article / 01 Nov 2014

Medicinal products in Sweden: even more substitution?

Responsive image

Substitution of prescribed medicinal products is a key feature of the Swedish reimbursement system and has contributed to substantial savings for Swedish taxpayers since its introduction in 2002. However, an increasing number of products are being excluded from the substitution regime.

Where a substitute product with reimbursement status is available, Swedish pharmacies must, as a rule, give a patient the cheapest available substitute to the prescribed medicinal product. The Medicinal Products Agency (MPA) used to decide which products are substitutes only after reimbursement status had been awarded by the Reimbursement Agency. Since 2007, however, the MPA decides on substitutability upon granting marketing authorisation to a medicinal product and thus prior to the potential award of reimbursement status.

Prescribed products without reimbursement status may not be substituted, regardless of whether a cheaper substitute with reimbursement status is available. This has not been a major issue up to now, as most companies traditionally have applied for reimbursement status and most products therefore have been part of the reimbursement system. However, recently we have seen a trend of many products being forced out of or voluntarily withdrawn from the reimbursement system.

One reason is the Reimbursement Agency’s increasingly strict approach when it comes to requiring price cuts to maintain reimbursement status. Companies may decide to withdraw from the reimbursement system rather than lowering their prices, e.g. in order to protect their prices in more important foreign markets where international reference pricing systems are applied by the authorities. It has also been suggested that certain originators may withdraw from the reimbursement system in connection with patent expiries, in order to avoid price competition and to make it more difficult for generic products to gain effective market access.

If an originator product withdraws from the reimbursement system, this may make it more difficult for a generic product to be awarded reimbursement status. If the generic product is nevertheless awarded reimbursement status, the withdrawal of the originator product from the reimbursement system will still mean that no substitution can take place at pharmacies. Traditionally, doctors prescribe the originator products that they have become familiar with during the patent term. If prescription patterns do not change, generics would have to make significant investments in marketing to gain effective market access. Hence, withdrawal from the reimbursement system may assist originators in maintaining significant market share even after patent expiry without having to engage in price competition with generics. Of course, the viability of this strategy will depend on pricing, patient preferences, indications, length of treatment and other factors related to the individual medicinal product.

The Swedish government has realised that the increasing number of medicinal products outside the reimbursement system may present a challenge to the system and the financing of medicinal products in Sweden. In April 2014, the government instructed the Reimbursement Agency to analyse the consequences of certain medicinal products not being included in the reimbursement system and to present proposals on how to deal with the situation.

The Reimbursement Agency published its first report on 1 October 2014. The report states that the costs for medicinal products without reimbursement status has increased from SEK 0.5 billion to SEK 2 billion in the last 10 years. The increased costs are borne both by the county councils, who pay for certain categories of medicinal products regardless of reimbursement status, and by patients. According to the report, the main categories of products without reimbursement status are anti-infectives and birth control products. The report discusses several issues related to medicinal products without reimbursement status, including free pricing, equal treatment between county councils, ineffective competition and lack of price information. The Reimbursement Agency confirms that the current legislation does not permit substitution if the prescribed product does not have reimbursement status. According to the agency, this means that the scope for price competition is reduced and that patients will have to pay a higher price for their products unless they are aware that cheaper substitutes exist and are able to convince their doctors to prescribe these substitutes. 

The Reimbursement Agency does not propose any legislative or other measures in this report. The final report, due for presentation to the Swedish government no later than 1 March 2015, will contain such legislative and other proposals. However, the existing report states that the Reimbursement Agency has considered the option of extending the substitution regime to also cover medicinal products outside the reimbursement system. According to the report, the agency has discussed this option with the MPA, which has undertaken to prepare a legislative proposal on how to implement such an extended substitution regime. 

Given the analysis presented in the report and the fact that the MPA already decides which products are substitutable from a medicinal perspective irrespective of reimbursement status, we consider that it is likely that the substitution regime will be extended in the next few years to also cover medicinal products outside the reimbursement system. However, prior to adopting such an extended substitution regime, the legislator must consider a number of difficult questions. Should substitution only be allowed if the substitute has reimbursement status or should substitution also be allowed between two products without reimbursement status? If the doctor prescribes a product without reimbursement status and the pharmacy gives the patient a substitute with reimbursement status, should this mean that the county council should reimburse the patient’s costs? Is it acceptable that the choice of product and whether the patient’s costs are reimbursed may differ between pharmacies depending on the price of the originator product at the individual pharmacy? Does the supervision of the extended substitution regime require a system for supervising the prices of non-reimbursed products?

We expect the proposal to be presented by the Reimbursement Agency and the MPA to answer these questions and others. We also expect the proposal to stir up a fair amount of criticism, at least from the innovative parts of the pharma industry.


Practice areas:

Life Sciences

Do you want to get in touch with us?

Please fill out the form and we will contact you as soon as possible.

  • This field is for validation purposes and should be left unchanged.