We analysed the impact of pharmaceutical pricing scheme on cost-effectiveness analyses in Finland. The Finnish drug retail prices are based on computational pricing scheme that does not reflect true cost of dispensing at pharmacies. The drugs with low whole-sale prices are sold at retail prices below their true costs whereas the drugs with high whole-sale prices are sold at retail prices exceeding their true cost (i.e. they include pharmacy premium).
In cost-effectiveness analyses pricing scheme induced distortion worsens the obtained incremental cost-effectiveness ratios (ICER) when new and expensive drugs are compared to cheap generic drugs. In the analysed scenarios the pricing scheme induced cost difference between expensive and cheap drugs increased the ICERs by 164-485 144 Euros/QALY.
Because drug reimbursement is not 100% for all drugs in Finland, Finnish patients needing more expensive drugs end up subsidizing patients whose illnesses can be treated with cheaper drugs. Usually the insurance based systems are designed to have exactly the opposite outcome i.e. they are aimed at decreasing the financial burden of those with the highest medical expenses.
Selling of goods below their true costs is referred to as predatory pricing in economics. It is a pricing strategy that companies may take to undermine or eliminate competition. In many countries these practices are illegal. Our question is: why is this kind of pricing strategy forced upon Finnish pharmacies by the Finnish legislation?
- Hallinen TA, Soini EJ. The impact of Finnish pharmaceutical pricing scheme in cost-effectiveness analyses. The Open Pharmacoeconomics & Health Economics Journal 2011;3:6-10. DOI
- Hallinen TA, Soini EJ. The impact of Finnish pharmaceutical pricing scheme in cost-effectiveness analyses. Value Health 2010;13:A249. Podium at the Annual ISPOR European Congress. PDF