The pharmaceutical sector was reformed during the 1990s with the aims of establishing drug regulatory authorities, creating a legislative framework, introducing a system for reimbursing drugs and privatizing pharmaceutical services. Generally, these aims have been achieved. Medicines of proven quality, safety and efficacy are available on the pharmaceutical market, and patients' access to prescription drugs is supported by the reimbursement system. Estonia's pharmaceutical sector looks very similar to pharmaceutical sectors in other EU member states.

Regulation

Legislation concerning the quality, safety and efficacy of pharmaceuticals and governmental control of pharmaceutical activities is based on the Medicinal Products Act of 1995 and on numerous governmental and ministerial decrees providing detailed regulations and guidance. The legislation on pharmaceuticals for human and veterinary use has also been harmonized with EU directives. The State Agency of Medicines (SAM) is fully responsible for the control of all pharmaceutical activities, including veterinary products. From 2000 it has also been the competent authority for medical devices. All pharmaceutical activities, including manufacturing, wholesale and retail, import/export and hospital pharmacy services, are licensed by the Licensing Board at the Ministry of Social Affairs. Pharmaceutical services are subject to inspections by the SAM, and the GMP (good manufacturing practice) standard is obligatory in the production of pharmaceuticals. The SAM also provides market authorization based on proven quality, safety and efficacy; approves clinical trials; regulates advertising and promotion of pharmaceuticals; and has responsibility for pharmacovigilance activities.

Market statistics

Drug statistics based on wholesale and retail sales data are collected by the SAM's Bureau of Drug Statistics. The WHO-endorsed ATC/DDD (Anatomical Therapeutic Chemical classification system with Defined Daily Dose) methodology is used for analyzing volume data. Summary annual reports (in defined daily doses per 1000 inhabitants per day) are available from the SAM web site.

Local production covers approximately 7% of the market value of pharmaceuticals. In 2002, there were eight licensed manufacturers (of mainly generic products) in Estonia. All drug manufacturers and wholesalers in Estonia are private companies. There are 38 enterprises with wholesale licences, but 6 major wholesalers provide over 90% of the turnover. These wholesalers have excellent facilities, computerized logistical systems and well-functioning distribution networks. Retail drug sales are only permitted in pharmacies. In 2003, there were 310 main and 158 branch pharmacies in Estonia. The number of retail pharmacies has been stable over the last five years. Growth in the number of pharmacies can be seen in bigger towns, while some rural pharmacies have closed. More recently, retail chains have developed. One pharmacy chain is closely connected to the largest wholesaler and includes about 40% of all pharmacies. Legally, the wholesale companies cannot directly own pharmacies, and sophisticated ownership schemes are in use. The 29 hospital pharmacies provide drugs only to hospitals and are not allowed to sell drugs to the public.

In monetary terms, the sale of pharmaceuticals has increased by 15-20% in the last few years. Per capita annual consumption of pharmaceuticals, including prescription medicines, over-the-counter drugs and hospital medicines, was estimated to be €70.30 (EEK 1100) in 2001. In volume (doses per capita), the amount of prescription medicines consumed in Estonia in 2001 is estimated to be approximately 25-30% of the amount consumed in the Scandinavian countries.

Manufacturers are free to set their own prices for non-reimbursed pharmaceuticals. The regressive cost-plus (profit margin) system is used for wholesalers and pharmacies, fixing the maximum mark-ups for both reimbursed and non-reimbursed pharmaceuticals, including over-the-counter drugs.

Reimbursement and expenditure

Since 2002, applications by manufacturers for EHIF reimbursement must be accompanied by formal pharmaco-economic analysis, following the common Baltic guidelines for pharmaco-economic analyses, available in English from the EHIF web site. The application, accompanied by clinical and pharmacoeconomic data, must be submitted to the Ministry of Social Affairs. The clinical data are then evaluated by the SAM, while the economic data are assessed by the EHIF. Both provide a written report to the ministerial committee that makes recommendations to the Minister on reimbursement decisions. After a positive opinion from the committee, the price is negotiated between the manufacturer and the Drug Policy Unit of the Ministry.

When a generic product become available, a reference price based on the active substance(s) is calculated as the average of the second and third cheapest product; from January 2005, it will be based on the second cheapest product. Reimbursement proportions of 75%, 90% and 100% are calculated from the reference price when the actual price is higher. Exemptions from the reference price are possible when there is proven therapeutic value in using a specific formulation - for example, a modified-release instead of an immediate-release pill.

Information and rational use of drugs

Information about medicines that is directed to either prescribers or consumers is controlled by the SAM through the market authorization process, and national language summaries of product characteristics (SmPCs) are published in the annual compendium Pharmaca Estica and on the SAM web site. Advertising of pharmaceuticals must be in line with the approved SmPCs. The first edition of a national formulary for medical doctors, similar to the British national formulary, was published in 1995. This handbook promotes the use of products with established efficacy and high benefit-to-cost ratios. The SAM distributes the bimonthly Drug information bulletin [Ravimiinfo Bülletään] free of charge to the majority of medical doctors and to all pharmacies. The bulletin is independent of the drug industry and compiled by specialists in the University of Tartu Faculty of Medicine, providing non-commercial reviews and comparisons of existing treatment alternatives and critical evaluations of new medicinal products.

In recent years, several treatment guidelines have been developed and implemented, in both primary and specialist care. However, it is recognized that there is a need for further work in this area, so until now national policies on the use of pharmaceuticals and new equipment have been limited to information and guidance.

A recent legislative proposal for obligatory generic substitution at the pharmacy level was opposed and eventually rejected by both doctors and pharmacists, the former fearing the loss of their decision-making power and the latter fearing increased responsibility. The regulation has been implemented from October 2004 in a milder form, in which doctors have been generally required to prescribe by active substance, though they are also allowed to prescribe by brand name if they provide a written justification for doing so in a patient's medical notes.

Possible future changes

The regulatory system for pharmaceuticals has achieved stability, and no major reforms are foreseen in this area. The distribution system faces the growth of pharmacy chains closely linked to wholesalers. This development has not been welcomed by pharmacists or patients, and legislative proposals to limit the maximum market share of chains are under way. Regarding the reimbursement system, the first results of the reforms have been controversial, with some decrease in the rate of growth in drug spending, but a drop in the number of prescriptions purchased as well. As the long-term effects become evident, further fine-tuning of the system is possible - for example, the introduction of therapeutic group-based reference prices for specific drug groups and the introduction of compulsory generic substitution to protect patients from the economic consequences of heavy brand-marketing.

Health care technology assessment

Estonia has no systematic programme of health technology assessment (HTA). The main activities in this field are assessing new services to be added to the benefit package, evaluating the need for high-cost technologies and ensuring the safety of medical equipment.

The first attempts to address the issue of health technology assessment was the establishment of the Committee on Medical Technology in February 1995 to coordinate and advise on the procurement and use of high-technology medical equipment. It consisted of representatives from the Ministry of Social Affairs, the EHIF (then the Central Sickness Fund), the Estonian Medical Association (EMA) and the Hospital Association. To be accepted for health insurance financing, all purchases of equipment costing over a certain limit were subject to approval by the Committee. In practice, however, equipment was also purchased without approval. There was no practical way of enforcing a refusal of payment by the health insurance system.

In 1999, the Medical Devices Department of the SAM was set up to deal with medical devices entering the Estonian market. However, it does not assess services and introduce regulations for medical devices so much as register products and assess their conformity to the requirements. Thus, the department assures quality control of medical devices rather than engaging in health technology assessment.

The Committee on Medical Technology was restructured in 2001 to include representatives from the Ministry of Social Affairs, the EHIF, the medical specialties and the SAM Medical Devices Department. The Committee is now responsible for regulating medical technology as well as high-cost equipment. Applications for technology procurement are assessed according to several criteria, such as the need for the equipment, the actual patient pool, optimality and sustainability.

Due to growing pressure from providers' management boards and increased competition among providers, there are strong incentives to introduce high-cost technology where there is no assessment of value for money. One of the ways to overcome this problem is to use capped cost and volume contracts between insurer and provider, which limit activities in general terms. The drawback is that some technology expenses could still be covered by the municipalities, leading to oversupply. There remains a need to develop a clear national medical equipment policy and to create a national plan for use of high-technology equipment to ensure financial feasibility. The latest ideas are to develop a list of equipment subject to national planning and to require support from the Committee on Medical Technology before purchasing, thus moving the system from cost limitation to an explicit positive list.

At the end of 2002, new rules were introduced on how new procedures, treatment methods etc. should be introduced into the EHIF benefit package. See the section on Health care benefits and rationing for more detailed information on this process. A key issue is the lack of trained human resources and research institutions in this area. Adapting technology assessments and evidence from other countries also presents a challenge to the scientific community and civil servants in Estonia. Methods for adapting and applying evidence-based research need to be developed.