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CSS Insurance

Medication

The market for medication is very tightly regulated. CSS Insurance measures additional regulations by their ability to allow for mechanisms that are as close to market mechanisms as possible. However, when it comes to the pricing of medicine today, there are still various false incentives and inadequate regulations (e.g. strict margin rules, arbitrary innovation supplement, unclear application of the foreign price comparison and therapeutic cross-comparison, lack of pricing momentum, no annual review of prices by the FOPH, no adequate licensing and pricing rules for new and innovative therapies such as CAR-T cell therapy, etc.): This inadequate regulation and false incentives mean that medication in Switzerland is still expensive compared with medication abroad, that unreasonable price demands by the industry go unchallenged and that fewer generic medicines are dispensed, among other things.

Another key factor is that medicine prices should not be calculated on the basis of their theoretical benefit to patients or the national economy; instead, they should be based on the costs or research and production or the price of similar therapies. Any form of pricing driven by a product’s theoretical benefits to the economy will lead to unacceptable prices having to be borne by social insurance – prices that are not found on any other market.

The market share of generics in Switzerland is low. That is why CSS supports the introduction of a reference pricing system for medicines whose patent has expired, as proposed in the first package of cost containment measures. In the basic insurance system (OKP), a reference price should be determined for substitutable medicines whose patents have expired. Patients asking for a different medication with the same active ingredient, whose price exceeds the reference price, should pay the difference themselves if there are no medical reasons for prescribing the more expensive preparation. This measure would make generic medicine more attractive and eliminate the advantage accorded original preparations.

CSS is conducting negotiations with the service providers to establish fair compensation of the distribution cost element for each distribution channel. In this respect, it is necessary to lower the current distribution margin and thus also the price of medicines on the Specialty List, while at the same time negotiating with hospitals, doctors and pharmacists regarding the distribution share that is freed up. Doctors, for example, have a restricted range of medicine on offer and thus lower storage costs. The logistic costs and capital expenditure for hospital pharmacies, on the other hand, are already included in the flat rates paid for hospital inpatient services. These differences must be reflected in the tariffs. At the same time, contract-based solutions have the advantage that additional services provided when dispensing medication can be compensated in accordance with their added value. An example of this kind of additional service is the dispensing of generic medicine at the start of treatment. CSS is working towards such a solution by taking part in the negotiations on service-based remuneration (SBR).

The Federal Department of Home Affairs (FDHA) held a consultation procedure in autumn 2018 on adapting the distribution share included in the cost of medication. Its aims are to minimise negative incentives in relation to the dispensing and sale of medicines, and to encourage the prescribing of more affordable generics. In addition, certain parameters taken into account when calculating the distribution share are to be updated. This involves lowering the part that remunerates pharmacies, doctors and hospitals for their logistical services – a move that could lead to savings of CHF 50 million a year in mandatory healthcare insurance.

CSS supports this adjustment in principle. However, the FOPH’s proposal does little to remove the false incentives. A better approach would be to make huge reductions in the price classes and replace the price-related surcharge with a fixed one. This would also create the right conditions for moving forward with channel-specific tariffs and reimbursing the actual services delivered.

You can find further information on the topic of medication in our publication on health policies "im dialog" 1/2016 (in german).