Since the beginning of the 2010s, the governments have saved on medical reimbursements, and next the government of Sanna Marin (sd) is trying to finance the increase in nursing staff by cutting expenses. However, in recent years, many new and expensive medicines have become eligible for reimbursement, and the costs may not be decreasing for a while yet.
Coil the amount of medical reimbursements they pay is increasing rapidly. In 2021, Kela paid 1.71 billion euros in medical reimbursements. Compensation was paid to almost three million Finns.
Last year, the amount of compensation increased compared to 2020 by 76 million euros.
Since the beginning of the 2010s, governments have tried to save on compensation, but the opposite has happened. There are several different reasons behind the growth. The aging of the population alone increases the consumption of medicines.
In recent years, many new and expensive medicines have also become eligible for reimbursement. It is precisely the price of such patent-protected medicines that explains the biggest increase in spending. They cost a lot, and you can’t exchange them for cheaper parallel products, because there are none on the market before the patent protection expires.
The growth of medical reimbursement expenses is a tough spot for decision-makers. If growth is covered by public funds, it may mean redistributing scarcity elsewhere. If spending is cut, medicines will become more expensive for citizens.
Pharmaceutical companies, on the other hand, say that societies just have to accept a high price for the value that medicines bring to healthcare.
Medical reimbursement expenses growth has been continuous in Finland for several years. Spending was last reduced in 2017, which was the result of numerous austerity measures taken in previous years.
All governments operating in the 2010s have tried to cut medical reimbursement expenses.
Jyrki Katainen The (kok) government agreed in its program that starting in 2013, it will reduce spending by 113 million euros per year. Juha Sipilä The (central) government, on the other hand, cut spending by 25 million euros in 2016 and 134 million euros in 2017.
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All governments operating in the 2010s have tried to cut medical reimbursement expenses.
Savings are also sought Sanna Marini (sd) board. Its intention is to cut medical reimbursement expenses by 60 million euros starting in 2023. With the resulting savings, the government aims to finance the increase in caregiver ratings in elderly services.
Savings in drug reimbursement expenses were realized in the 2010s, among other things, by reducing the amount of reimbursements, increasing patient deductibles, and cutting the reasonable wholesale prices of drugs.
As a result of the surgeries, drug costs increased for Finns whose number of drugs was small or the price was affordable. For those who use a lot of medicine, the costs did not rise that much.
Last in May, Kela reported on a significant price drop for a cancer drug.
It was about a medicinal product called Revlimid used in the treatment of multiple myeloma, i.e. bone marrow cancer. The price of its monthly dose suddenly fell from 5,700 euros to 150 euros. Patients can now buy the medicine for 81 to 98 percent less, depending on its strength.
The reason behind the price collapse was the expiration of the patent for Revlimid’s active ingredient, lenalidomide. In Finland, the medicine came under the so-called reference price system, which opened up price competition around the preparation.
Even last year, Kela paid out the fourth most compensations from Revlimid. Its compensation expenses were almost 43 million euros. This is how much the state will save in the future if the price competition around the medicine remains active.
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The price of a monthly dose suddenly fell from 5,700 euros to 150 euros.
Reference price system was introduced in 2009. Its purpose is to curb the growth of drug costs by increasing price competition between drug companies.
The system complements another price regulation tool, drug exchange, which also aims to curb the growth of drug costs in Finland. With the drug exchange introduced at the beginning of the 21st century, patients have been able to exchange their prescribed drugs for more affordable parallel preparations.
However, drug exchange and the reference price system only cut drug reimbursement expenses when the patents of expensive drugs expire. In recent years, the increase in reimbursement expenses has been caused specifically by the transition of new, patent-protected and expensive medicines to the scope of reimbursement.
In the monopoly market of patent-protected medicines, prices can be influenced mainly by direct price regulation, such as by setting reasonable wholesale prices for medicines before they are accepted under the compensation system.
Revlimid was the second most profitable drug of the US company Bristol Myers Squibb until its patent expired. The product that generates the most cash flow for the pharmaceutical company, the blood thinner Eliquista, on the other hand, is still protected by a patent.
Bristol Myers Squibb and Pfizer hit a gold mine when they launched Eliquis in the early 2010s. It is currently the fourth best-selling drug in the world, and 98,000 people use it in Finland as well.
The properties of the drug made it a sales success. Previously, people taking blood thinners had to wear a uniform for laboratory tests, but Eliquis eliminated this need and thus made life easier for patients. In addition, its use was associated with a lower bleeding risk than other blood thinners.
Eliquis is a textbook example of the impact of patent protection on drug pricing. Bristol Myers Squibb and Pfizer have raised the price of the drug they sell exclusively in the United States by 111 percent in nine years, so that its monthly dose now costs more than $550.
of the United States outside, the price of Eliquis is lower due to price regulation, but it is still difficult to talk about a drug that is affordable for patients. A Finnish user would pay more than 80 euros for a pack of 60 tablets if Kela did not reimburse 40 percent of the price of the medicine.
Kela, on the other hand, paid the most compensation last year precisely for the use of Eliquis. Its compensation expenses totaled 53.5 million euros.
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Eliquis is a textbook example of the impact of patent protection on drug pricing.
Bristol Mayers Squibb and Pfizer have also made sure that the competition does not limit the price and market position of Eliquis for years to come.
When the first Eliquis generics hit the drug market three years ago, the companies sued their competitors. Bristol Mayers Squibb and Pfizer have succeeded in legal proceedings to delay the introduction of generics to the market at least until 2028.
I demand should in principle also guide the prices of monopoly products, but it is different for patent-protected medicines. It is possible to keep their prices high or even raise them, because if the drug is necessary for its users, its demand does not react to the price.
Economist Mariana Mazzucato in my opinion, drug pricing embodies the modern patent system at its most pernicious.
He criticizes the system for not creating enough incentives for pharmaceutical companies to develop medical innovations. According to him, the companies use the monopoly position enabled by patent protection instead of innovating to pursue higher profits.
The claim is supported by studies in which pharmaceutical companies’ profits have been found to be multiple times their research and product development costs.
Studies have also shown that companies spent more money on marketing and buybacks of their own shares than on research and product development.
For example, the US administration recent report points out that between 2016 and 2020, 14 leading pharmaceutical companies spent around $56 billion on share buybacks and dividends.
This was 55 billion more than what the companies spent on research and product development costs.
Medicine patent the duration is 20 years in Finland. Since a lot of new and expensive drugs have come under reimbursement in recent years, drug reimbursement costs are unlikely to decrease significantly in the near future.
According to experts, the best way to reduce medical reimbursement expenses in the current situation would be to increase the use of biosimilars, i.e. copies of biological medicines, in Finland. The vast majority of medical reimbursements paid by Kela are related to the use of biological drugs and cancer drugs.
The savings potential of biosimilars is still largely unexploited in Finland as well, as they are currently not covered by the reference price system and the pharmacy exchange.
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