Drug Companies Accused of Price Fixing

The pharmaceutical companies have found a way to get around the Swedish state's price control on medicine, by manipulate the prices, according to the daily Dagens Nyheter. This means that the price of one product can sometimes increase 20 times from one month to the next.

There is a ceiling for how much patients in Sweden have to pay for their medical care and medicine during one year. Once they have reached that ceiling, the state's health insurance will pick up the bills for the rest of the year.

In order to try to control the prices of the pharmaceutical products that in this way are subsidised by the state, the Government introduced a reform in 2002 that would encourage the pharmacies to exchange expensive original drugs for cheaper copies once the original patent has expired.

In the new system, pharmaceutical companies compete every month to sell their products to the pharmacies. If they win the bidding, they will be the one seller of that product for that month. And next month there is a new bidding process, where a company is supposed to win the monopoly for the coming month. But this is not how it has worked in practice.

By putting a very low price one month and then increasing it tremendously the next, the pharmaceutical companies can win the bidding one month, and then really start earning money the next month.

Dagens Nyheter takes the example of one of the most sold drugs in Sweden, omeprazol against gastric ulcer. In march this year, one jar of 56 tablets was offered for nine Swedish crowns and won the bidding. The next month, the same jar cost 195 crowns, and the bidding was won by a competing drug company.

But by then several patient have already started a treatment with the first product, and got used to it, so they are quite likely to want to stay with it. According to Dagens Nyheter, the pharmacies buy half of their drugs to the lower price, and the other half to the higher price.

It is the Swedish Dental and Pharmaceutical Benefits Agency that determines whether a pharmaceutical product shall be subsidised by the state. The Agency now says that they have carried out some adjustments to deal with the problem, but that there has been technical difficulties and delays in implementing them.