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Generic Substitution Saves Finland US$54.8 mil. in 2007
17 Mar 08
Although Finnish generic substitution rates have stayed at around 86%, the volume of substituted prescriptions rose in 2007, while savings were relatively stable at 35.6 million euro (US$54.8 million) to reflect a drop in wholesale prices.
Global Insight Perspective | | Significance | The non-mandatory generic substitution scheme generated savings of 35.6 million euro in Finland in 2007. Three quarters of doctors prescribed cheap generic versions of branded drugs and just under half of the remaining substitutable prescriptions were dispensed generically at pharmacy level. | Implications | The generic substitution scheme has experienced great success in the country. Every year, over 85% of substitutable prescriptions are dispensed generically. | Outlook | With an increasing number of branded products facing patent expiration, the volume of generics being dispensed in Finland is expected to keep rising. The scheme's strong uptake will put the price of off-patent branded medicines under increasing pressure. |
The Social Insurance Institution of Finland (KELA) has revealed that generic substitution generated savings of 35.6 million euro (US$54.8 million) in the country in 2007. The savings benefited KELA and patients equally as both parties saved 17.8 million euro. KELA's statistics show that when a generic alternative existed, doctors prescribed one of the cheapest options on the market in three quarters of cases. Of the remaining substitutable prescriptions, 11.9% were substituted at the pharmacy level. Patients opposed generic substitution in 9.7% of cases while doctors opposed it in 0.2% of the cases. KELA has also announced that in January 2008 generic substitution saved the country 2.9 million euro. Generic Substitution: Selected Rates of Occurrence in Finland | Year | Number of Reimbursable Prescriptions (million) | Number of Prescriptions where Generic Equivalent Exists | % Cases Where Doctors Prescribed Cheapest or Close to Cheapest Generic Alternative | % Cases Where Patients Opposed Substitution | % Cases Where Doctors Opposed Substitution | % Cases Where a Generic was Substituted | 2007 | 34.8 | 22.0 | 74.7 | 9.7 | 0.2 | 11.9 | 2006 | 32.1 | 19.6 | 74.5 | 9.8 | 0.2 | 12.3 | 2005 | 28.0 | 14.2 | 75.7 | 10.4 | 0.2 | 11.5 | 2004 | 27.9 | 12.9 | 73.7 | 11.8 | 0.3 | 12.0 | April-December 2003 | 20.7 | 9.3 | 73.5 | 10.6 | 0.4 | 12.8 | Source: Social Insurance Institution of Finland (KELA) |
Savings on Medicines Generated Through Generic Substitution in Finland | Year | Total Saving (million euro) | Savings to the Patient (million euro) | Savings to KELA | 2007 | 35.6 | 17.8 | 17.8 | 2006 | 36.2 | 18.3 | 17.9 | 2005 | 25.7 | 12.0 | 13.8 | 2004 | 30.5 | 13.7 | 16.9 | April-December 2003 | 20.3 | 9.0 | 11.2 | Source: Social Insurance Institution of Finland (KELA) |
The generic substitution scheme was introduced in Finland in April 2003. Although not mandatory, since its introduction the scheme has experienced a strong uptake. In 2003, 86.3% of substitutable prescriptions were dispensed generically, compared to 85.7% in 2004, 87.2% in 2005, 86.8% in 2006 and 86.3% in 2007. Generic substitution has generated total savings of 148.3 million euro since 2003, of which 70.8 million has benefited the patients and 77.6 million has benefited KELA. Over the years an increasing number of prescriptions have fallen into the "substitutable" category and fewer patients have opposed generic substitution for their prescription. Over the last two years, generic substitution was opposed in just 10% of the cases, suggesting that general approval for the scheme is still progressing. Outlook and Implications The generic substitution scheme has been highly successful in Finland. Prescribers' and pharmacists' endorsement of it resulted in 86.3% of substitutable prescriptions being dispensed generically during the scheme's first year. The savings generated have fluctuated over the years, but the percentage of prescriptions dispensed generically has remained at around 86%. According to Pharma Industry Finland, this translated into a market share of over 40% in volume terms for generics in 2007 and a market share of 22.6% in value terms in 2005. In 2007, there was a generic equivalent on the market for 63.2% of all prescriptions written out, up from 50% in 2005 and 45% in 2003. With an increasing number of branded drugs facing patent expiration, more and more medicines will face generic substitution in Finland. Given the strong voluntary compliance with the scheme, this is likely to translate into a greater volume of generics being dispensed, even if the substitution rate remains at around 86%. Manufacturers of branded off-patent medicines will remain under pressure to cut their prices to generic levels to retain market share (see Finland: 18 February 2008: Finnish Wholesale Pharmaceutical Prices 1.3% Lower in 2007). Although generic substitution has helped contain Finland's healthcare expenditure, it is unlikely to be enough to curb the medicine bill. In 2007, non-substitutable medicines accounted for 53.5% of Finland's total drug expenditure, and for prescription volume of 36.8%. With newer and more expensive treatments reaching the market in therapeutic areas such as oncology and infectious diseases, the country will remain under pressure to curb its medicine spending (see Finland: 21 January 2008: Finnish Wholesale Pharma Market Expands by 6.2% in 2007). Making the generic substitution scheme mandatory would be one way to generate more savings, but with substitution rates at over 86% there seems to be little room left for improvement. This makes the possibility of a reference pricing scheme all the more likely (see Finland: 26 February 2008: Finland Considers Generic Reference Price Scheme).
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