Medicine prices and margins

Various false incentives and inadequate regulations affect the pricing and approval of medicines today. This means that medication in Switzerland is still more expensive than medication abroad and that unreasonable price demands by the industry go unchallenged.

Many new high-price medicines will be licensed in the coming years. This raises questions of financeability and how to curb expenditure on medication. The current rules do not allow for new phenomena such as the personalisation of medicine, the handling of a lack of evidence (uncertainty) or combination products to be taken into account.

Future pricing models must also face up to these challenges. The following points are important:

• Making the pricing rules more flexible: The set of rules must be updated regularly to take account of the latest challenges (e.g. a solution for the combination problem). If there is no clear evidence (as yet), products should be added to the Specialty List (SL) temporarily, with conditions attached and at a lower price (a procedure sometimes known as ‘managed entry schemes’). If they fail to meet these conditions or subsequently provide evidence of their effectiveness, such products would have to be removed from the list again. The proposal put forward by the Federal Council in its second package of measures is a step in this direction. A certain lack of transparency could be accepted in making pricing more flexible, e.g. if net prices were to no longer appear on the Specialty List. However, the net prices must automatically be made known to those paying for the medication and, ideally, also to the service providers. From the point of view of the insured persons and premium payers, a complete lack of transparency such as that entailed by the proposal for a reimbursement fund solution is not an option and should be rejected.
  
• Developing and implementing a differentiated pricing system: A system of this kind would take account of prevalence and budget impact. In other words, if a product is to be widely used or its use is to be expanded, a low price must be set or the current price lowered. Pricing, on the other hand, must not be driven by a product’s theoretical benefits to the economy as this will lead to unacceptable prices having to be borne by social insurance – prices that are not found on any other market.

At present, only the company which submitted the application can appeal an FOPH decision on approval or pricing. This means that, as cost bearers, the health insurers cannot react in the interests of their clients when a medication is admitted to the catalogue of benefits in spite of doubts regarding its WZW criteria or if it is given a price that is too high to be considered justified. Like the Federal Council’s group of experts on cost-cutting, CSS therefore advocates introducing to the pricing system a right of appeal for the stakeholders concerned (insurers, consumers/patients).

CSS is still seeking to establish fair compensation of the distribution cost element by means of negotiations with the service providers in each distribution channel. In this respect, it is necessary to lower the current distribution margin and thus also the price of medicines on the Specialty List, while at the same time negotiating with hospitals, doctors and pharmacists regarding the distribution share that is freed up. Doctors, for example, have a restricted range of medicine on offer and thus lower storage costs. The logistic costs and capital expenditure for hospital pharmacies, on the other hand, are already included in the flat rates paid for hospital inpatient services. These differences must be reflected in the tariffs. At the same time, contract-based solutions have the advantage that additional services provided when dispensing medication can be compensated in accordance with their added value. An example of this kind of additional service is the dispensing of generic medicine at the start of treatment. With the newly negotiated service-based remuneration (LOA V) system for pharmacies, which has been submitted to the Federal Council for approval, services of this kind will be properly reflected.