2.4. Regulation and planning

Several bodies established at the national level have some direct regulatory functions. Valvira supervises health care providers, health professionals, municipalities and hospital districts, while Fimea supervises the pharmaceutical sector (see Table2.1). THL plays an important role in supporting planning and governance at the national and local level by collating and disseminating information, producing guidelines, as well as through carrying out research and development projects (see section 2.1).

Table2.1

Apart from legislation, the formal role of the central state in terms of the governance and planning of services is fairly limited and is mainly based on soft governance measures, such as providing information and recommendations.

The MSAH has the main responsibility for national level planning of the health system. Over the years the management of the MSAH’s operations has changed. In 2015 the MSAH drew up an action plan for the four-year term of the then Government. The action plan was based on the Government programme and the MSAH strategy and has then been updated by documenting specific measures to be implemented annually. The overall governance of the system also takes place through various national level projects through which funding is allocated to strategically important development tasks. Through these projects, the MSAH has also allocated funding for implementation at the local and regional level.

At the municipal level, planning is performed by the chief physician and other senior professionals responsible for planning, human resources and financing, the municipal council, the municipal social and health committee and the executive board. In hospital districts, planning is performed by chief physicians and other senior staff, the council of the hospital district and the executive board. Citizens can participate in planning through electing the municipal council and through municipal health committees. Local planning activities are supported by the Association of Finnish Local and Regional Authorities.

Box2.1 discusses the capacity for policy development and implementation in Finland’s health system.

Box2.1

2.4.1. Regulation and governance of third-party payers

The public financing of health services comes from three main sources (see section 3.3): municipal taxation, state subsidies and the NHI. The state subsidizes municipalities but does not act as a purchaser. The NHI is run by Kela and is regulated by the Parliament through the Sickness Insurance Act and through the board of Kela Parliamentary Trustees. The legislation defines which services are reimbursed by the NHI. The NHI is also controlled to some extent by the Insurance Department of the MSAH. For example, the department contains the PPB, which decides on the inclusion of drugs in the drug reimbursement system (see section 5.6).

Private insurance companies, handling both statutory and voluntary insurance in Finland, are subject to licensing. The Insurance Department of the MSAH regulates insurance policies and is responsible for drafting insurance legislation.

2.4.2. Regulation and governance of provision

The general oversight of municipal health services is mainly carried out in response to complaints or other highly visible issues. The state-level administration (either the MSAH, Valvira or RSAAs) can intervene if it detects a violation or neglect of existing health service legislation, usually in the form of highlighting a problem, or issuing a reminder or a formal warning. An option of imposing a conditional fine or stopping the operation of the provider exists for special situations, but is rarely used in practice.

Legislation provides for municipalities to have overall responsibility for organizing care. In 2018, around one quarter of the municipalities organized primary care services themselves. However, these municipalities were on average larger and corresponded to 50% of the Finnish population. For the rest, primary care services were organized by health and social care collaboration areas, which are administratively either federations of municipalities or based on a collaboration agreement according to which one municipality organizes services on behalf of other municipalities. About one fifth of municipalities (mainly smaller ones) are participating in these collaborations (Kuntaliitto, 2018b). The scope of health services provided by municipalities is not defined in detail in the legislation (see section 2.4.3). Only a few have adopted a purchaser–provider split in their governance model (Tynkkynen et al., 2013), which changes the relationship between the municipality’s central administration and the health centre to a contractual one.

Municipal regulation of specialized care is more complex. Hospital districts are governed by member municipalities which can influence them through their representatives in the executive board and the council (see section 2.1). The main mechanism is through negotiations on volumes and costs (see section 3.4.1). Beyond this, municipal regulation of hospital districts is rather weak. This is particularly the case with small municipalities, where there is a major information and economic asymmetry between the municipality and the hospital district (Häkkinen & Lehto, 2005).

Regulation of private health care provision is stipulated in the Private Health Care Act, and is quite weak. Private health care providers must be licensed by RSAA, which monitors services to ensure they meet standards and quality criteria. Independent private practitioners and private health care providers are also monitored by Valvira through patient complaints (see section 2.5.3). Private physicians who are members of the Finnish Medical Association normally conform to its code of conduct. Municipalities and hospital districts which purchase services from the private sector regulate and control purchased services through contracts. Kela does not regulate private providers which are reimbursed by the NHI.

The quality of care is seen as a basic principle of health care provision. The Health Care Act (2010) states that health care has to be evidence-based, safe, appropriate and of good quality. The law on patient rights states that patients have the right to health care of good quality. THL has set out that the key elements in terms of quality are patient-centredness, access and accessibility, equality, freedom of choice, patient safety, high professional competence and effectiveness of care. There are no national level quality registers that would enable systematic monitoring of quality of care. However, in 2019 five quality register pilots were launched by THL. Valvira and RSAAs monitor access to care. Valvira also monitors safety of care through handling patient complaints (ex-post) and professional competence through licensing health care professionals.

The main mechanism at the national level to ensure quality of care are MSAH and THL guidelines, such as the Current Care Guidelines, produced by the Finnish Medical Society Duodecim, guidelines on health promotion (2006) and services for older people (2013). At the local and regional level all health care facilities have to draw up a plan to ensure quality and safety. The content of the plan is regulated by the 2011 MSAH Decree on quality management and patient safety in health care. The plan should include procedures for patient feedback and complaints, managerial responsibilities and leadership practices for quality and safety, staff development and safety training, procedures to identify risks and so on. In addition, there is a web-based service for voluntary reporting of patient safety incidents, HaiPro, developed with funding from the MSAH, Fimea and the Technical Research Centre; it is currently used by approximately 200 health and social care providers of various sizes.

2.4.3. Regulation of services and goods

Basic benefit package

The Constitution requires the state to guarantee adequate health services for everyone. This provision ultimately sets the limits within which the service range can be defined. Under the 2010 Health Care Act, health services comprise disease prevention, diagnostic procedures, treatment and rehabilitation. There is no comprehensive list of publicly funded health services. Existing services are needs-based, with a health professional assessing a patient’s need.

COHERE (see section 2.1) can further decide whether a service should be publicly funded, based on significance of the health problem and medically justified need of treatment, effectiveness and safety of the intervention, and ethical considerations. In addition, the introduction of new technologies is assessed from the perspective of the overall financial capacity of the health system and in view of the health benefits to be gained at population level.

Health technology assessment (HTA)

The Finnish Office for Health Technology Assessment (FinOHTA) was established in 1995 and was responsible for HTA activities until 2016 when it was dismantled due to the budget cuts of its host organization, THL. In 2018, in line with an MSAH Decree, the Northern Ostrobothnia Hospital District, which runs Oulu University Hospital, launched the Finnish Coordinating Centre for Health Technology Assessment (FinCCHTA). The unit coordinates HTA in Finland and cooperates with international HTA bodies, such as the European Network for Health Technology Assessment (EUnetHTA). Other key objectives are to develop HTA methodological training and strengthen related research. FinCCHTA also coordinates the national HTA network, which involves HTA medical officers operating in university hospitals and other hospital districts.

2.4.4. Regulation and governance of pharmaceuticals

Fimea (see section 2.1) is responsible for the regulation of pharmaceuticals. It grants market authorizations, classifies drugs and decides whether they can be sold over the counter, monitors the quality of medicines, supervises wholesalers and pharmacies, and oversees the advertising of pharmaceuticals. Fimea maintains a register of adverse reactions to medicines.

Regulation of pharmacies is fairly stringent. Fimea decides on the number of pharmacies in municipalities and issues a licence to pharmacists to run them. When a new pharmacy owner is needed, Fimea issues a public notice. Community pharmacies are privately owned by pharmacists, but they cannot be owned by companies (with the exception of the University of Helsinki and the University of Eastern Finland, which have special rights to own pharmacies). One pharmacist can own only one pharmacy (and possibly some subsidiary pharmacies). Pharmacists are required to hold a Master of Science degree in pharmacy and to be a citizen of the EU.

Pharmacies must pay a pharmacy fee collected for the state by the Tax Administration. The fee is progressive. In 2017, it amounted on average to about 6.6% of the annual turnover of pharmaceutical sales ranging from 0% to over 10%. The purpose of the pharmacy fee is to decrease existing differences in income across pharmacies. Pharmaceutical pricing is uniform, with wholesale prices of a drug being the same for all pharmacies. Companies can change the wholesale price every two weeks. The Government decides on the formula by which the retail price is calculated from the wholesale price. In addition, there is a 10% value added tax (VAT) for pharmaceuticals. On average, of the price of a medicine, 60% comes from the wholesale price, 24% from the pharmacy margin, and 16% from VAT and the pharmacy fee. Because of regulation, there is no price competition between pharmacies.

Municipalities and hospital districts have their own hospital pharmacies and medicine dispensaries, with 24 pharmacies and 37 medicine dispensaries in 2019. They can issue medicines only to their own wards and departments. Medicines are tendered according to the public procurement legislation. Hospital pharmacies and medicine dispensaries dispense medicines with their own margins to customers (wards, departments, clinics). They are not allowed to sell medicines to patients or members of the public. Only on special occasions may a patient who has been discharged be issued with medicines from the hospital to ensure the continuation of the medication. Inpatient pharmaceuticals are covered by hospital budgets and are provided to patients free of charge.

Outpatient drugs are reimbursed by NHI. The vast majority of drugs are reimbursed, but some of them are not, mainly due to their high prices or lack of efficacy.

The PPB, made up of seven representatives from different state agencies, decides whether a medicine is reimbursed (positive list) and sets a maximum wholesale price for each pharmaceutical substance. The price is based on the cost of the medicine and how this compares to its benefits, as well as how it compares to the costs and benefits of its therapeutic alternatives. In addition, the proposed price is compared with prices in other EU countries. There are no restrictions on pricing of other drugs with a marketing licence.

Decision-making in PPB is based on applications from pharmaceutical companies. They have to apply to PPB for a reimbursement at a specific level (basic or special, limited basic or limited special categories; see sections 3.3 and 3.4) and a maximum wholesale price, and propose a reasonable wholesale price for the drug. Applications for a new pharmaceutical substance require a pharmacoeconomic evaluation. Before applying for special reimbursement, the drug must already be in a basic reimbursement category. Medicines reimbursed at 65% level must be essential and used for treatment of severe and long-term conditions. Drugs in the 100% reimbursement category must have a corrective or supplementary effect, in addition to being essential. In order to obtain a limited basic or limited special reimbursement, patients have to comply with certain criteria, which are decided by Kela. This means that one medicine can have different reimbursement levels for different patients. Reimbursement is granted for a maximum of five years before needing a renewal, and is paid directly to pharmacies.

A clawback system was introduced in Finland in 2017 as a pilot, but its effect is not yet clear. Within this system, the state can for example receive compensation if sales of pharmaceuticals exceed a defined level or new data on effectiveness emerge. A pharmaceutical company has to apply for this when applying for reimbursement from PPB and a special agreement will be made between the company and PPB if negotiations are successful.

There is no obligation to prescribe generic substances in Finland, but this is encouraged by generic substitution. After introduction of voluntary generic substitution in the early 1990s without much success, compulsory generic substitution was introduced in Finland in 2003. According to the Medicines Act, pharmacies are obliged to substitute a prescribed medicine that costs more than a maximum price limit with a product containing the same substance but costing less than that limit. PPB reviews the price limits for generic substitution every three months and calculates the maximum price by adding €0.50 to the price of the cheapest alternative in Finland at that moment. Fimea defines the list of substitutable medicinal substances, which contains most reimbursable drugs, but excludes some, e.g. insulin and antiepileptic medicines. In addition, physicians are obliged to take account of cost-efficiency when prescribing drugs and to prescribe a long-lasting medication from a small package size.

Prescribing physicians may decline generic substitution for medical or therapeutic reasons. In this case “no substitution” is marked on the prescription. Patients can decline substitution but are then reimbursed by NHI according to the price limit (€0.50 plus cheapest alternative) if the drug is more expensive than the price limit. If the drug costs less than this price limit, reimbursement is calculated from the actual costs of the prescription. Physicians rarely decline substitution (1.2% of possible substitutions) and patients refuse only 4.4% of the potentially substitutable prescriptions (Fimea, 2015).

Outpatient pharmaceuticals can be sold to patients only through pharmacies (including over-the-counter (OTC) drugs), with nicotine replacement products being the only exception that can be sold in retail. Direct-to-consumer advertising of prescription drugs is not allowed. However, disease-oriented advertisements without specifying drugs are permitted. On the Internet, only text containing patient information can be presented. Direct-to-consumer advertising of OTC drugs is permitted, but regulated. Fimea and the Pharmaceutical Industry Finland (a national industry association) enforce regulations concerning drug promotion to the public and health professionals.