OBJECTIVES: Finnish retail prices for drugs are determined with a pricing scheme (PS). The PS is of the form “multiplier x wholesale price + fixed sum”. The multiplier ranges from 1.125 to 1.5 (being smaller for higher wholesale prices), whereas the fixed sum ranges from 0.5 to 47.68 euros (being larger for higher wholesale prices). Although PS is regressive, it nevertheless provides higher absolute pharmacy margins for drugs with higher wholesale prices. At the lower end of wholesale prices PS results in retail prices that do not cover dispensing costs. Despite this, the retail prices (excluding VAT 8%) are used to represent all drug and drug delivery costs in economic evaluations. This study assesses the impact of this Finnish system derived “distortion” in cost-effectiveness analyses. METHODS: The cost-utilities of new hypothetical treatments were assessed in a setting where the new and old treatments produce different amounts of quality-adjusted life years (QALYs) and the only cost difference comes from the pharmaceutical prices. The treatments are assumed not to differ regarding the real costs of drug delivery and patient survival. The PS-induced computational cost difference was deducted from the retail price differences of new and old treatments to estimate the impact of PS on the incremental cost-effectiveness ratios (ICER). RESULTS: The computational cost differences due to PS ranged from 7.3 to 1 951 euros and the QALYs gained ranged from 0.004 to 0.070 in estimated scenarios. The respective ICERs increased by 104 to 487 840 euros/QALY due to the PS. CONCLUSIONS: The PS significantly worsens the ICERs obtained for more expensive and often innovative pharmaceuticals. The Finnish PS is problematic when the aim is to provide optimal, cost-effective treatments to Finnish patients. In the current form, the PS discourages innovation and may prevent reimbursement of otherwise cost-effective treatments.