LIF Calls for Review of Parallel-import Clauses in Side Agreements

The trade association for the research-based pharmaceutical industry in Sweden (Sw. Läkemedelsindustriföreningen or “LIF”) has written to the Ministry of Social Affairs calling for the Dental and Pharmaceutical Benefits Agency (“TLV”) to investigate how parallel-import (“PI”) clauses can be abolished.

In Sweden, decisions on pricing and the reimbursement of pharmaceuticals need to be in line with the so called ethical platform, which consists of three principles: the human value principle, the need and solidarity principle, and the cost-effectiveness principle. This is called value-based pricing. However, this has changed since 2015, without any amendments to legislation, making it possible for pharmaceutical companies and Swedish regions to enter into side agreements on discounts for the regions. Discount rates are secret. In a report from April 2020, TLV stated that its work on developing value-based pricing shows that large savings can be achieved through reviews of reimbursement in combination with side agreements between companies and regions.

However, these side agreements include a PI clause. Under a PI clause, the original company pays a discount to the region regardless of whether the company itself has sold the product or has entered the Swedish market via parallel import through another company. The PI clause ensures that the region’s cost reduction remains in place, regardless of whether the product is imported directly or in parallel.

LIF agrees with TLV’s assessment that savings can be achieved by these side agreements. At the same time, it is LIF’s experience that companies’ incentives for entering into side agreements with the regions have been reduced as a result of side agreements containing PI clauses.

More specifically, LIF now wants TLV to investigate the conditions for applying for reimbursements to be granted only if the medicinal product meets the requirements of the Pharmaceutical Benefits Act on its own merits, regardless of whether the product is directly imported or imported in parallel.

LIF also wants TLV to clarify how an application for reimbursement for a parallel-imported pharmaceutical is assessed when the reimbursement for a directly imported medicinal product is combined with a side agreement with the regions that does not include parallel-imported pharmaceuticals.

This issue has been under discussion since 2016, when LIF and SKR (the Swedish Association of Local Authorities and Regions) sent a joint letter to the Swedish government. LIF now says the issue requires urgent attention.

This issue continues to be debated and we will follow developments closely.