US price pressure ‘threatens new drugs’ in Switzerland

The Swiss authorities also want to drive down the price of medicines Keystone / Christian Beutler

The pharmaceutical industry is the engine of the Swiss economy. If the pharmaceutical industry is struggling, Switzerland's tax revenues will decline, says René Buholzer, CEO of Interpharma, the association of research-based pharmaceutical companies.

In an interview with Swiss public broadcaster SRF, Buholzer also warns that price pressure from the United States is preventing new drugs from being developed in Switzerland.

SRF: Why does such a powerful industry need political support from a federal working group on ‘Life Sciences Location’?

René Buholzer: Because we are significantly worse off than it appears. Without improved framework conditions, Switzerland’s pharmaceutical industry will shrink. A recent analysis shows that we could be smaller by 2040 than we are today. This would have a massive impact on tax revenues across the country.

We were surprised ourselves at how quickly it happened. A new analysis shows that one-third of the medications already approved by the Swissmedic drug regulatory authority are no longer even submitted for reimbursement by health insurers.

SRF: Do you attribute this development to US policy?

R.B.: The US has introduced an international reference pricing system. This means that when setting prices, they look directly at a basket of countries, which includes Switzerland. Our price thus becomes the benchmark for the American market. A low price in tiny Switzerland would massively reduce revenues in the enormous US market.

SRF: This trend is not new, however. For years now, not all medications approved in Europe are also available in Switzerland.

R.B.: That’s correct. The development is long-term because the Federal Office of Public Health (FOPH) has been focusing more on cost reduction than on security of supply for years. But the situation has worsened dramatically with the new US pricing policy, which is targeting our prices, and is accelerating the problem significantly.

SRF: Does this mean that the pharmaceutical industry is specifically demanding higher drug prices in the federal working group?

R.B.: To ensure supply, higher prices may be necessary due to the changed global situation. We are open to financing options.

SFR: To lower prices, politicians want to allow discounts through a revision of the health insurance regulations. Why are you opposing this?

R.B.: That would have been a solution in the old world. But the US now explicitly demands the net price, meaning the price after all discounts. This renders the instrument ineffective. If we have a net price that is too low, companies would rather forgo the small Swiss market than risk a price reduction in the enormous US market.

SRF: One of the working group’s proposed solutions, as reported in the media, involves a fund through which, for example, the cantons would finance higher prices for new medications. Is this something you support?

R.B.: We must take concerns about the level of health insurance premiums seriously. Therefore, we are open to any kind of financing solution. This could be a fund, savings on off-patent medications, or a different distribution of costs.

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