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Swiss pharmaceutical prices to fall further

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The most recent measures implemented for the pharmaceutical sector by the Swiss Federal Council and the Federal Department of Home Affairs effective from 1 May 2012 mean further losses for the pharmaceutical companies in Switzerland. Given global advances in sales and the growth rates for the life sciences sector, at first glance this hardly seems significant, but if we look at the importance of local pharmaceutical, biotech and medtech companies for the Swiss economy, these latest efforts to relieve the burden on the mandatory social health insurance scheme should be seen in a critical light.

Additionally to the comparison of its price in other countries the price-setting process of a pharmaceutical, when initially admitted on the reimbursement list (SL)[1], will continue to include a comparison with state-of-the-art pharmaceutical treatment. This Swiss specific therapeutic value assessment will not be carried out anymore in the subsequent three-yearly re-assessments (see new Art. 65d par. 1bis Health Insurance Ordinance).

With this decision, Switzerland is delegating the structuring of its pharmaceutical prices even more strongly to foreign countries than today. This increasing “implantation” of decisions from other jurisdictions is weakening Switzerland’s autonomy, specifically in an area that falls outside the sphere of current discussions on the (autonomous) implementation of European provisions, as in this instance Switzerland is not adopting EU law but is following decisions by individual states.

The future practice of the Federal Office of Public Health (BAG) will show whether prices will still be determined with great care and autonomy, when drugs are first admitted to the reimbursment list, or whether even at this stage, the procedure will be restricted to “copying” prices that already apply in other countries.

The latter would mean that Switzerland factually will not have a legal or economic vote on the market prices of one of its most important export products, not only during their life cycle, but already upon their introduction to the market.

If not even Switzerland succeeds to determine pharmaceutical prices according to an intellectually sound “equation” that rigorously aims to reflect the complexity of this issue, the life sciences industry runs the risk of finding ever less recognition and financial support for its growing R&D investments, both nationally and internationally.

The new policy will only have a small impact on individual pharmaceutical companies what their scope for action is concerned: In most cases it will be impossible to justify a higher price for a pharmaceutical than in the reference countries at the three-yearly review. There are cases, however, where a higher Swiss price could or even ought to (e.g.) stimulate research, introduce market fairness or boost a specifically effective therapeutic use. Every once in a while it may therefore be necessary to check whether narrow interpretation and general application of this new Art. 65d par. 1bis of the Health Insurance Ordinance might not be inappropriate or designed to promote unequal treatment of two competitors.

It is of utmost importance to individual companies whether an appeal against a three-yearly price alteration decree will have suspensive effect. The complexity of an individual case might justify it, although (older) decisions by the Supreme Court in similar matters suggest otherwise.

[1] As a collection of individual decisions, the Federal Office of Public Health’s list of pharmaceutical specialties determines which drugs must be reimbursed at what price and under what conditions to insured persons with basic health insurance cover, i.e. all Swiss residents.

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