Pricing

Drug prices are not market prices; they are set by the Federal Office of Public Health. Pharmaceutical and medical innovations improve the chances of recovery and survival or contribute to improving patients’ quality of life. However, the additional expenditure on new medications is offset by lower expenditure in other areas (hospitals, physicians, nursing care). The marketing authorization holder can only submit an application to the FOPH for inclusion on the Specialties List shortly before market authorization and with positive advance notice from Swissmedic. When discussing medication prices, it is often overlooked that the pricing of medications covered by statutory health insurance is not decided on the free market, but through complex government interventions. The government administers and regulates the manufacturer’s selling price, sales margins, as well as consultancy fees, administrative costs, and taxes. Regulation begins before a drug is even launched on the market. It takes around 8 to 12 years for a drug to reach market maturity and for all the data required for approval to be submitted to and accepted by the competent authority. Only then can the manufacturer apply for reimbursement by health insurers.

Price controls by the Federal Office of Public Health

In Switzerland, as in most other countries, the authorities set the prices of medicines and review them at regular intervals. Prices for medications covered by statutory health insurance are controlled by the Federal Office of Public Health (FOPH). In order to determine prices, it first takes into account the treatment costs of medicines already approved for the treatment of the same disease in an internal reference price (IRP)  comparison. An international price comparison (IPC) is then carried out in accordance with the recommendations of the Federal Medicines Commission (FMC). Countries that are economically comparable with Switzerland in the pharmaceutical sector are taken into account when comparing prices with other countries.

Specialties List

Under compulsory health insurance, health insurers only reimburse a medication prescribed by a physician if it has been placed on the Specialties List (SL) by the FOPH. Before the FOPH can add a drug to the SL, it undergoes a safety, efficacy, and quality check. The competent authority is the Swiss Agency for Therapeutic Products, Swissmedic. However, to be included in the SL, it is not only assessed whether the medicinal product is effective and appropriate in the context of social health insurance, but also whether it is economically efficient (the so-called EAE test). This is decided by the FOPH on the recommendation of the Federal Compensation Office FCO. The EAE criteria must be met to be included in the Specialties List.

Triennial price reviews

Every three years, every medication undergoes a price review by the FOPH. For the price review, the FOPH uses the international price comparison (IPC) and the internal reference price comparison (IRP) as the statutory price-setting criteria. In the price reviews, the FOPH splits medicinal products into three groups, one of which is reviewed each year with respect to effectiveness, appropriateness, and economic efficiency. Between 2017 and 2023, the prices of more than 2,700 medicinal products were reduced by an average of 14 percent. The reviews lead to annually recurring savings of over CHF 1.5 billion. The pharmaceutical industry is the only player in the Swiss health care sector that makes a significant contribution to cost containment through institutionalized price reviews.

At the beginning of March 2017, the Federal Council introduced a new pricing system by means of amendments to the ordinance. In addition to various minor amendments, it decided that, from then on, the IPC and IRP would always be given equal weighting for the initial inclusion of new drugs in the SL, as well as for triennial price reviews, indication extensions, and patent expiry. Previously, the IPC had been weighted higher than the IRP in the triennial price review.