Insurers criticise drug profit margins

The pharmacists' association pharmaSuisse warned that 3,000 jobs could be lost if drug profit margins are cut back Keystone

Switzerland’s main health insurers’ association, santésuisse, has called for less profit-making on drug resales, demanding that margins be lowered to the European average.

For the third time, the association compared the difference between the producer and sales prices of 8,000 prescription medications in Switzerland and six European countries. The resale margins on Swiss drugs were above average, as in neighbouring Germany and Austria.

Insurers paid around CHF5 billion ($5.6 billion) last year for prescription drugs under the compulsory health scheme, of which wholesalers, pharmacists, doctors and hospitals pocketed CHF1.3 billion.

According to santésuisse, lowering resale margins to the European average would lead to potential savings of around CHF450 million or the equivalent of a 2% reduction on premiums. This could help rein in ever-increasing healthcare costs in Switzerland.

Savings would be possible if resale margins were only allowed to cover effective costs, the association on Wednesday. For pharmacists, who are responsible for selling half the prescription drugs distributed across the country, this would mean cutting into margins by CHF180 million.

For doctors who distribute medication themselves, the savings potential of lowering resale margins is CHF257 million, based on a cost model approved by Switzerland’s price watchdog. Hospitals could save CHF16 million.

The pharmacists’ association pharmaSuisse warned that cutting back on margins as suggested could lead to the loss of 3,000 fulltime jobs, adding that any profits went first and foremost to cover infrastructure and logistics costs that are higher in Switzerland than elsewhere.

The Swiss Medial Association (FMH) also criticised santésuisse’s numbers. “Doctors need those margins to cover all their costs,” said FMH central committee member Urs Stoffel.

santésuisse director Verena Nold Rebetez said, however, that it was perfectly fair to call for lower margins, especially since drug costs were easy to compare and made up an important share of the health budget.

She added that the potential savings were based on conservative estimates. Discounts received by hospitals for bulk buying were not included, for example.

santésuisse says that the Federal Public Health Office, which approves resale margins, should take a closer look at effective costs and implement changes if necessary.