New Rules on Substitution of Biological Medicines at Pharmacies

Authors: Liisa Vaaraniemi (Associate), Jasmin Metwally (Associate Trainee), Vilhelm Schröder, (Counsel), and Panu Siitonen (Partner)

Legislative amendments have been made to allow for substitution of biological medicines at pharmacies in Finland and allow new reference price groups to be formed for biological medicines and biosimilars in the Finnish reference price system. The amendments relate to the Medicines Act (395/1987, as amended) and the Health Insurance Act (1224/2004, as amended).

Substitution of Biological Medicines

In Finland, generic substitution of chemical medicines at pharmacies was introduced in 2003. In practice, the generic substitution scheme enables pharmacy personnel to replace a medicinal product prescribed by a healthcare practitioner with the cheapest or close to cheapest generic medicine, which has the same effect and is suitable for substitution. The idea with the generic substitution scheme is to promote price competition and lower the wholesale prices of medicinal products in Finland.

As of 1 January 2024, similar rules will apply to the substitution of biological medicines. According to the amended Medicines Act, when supplying a biological product or a biosimilar on the basis of a prescription, the pharmacy must, as a general rule, exchange the prescribed product for a generally available substitutable product, the price of which is the lowest or the price of which differs from the lowest price by a maximum of EUR 0.50. The Finnish Medicines Agency (“Fimea”) is responsible for determining and compiling a list of products that are substitutable.

However, unlike the generic substitution scheme, the biosimilar substitution scheme will contain an exception to this general rule. In the biosimilar substitution scheme, the pharmacy must only carry out the substitution (i) in connection with the first prescription delivery, (ii) if the patient has used the same biological product or biosimilar for six months, or (iii) if six months have passed since the previous delivery. When delivering a biological product or a biosimilar at any other times, the pharmacy must ensure that the patient's treatment is continued with the same medicine that was last delivered to them. This exception is justified by the need to ensure the continuity of the patient’s treatment.

The aim of the amended legislation is to ensure that patients are always provided with the most affordable product at the pharmacy, except where the practitioner prescribing the product has prohibited the substitution on medical or therapeutic grounds. The patient can also prohibit the substitution but will themselves be responsible for the price difference between the reference price and the more expensive product when doing so.

During the legislative process, the proposed amendments raised concerns among some stakeholders, especially in terms of medication and patient safety. In order to ensure medication and patient safety, the amendments increase the obligation of pharmacies to provide advice to patients, so that when the pharmacy substitutes a biological medicine or biosimilar, the patient should be given drug and device advice, which will reduce the risks resulting from the use of the new administration device or the mixing of devices.

When the amendments become applicable on 1 January 2024, all biological medicines and biosimilars will immediately be within the substitution scheme, except for insulin products, for which pharmacy substitution will be introduced in stages over two years to ensure patient safety. In order to ensure the effectiveness of the amendments as of the beginning of 2024, the amendments will also apply to prescriptions for biological drugs and biosimilars issued or renewed in 2023. Biological medication prescriptions are typically valid for two years, and this way, it is ensured that any two-year prescriptions issued in 2023 are also within the scope of the amendment.

Reference Price System

The amendments to the Health Insurance Act concern the Finnish reference price system, which is used to regulate the prices of medicines in Finland. The reference price system was introduced in 2009 to support the generic substitution scheme. In the reference price system, products are divided into groups, and a reference price is determined for each reference price group. The reference price is calculated using the price of the most affordable product in the reference price group. The reference price is the highest price on the basis of which reimbursement for any medicinal product in a certain group may be calculated. The reference price system was introduced to promote price competition and lower the wholesale prices of medicinal products in Finland.

The reference price groups are based on the list of substitutable medicinal products compiled by Fimea. Currently, the reference price system includes reference price groups for chemical medicines, generics, parallel distribution, and parallel import chemical medicines as well as separate reference price groups for biological medicines and biosimilars. As of 1 January 2024, when the biosimilar substitution scheme is introduced, the amended Health Insurance Act will also allow reference price groups in the reference price system to include both biological medicines and biosimilars. Such groups will include at least two substitutable medical products with one of them being biosimilar. The amendment is expected to lower reference prices.

Implications

The now approved amendments to the Medicines Act and Health Insurance Act will be applied as of 1 January 2024. The aim of the legislator is to create and maintain more effective price competition, lower the prices of biological medicines and biosimilars, and increase the number of biological medicines and biosimilars on the market. In this way, patients’ pharmaceutical costs and the state’s reimbursement expenses are expected to be reduced. At the same time, the amendments are expected to significantly impact the market for biological medicines and the effects on the market conditions for pharmaceutical companies will likely be significant.

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References

Act Amending the Medicines Act (339/2023)

Act Amending the Health Insurance Act (340/2023)

Government Proposal 314/2022