Pricing and availability of pharmaceuticals

The Government decided as early as June 2011, to appoint a special investigator to conduct a review of certain matters relating to pricing, availability and market conditions within the pharmaceutical and pharmacy area. The Committee is called The Pharmaceutical and Pharmacy Inquiry (S 2011:07) and has presented several reports.

The Committee’s first interim report on the pricing and availability of pharmaceuticals, which included a proposal to introduce international reference pricing, led to a large number of comments in the round of referral in early 2013. LIF, the research-based pharmaceutical industry in Sweden, suggested that the proposals would not signify any improvements on Swedish patients’ access to medicines and that the pressure on pharmaceutical companies would become so significant, that the proposals to revitalize the Swedish pharmaceutical research could threaten to collapse before they even got started. It was also pointed out that the combination of “a variety of differentiated price-reducing steps bring to mind restraining measures that the crisis-ridden countries across Europe are forced to implement. If the proposal is implemented, Sweden will indirectly capitalise on the difficult economic situation in countries like Greece, Spain and Portugal.”

The Government’s bill

In March 2014, the Government presented a bill called Increased Availability and More Appropriate Pricing of Pharmaceuticals (Government Bill 2013/14: 93) to parliament.

According to the proposal, the decision on subsidy will continue to be based on the ethical platform, but the value-based pricing should be evolved to ensure that pharmaceuticals are cost effective throughout their life cycle and, if possible, increase the cost-efficiency in new introductions and reassessments of pharmaceuticals.

The Government’s focus is to ensure a “reasonable price range throughout the life cycle of a medicinal product”. International reference pricing is currently not relevant. LIF has managed to avoid the international reference pricing by voluntary price reductions on older original pharmaceuticals.

Few actual suggestions on pricing in the bill

The bill provides few actual proposals. The development of value-based pricing is largely put on the Dental and Pharmaceutical Benefits Agency, TLV. This means that it is still unclear what the development of value-based pricing will signify in practice. Some conclusions that may be worth noting are set out below.

• The Government wants more dynamic pricing and discusses TLV’s opportunities to coordinate price and volume components within the framework of its decisions. The decision on how to proceed is assigned to TLV.
• The Government is discussing how the reassessment of earlier reimbursement decisions could be carried outmore efficiently. One suggestion is that TLV could limit the number of pharmaceuticals in a therapy group during the reassessment and give companies the opportunity to
  submit new prices based on the limited offer.
• It is indicated that TLV, when reassessing, has the opportunity to compare the price level in Sweden with prices in other countries. This provides a form of international reference pricing.
• As regards the so-called confidential agreements between the industry and the county councils, the Government proposes that the framework for cooperation in this area eventually need to be revised once the ongoing judicial proceedings are completed. 

The only actual proposal in the pricing area is that regulations regarding the conditions for changing the price of a medicinal product within the reimbursement system could be established for medicinal products provided that there has been 15 years since the product was approved for sale, or if there are accessible generic substitutions marketed to pharmacies in Sweden.

Other proposals in the proposition

In this context, it is worth mentioning that the bill comprises several proposals that are aimed at increasing the availability of pharmaceuticals such as:

• More clearly defined negotiating rights regarding the purchase price of certain pharmaceuticals for outpatient pharmacies.
• Opportunity to replace prescribed parallel imported pharmaceuticals with less expensive originals.
• Obligation for authorized retailers to provide the relevant “product of the period”.
• Sanctions for a pharmacy and a marketing authorization holder that does not follow the rules on substitution and provision of the “product of the period”.
• Where a pharmacy is not able to fulfil its supply obligations directly, it must inform the consumer in which pharmacies the drug or product is available.
• An opportunity for pharmacists to oppose substitution (known in Swedish as “farmaceutkryss ” ).
• The Swedish eHealth Agency is to submit information to TLV as well as to the Swedish Medical Products Agency to enable the follow-up of substitution and supply obligation.

The proposals are to apply from the 1 July 2014, except in respect of farmaceutkryss, which becomes effective on 1 January 2015. 

Conclusion

LIF has stated that any change in the model of pricing and reimbursement for pharmaceuticals has to be made concrete in actual proposals by the Government and prepared in an open political process before being implemented.

It is a challenging assignment for the Government to achieve a realistic balance between the public cost control and the refund of the investments and other efforts of the pharmaceutical companies. However, it is essential that the pricing model is predictable for all parties. It is, therefore, an evident problem that the Government has announced that new rules will apply that could be of crucial importance for the introduction of new pharmaceuticals on the Swedish market, without declaring the meaning or consequence of these.

We therefore still call for the Government’s concrete proposals on the future model of pricing and reimbursement of medicines. We are monitoring the development closely.