Medicines prices slightly down - price competition slackening

Lääketeollisuus ry

The pharmaceutical wholesale prices decreased by 1.2 percent and those of reimbursable prescription prices by 1.8 percent from the previous year. The drop is due to the price regulation imposed by the authorities as well as to the price competition boosted through the reference price system, among other public measures. The more detailed analysis of the wholesale price index suggests that the price competition within the reference price system is fading.

The prices of generics included in the reference price system rose by 2.4 percent on average while the prices of original innovative products dropped by 9.1 percent.

The wholesale prices of all outpatient care medicines were 1.2 percent down in 2016  from the previous year’s level.  The prices of the reimbursable medicines were 1.8 percent lower, with the major decrease shown by the medicines in the upper special reimbursement category (-3.7%). The severe diseases of the upper special reimbursement category include, for example, cancer and diabetes treated with insulin.  

The prices of medicines in the basic reimbursement category decreased by 1.3 percent while those in the lower special reimbursement category were slightly higher (0.8%) than the year before. The patient receives a 40 percent basic reimbursement for all prescription-only medicines with an adopted reimbursement status. The lower special reimbursement status applies to medicines such as cholesterol-lowering and antihypertensive medicines.

The prices of self-care medicines and products not included in the reimbursement system were somewhat higher than before.

During the entire index review period, the prices of the medicines in the reimbursement system have decreased annually. Now the change was -1.8% while the average drop from the 2005 prices is 30%.

Price competition within the reference price system dwindling

The price competition of a medicine starts as its patent expires and a generic medicine enters the market. The price competition has been boosted through various measures, such as the reference price system that promotes the demand for the cheapest products. In the reference price system, the patient's maximum reimbursement is based on the reference price while the patient choosing a more expensive product is liable to pay the difference between the higher sales price and the reference price.

A more detailed analysis of the wholesale price index shows that the price competition between the products in the reference price corridor is decreasing. The prices of the original innovative medicines in the reference price system dropped considerably from the previous year (-9%) while those of the generics grew by 2.4% on average. Since the year 2012, the prices of generics have grown by 2.6 percent on average, and a particularly big increase has been recorded in medicines used by large patient groups, such as statins and antihypertensive medicines.

Since the beginning of 2016, the price competition between the products in the reference price system has been promoted through measures such as requiring the pharmacies to provide price advice to support the use of the cheapest products. During the year 2016, however, the intensified price advise did not enhance the competition.

Price index reflects average change in prices

The pharmaceutical wholesale index is calculated by Statistics Finland on assignment by Pharma Industry Finland PIF. The index has been produced for over two decades and its follows the price trend of all medicines that have been available at the pharmacies for at least two years. The material comprises over 6000 medicines packages. In addition to the price, the index also takes the sales volumes of packages into consideration and describes the average change in prices.

The reimbursable medicines have been assigned a maximum price, considered to be reasonable and adopted by the Pharmaceutical Pricing Board. The price competition takes place under this maximum price level. The price of reimbursable medicines can never be in excess of the reasonable maximum price.

29. May 2017