Further reading on the new pharmaceutical inquiry

Setterwalls has previously reported that the Swedish Government has appointed a new commission of inquiry tasked with analysing and proposing how Swedish state responsibility for medicinal products and vaccines should be expanded, enhanced and organised. In this article, Setterwalls goes into further detail on the tasks of the inquiry and potential proposals.

The special investigator appointed to lead the inquiry is to submit an interim report by 1 June 2027 and a final report by no later than 31 December 2027.

Challenges in the current system

In the terms of reference for the inquiry, it is noted that the current Swedish system for medicinal products and vaccines is fragmented and unequal, with disparities present in access to treatment between different parts of Sweden. The system has evolved gradually through various reforms, resulting in a complex structure in which responsibility, funding and decision-making processes are divided between the Swedish state and the regions in Sweden. A key problem is that the financing system encompasses several parallel arrangements: medicinal products for outpatient care generally fall within the pharmaceutical benefits scheme administered by the Swedish Dental and Pharmaceutical Benefits Agency (TLV), while medicinal products for inpatient care are procured and funded by the regions. Vaccines are mainly procured by the regions within preventive healthcare efforts.

Different processes are also employed when launching new medicinal products. When new medicinal products are to be launched on the Swedish market, the company marketing the medicinal product may submit an application to the pharmaceutical benefits scheme, with the Swedish Dental and Pharmaceutical Benefits Agency conducting a health economic evaluation of the medicinal product’s cost-effectiveness, and decisions apply nationwide.

For medicinal products administered in inpatient care or specialist outpatient care, new medicinal products are launched across the regions via a nationally coordinated process led by the New Therapies Council (NT Council). Unlike the Swedish Dental and Pharmaceutical Benefits Agency, the NT Council is not a government agency but rather an inter-regional collaborative body, so it is not bound by the principle of public access to official records or by administrative law, and its decisions are not subject to appeal. In addition, its recommendations are non-binding, leaving each region to decide on implementation and the conditions thereof. As a result, the same treatment may be launched at different points in time across regions, and patient access may vary depending on regional finances and priorities.

These shortcomings have been identified by several previous inquiries, all highlighting structural problems and unjustified regional differences. At the same time, medical developments have progressed rapidly without the system for managing medicinal products and vaccines keeping pace. This has led to unequal access to treatments and extensive waiting periods before new medicinal products reach patients. Therefore, the Government considers that a more coordinated approach to medicinal products and vaccines is needed in Sweden.

The inquiry’s remit

The overall objective of the inquiry is to establish a uniform, transparent and efficient medicinal products system in Sweden capable of capitalising on medical advances and meeting the increased demands placed on healthcare. The system must also ensure that patients throughout Sweden have timely access to cost-effective and medically justified treatments and vaccinations. To this end, the inquiry will take a holistic approach and examine how expanded and uniform state responsibility can be structured, covering the entire chain – from funding and governance to specific processes for assessing, procuring, launching, subsidising and monitoring medicinal products and vaccines.

The remit of the inquiry includes analysing and proposing how Swedish state responsibility for medicinal products and vaccines should be expanded, strengthened and organised. This includes identifying which government agency or agencies, or other actors, should be responsible for governance and monitoring, and how information sharing and other arrangements should be organised to ensure an effective system. The inquiry will also propose how cooperation between the state, the regions, municipal health and medical care and other relevant actors should be structured and will develop uniform and coordinated national processes for managing medicinal products.

A funding model for expanded and enhanced central government responsibility within the central government budget process

Expanded and enhanced central government responsibility for medicinal products and vaccines could lead to a significant redistribution of healthcare costs from the regions to central government. Today, the regions bear the primary financial responsibility for medicinal products. Shifting this responsibility to the state would fundamentally alter the financial and operational conditions under which the regions plan, prescribe and follow up on the use of medicinal products, and would require a careful review of how cost responsibility, governance and incentives interact across the various levels of the healthcare system.

A key part of the inquiry is therefore to propose a new funding model for expanded and enhanced state responsibility, designed within the central government budget process. The model should be supported by appropriate governance structures, a clear division of responsibilities between the state, the regions and other actors, and a regulatory framework that enables uniform assessments of medicinal products and vaccines across the country. More specifically, the inquiry is to propose a funding model that reflects the transfer of cost responsibility from the regions to the state in a transparent manner that is sustainable in the long term. As part of this work, the inquiry will also outline what changes to the tax system may be necessary to accommodate the reallocation of financial responsibility.

The inquiry will also analyse whether, and if so how, expanded and enhanced state responsibility for the costs of medicinal products and vaccines affects the municipal equalisation system and propose any adjustments needed to avoid a skewed distribution of resources between regions. In addition, the inquiry is to propose how unforeseen cost increases should be managed within a system of expanded and enhanced state funding responsibility without undermining overall budgetary discipline or weakening incentives for the cost-effective and clinically appropriate use of medicinal products. At the same time, it is expressly emphasised that the inquiry’s remit does not extend to proposing changes that would restrict or reduce patients’ entitlement to subsidised medicinal products under the existing pharmaceutical benefits scheme.

Centralised government management of confidential prices for medicinal products and vaccines

As part of the Swedish Dental and Pharmaceutical Benefits Agency’s case handling, tripartite discussions may be held in which the Agency, the regions and pharmaceutical companies jointly address issues of price, subsidy limitations and follow-up conditions. These discussions may result in an agreement between the regions and the companies (known as a side agreement) governing a confidential rebate from the company to the state and the regions, thereby lowering the actual cost of the medicinal product. The arrangement nevertheless involves several challenges, as participation is voluntary for both sides, and the state funds the pharmaceutical benefits but is not a party to the side agreement negotiations. This means that funding responsibility and negotiating mandate are not aligned. The inquiry will therefore examine the conditions for, and propose organisational solutions enabling, centralised state management of confidential prices, with or without agreements, including how the various actors should cooperate and how the regions’ medical expertise and local ties should be utilised. The inquiry will also analyse and propose how this management can be structured, with a view to enabling efficient management of price negotiations and agreements between the state and pharmaceutical companies and will propose how existing agreements should be dealt with during the transition to centralised state management.

Models for risk-sharing and financing

The inquiry will also propose models for risk-sharing and financing that ensure risks and costs are distributed in an appropriate manner while ensuring the system encourages medical innovation.

This is particularly important as the market changes, with more medicinal products aimed at small patient groups at a high cost to the individual. The emergence of precision medicine and advanced therapies such as gene and cell therapies (ATMPs) places new demands on managing confidential prices. A further challenge is that many new medicinal products are approved on the basis of limited clinical documentation and often in early development phases, particularly diseases without treatment alternatives.

According to the Swedish Government, this means that the long-term effect of the medicinal products in clinical use is uncertain. When the cost of a new medicinal product is high and the effect uncertain, this entails a major financial risk for the public sector, a risk that needs to be shared to secure both access and sustainable financing. Traditional financing models in which full payment is made upon delivery of the medicinal product are no longer suitable for these treatments. At the same time, a decision not to pay for the medicinal product due to high cost or uncertain evidence may mean that patients with life-threatening diseases are denied access to potentially life-saving treatments.

Freedom to prescribe and state-controlled subsidy rights

The inquiry will also consider how the freedom to prescribe should be balanced against the state-controlled subsidy system.

The terms of reference note that, under the Swedish Medicinal Products Act (2015:315), licensed healthcare professionals are entitled, within their area of competence, to prescribe medicinal products based on their own assessment of the patient’s medical needs. While this freedom to prescribe is intended to enable care tailored to each patient, it can give rise to challenges when combined with improper management of subsidies.

Incorrect or inappropriate prescriptions issued under the subsidy system place a burden on public finances and undermine confidence in the pharmaceutical system. At present, this concern relates primarily to medicinal products funded by the state, but in a system with expanded and enhanced state responsibility, it would extend to a significantly larger proportion of prescriptions. The issues range from prescribing without medical justification in a criminal context to prescribing patterns that suggest inadequate adherence to clinical guidelines or subsidy restrictions. Where prescription volumes and costs have a direct impact on the state budget, effective mechanisms are required to prevent and address abuse of the system. The inquiry will therefore propose how the state-controlled subsidy system for medicinal products and vaccines may be limited while preserving the freedom to prescribe and will submit the necessary legislative proposals.

Authority to determine the trade margin

Another question for the inquiry is whether the authority to decide on pharmacies’ trade margins should remain with the Swedish Dental and Pharmaceutical Benefits Agency or be transferred to the Swedish Government. Under the current framework, the Swedish Dental and Pharmaceutical Benefits Agency determines trade margins for medicinal products through its own regulations. Because the trade margin forms part of the price incurred by the end consumer, it influences both patient costs and state expenditure on pharmaceutical benefits. A broader and enhanced state role for medicinal products may alter the conditions under which such decisions are taken and the level at which they should be taken. As the state assumes greater responsibility in this field, it must be considered whether decisions related to pricing and costs should be taken by the Swedish Government or continue to be delegated to the Swedish Dental and Pharmaceutical Benefits Agency.

Lastly, an implementation plan, accompanied by a timeline, must be prepared describing how expanded state responsibility can be put into practice.

The inquiry is to submit an interim report by 1 June 2027 and a final report by no later than 31 December 2027.

Conclusion

According to the terms of reference, the division of responsibility for medicinal products and vaccines in Sweden between the state and the regions has resulted in unequal access and limited predictability. This fragmented structure risks contributing to inefficiency and weakening oversight of both the use and the costs of medicinal products. It also entails a risk that patients’ access to new treatments will depend on where they live and on regional economic conditions; an outcome that is inconsistent with the objectives of the healthcare system. Achieving a modern, effective and equitable system for medicinal products and vaccines, capable of meeting the demands of new therapies, evolving forms of care and economic pressures, will require a fundamental change in how responsibilities are allocated. In particular, the state will need to take on a broader and enhanced role in order to ensure consistent governance, effective cost control and equal access to medicinal products and vaccines, regardless of place of residence or form of care.

Attention has been drawn to the shortcomings of the current system by a wide range of stakeholders over a considerable period of time, and the new inquiry is therefore a welcome development. That said, the subject matter is complex, the scope of the assignment is substantial and the work must be completed within a comparatively short timeframe.

Setterwalls will continue to monitor the inquiry’s progress and will provide further updates in due course.