Prices of novel medicines reflect development costs
The medicines pass a long way from research to the pharmacy shelves. Although innovations are protected by patents, the development phase of a medicinal product eats out at least 10 to 12 years into the patent period.
In addition to the research and development costs, the expenses incurred for unsuccessful projects must also be covered during the patent period. This is another factor influencing medicine prices.
It costs a billion euro to bring one medicine from its molecule stage to the market. Strictly regulated research can stop at any step of the way, often on the final stretch. At that point a large part - if not all - of the money invested in research goes wasted.
The profits from pharmaceutical sales are re-invested in research.
All Finnish medicines prices go down
When a new medicine enters the Finnish market, an application is normally made to include it in the reimbursement system. The price authorities will ensure that the price applied for the product is reasonable.
The initial price of the medicine is often valid for the maximum of one year – and that is the highest its price ever gets. In time, the use of the new medicine increases as doctors gain more experience on the product. Already before the patient numbers have started to grow, the price of the medicinal product has been decreased at least once or twice.
Pharma Industry Finland PIF has been following wholesale prices for a long time. The index ordered from Statistics Finland shows that the prices of medicines, especially those in the reimbursement system, continue to diminish from year to year.
The price decrease is mainly caused by price competition but also the temporary character of adopted price decisions. The authorities have several means to ensure that the prices remain reasonable or at least do not go up.
Medicine prices are the same throughout the country
In Finland, the patient always pays the same sum for the medicine, irrespective where it is bought.
Medicine price components are
- the wholesale price
- the pharmacy margin
The statutory medicine price list defines the retail price based on the wholesale price.
Self-care medicine prices are similarly the same in every pharmacy. They are the only medicines that have more or less followed the consumer price index.