High-priced medicine could be our best chance to lower drug prices

The best opportunity to rein in skyrocketing drug prices is coming from the most unlikely place – the highest priced therapies in the world.

If you think drug prices are bad now, just wait until the cell and gene therapies in clinical trials come on the market. When Novartis announced the price tag for its gene therapy Zolgensma in 2019, people were shocked. But Zolgensma’s $2.1 million price tag is old news now. Several therapies, including one at $3 million by Bluebird bio, a US-based biotech firm, have already surpassed this.

About the Eye on the Multinationals newsletter

There are few better places to talk about multinationals than in Switzerland. It has one of the highest densities of big global companies and a reputation for turning a blind eye to their transgressions. In this newsletter, we take on a burning issue affecting multinationals in Switzerland, and feature the highs, lows, and everything in between to keep you up to speed on what the biggest companies in the world are up to.

There’s some silver lining to all this. The higher prices go, the more questions are being asked. Why does this cost so much? Is it worth it? How much would I pay to save my child’s life? These are uncomfortable questions that have long been taboo. But they are important because they give payers and patients the power to push back on prices when a drug does little to improve a patient’s health.

Payers such as governments and insurers are starting to integrate the concept of “value” into drug pricing and contracts with pharmaceutical companies. (Here’s a Swiss start-up that’s developed a technology platform to make it happen.) But to make this work, pharma companies can’t use the complexity calculating “value” as a poor excuse for more secrecy.

This could be good news for Big Pharma too. Executives at both Roche and Novartis said this week that they want authorities to see health as an investment instead of a cost. Showing the value their medicine brings to patients and health systems is a good start.

What do you think about drug prices and how they are changing? Send me a note – [e-mail]

What else caught my eye

Nestlé agrees to pay compensation in sexual harassment case. The agri-food giant decided this week not to appeal the verdict, and instead settle with the former food safety manager who claimed the company didn’t do enough to protect her from harassment. As Le TempsreportsExternal link, the case has been batted around for more than a decade. The case concerns more than harassment though as the manager had tried to raise red flags on food safety at the Swiss company. The amount of compensation wasn’t disclosed.

The first climate liability case against a Swiss multinational is formally filed. As we reported back in December, four residents of the Indonesian island of Pulau Pari are taking on Swiss cement giant Holcim, seeking compensation for climate damages. This week the case was officially filed in canton Zug after a conciliation meeting failed to reach a resolutionExternal link reported the FT. This could pave the way for more loss-and-damage cases to be tried in the Alpine country.

Three-quarters of Swiss companies increased their investments in sustainability last year. These were largely focused on improving energy efficiency, according to a survey of 75 executives by Deloitte. Despite the increase, only 12% of Swiss companies believed the private sector was “very” serious about addressing climate change (compared with 29% globally). Exactly how much they are increasing their investment in sustainability wasn’t revealed by the survey.

Off the radar

How many companies have left Russia? At least four studies have come to very different conclusions. In late January, a study by researchers in Switzerland found that only 8.5% of companies (around 120) from EU and G7 countries have exited Russia. Another studyExternal link by Credit Suisse economists came up with a similar result: 6% of the 650 Swiss companies surveyed said they had left Russia; among the 50 largest companies the figure is 24%.

Yale professor Jeffrey Sonnenfeld, who has been keeping a running list of company activities in Russia, has contested the findings, arguing that the “Swiss study” overestimates the number of companies that remain in Russia because it includes Russian companies that have a presence in Europe. The big issue is not who is right or wrong but rather how little transparency there is over who owns a company, where they are based, and how you define exiting a country.

Regulatory moves

The Swiss government plans to introduce new rules to prevent greenwashing in the financial market. This follows a similar move in the European Union under its sustainability reporting disclosure regulation that came into force in January. While the rules sound good on paper, sustainable finance expert Cécile Biccari argues in an op-ed on SWI that narrowing down the definition of green, sustainable, or ESG criteria too far, could end up doing more harm than good.

The crack down on greenwashing is going beyond the financial markets. The UK’s competition watchdog announced it will be looking into misleading green claims by the fast-moving consumer goods sector. Food giants like Nestlé and Coca-Cola are expected to be part of the greenwashing probeExternal link according to euronews.

Switzerland plans to implement the global minimum tax deal with or without the US. The statement from Finance Minister Karin Keller-Sutter on the sidelines of the WEF annual meeting in Davos comes as the Biden administration struggled to rally Congress around the deal for a minimum corporate tax of 15%, which was agreed by more than 130 countries. It’s still up to the voters here in Switzerland though, who will have their say in June.