Widespread painkillers and other non-prescription drugs are usually more expensive in Estonian pharmacies than in Sweden. While there can be many reasons for the difference in prices, the Ministry of Social Affairs is planning to update pharmaceutical markup rules which have remained in place for two decades.
Last week, Helsingin Sanomat wrote about a study commissioned by the Finnish Commerce Federation, which found that over-the-counter medications in Sweden cost 37 percent less than in Finland. ERR examined the prices of the most commonly used fever reducers and pain relievers, as well as other over-the-counter medications in Estonia, Latvia, Finland and Sweden, and it emerged that compared to Sweden, many medicines in Estonia are also much more expensive.
Orange-flavored ibuprofen-containing Nurofen syrup, intended for reducing fever and relieving pain in children, is on sale in a Swedish online pharmacy for €4.84. The same product in Estonian online pharmacies is priced at €10.19, several times more expensive. In Latvia, it is sold even more expensively, for €11.45.
Price differences are also noticeable for ibuprofen. A box of 400-milligram Ibumax with 30 tablets costs €4.51 in Estonia, while in Sweden it's €2.52 and in Finland €3.94. The highest price for this product is in Latvia – €5.07. Even the price for a box of the same brand with ten tablets varies between countries, being most expensive in Estonia – €2.45 – and cheapest in Sweden – €1.30.
By monitoring special offers, one can find a pack of ten ibuprofen tablets on Estonian shelves for €1.80 and a box of 30 tablets for three euros, but even these prices during a campaign are higher than the regular price in a Swedish pharmacy.
For paracetamol, the quantity purchased plays a significant role. When buying a jar of a hundred tablets, one can find products in Estonia at the same price as in Sweden, but the difference becomes apparent when buying a smaller pack of about twenty tablets. Most of such packs in local pharmacies cost over two euros or fall just twenty cents below this during discount campaigns, yet in Sweden, a 20-tablet pack of paracetamol can be purchased for 87 cents, making the cost per tablet €0.04.
In Finnish pharmacies, the price is significantly higher; generally, packages containing ten 500-milligram paracetamol tablets are sold for just over two euros, and the more commonly found next size, a pack of 30 tablets, costs around five euros. Cheaper jars with a larger tablet content are not found in over-the-counter sales in Finland.
While the price differences in Estonian and Latvian pharmacies are not very large upon superficial observation, some curiosities can be found: Apotheka sells its brand of D-vitamin drops in Latvia for €4.30, and there's currently a discount campaign where it can be obtained for €2.58, while the Estonian Apotheka asks €9.80 for the same product, nearly four times more.
A pack of Strepsils throat lozenges costs €5.68 in a Swedish online pharmacy, €7.44 in Estonia, and €7.83 in Latvia. This product is most expensive in Finland, where a similar box is sold for €10.27.
Finding relief for a blister on the heel is considerably more expensive in Estonian pharmacies – in Sweden, five blister plasters cost €4.66, but in Estonia, it's €11.30. In Latvia, a similar pack of plasters costs €10.55 and in Finland, it's €7.60.
However, Estonian allergy sufferers can rejoice, as Zyrtec syrup is on sale in Estonia for €4.28, while it costs €10.45 on Finnish pharmacy shelves. This brand of syrup is not found in Swedish online pharmacies.
Also, loratadine-containing allergy medicines are cheaper in Estonia than in neighboring countries. A box of ten tablets of Claritine costs €6.07 in Sweden, €6.16 in Latvia, while the same product can be obtained in Estonia for €5.23.
Additionally, local pharmacies offer Voltaren pain-relieving gel at a more affordable price than neighbors, at €12.81. A hundred-gram tube of this gel costs €15.49 in Latvia, €15.65 in Sweden, and a whopping €23.05 in Finland.
Enterol, used for relieving stomach ailments, is cheapest in Sweden, where a pack costs €9.18. The price in Estonia, €9.54, is lower than in Latvia and Finland, where it costs €11.16 and €13.67 respectively.
VAT on medicines zero in Sweden
Laura Viidik, advisor for the Ministry of Social Affairs' pharmaceutical department, told ERR that several factors can influence price differences, such as the initial price set by the manufacturer, which is mostly formed freely and may depend on the size of the medicine market and other business factors, but also the methods of price formation vary by country.
"In the case of over-the-counter medicines in Sweden, there is no regulation on retail markup, and pharmacies are allowed to freely set product prices and markups. In Estonia, maximum markup limits have been set at both wholesale and pharmacy levels," Viidik said.
The VAT rate on medicines also affects the final price, which is zero in Sweden, 10 percent in Finland, and 9 percent in Estonia.
Data from the Ministry of Social Affairs show that in 2022, the weighted average markup for medicines was 3.5 percent at the wholesale level and 12.4 percent at the retail level in Estonia.
Kaidi Sarv, a member of the board of the Pharmacists' Association, noted that the price of a medicine that a consumer has to pay at a pharmacy is formed by adding the manufacturer's price or wholesale purchase price, the wholesaler's markup, the retailer's markup, and VAT. In this respect, unlike the general increase in VAT, the VAT on medicines remained the same.
Sarv pointed out that the markup limits for medicines have remained almost unchanged throughout the entire post-restoration of independence period. The percentage of the markup depends on the package price, and the higher the purchase price of the medicine package, the lower is the maximum allowed markup percentage.
For example, a pharmacy can add a maximum of 38 cents to a product priced up to 64 cents, up to 35 percent for a product priced between €1.29 and €1.92, and for prices over €44.74 euros, the markup must not exceed €5.11.
Sarv emphasized that even if a medicine costs a million euros, its markup in the pharmacy must not be more than €5.11. Therefore, she argues that pricing in pharmacies is relatively transparent. However, when looking at the broader picture, it's difficult to say exactly why medicine prices are as they are.
"The introduction prices are covered in a veil of secrecy, all of it is a business secret, and nobody knows anything nor should they. The wholesaler sells it, sends an invoice to the pharmacist, and the retail price in the pharmacy is calculated based on that. The basis is a national table, and since the markup rates are very small, the maximum allowed markup is used everywhere," Sarv acknowledged.
She added that over time, there have been numerous discussions about letting the prices of medicines float freely so that they could form without restrictions, but she believes that this would likely lead to higher prices. Reducing the markups in pharmacies would also not offer significant savings, in her opinion, since this percentage is not very large anyway.
The representative of the Pharmacists' Union highlighted that one option is to negotiate lower prices with manufacturers. However, manufacturers are relatively inaccessible fortresses, as Estonia is unable to exert significant pressure on anyone, referring to the small size of the Estonian market.
According to Laura Viidik of the Ministry of Social Affairs, the ministry also sees the need to update the regulations on the pricing of medicines and medical devices, including the rules on markups, as they have remained unchanged for over 20 years. A study commissioned by the ministry and conducted by the University of Tartu, which addressed this issue, was completed last October.
The study revealed that the current regulation on medicine markups does not fulfill its purpose, including a lack of a comprehensive institution and legal framework for oversight. The regulation of medical device pricing also sometimes leads to unequal market conditions.
"The study provides evidence-based material to prepare, in cooperation with stakeholders in the pharmaceutical sector, a plan for the development of the most suitable price regulation for Estonia," Viidik stated.
Higher prices in Finland part of regional policy
According to Kaidi Sarv, one of the factors contributing to the high prices of over-the-counter medicines in Finland is regional policy. In Finland, a portion of the medicine price is used to subsidize pharmacies in sparsely populated areas, essentially acting as a pharmacy tax. The rationale behind this has been debated in Finland for decades.
"Politically, it has been determined that the benefit of having pharmacies accessible throughout Finland outweighs the benefit of people being able to buy the medicine 3 percent cheaper, even though that can be a very large amount for more expensive medicines," Sarv explained.
She summarized the topic of medicine price differences in different countries, stating that it all depends on the VAT and markup rates, as well as the import price.
"The topic of medicine prices is a Bermuda Triangle," said Sarv. "It's such a complex issue with so many players – the Health Insurance Fund, national regulations, the purchasing power of the state, foreign importing companies."
While Swedish authorities claim their medicine prices are the lowest in the European Union, Viidik mentioned that there is no such statistic in Estonia to determine the position of local medicine prices on such a scale.
Riho Tapfer, the head of the Association of Pharmaceutical Manufacturers of Estonia, also stated that to his knowledge, there is no universal database comparing the prices of medicines with the same active ingredient and package size in different countries. He added that since there are hundreds of different over-the-counter medicines, the reasons for price fluctuations can be very diverse.
Helsingin Sanomat cited the weaker competitive situation in Finland as one of the reasons for the price differences between Finland and Sweden. In Sweden, many over-the-counter medicines can be sold in regular grocery stores in addition to pharmacies. The Swedish Pharmacy Association has previously estimated that allowing the sale of medicines in grocery stores has promoted competition and lowered prices.
In Estonia, there hasn't been political support for allowing medicines to reach store shelves. The discussion on this topic has always been subdued by the argument that the sale of medicines requires professional advice.
Editor: Marcus Turovski