Patented medicines: The substitution list and the stepped-price system

When the patent protection for patented medicinal products expires, other manufacturers are free to offer equivalent products. Medicinal products that the Norwegian Medical Products Agency (the NOMA) considers interchangeable – meaning they contain the same active ingredient at the same strength, are biosimilar or bioequivalent, are medically equivalent, have the same dosage form, and have comparable pack sizes – will be included in the NOMA's list of interchangeable medicinal products (the substitution list).

Such competition helps to drive down prices for the relevant medicinal products. To ensure that this market situation benefits patients and society, a stepped pricing system has been introduced for interchangeable medicinal products. When a medicinal product loses its patent protection and competition arises from generic or biosimilar products, and the medicinal product is added to the NOMA's substitution list, the stepped price will come into effect. Pharmacies are required to have at least one medicinal product at the stepped price within each substitution group.

The step price indicates the maximum pharmacy retail price (PRP). The NOMA sets the step price based on the original medicinal product's maximum pharmacy purchase price (PPP) and reduces this in stages by fixed percentages. Price reductions occur in different steps and with varying rates, depending on whether it is a chemical or biological medicinal product.

Chemical medicinal products

For chemical medicinal products, the price reduction occurs in one to two steps. The first cut takes place with the onset of generic competition, with either a 59% or 81% reduction, depending on whether the sales prior to generic competition were below or above 100 million NOK, respectively. The second price cut can occur no earlier than 18 months later. Medicinal products that had an initial sales figure of under 100 million NOK are then reduced by 69%, provided that the sales are higher than 15 million NOK. Medicinal products with an initial sales figure of over 100 million NOK are reduced by 88% if the current sales exceed 30 million NOK, and by 90% if the sales are still over 100 million NOK. Medicinal products with sales below the specified thresholds are not subject to a price cut at the second stage.

Biological medicinal products

For biological medicinal products, or biologicals, the price reduction occurs in two to three steps. The first price cut takes place with the onset of generic competition, applying a standard rate of 25%. The second price cut occurs six months later, either by 50% or 70%, depending on whether the sales prior to biosimilar competition were below or above 100 million NOK, respectively. The third price cut can occur no earlier than 12 months after the second cut. Medicinal products that had an initial sales figure of under 100 million NOK are then reduced by 60%, provided that their sales exceed 15 million NOK. Medicinal products with an initial sales figure of over 100 million NOK are reduced by 75% if the current sales exceed 30 million NOK, and by 80% if the sales are still over 100 million NOK. Medicinal products with sales below the specified thresholds are not subject to a price cut at the third stage.

Read more about the substitution list and the stepped-price system at NOMA's websiteOMA's website.