Medicines in Finland are divided into medicines in ambulatory and hospital care. This article describes these two routes in more detail and provides information of the market access options and current pricing system.
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Medicine price formation in ambulatory care
Medicine price components are the wholesale price, the pharmacy margin and taxes. The prices of ambulatory medicines are same in every pharmacy in Finland and the medicinal decree sets the statutory medicine price list, which defines the retail price based on the wholesale price (Table 1 and 2). Price formation is different for prescription and non-prescription medicines. 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 sold without a prescription, 14%; and emollient creams, 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
|Wholesale price, €||Retail price, €|
|0 - 9,25||1,45 x wholesale price|
|9,26 - 46,25||1,35 x wholesale price + 0,92 €|
|46,26 - 100,91||1,25 x wholesale price + 5,54 €|
|100,92 - 420,47||1,15 x wholesale price + 15,63 €|
|over 420,47||1,1 x wholesale price + 36,65 €|
Price formation for non-prescription medicines in Finland
|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 €|
Reimbursement classes for the prescription medicines
Reference: Kela, http://www.kela.fi/web/en/medicine-expenses
Medicinal reimbursement system is designed to enable the acquisition of necessary medicines needed for the treatment of medical conditions at a reasonable cost. The reimbursement starts after a patient has payed 50€ of covered medicines each calendar year. Prescription medicines have three levels of compensation: basic reimbursement (40%), lower special (65%) and upper special reimbursement (100 %). 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, which means that after the medication costs has reached the amount of 605,13 € within a calendar year, one pays 2,50 € for each medicine purchase for the rest of the year.
For the medicinal products that have marketing authorization in Finland, whole sale price and reimbursement are applied from the Pharmaceutical Pricing Board (Hintalautakunta, Hila), which acts under the Ministry of Social Affairs and Health, Deparment for Insurance and Social Security. Patient can receive reimbursement from the medicines, clinical nutritional supplements and basic creams that a doctor have prescribed to the treatment of their disease. Usually reimbursement is obtained directly from the pharmacy purchase.
Reimbursement can be obtained only for those medicines that are meant for the treatment of illness or relieving symptoms. The reimbursement is always tied to the accepted and authorized indication of the preparation.
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 a basic reimbursement. The medicinal product can be approved for special reimbursement when its usefulness and therapeutic value for the treatment of severe and long-term illness compared to treatment alternatives is demonstrated based on user experience and research information. When deciding on special reimbursement, the quality of the illness as well as the therapeutic value, compensatory or corrective mode of action, the necessity and the economy of the medicinal product have been sufficiently demonstrated based on the user experience and research information.
The decision on the special reimbursement of a medicinal product may also be limited only to a particular form or degree of illness.
(effective 1.1.2017-31.12.2019), Health Insurance Act, chapter 6, section 6 a § (9.12.2016/1100)
New drugs for unmet medical needs are constantly entering the market. Typical for these types of drugs are high price, small user group and limited amount of knowledge available regarding the benefits of the new drug in respect to costs. Fair and reasonable allocation of the restricted resources require evidence-based decision making. In the case of orphan medicines this is challenging as there is only limited amount of research-based evidence available due to small patient numbers available for clinical trial recruitements. For this reason, new risk sharing model, namely conditional reimbursement, was taken in the use in Finland 1.1.2017 (Pelkonen, Sic! Nro 4, 2016; Health Insurance Act).
As a part of conditional reimbursement decision is the agreement between the Pharmaceutical Pricing Board and the Marketing Authorization Holder, which defines the division of responsibilities between uncertainties associated with the health benefits of the product, its cost-effectiveness, cost or other similar factors, as well as monitoring the implementation of the agreement and the effects of termination of conditional reimbursement. If the marketing authorization holder has an obligation to repay the refund as specified in the contract, the reimbursement fee will be paid to the Social Insurance Institution’s Health Insurance Fund in accordance with the criteria specified in the agreement. The Social Insurance Institution is responsible for the implementation of the recovery fee.
The conditional reimbursement and reasonable wholesale price of the medicinal product may be accepted together for up to a five year period. At the end of the conditional reimbursement, the reimbursement and the wholesale price shall cease unless reimbursement and wholesale price have been approved before the deadline as provided for in the Act. If expansion or special reimbursement is applied for the medicinal product during the term of the conditional reimbursement, the conditional reimbursement will cease when the new decision is valid.
Learn about conditional reimbursement from the interview with CEO Jarmo Hahl, Medaffcon Oy: video interview with Jarmo Hahl
Confidential (Risk-Sharing) Agreement process
Risk-Sharing Agreements, RSAs have become popular in the western high-income societies in the last ten years . 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 . 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 , however there is very little or no data of their use in Finland. Medaffcon conducted an anonymous survey in 2017 about experiences with and attitudes toward confidential discounts in Hospitals in our country. It seems that despite a slower start than in most other countries, RSA’s are now in place in most of the hospitals that participated in our study, though some had only recently begun to use them.
The RSA process consists of building (Figure 1.) and executing phases (Figure 2.).
Figure 1. Process for building the RSA
Figure 2. Process for executing the RSA
Learn more about Risk-Sharing Agreements (RSA): video interview with Pekka Männistö
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.
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).
Picture 1. Hospital procurement rings in Finland and their current competitive bidding situation
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.
Picture 2. The hospital tendering process