Generic substitution of prescription drugs

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Featured in half-yearly report: G-politik in Industrieländern 2

Abstract

The story of generic substitution in Finland continues: Pharmacies favour certain products in exchange to receive financial benefits.

Purpose of health policy or idea

Political and economic background

The generic substitution of prescription drugs was introduced in Finland on April 1, 2003  (see (1)2003). While the reform has effectively reduced the prices of non-patented drugs by increasing competition (see (2)2003), the pharmaceutical industry has been very critical against it and requested restrictions for the scope of the substitution (see (3) 2004). However, the Government has not responded to these initiatives.

In March 2005, the leading daily newspaper in Finland (Helsingin Sanomat) reported that pharmaceutical companies and pharmacies have made contracts on unofficial wholesale price discounts or other financial benefits in return for favouring the products of the company in the substitution. These contracts may not be illegal but they are against the principles of generic substitution and the pharmaceutical pricing system. The conflict arises from the following issues:

• The pharmacies in Finland are privately owned but their foundation, location and prices are strongly regulated.
• The maximum wholesale prices in Finland are nationally defined for each pharmaceutical substance by the Pharmaceutical Pricing Board. However, pharmaceutical companies can sell their products with lower wholesale prices if they want.
• While the formula to calculate retail prices from the wholesale prices is defined by the legislation, the profit level of the pharmacies also becomes more or less regulated. Accordingly, in return for their protected market situation the pharmacies are in principle expected not to make excessive profits from prescription drugs.
• The prescription drug products must have uniform wholesale and retail prices across the country
• According to the rules of generic substitution, if the drug is more expensive than a certain defined limit of the maximum price, the drug must be substituted for the product for which the price is below the limit. In these cases the pharmacies decide for which generic alternative the drug is substituted. For most common pharmaceuticals, many generic alternatives lie below the limit of the maximum price.
• The pharmacies are not obliged to stock all generic alternatives. When a doctor has prescribed a drug priced below the limit but the pharmacy does not have the drug in stock, the drug can be substituted for one which the pharmacy stocks and which is also priced at below the maximum limit.

In this situation, pharmaceutical companies have an incentive to make contracts with pharmacies on the favourable treatment of their products in stocking and generic substitution. In return, pharmaceutical companies have claimed to have offered discounts and other financial benefits.

 

Soon after the first report on the contracts, the Ministry of Social Affairs and Health ordered the National Agency of Medicines to explore which kind of contracts have been made between pharmacies and pharmaceutical companies and whether they are in conflict with the current legislation and regulations.

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Initiators of idea/main actors

• Privatwirtschaft, privater Sektor

Actors and positions

Privatwirtschaft, privater Sektor
pharmaceutical companies and pharmacies	sehr unterstützend		stark dagegen

Actors and influence

Privatwirtschaft, privater Sektor
pharmaceutical companies and pharmacies	sehr groß		kein

Positions and Influences at a glance

Expected outcome

References

Reform formerly reported in

Generic Substitution of Prescription Drugs Process Stages: Umsetzung, Gesetzgebung

Selecting drugs to a higher reimbursement category Process Stages: Umsetzung, Gesetzgebung

Restrictions for generic substitution Process Stages: Strategiepapier, Idee

Author/s and/or contributors to this survey

Lauri Vuorenkoski

Empfohlene Zitierweise für diesen Online-Artikel:

Lauri Vuorenkoski. "Generic substitution of prescription drugs". Health Policy Monitor, April 2005. Available at http://www.hpm.org/survey/fi/a5/6