation is different for prescription and non-prescription medicines (Table 1 and 2). The government act states that the retail price for non-prescription medicines sold from community pharmacy has to be at least the pharmacy purchase price (wholesale price) and at most according to the list presented below (Table 2). The prices shown in the databases are based on price notifications submitted by pharmaceutical companies. If a particular product is not reimbursable, the pharmaceutical company can price it freely. The price of reimbursable products may not be higher than the price confirmed by the Pharmaceuticals Pricing Board.

Medicine prices are usually the retail price including value-added tax (VAT). The VAT rates are as follows: medicines, 10%; clinical nutrients and basic ointments when they are reimbursed, 10%; clinical nutrients sold without a prescription, 14%; basic ointments sold without prescription, 24%.

Prices are updated on the 1st and 15th of the month. The same prices apply in all Finnish pharmacies

When a product is dispensed on prescription, a €2.39 dispensing fee (incl. VAT) is added to the price at the pharmacy. The price at the pharmacy is therefore higher than the one shown in the Medicinal Products Database. If the dispensed product is reimbursable, the customer is paid a reimbursement also for the dispensing fee.

Clinical nutrients and emollient creams can be sold by pharmacies also without a prescription. The price at the pharmacy will be different from that shown in the Medicinal Products Database, because the pharmacies are free to price these products.

Price formation for prescription medicines in Finland

Prescription medicines
Wholesale price, €	Retail price, €
0 – 7,49	1,42 x wholesale price
7,50 – 39,99	1,35 x wholesale price + 0,52 €
40,00 – 99,99	1,24 x wholesale price + 4,92 €
100,00 – 399,99	1,15 x wholesale price + 13,92 €
400,00 – 1 499,99	1,10 x wholesale price + 33,92 €
1 500	1 x wholesale price + 183,92 €

Price formation for non-prescription medicines in Finland

Non-prescription medicines
Wholesale price, €	Retail price, €
0 – 9,25	1,5 x wholesale price + 0,50 €
9,26 – 46,25	1,4 x wholesale price + 1,43 €
46,26 – 100,91	1,3 x wholesale price + 6,05 €
100,92 – 420,47	1,2 x wholesale price + 16,15 €
over 420,47	1,125 x wholesale price + 47,68 €

Reference:

Medicinal decree: https://www.finlex.fi/fi/laki/ajantasa/1987/19870395#P58

Government act: https://www.finlex.fi/fi/laki/ajantasa/2013/20130713

Reimbursement of medicines in ambulatory care

Medicinal reimbursement system is designed to enable the acquisition of necessary medicines needed for the treatment of medical conditions at a reasonable cost. For the medicinal products that have marketing authorisation in Finland, confirmation of a reasonable wholesale price and reimbursement status are applied from the Pharmaceuticals Pricing Board (PPB, Lääkkeiden hintalautakunta, Hila), which acts under the Ministry of Social Affairs and Health, Deparment for Insurance and Social Security. The reimbursement is always tied to the accepted and authorized indication of the preparation.

Patient can receive reimbursement from the medicines, clinical nutritional supplements and basic ointments (for chronic skin disease) that a doctor has prescribed for the treatment of their disease. Thus, reimbursement can be obtained only for those medicines that are meant for the treatment of illness or relieving symptoms. Usually reimbursement is provided directly at the pharmacy during the purchase of the medicine.

Reimbursement classes for prescription medicines

Reference: Kela, http://www.kela.fi/web/en/medicine-expenses

The patient starts receiving reimbursement after paying 50 € (initial deductible) of covered medicines each calendar year. Prescription medicines have three levels of compensation: basic reimbursement (40%), lower special reimbursement (65%) and higher special reimbursement (100% of the amount that exceeds co-payment 4,50€). Compensation levels are based on the severity of the disease and the necessity for medical treatment. An important part of the reimbursement system for those who have extensive medication is the maximum annual limit on medicine expenses. This means that after the medication costs during a calendar year have reached the maximum annual limit (592,16 € during the year 2023), for the rest of the year the patient pays 2,50 € for each medicine purchase.

Special reimbursement for a medicinal product may be granted for severe and long-term illnesses as defined in the Government Decree. A prerequisite for special reimbursement is that the medicine first obtains basic reimbursement status. When deciding on special reimbursement status, the PPB will consider for example the type of the disease as well as the therapeutic necessity and value of the product in the treatment of this severe and long-term illness, the replacement or remedial mode of action of the product in addition to the the cost-effectiveness and expected costs for the reimbursement system resulting from the applied special reimbursement. The medicinal product can be approved for special reimbursement when there is sufficient experience of use and research evidence to support the application.

The decision on the special reimbursement of a medicinal product may also be limited only to a particular form or degree of illness.

Conditional reimbursement

New drugs for unmet medical needs are constantly entering the market. Typical for these types of drugs are high price, a targeted / small patient group and limited amount of knowledge available regarding total costs, cost-effectiveness and/or therapeutic value of these new medicines. The goal of conditional reimbursement aims to control these uncertainties through a confidential agreement process. New pharmacotherapy is the primary group eligible for conditional reimbursement (new active substances and extensions to new significant therapeutic indications).

After Marketing Authorisation holder (MAH) has given a proposal for conditional reimbursement and the PPB considers the product eligible, negotiations are initiated between the PPB and the MAH. If conditional reimbursement is confirmed by the PPB the decision is attached with a confidential agreement between the PPB and the MAH detailing the conditions for monitoring and controlling the uncertainty associated with the medicinal product. So far, all agreements have been financial agreements with payback arrangements to Social Insurance Institution’s Health Insurance Fund in accordance with the criteria specified in the agreement [1]. The Social Insurance Institution is responsible for the implementation.

As with all decisions by the PPB regarding reasonable wholesale price and reimbursement status of a product, the conditional reimbursement status is valid for a fixed period of time. During the validity period the eligibility of a product for conditional reimbursement will be reassessed if the MAH applies for a renewal or extension of the product’s conditional reimbursement status or for special reimbursement status. These applications should already at the time of submission include as a separate document a proposal for continuation of the conditional reimbursement status describing the changes that have happened and the effects they will have on the grounds for a conditional reimbursement status and on the proposed measures to control uncertainty.

Additional information on conditional reimbursement: The Pharmaceuticals Pricing Board’s instructions on conditional reimbursement (https://www.hila.fi/content/uploads/2021/01/Ehdollinen-korvattavuus_ohje-hakijoille_11.3.2021_EN.pdf)

Reference:

[1] Martikainen J, Pelkonen L: Lääkkeiden ehdollinen korvattavuus ja järkevä lääkehoito. Lääketieteellinen aikakauskirja Duodecim, 2020;136(2):200-205.

Confidential (risk-sharing) agreement process

Risk-sharing agreements, RSAs have become popular in the western high-income societies in the last ten years [1]. In the US the institutional payors have been negotiating prices that differ from the official list prices for the last 20 years, however many of these agreements have been direct discounts obtained through purchasing power and can as such not be considered as risk-sharing models per se. The expanding use of more complex, performance-based RSA’s is a stronger current trend in many countries [2]. The increasing use of RSA’s highlights their significance in creating access for new interventions while at the same time mitigating the risk between the payer and the manufacturer and the limitations of the current reimbursement systems.

This process has internationally existed already for several years [3], however there is very little or no data of their use in Finland. Medaffcon conducted an anonymous survey in 2019 about experiences with and attitudes toward confidential RSA processes in Hospital pharmacies in our country. Based on the results of the survey it appears that in increrasing extent RSA’s are considered to be very usefull and in all but one unit there were both performance-based RSA’s and RSA’s that involved providing free treatment periods in place. Nonetheless, the agreement processes are evolving continuously and should take into account the workload of the agreement process for the individual Hospital pharmacies.

The RSA process consists of building (Figure 1.) and executing phases (Figure 2.).

Reference:

[1] Kanavos P, Ferrario A, Tafuri G, Siviero P: Managing Risk and Uncertainty in Health Technology Introduction: The Role of Managed Entry Agreements. Global Policy, 8, Issue S2:84–92, 2017.

[2] Edwards G, Staufer A, Dunlop W: Variations in Stakeholder Preferences between Innovative Pricing Agreement Types Across the EU5. Value in Health, 19(7), A47, 2016.

[3] Morgan SG, Vogler S and Wagner AK: Payers’ experiences with confidential pharmaceutical price discounts: A survey of public and statutory health systems in North America, Europe, and Australia. Health Policy, 121(4):354-362, 2017.

[4] Honkanen H, Snicker K, Ahlamaa J: Lääkkeiden riskinjakosopimukset Suomen sairaaloissa – kyselytutkimus 2019. Suomen Lääkärilehti 2019; 74(49): 2872–2876.

Hospital medicines and tendering process

All hospitals in Finland and their outpatient clinics use medicines intended for hospital use or those also indicated for outpatient use. Hospitals procure all their medicines through competitive bidding. Hospital sales account for about one fourth of the Finnish pharmaceutical market (PIF). Hospitalized patients get medicines free of charge.

The hospital districts and municipalities who are owners of hospitals are covered by the competitive procurement obligation by law. The Act on Public Contracts sets strict terms for the procedures to be followed by the public sector (Laki julkisista hankinnoista ja käyttöoikeussopimuksista, 1397/2016). The buyer decides on the medicine procurements and the conditions to be applied. However, the terms and conditions should be reasonable for the companies involved.

Normally, the hospital districts organize large procurement rings which put out tenders for all medicine procurements. These rings are mostly operated by the five university hospitals and the agreements are made for 2-3 years (Picture 1).

For the competition to work there must be enough competitors and an even distribution of the procurement rounds so that the unsuccessful companies would not face unsurmountable problems (PIF). If such a company is also covered by the obligatory storage liability resulting from the emergency supply legislation, its products will be disposed after the competition since there will no longer be any use for them. The competitive tendering process is described in Picture 2.

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