Federal audit finds Swiss hospitals fail to pass on discounts to patients

The audit gave poor marks to pharmacies and hospitals for passing on discounts to patients. Keystone / Christian Beutler

Despite being legally obliged to do so, doctors’ practices, hospitals and pharmacies do not always pass on discounts on medicines to health insurance funds and patients. This is the finding of the Swiss Federal Audit Office, which is calling on the federal government to make improvements.

By law, doctors’ practices, hospitals and pharmacies are generally required to pass on any discounts they receive when purchasing medicines to health insurance funds. In an audit report published on Wednesday, the Swiss Federal Audit Office (EFK) has given a poor assessment of the performance of these stakeholders and the federal government.

In 2024, service providers are estimated to have received benefits in kind totalling CHF743 million – 8% of medicine sales, according to the EFK. It assumes that, for around half of this amount, the benefits were either retained in breach of their obligations or were not appropriate. Some CHF88 million is said to have been passed on.

Uncertain estimate

The EFK admits that its estimate is subject to considerable uncertainty. The reason is that the exact extent of the benefits in kind cannot be determined. Furthermore, wholesalers were not included in the calculation.

Where wholesalers act as intermediaries between pharmaceutical manufacturers and healthcare providers, they are not required to disclose benefits granted by the manufacturers, nor are they obliged to pass them on to health insurance funds and insured persons. This applies only to benefits provided by wholesalers to healthcare providers.

Since 2020, the Federal Office of Public Health (FOPH) has been checking whether healthcare providers pass on monetary benefits to health insurance funds – and ultimately to insured persons – when required to do so. According to the EFK, these checks are hardly effective. Insufficient account is being taken of the risk of benefits being retained improperly or in breach of the law.

The reasons cited are the Covid-19 pandemic and staff-cutting measures. To date, there have been no criminal sanctions for the unjustified retention of benefits. However, proceedings are currently underway. Although there has been a delay, the necessary structures are being put in place, the FOPH stated.

Providing clarity

The EFK recommends that the FOPH first obtain the necessary, up-to-date data for assessing benefits in kind. The extension of transparency obligations to wholesalers should also be examined.

For the EFK, another relevant question is which benefits must be passed on and which do not. This would include in particular the shift towards discounts and rebates for bulk orders or for orders placed online.

In the view of manufacturers and service providers, these are payments in return for equivalent services that are not subject to the onboarding requirement, it writes. For the EFK, however, a discount of 1-2% is “significant”.

It believes that these discounts must be passed on to health insurance funds and insured persons. The FOPH has agreed to require this passing-on in future.

‘The wrong signal’

The EFK also criticises the fact that the FOPH only monitors practices and hospitals that have entered into agreements not to pass on discounts in full – pharmacies are not included. Under the agreements, up to 49% of the discounts may be used to improve the quality of treatment.

Furthermore, the Federal Office investigates reports – for example from health insurers – regarding unjustifiably withheld financial benefits. The EFK considers that inspecting only those service providers who have entered into such an agreement sends “the wrong signal”.

It believes the FOPH should focus its scrutiny on areas where no such agreements exist. It should require doctors and hospitals that have entered into agreements to submit details of the benefits per medicine on an annual basis.

The FOPH initially rejected these recommendations, citing the legal situation and limited resources. However, Health Minister Elisabeth Baume-Schneider, who was contacted by the EFK due to the financial implications of this stance, subsequently stated that the recommendation would be implemented.

In response to the report, the Foundation for Consumer Protection called for the abolition of the discount schemes. These should be replaced by lower and more transparent medicine prices, it wrote. This would also reduce the costs of basic health insurance and eliminate the scope for questionable incentives in prescribing practices.

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Translated from German, reviewed by an English Department journalist.