Sweden: Setting the Pace for Global Pharma

Influence in the pharma industry does not necessarily bear a human face: institutions—in fact, entire countries—can exert the same impact. Sweden is a good example, where the pharmaceutical industry association, LIF, has a long record of working closely with the government and other stakeholders to move the needle forward in changing the competitive dynamic, in a way that forces the rest of the world to take notice.

Garbo gets it ...

On health system decentralization, regulatory convergence, drug detailing, promotion, patient information, the environment, value-based pricing, and the pursuit of cost-effectiveness, the Nordics have been true innovators over the past decades, with many ideas subsequently emerging as common practice in Europe and around the globe. A good example is the "professionalization" of the sales force, where almost all companies in the region have adopted the Swedish model of relying on far smaller groups with superior scientific credentials to execute a more structured relationship with clinicians. Executives who claimed this approach might work in Sweden but not elsewhere are now eating their words, as the industry—at least in the mature markets—trims down. And decades ago, Sweden organized and led efforts by the Nordic countries to harmonize drug registration and approval rules that helped spur a much wider international effort that is now bearing fruit today.

Another useful precedent is the Swedish approach to patient information, where it has largely avoided the rhetoric and ideology that has hampered progress in the rest of Europe in keeping up with the expanding accessibility of health information. In 1983, the industry, with support from the government, launched Patient-Fass, its printed directory of medicines. FASS began to gather real momentum when it debuted online in 2001; www.fass.se is now the country's most popular health-related website, with over 4 million unique visitors per month. Pharma companies provide their own product information for FASS, but only approved information is featured. Elsewhere in the EU, where real direct-to-patient reform discussions have been effectively deadlocked, the site is the envy of many. As Richard Bergstrom, LIF's Director-General from 2002 to 2009, tells Pharm Exec: "It is as close as you can get to direct-to-consumer advertising in Europe. But our argument is different than that—the important thing for us as an industry is to help to make individual patients powerful. This was always central to our negotiating approach."

FASS is also home to Sweden's national database for classifying pharmaceuticals according to their environmental risks. Again, this is an area where the country has taken the lead in raising expectations about the role of medicines. Stockholm established a regional system of environmental classification for drugs, JanusInfo, in 2003. When it proved a local success, LIF cooperated with the government to extend it nationally. The database now lists well over 1,000 substances, and all patients, prescribers, and researchers can search for a drug's environmental impact 'rating' by logging on to fass.se. The concept has been extended to the point that if a new medicine can establish that it will be manufactured, processed, and used with a minimal environmental footprint, then its reimbursement status can be positively affected.

Sweden has also widened the threshold on drug cost-effectiveness, adding a strong "societal perspective" in the way it evaluates medicines for eligibility for reimbursement. A treatment's benefit, for example, is considered not just in relation to the patient, but also in relation to the patient's employers and the state. If a particular treatment means a patient is able to return to work and support himself—or manage without care services if he is elderly—then it could be considered cost-effective, not just for the healthcare sector but for society as a whole. This, of course, reflects tough modern realities as much as it strives for healthcare harmony. Sweden has not been immune to the healthcare implications of unemployment, an aging population, and the challenges of integrating different sections of society. Nevertheless, the Swedish precedent has put more pressure on the UK and other markets relying on strict metrics like the quality adjusted life year (QALY) to take these larger non-quantitative measures into account.

Sweden has also set a new paradigm on drug prices, where its standard of "contingent regulation" has helped set the framework for reimbursement in other markets. A pharma company sets its own price for a product and then TLV, the department responsible for drug reimbursement, either accepts it or rejects it. The Swedish view is that this is the fairest way to let the market work as freely as possible and to stimulate innovation. "TLV doesn't even ask for price information from other countries—that wouldn't be compatible with our philosophy," says Bergstrom.

In 2002, generic substitution became mandatory in Sweden for medically equivalent drugs. From that point, pharmacies have had to dispense the least expensive generic or parallel-imported drug, regardless of what a doctor has written on the prescription. In the first three years of mandatory generic substitution, off-patent drugs fell in price by more than 40 percent on average. Japan and many other countries—including China—have looked at the Swedish experience in evaluating their own evolving policy on generics.

Not all change in Sweden goes forward with the industry's imprimatur. One controversial reform has been a deregulation of the official pharmacy network. The state-run pharmacy monopoly is being broken up and partly sold off, a move opposed by LIF. Bergstrom says the country's healthcare model will eventually have to bring patient finances into the reimbursement equation. Still, if any country can implement a payment model responsibly and innovatively, Sweden can—so keep the country in your sights. "The payment model is the root cause of all the bad things in the US healthcare system," says Bergstrom. "But Sweden could learn from it." – Julian Upton