Editorial | The prices of medicines must be tackled boldly now

The high prices of medicines cannot be justified by the fact that lowering prices could jeopardize the profitability of poorly performing pharmacies.

In June the Ministry of Social Affairs and Health sent to the opinion round of the bill on improving the cost-effectiveness of medical care. According to the presentation, efficiency can be achieved by changing the drug tax for prescription drugs, i.e. by cutting pharmacies’ margins.

The drug tax for prescription drugs ensures that the same price is charged for the same prescription drug in all pharmacies in Finland. At the same time, the obligation of pharmacies to inform about inhaled medicines is expanded. The legal package is supposed to enter into force at the beginning of next year.

The presentation is related to Sanna Marin’s (sd) board’s program notes on improving the cost-effectiveness of medicines. The goal is to reduce users’ medical expenses and reduce the state’s medical reimbursement expenses. The state needs these funds to increase the minimum number of nursing staff in round-the-clock care units.

The pharmaceutical safety and development center Fimea estimates, based on the prices of 2022, that the decrease in drug prices would cut the margins of pharmacies around 54 million euros per year.

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Effective The Union of Finnish Pharmacists, known for its lobbying, strongly opposes the change. The union paints a grim picture that by after the change, “in about 50 pharmacies, the pharmacist would not have a single euro of salary or profit from drug sales, and in about every fourth pharmacy the incentive to become a pharmacy entrepreneur would disappear”.

The union’s calculations are partly based on the fact that the pharmacy’s “minimum profit” of 89,000 euros might no longer be realized in remote areas, and pharmacists would therefore no longer want to continue as entrepreneurs. In Finland it was at the end of last year 632 main pharmacies and 190 secondary pharmacies.

Pharmacists and Finnish Pharmaceutical Associationo have also appealed to the fact that pharmacists and pharmacists in pharmacies give free advice on drug treatment and know how to advise customers on many other issues related to healthcare.

Safety and development center for the pharmaceutical industry Fimean the calculations give a clearer picture of the profitability of pharmacies. According to them, the annual average profit per pharmacist in 2019 and 2020 before financial statement transfers and taxes was 267,220 euros. After the change, it would decrease to 184,795 euros, taking into account the tax changes.

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From these sums, the pharmacist pays himself a gross salary with side costs and makes investments. About 40 percent of pharmacists also transfer revenue from sales other than medicines to separate joint stock companies. If the results of these companies are taken into account, the average profit per pharmacist is 361,395 euros, and after the change 278,971 euros.

Few entrepreneurs reach similar profits, even though the risks are often greater.

Medicines according to Fimea’s estimates, retail prices in Finland are higher than in other Nordic countries. Wholesale prices are still competitive, but prices are rising due to the combined effect of pharmacies’ high margins and the pharmacy tax.

The pharmacy tax oppresses those pharmacies that sell a lot of expensive medicines. In Finland, the margin for prescription drugs decreases depending on the more expensive drug in question. When the pharmacy tax is calculated based on the turnover of drug sales, the drug sales of a pharmacy that sells a lot of expensive drugs can even be at a loss. Small pharmacies therefore prefer not to keep expensive drugs in stock, but direct customers to university pharmacies. It would be good to fix the system error, for example, so that the pharmacy tax is calculated according to the sales margin of medicines.

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In a perfect world, the reform of the pharmacy tax and the cut of the drug tax would be implemented at the same time, but now the most urgent thing is to reduce the prices of drugs and the reimbursements paid by the state. Changing the pharmacy tax can be left to the next government. If you want to improve the medical care of remote areas, it should not be paid for by pharmacy customers by keeping the prices of Finnish prescription drugs high.

The editorials are HS’s positions on a current topic. The articles are prepared by HS editorial staff, and they reflect the journal principle line.

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