What’s behind Switzerland’s push for drug-pricing secrecy?

More therapies are coming on the market with price tags over CHF100,000 and limited clinical evidence, creating new challenges for health insurers. Keystone-SDA

In a bid to lower healthcare costs, the Swiss parliament is considering measures on drug pricing that are drawing the ire of some health experts. What’s behind the measures and why are they stirring controversy?

Last week the Swiss senate voted in favour of a sweeping package of measures to stem spiralling healthcare costs. Among them is a series of proposals intended to lower drug prices and improve access to new, high-priced treatments.

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The federal government and the other chamber of parliament still have to weigh in on the latest version of the cost-containment package, but public health and legal experts are already sounding the alarm on specific drug-pricing proposals. They warn that some measures won’t just fail to rein in costs but could lead to higher drug prices in the long term and have consequences for drug prices globally.

What’s behind the debate? An explainer.

What is being proposed on drug prices?

One measure in the cost-containment package would enshrine so-called price models, also known as managed entry agreements, into the health insurance law. A price model is an agreement between the Federal Office of Public Health (FOPH) and a pharmaceutical company that sets the terms and conditions for a drug to be included on the specialities list, and therefore be covered by health insurance.

There are different types of price models. One of the most common models is a volume discount whereby a pharmaceutical company offers discounts or refunds when sales have reached an agreed threshold. Another model is based on a drug’s performance and is often used for new, high-priced treatments such as gene therapies where there’s little long-term clinical evidence. This requires an insurer to pay a drugmaker only if certain patient health outcomes are achieved.

The measures being discussed in parliament would not only anchor such price models in law, but they would allow prices to be kept confidential. This means the public wouldn’t know the final drug price or the terms agreed.

Other controversial drug-pricing measures

Another measure being discussed as part of the cost-containment package intends to make new medicine available faster to patients. This would allow patients to access a treatment as soon as it is approved by the Swiss drug regulator, Swissmedic, instead of waiting until the health office and drugmaker come to an agreement on the price and terms. Insurers would pay the price set by the pharmaceutical company until a fixed date. The measure being discussed in parliament is modelled on Germany, which offers immediate access to treatment.

The proposal comes as negotiations become more complex in the face of new, high-priced treatments. A surveyExternal link by the European Federation of Pharmaceutical Industries and Associations found that in 2023 it took on average 301 days from regulatory approval to the time new treatments were put on the specialities list in Switzerland. This is compared with an average 42 days in 2015, and much higher than the 60-day legal limit.

Although such a move would improve access to treatment, it may lead to higher prices in the end, warn some experts. Studies have found that it is very difficult to renegotiate prices or to remove a drug from the market once it is already out being used. This means that the first price often becomes the final price, says law and medicine expert Kerstin Noëlle Vokinger from the University of Zurich.

“The German model should not be followed. Although it would ensure faster access to drugs, it would result in higher costs to the Swiss health system and households,” she told SWI swissinfo.ch. Based on newly reimbursed drugs between 2011 and 2022, she calculatedExternal link that Switzerland would pay CHF655 million ($735 million) additional costs per year if it adopted the German model.

Switzerland already has an article in the health law (Article 71) for off-label usage that allows doctors to request special access to a treatment that hasn’t been negotiated.

What’s driving the push for drug-pricing secrecy?

The cost-containment package was proposedExternal link by the federal government in 2022 in a bid to rein in healthcare costs. After Swiss voters rejected two initiatives in June that sought to curb healthcare spending, there’s even greater urgency to find solutions to the growing financial burden on Swiss households.

Drug prices are seen as a key area for savings. More therapies are coming on the market with price tags over CHF100,000 and limited clinical evidence, creating new challenges for health insurers.

Many countries, especially in Europe, have introduced price models to make new treatments available while managing their own financial risks. Some 28 out of 41 high-income and European Union countries in one surveyExternal link use managed entry agreements.

Switzerland has already agreed to price models in individual cases but to do them more regularly there needs to be a legal basis.

Pharmaceutical companies are increasingly willing to agree to discounts and other price models, on condition that they remain under lock and key. They argue confidentiality allows them to tailor pricing strategies to the different needs of different countries.

“Confidentiality of price models is essential if we are to continue to be able to offer innovative medicines,” Health Minister Elisabeth Baume-Schneider told the Senate. “Without this confidentiality, the price could be higher, which would heavily weigh on premiums.” There’s also a risk, she added, that companies won’t offer new treatments in Switzerland at all or with some delay.

The government estimates that using volume discounts could offer savings of around CHF400 million. One surveyExternal link in 11 countries with price models in 2017 showed they received discounts in the 20-29% range on new drugs.

Why is the proposal stirring controversy?

Law and medicine expert Kerstin Noëlle Vokinger from the University of Zurich argues that price models or reimbursement contracts aren’t a problem in some situations but what is concerning is growing secrecy. Germany is also discussing whether to make confidential rebates part of its healthcare law.

“We are finding ourselves in some sort of a prisoner’s dilemma,” Vokinger told SWI swissinfo.ch earlier this year. “If one country only thinks about themselves because they believe secrecy will help them receive a lower price, the whole system won’t work anymore because then other countries also lose the motivation to be transparent.”

Switzerland has had one of the most transparent drug-pricing systems in the world. Once prices are agreed between the health office and the drugmaker, they are published on the specialities list and can be a reference to other countries. Switzerland also relies on prices in a reference group of countries for its own negotiations.

The World Health Organization (WHO) has strongly advised against confidential rebates, warning that they can lead to a distortion of drug prices. In 2019, Switzerland backed a WHO resolution that urged countries to share information on net prices and support better data sharing.

+ Swiss expert calls for drug pricing transparency

Growing secrecy contradicts this. It also puts governments in a weak negotiating position vis-à-vis pharmaceutical companies, said Patrick Durisch, who leads health policy at Swiss NGO Public Eye. “We need more transparency, not less. The pharmaceutical industry wins with secret rebates by keeping new patented drug list prices high everywhere,” Durisch wrote in an email.

A study led by Vokinger found that the number of drugs with a rebate increased from one in 2012 to 51 by October 2020 in Switzerland. Of these, at least 14 had no information available to the public about the amount of the rebate or the price paid to pharma manufacturers.

Without transparency, it’s difficult to know whether the health office is really getting a good deal. This was echoed by Swiss parliamentarian Flavia Wasserfallen from the Social Democratic Party during the Senate debate. “In the end, it remains rather unclear and non-transparent whether the reported savings potential actually occurs,” she said.

An observational studyExternal link published in December of managed entry agreements in Italy, which was one of the first countries to adopt them, found little evidence that such models led to lower pharmaceutical spending. One key reason suggests Vokinger is that pharmaceutical companies often start with higher prices in negotiations than they would if prices were transparent. They also tend to lead to longer negotiations, delaying the entry of new medicine.

Switzerland’s data chief has already spoken out against the move to reduce transparency, saying it contradicts the principle of public access.

Ultimately, Vokinger says, it’s an issue of accountability. “Society and patients have a right to know how much a treatment costs.”

Edited by Balz Rigendinger/ts.