Increased proportion of generics, biosimilars and innovative new medicines – at the same cost?

Denmark is usually cited as a pioneer in the use of innovative new medicines. While Denmark uses a greater proportion of newly introduced drugs, they also use more generics and biosimilars than we do in Sweden. How is this possible? The explanation is quite simple. These drugs are not opposed to one another; on the contrary, they are related. In order to be able to afford expensive new drugs, cost-effective medicines must be used whenever possible. The idea that Sweden does not invest in innovations and instead just focuses on generics is incorrect. On the contrary, Sweden actually has a lower percentage of generic drugs than, for example, the US, UK, Denmark and Germany – countries usually regarded as frontrunners regarding the introduction of innovative medicines. A few months after patent protection of Remicade expired, the two Infliximab biosimilars had captured a 94% market share in Denmark, 75% in Norway, 40% in Finland, but only an 8% market share in Sweden. With that attitude, it is perhaps not surprising that no money is left over to invest in new medicines. The attitude towards switching existing patients is also an interesting issue in this context. The originator industry often asserts that existing patients should not change and thus implicitly, only new patientsshould be started on biosimilars. Based on that premise, patent expirations on biologics are barely noticeable in healthcare budgets, thereby also limiting the potential to launch new medicines. The Association for Generic Pharmaceuticals in Sweden (Föreningen för Generiska Läkemedel, FGL) believes that switching patients during treatment is possible, as long as it takes place under medical supervision with structured follow-up. This means that the treating physician should be involved in the change and thus biologics should not be substituted at the pharmacy.

Unlike biological drugs, most generic drugs are suitable for substitution at the pharmacy. Sweden has a very efficient generic substitution system. The Swedish Dental and Pharmaceutical Benefits Agency (Tandvårds och Läkemedelsförmånsverket, TLV) estimates that the system produces an annual savings of SEK 8 billion. This money can be used for more expensive treatment for those patients who really need it.

The basic principle of the Swedish generic model is to allow generic suppliers to compete with open and transparent prices. The system assumes that pharmacies cannot choose their supplier, but are instead obligated to provide the least expensive drug.

When the pharmacy market was privatised, many people doubted that the current competition with open and transparent prices would work with private pharmacies. It was feared that generic suppliers would be too dependent on pharmacy chains to dare to lower prices (which would negatively impact pharmacies’ future profits). When Norway reregulated its pharmacy market, the government had initially hoped for price competition – but that never materialized. The Swedish system is unique in that each reduction of the pharmacies’ wholesale price (apotekens inköpspris, AIP) corresponds with the same reduction of the retail price (apotekens utförsäljningspris, AUP). Only one country has succeeded with the same feat as Sweden – Denmark. Denmark and Sweden also have the lowest retail price for generics. The same generic companies are in Sweden, Denmark and Norway, and the same tablets in containers come from the same factories. When the generic companies drop their price in these three countries at the same time on the same products, the retail price automatically drops in Sweden and Denmark, which provides savings for taxpayers and patients. In Norway, the entire price difference lines the pockets of the pharmacy chains. It is easy to understand why the Swedish Pharmacy Association is eager to adopt the Norwegian model.

Guest contributor
Mr. Kenneth Nyblom
Managing director for the Generic Pharmaceutical Association in Sweden