Determination of price corridors
Under the Pharmaceuticals Act, pharmacies must substitute a prescription medicine with a generally available substitutable product that is the least expensive or whose price is, at most, EUR 0.50 higher than that of the least expensive product.
Kela compiles a list of the prices of substitutable products four times a year based on price information disclosed to Kela. Kela groups the products on the list so that interchangeable packs of the same size are included in the same group. Kela also calculates a highest price for each group. This means that products whose price exceeds this upper limit must be substituted with less expensive substitutable products. Kela forwards this information to the pharmacies for the implementation of generic substitution.
Grouping of medicinal products
Fimea maintains an up-to-date list of substitutable medicinal products (fimea.fi) (in Finnish and Swedish). Each product on the list is assigned a four-digit substitution group code. Products in the same substitution group are bioequivalent, and they contain equal amounts of the same active substance or of a different version of the same active substance. Read more about the criteria for substitutability (fimea.fi).
Kela and the Pharmaceuticals Pricing Board further divide medicinal products that belong to the same substitution group into subgroups based on packaging size.
The following pack sizes are assigned to the same group:
- packs that contain the same number of doses either all in one container or in several containers
- treatment initiation packs and regular packs that contain the same number of doses
- packs that contain 28, 29 or 30 doses
- packs that contain 59 or 60 doses
- packs that contain 98, 99 or 100 doses.
Kela and the Pharmaceuticals Pricing Board assign each group a ten-digit substitution group code, i.e. a substitution code, to serve as an identifier. The same code is used both in generic substitution and in the reference price system. In the reference price system, this code is referred to as the reference price group code instead of as the substitution code.
Example of the formation of a substitution code
Active substance: ibuprofen
Strength: 400 mg
Pack size: 98 or 100 tablets
Substitution code: 0002920100
- 00 = the first two digits of the code are always 00 unless the code refers to an exceptional reference price group. Read more about exceptional reference price groups (hila.fi).
- 0292 = the substitution group code assigned by Fimea
- 0100 = the final digits assigned based on pack size
Retail prices
Pharmaceutical companies report the wholesale prices of products that are subject to the price notification procedure to Kela, which then uses the wholesale prices to calculate VAT-inclusive retail prices for the products. Kela uses a formula defined in the Government Decree on the price determination of drugs to calculate the prices. The government decree sets out separate formulas for calculating the retail prices of prescription and non-prescription medicines.
Price corridors
Kela establishes a price corridor for each group of interchangeable medicinal product packs of the same size. In practice, this means that Kela calculates an upper limit for each price corridor, and if the price of the medicinal product exceeds this limit, the pharmacy must substitute the product with a less expensive substitutable product.
When determining the upper limit of a price corridor, Kela will take into account the reimbursability of the products and whether a reference price group will be established in addition to the price corridor. In addition, only products that are generally available are taken into account when setting the upper limit.
Determination of the upper limit of the price corridor when a reference price group is also established
A reference price group is established when a group of interchangeable medicinal product packs of the same size
- includes at least two reimbursable medicines that are generally available and at least one of them is a reimbursable generic, parallel import or parallel distribution product or a biosimilar.
When a reference price group is established,
- Kela will calculate an upper limit for the price corridor by adding EUR 0.50 to the VAT-inclusive retail price of the least expensive reimbursable product in the group
- the Pharmaceuticals Pricing Board will calculate the reference price by adding EUR 0.50 to the VAT-inclusive retail price of the least expensive reimbursable product in the group. Read more about how the reference price is determined (hila.fi).
Only a product that is generally available can be used to determine the reference price and the upper limit of the price corridor.
The reference price is the highest price from which a reimbursement can be calculated. The reference price and the upper limit of the price corridor are the same because they are both calculated with the same formula.
Determination of the upper limit of the price corridor when a reference price group is also established
| Medicinal product packs included in the group | Reimbursability | Availability | Price (EUR) | Upper limit (EUR) | Reference price (EUR) |
|---|---|---|---|---|---|
| Product A, generic | yes | no | 1.00 | 2.50 | 2.50 |
| Product B, generic | yes | yes | 2.00 | 2.50 | 2.50 |
| Product C, generic | yes | no | 2.10 | 2.50 | 2.50 |
| Product D, generic | yes | yes | 2.50 | 2.50 | 2.50 |
| Product E, generic | yes | yes | 4.00 | 2.50 | 2.50 |
- In this case, a reference price group is established in addition to the price corridor because three of the generally available products are reimbursable and two of them are reimbursable generics.
- Products A and C are not taken into account when determining the reference price and the upper limit of the price corridor because they are not generally available.
- The product that determines the reference price and the upper limit of the price corridor is product B as it is the least expensive reimbursable product.
- Kela uses the VAT-inclusive retail price of product B to calculate the upper limit of the price corridor as follows: EUR 2.00 + 0.50 = 2.50.
- The Pharmaceuticals Pricing Board uses the VAT-inclusive retail price of product B to calculate the reference price as follows: EUR 2.00 + 0.50 = 2.50. The reference price applies to reimbursable products B, C, D and E.
- If a customer has been prescribed product E, the pharmacy must substitute it with the least expensive available product (product B or D). However, the customer can choose to refuse the substitution. Where this is the case, the reimbursement the customer can get will be based on the reference price, and the customer will have to pay the amount that exceeds the reference price, i.e. EUR 1.50, out of pocket.
Determination of the upper limit of the price corridor when a reference price group is not established
A reference price group is not established when a group of interchangeable medicinal product packs of the same size
- does not include any generally available reimbursable medicines
- includes only one generally available reimbursable medicine
- does not include any generally available reimbursable generic, parallel import or parallel distribution products or biosimilars.
When a reference price group is not established,
- Kela will calculate an upper limit for the price corridor by adding EUR 0.50 to the VAT-inclusive retail price of the least expensive generally available product in the group (this product can be either reimbursable or non-reimbursable).
- No reference price will be set for the group.
If the customer is provided with a reimbursable product that has no reference price, the customer will be reimbursed based on the full price of the product.
Determination of the upper limit of the price corridor when a reference price group is not established
Example 1. No reimbursable products in the group
| Medicinal product packs included in the group | Reimbursability | Availability | Price (EUR) | Upper limit (EUR) | Reference price (EUR) |
|---|---|---|---|---|---|
| Product A | no | no | 1.00 | 2.50 | - |
| Product B | no | yes | 2.00 | 2.50 | - |
| Product C | no | no | 2.10 | 2.50 | - |
| Product D | no | yes | 2.50 | 2.50 | - |
| Product E | no | yes | 4.00 | 2.50 | - |
- In this case, no reference price group is established because none of the products are reimbursable.
- Products A and C are not taken into account when determining the upper limit of the price corridor because they are not generally available.
- The product that determines the upper limit of the price corridor is product B as it is the least expensive product.
- Kela uses the VAT-inclusive retail price of product B to calculate the upper limit of the price corridor as follows: EUR 2.00 + 0.50 = 2.50.
- If a customer has been prescribed product E, the pharmacy must substitute it with the least expensive available product (product B or D). However, the customer can choose to refuse the substitution.
Example 2. Only one product in the group is generally available
| Medicinal product packs included in the group | Reimbursability | Availability | Price (EUR) | Upper limit (EUR) | Reference price (EUR) |
|---|---|---|---|---|---|
| Product A | yes | no | 1.00 | 2.50 | - |
| Product B | yes | yes | 2.00 | 2.50 | - |
| Product C | yes | no | 2.10 | 2.50 | - |
| Product D | yes | no | 2.50 | 2.50 | - |
| Product E | yes | no | 4.00 | 2.50 | - |
- In this case, no reference price group is established because only one of the products is generally available.
- Products A, C, D and E are not taken into account when determining the upper limit of the price corridor because they are not generally available.
- The product that determines the upper limit of the price corridor is product B as it is the least expensive product.
- Kela uses the VAT-inclusive retail price of product B to calculate the upper limit of the price corridor as follows: EUR 2.00 + 0.50 = 2.50.
- If a customer has been prescribed product E, the pharmacy must substitute it with the least expensive available product (product B). However, the customer can choose to refuse the substitution. As the product does not have a reference price, the customer will be reimbursed based on the full price of the product.
The availability of the product affects the determination of the upper limit of the price corridor
The price notification must indicate whether the product is generally available. A product is considered to be generally available if it is available at the wholesalers at the time of notification and for the entire duration of the following quarter.
Only products that are generally available are taken into account when determining the upper limit of the price corridor. It is important for the information on availability to be disclosed correctly in the price notification. That way Kela can ensure that the upper limit of the price corridor is based on the price of the least expensive generally available product.
If no interchangeable medicinal product packs of the same size are available, Kela will establish a technical upper limit for the price corridor that applies to the group. This ensures that the pharmacy can include these products in the substitution process when they are available. Kela will calculate the technical upper limit of the price corridor by adding EUR 0.50 to the VAT-inclusive retail price of the least expensive product in the group
Medicinal products that enter the market during the quarter
If a new product that enters the market is included in the current list of substitutable medicinal products, it will be assigned a substitution group and a substitution code as well as an upper limit for its price corridor in the Pharmaceutical Database and pharmacy price lists.
If the new product belongs in a reference price group confirmed by the Pharmaceuticals Pricing Board, it will also be assigned a reference price in the Pharmaceutical Database and pharmacy price lists. However, new reference price groups will not be established during the quarter. This means that the Pharmaceuticals Pricing Board will not calculate a reference price for these new groups, and they will only be included in generic substitution.