Generics, which are copies of brand-name medicines, are manufactured after the patent protection on the original product has expired, using the same active ingredient. A generic product has the same composition, volume, dosage and pharmaceutical formulation as the original.
The price-difference rule states that generics can only be granted reimbursable status under statutory health insurance cover if they are less expensive than the products they are copying by a percentage determined by the market volume of the original. This takes into account the fact that generics do not incur any costs for research or development. Generic pricing is based on the price of the original product on the date its patent expires. The price-difference rule is set out in Art. 65c of the Health Insurance Ordinance (HIO). The manufacturer may reduce the price of the original product to that of the generic in order to remain competitive.
The Federal Council revised this price difference between generics and original products in 2017 with the aim of reducing the prices of medicinal products. Generic pricing was differentiated more strongly according to the market volume of the original product as a criterion for inclusion in the List of pharmaceutical specialities. There are five levels determined by the market volume of the original product during the three years prior to the expiry of its patent.
The Federal Council also made the differentiated co-payment made by the patient more flexible. Patients are currently required to make a differentiated co-payment of 20 percent for a medicine if it is at least 20 percent more expensive than the average of the cheapest third of all medicinal products with the same active substance composition on the List of pharmaceutical specialities. Previously, patients had to make a co-payment of 10 percent for generics and 20 percent for original products.
Substitution – a right, but not an obligation
According to Art. 52a of the Health Insurance Act, pharmacists can substitute a generic for an original product prescribed by a doctor, but they are not obliged to. Pharmacists therefore have a right to substitute generics in Switzerland, but substitution is not mandatory. The doctor can leave it to the pharmacist, as a healthcare professional, to select the product most suitable for the patient.