Pricing of Medicines in Switzerland | Three-yearly price review: What are the most important changes for 2023?

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The Federal Office of Public Health (FOPH) reviews the price of every medicinal product that is reimbursed under the statutory health insurance in Switzerland once every three years. These products are included in the list of pharmaceutical specialities (SL). However, the modalities of the review are often controversial and recent case-law requires periodic adjustments. This is no different for the 2023 review. While no fundamental changes are to be expected with regard to the review of the prices of medicinal products that are reimbursed by the mandatory healthcare insurance in Switzerland, there are still a number of important changes to the FOPH's practice. The following article outlines the pricing review in 2023.

At the end of last year, the FOPH announced the pricing review for medicinal products in 2023. Affected by this year's review are medicines that were included in the SL before 1 January 2022, which includes gastroenterologicals, metabolics, antidotes and cation exchangers. In addition to originator drugs, the prices of generics with the same active ingredient, co-marketing preparations and biosimilars will also be reviewed. Exempted from the review are medicines whose prices have already been reviewed in 2022 due to a change in limitation or an extension of the indication.

For its review, the FOPH carries out an international price comparison, considering the price of the same medicine in selected reference countries (e.g. external reference pricing, ERP) and a therapeutic cross-comparison in which it notes the treatment costs of already-approved medicines for the same condition (e.g. internal reference pricing, IRP). For the assessment of cost-effectiveness, the FOPH weights equally the result of the average prices of the ERP and the IRP.

Internal Reference Pricing (IRP)

In the IRP, the FOPH reviews efficacy in relation to the price of other medicines used to treat the same indication. The FOPH determines whether a medicinal product can be considered a therapeutic alternative according to the indication. In doing so, it takes into account the SmPC and any limitations on the reimbursement according to the SL, as well as national and international treatment guidelines. The alternative products must be included on the SL at the time of the review. The comparison is not limited to products of the same class of active ingredients. Medicines used in different treatment lines are not considered therapeutic alternatives. The FOPH has broad discretion in the choice of medicines. It can make a selection from the group of possible comparative medicinal products and exclude costly preparations from the comparison. The costs per day or course of treatment are relevant for this assessment.

For the IRP, the FOPH may also take into account medicines for which it has ordered a price reduction, but which has not yet become enforceable following an appeal against it. The FOPH links the conclusion of the review to the condition that the price must be reviewed again if the reduced price of the comparator product becomes enforceable. The FOPH's reassessment will then be limited to the reduced price of the comparator product.

In the case of medicinal products with several different indications, the FOPH limits the IRP to the main indication, which is determined on the basis of prevalence of the indication and the therapeutic line in which the drug is used. According to the case-law of the Swiss Federal Administrative Court, failure to take secondary indications into account may conflict with the legal obligation to conduct a comprehensive review of cost-effectiveness. Such a failure might be inadmissible, particularly in the case of different treatment lines.

For the review of combination products, the FOPH wants to consider not only equivalent mono-preparations, but also different combination products that can be considered a therapeutic alternative. With this change in practice, the review of combination preparations is no longer limited to mono-preparations with the same active ingredient, but also allows the consideration of therapy-equivalent combination products. The FOPH indicated that it will also take into account the costs of generics and biosimilars. The consideration of generic drugs contradicts the different pricing rules for innovative and generic drugs.

In principle, the IRP for patent-expired originator products is carried out with patent-expired originator products. If no comparison with patent-expired originator products is possible, the FOPH may exceptionally compare with patent-protected originator products, but must apply a discount of 20% to the FAP. This value is an approximation to determine the average price change at patent expiry and corresponds to the difference determined by the FOPH between the price before and after patent expiry.

External Reference Pricing (ERP)

In the ERP, the FOPH compares the price in Switzerland with selected reference countries. The basis of the comparison is the ex-factory price. The ex-factory price includes all manufacturing and distribution costs up to the manufacturer's or importer's ramp in Switzerland. If the FSP is not published, the FOPH uses the pharmacy cost price or the wholesaler's price after deducting the wholesaler's margin. Any official manufacturer discounts (e.g. as in Germany) must be taken into account as well. The marketing authorisation holder must demonstrate the actual prices.

For the ERP, the same medicinal product is to be considered, regardless of its name, the person holding the marketing authorisation or the reimbursement status in the reference country. Original preparations with the same effect and the same dosage form are deemed to be the same medicinal product. Different indications are not taken into account.

The assessment of the identity of a medicinal product for the ERP differs from that of the Therapeutic Products Act (Heilmittelgesetz, HMG) or the health insurance law, namely the Health Insurance Ordinance (Krankenversicherungsverordnung, KVV), which are based on a different concept of original product. According to this different definition, the ERP is not limited to identical medicinal products and does not require a corresponding field of application. From this, the FOPH deduces that the ERP may be carried out with any preparation that has the same active ingredient and the same dosage form. Generics are not to be taken into account, as these are not considered original preparations and parallel-imported medicinal products. It is unsettled how medicinal products with known active ingredients are to be treated, as they qualify neither as original preparations nor as generic products.

The distribution channel in the reference country is irrelevant for the ERP. In particular, it is irrelevant whether the distribution is carried out by a subsidiary, a licensee or a legal successor (e.g. transfer of distribution rights). Whether the Swiss marketing authorisation holder has an influence on the ex-factory price in the reference country is not decisive. It is also irrelevant whether the medicinal product is reimbursed in the reference country or whether it is dispensed only by pharmacies. Therefore, the ex-factory price often cannot be determined with the necessary certainty. If the product is subject to free trade, there are no official, let alone published, prices for the intermediate trade.

The FOPH now also wants to consider medical devices for the ERP. If the marketing authorisation is not a prerequisite to the ERP, and only the active ingredient and the dosage form are to be considered, an ERP can also be carried out with products that are not authorised as medicinal products. This also allows medical devices, cosmetics or food supplements to be considered. However, disregarding the requirement of marketing approval as a medicinal product was hardly the intention of the legislator. This is confirmed by the difficulties in establishing a clear price for the intermediate trade. This is because these products are not subject to any price controls, unlike medicinal products that are reimbursed by the statutory health insurance system or any foreign equivalent. In many cases, these products are also traded across borders or online, which is why the cost price or retail price can hardly ever be determined in a reliable manner.

However, this practice need not be to the disadvantage of the marketing authorisation holders. Medical devices or dietary supplements are not necessarily traded more cheaply abroad than reimbursed medicinal products in Switzerland just because they are not subject to any price controls. To consider other products than medicinal products can also be an opportunity for marketing authorisation holders to improve an unfavorable ERP.

Punctual improvements, effects to be adjudicated on a case-by-case basis

In sum, no fundamental changes are to be expected with regard to the review of the prices of medicinal products that are reimbursed by the mandatory healthcare insurance in Switzerland. Due to various changes in practice, however, new questions may arise in individual cases, the effects of which must be examined in detail. In any case, marketing authorisation holders may not rely on the fact that prices that have already been reviewed in the past will continue to apply. The FOPH is not bound by the results of earlier reviews.

For more information on how the pricing review for medicinal products in Switzerland could affect your business, contact your CMS client partner or local CMS experts: