Medicines reimbursement savings in 2017 and Finnish risk-sharing model regarding reimbursable medicines

The budgeted cut in medicines reimbursement expenses payable from the national health insurance is 10% in 2017. The cuts will amount to 134 million euros, constituting one element in the overall savings in public spending, targeted at core areas of the Finnish society.

From the perspective of the pharmaceutical industry and the entire reimbursement system administered by the National Insurance Institution Kela, the savings are huge.  The earlier Kela reimbursement savings, e.g. those imposed as of the beginning of 2016, must be added to the 2017 figures.

The Ministry of Social Affairs and Health STM was responsible for the preparation of the savings decision and collaborated with the pharmaceutical branch stakeholders. The collaborative preparation work helped to identify means that are more balanced for the patients, the society and the pharmaceutical branch actors than they have been in the past. The PIF objective was to implement the savings so that they would not significantly weaken the PIF member companies’ possibilities in novel medicine development work.

Savings measures and their impacts on PIF member companies

The savings measures with a direct impact on the industry include the promotion of the price competition between the pharmaceutical products, the measures to further rational use of medicines and the introduction of risk-sharing agreements.

The promotion of price competition materialises through four different mechanisms:

  • In the generic reference price system, each reference group is imposed a price corridor which remains in force for 3 months at a time, and the related products can be substituted by the pharmacy within the set price variation range. The products in question are grouped in the interchangeable product list issued by the Finnish Medicines Agency Fimea.

    The current competition mechanisms within the Finnish reference price system do not operate optimally, and the prices of generics took a clear upward turn in 2011.  
     

As of the beginning of the year 2017, the variation range, or the so-called price corridor, of the prices in a reference group, will be narrower, curtailed from the current 1.5—2 euro to 0.5 euro. The change will contain the growth rate of the generics prices.  Starting from the beginning of 2016, the pharmacies have already had the obligation to give the patients more information on the price differences of interchangeable medicines.  These combined measures are expected to boost generic price competition.

The change will also impact PIF member companies with products included in the reference price system. PIF will support all mechanisms geared to promote the price competition in the generic reference price system. The savings will target older products which can be seen as an acceptable measure in terms of innovation policy.

  • In the biological medicines category, the price competition measures will be targeted at physicians and price regulation. Substitution by pharmacies will not be introduced in Finland.

As of the beginning of 2017, physicians are encouraged to prescribe the most inexpensive product if there is a biosimilar available for the original biological medicine.  The year 2017 will see a new price rule regarding the first reimbursable biosimilar whereby its acceptable reimbursable price cannot exceed 70% of the adopted list price of the original product. Once the biosimilar is launched, the list price of the innovative medicine will be re-examined.  

These savings measures will impact the PIF member companies in different ways, depending on their selection of biological medicines and biosimilars. PIF supports the measures taken to promote the price competition of biological medicines and biosimilars. The competition starting after the expiry of the patent can boost the use of the active substance in question, and the savings potentially achieved through the competition will increase the opportunities to introduce novel medicines at a more rapid rate. (See additional information)

 

  • Parallel import and parallel distribution products will be promoted so that these products, so far outside the reference price system, would also initiate a reference group. In April 2017, the first reference group can be established as soon as the first parallel import (PI) product /parallel distribution product has its reimbursement status approved and enters the market.

 

After the beginning of April 2017, a chemical or biological original product can find itself in the reference price system with the PI product irrespective of whether the patent of the original innovative product is still in force or not.

PIF is opposed to setting up a reference price group on the basis of a PI/parallel distribution product since the entry of patented medicines in the reference price competition regime will hamper the implementation of the Health Sector Growth Strategy. Moreover, the change will make it more difficult for the companies to predict their future operations, adding to drug shortages and creating overlapping bureaucracy (See additional information).

 

  • The substitutability of antiepileptics (ATC group N03) by the pharmacies is extended for indications other than epilepsy. In the case of epileptic patients, the pharmacies must not make any substitutions of the medicines. As of the beginning of 2017, the antiepileptics used for other indications will be included in the generic reference price system once the basic patent of the products has expired and there are reimbursable generic competitors on the market.

    Substitutability does not apply to the indications protected by the so-called second medical use patent, and the generic therefore has no marketing authorisation for the indication in question.

    PIF supports the model protecting the second medical use patent.

The decrease of unnecessary use of medicines and medicines waste is a significant and constructive savings measure from the pharmaceutical industry's perspective. This objective is targeted through various measures promoting rational use of medicines, such as increasingly favouring small starter packs at the early stages of long-term medication as well as limiting the dispensing of medicines that cost over 1,000 euro (retail price) a month to selling only one month’s medicines instead of the normal three months. As regards the dispensing intervals of medicines in the basic reimbursement category, a stricter time control is also imposed.

These changes will affect different company types in an even manner. PIF supports mechanisms that promote the rational use of medicines and reduce their unnecessary use.  

Patient’s share of the savings

As a result of lower medicines prices or diminished medicine use, most savings measures lead to a decrease in the medicines expenditure paid by Kela and by the patients.   However, the patient overall share will be increased through transferring the diabetes medicines other than insulin products from the upper (100%) to the lower special reimbursement category (65%).  Insulin products remain in the upper special reimbursement category.  In the legislative bill, the change has been motivated, among other arguments, by the fact that the reimbursements payable to type II diabetes patients would be equal to those obtained by the patients using medicines for cardio-vascular diseases. 

This change will impact the PIF member companies in various ways. However, it is neutral from the perspective of the companies because the medicines in mutual competition remain in the same reimbursement category.

Finland will introduce risk-sharing agreements in the reimbursement system

As of the beginning of 2017, there will be a new risk-sharing agreement related to the outpatient medicines reimbursable through the health insurance, the so-called adaptive reimbursement.

The implementation of the risk-sharing agreement introduces a new option for managing the uncertainty related to the reimbursability of novel medicinal products.

An element of the overall savings package, the procedure will also speed up the reimbursability decisions on novel medicines, and their new indications.  The possibility to negotiate on the risk-sharing agreement supports the Finnish innovation policy and the objectives of the Health Sector Growth Strategy outlined in 2014.

The agreement procedure will first be experimented with on the basis of a temporary three-year act.  Access to the system will be very limited due to scarce resources of the authorities. During the experiment, the functioning of the reform is followed, also looking at eventual needs of amendment and resourcing. (See additional information)