Browsing by Author "Helle, Emilia"

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    Pricing of outpatient pharmaceuticals and price controls in the Finnish pharmaceutical market
    (2023) Helle, Emilia; Murto, Pauli; Taloustieteen laitos; Kauppakorkeakoulu; School of Business
    Growing health care expenditures are in many countries, including in Finland, a constant concern. As medicine expenditures are a major contributor to the growth of health care expenditures, decision-makers need to find efficient ways to control the prices of med-cines. Since the price of a pharmaceutical is affected by many factors, to be able to identify efficient ways to control the prices, it is important to understand how different factors and their combinations may affect the price. This literature review aims to identify which factors impact the pricing of outpatient pharmaceuticals in Finland. Additionally, the theoretical and empirical impacts of price controls used in the Finnish pharmaceutical market are examined. The effectiveness and adequacy of the current price controls are discussed, and potential areas of developments of the current price controls are considered to possibly enable greater savings in medicine expenditures in the future. Lengthy patents, high research and development costs, inelastic demand as well as strict regulation are identified as general characteristics of the pharmaceutical markets impacting how prices of pharmaceuticals are formed. In Finland, the retail price of prescription and over-the-counter pharmaceuticals is determined by the Government Decree on pharmaceutical tariffs (713/2013). Additionally, the customer’s out-of-pocket costs are affected by the reimbursement status of a pharmaceutical. The wholesale price of a prescription pharmaceutical, on the other hand, is affected by factors such as competition, generic substitution and the reference price system. Based on available empirical studies, generic substitution and the reference price system seem to be good price controls, although some areas of developments are identified. What comes to the prices of over-the-counter pharmaceuticals, the literature review demonstrates them being much less controlled than the prices of prescription pharmaceuticals. At the moment, price competition between pharmaceutical companies and pharmacies seems to be the most potential factor to put downward pressure on prices of over-the-counter products.