Switzerland faces pressure from US drug pricing policy

Raising drug prices would affect healthcare insurance bills. Keystone / Gaetan Bally

US pressure on medicine prices could cost Switzerland hundreds of millions of francs a year, according to a study.

Swiss drug prices are already among the highest in the world, but prices in the US are significantly steeper. The US government wants to change that and is pressuring pharmaceutical companies to offer new medicines at lower prices in the American market.

For Swiss pharmaceutical giants such as Roche and Novartis, lower prices in their biggest market would mean lower revenues.

Pharma firms are responding by pushing other countries to accept higher prices. A new study by researchers at the federal technology institute ETH Zurich and the University of Zurich concludes that if Switzerland and other countries give in to this pressure, Swiss households could face additional annual costs amounting to hundreds of millions of francs.

Co-author Kerstin Vokinger says Switzerland must carefully consider how it deals with US pressure.

The US wants to become a “most-favoured nation” for drug pricing. Under this approach, US prices would be compared with those in a group of reference countries, including Switzerland. For pharma companies, this creates a strong incentive: the higher prices are in those countries, the higher prices can remain in the US.

Conversely, if a country refuses to raise prices, it may become less attractive for companies to launch new medicines there.

According to Vokinger, no country wants to end up with the lowest prices and risk losing access to innovative medicines. This dynamic could lead to countries outbidding one another with ever-higher prices.

Swiss prices relatively high

It remains unclear how the US will ultimately determine drug prices in the future. However, the threat is already causing debate. René Buholzer, head of Interpharma, the association representing major pharma companies in Switzerland, says that because prices in the small Swiss market can affect the much larger US market, companies must adapt.

In practice, that means higher prices may be necessary to ensure innovative medicines continue to be offered in Switzerland.

The Swiss Federal Office of Public Health disagrees with the idea of raising prices across the board. The agency argues that it is still uncertain whether US pricing models will be implemented over the long term.

Vokinger also notes that Swiss prices currently do not play a decisive role in US pricing because they are not among the lowest internationally. Swiss prices would play a larger role only if other countries also to raise theirs.

Innovative medicine access

According to Buholzer, pharma companies are already adjusting their behaviour. A survey of Interpharma members found that around a third of approved medicines are no longer being submitted to the health ministry for reimbursement approval.

But the agency says it has received roughly the same number of applications as in the previous year.

Access to innovative medicines remains crucial for patients in Switzerland. Whether a company applies for reimbursement for a medicine ultimately remains its own decision, regardless of pricing pressures.

Vokinger believes Switzerland should work with other countries to find common solutions. The study suggests that in an extreme pricing conflict, US drug prices might not fall at all. Instead, prices in other countries could rise, leaving the pharma industry as the main beneficiary rather than American patients.

Translated from German, sub-edited by Matthew Allen/ts

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