Society gains substantial added value from investments in the healthcare sector. Pharmaceutical and medical innovations open the way to better chances of a cure or survival, or help to enhance patients’ quality of life. The additional cost of new medicines is compensated by lower expenditures in other areas (hospitals, doctors, nursing care). For instance, new medicines enable patients to be treated in hospital on a day-care basis or even at home, instead of taking up expensive hospital beds.
One fact that is often overlooked in the discussion of medicine prices is that the price of medicines covered by statutory basic medical insurance is not set on the open market but through complex state interventions. The manufacturer’s selling price, distribution margins, counselling fees, administrative costs and taxes are all administered and regulated by this process. This regulation begins before a medicinal product even reaches the market. It takes roughly 8 to 12 years for a medicine to reach market readiness and for all the data required for authorisation to be submitted to and accepted by the competent authority. Only then can the manufacturer apply for the product to be reimbursed by the statutory health insurance providers.
Prices controlled by the Federal Office of Public Health
In Switzerland, as in most other countries, the authorities determine the prices of medicines and review them at regular intervals. The prices of medicines reimbursed by the statutory health insurance providers are controlled by the Federal Office of Public Health (FOPH). In order to determine the price of a medicinal product, the FOPH first considers the cost of therapy with products authorised to treat the same disease. This process is known as internal reference pricing (IRP). It then compares the prices of products in other countries (known as external reference pricing, or ERP) in line with the recommendations of the Federal Medicines Commission (FMC). For external reference pricing, prices are compared with those in countries with a pharmaceutical industry economically comparable to that of Switzerland’s.
List of pharmaceutical specialities
Health insurance providers only reimburse the cost of a medicine prescribed by a doctor under the provisions of statutory health insurance if the FOPH has included it in the List of pharmaceutical specialities (LS). The medicine is examined for safety, efficacy and quality before the FOPH can include it in the LS. The authority responsible for this review is Swissmedic, the Swiss Agency for Therapeutic Products. Before a medicine can be included in the LS, Swissmedic considers not only whether it is effective and appropriate in the context of social health insurance, but also whether it is cost-effective (known as a WZW assessment, from the German words for effectiveness, appropriateness and cost-effectiveness). The decision on inclusion is taken by the FOPH at the recommendation of the FMC. If medicines no longer fulfil the WZW criteria, their prices are adjusted, their use is restricted or, in certain cases, the FOPH removes them from the LS.
Three-yearly price review
The price of every medicine is reviewed by the FOPH once every three years. From May 2012 this review was based solely on the price in other countries (external reference pricing, ERP). A comparison with products authorised for the same disease (known as internal reference pricing, IRP) was added to the price review in June 2015. Conformity with the WZW criteria is checked for around one third of all LS products each year during the three-year review cycle. All the products authorised for a specific indication (e.g. all the medicines authorised to treat cancer) are reviewed in each case. Price cuts come into effect on 1 December each year.
The Federal Council brought a new pricing system into effect at the start of March 2017 following modification of the respective Ordinance. In addition to a number of minor changes, the Federal Council decided that ERP and IRP should always be given equal weighting when new medicines are included in the LS, in the three-yearly price reviews, when indications are extended and when patents expire. Previously the ERP was given a greater weighting than the IRP in the three-yearly price reviews.