Position paper – Reference prices

Reference prices – the wrong measure?

Reference prices are basically peak prices for reimbursement of the cost of medicines with expired patents through health insurance. These maximum prices are based on the comparison with foreign prices and the market volume and/or a price comparison of drugs of the same type. If the premium payer wants to purchase a more expensive drug, he has to pay the difference to the reference price himself or accept the change of his drug. For the introduction of a reference price system, an amendment to the Federal Law on Health Insurance (KVG) is necessary.

Is it an austerity measure that leads to additional costs, higher premiums and worse benefits?

Yes, the austerity measure “reference prices” for patent-expired medicines are in conflict with the objectives: sustained cost containment, generics promotion, safe use of medicines and safe supply of medicines.

The premium payer and patient not only carries a resulting overall cost increase and the new risks in care and therapy, he or she also pays out of his own pocket and has no choice.

The austerity measure of reference prices leads to additional costs, higher premiums and worse benefits. Mehrkosten, höheren Prämien und schlechteren Leistungen.

The Public Interest Organization Premium Payer (IGPZ) is committed to a fair, solidary and payable healthcare system in Switzerland. From this perspective we look at the "38 Federal Council's measures to reduce costs in the healthcare system".

In doing so, the IGPZ distinguishes between the measures that move the healthcare sector towards "cheaper and better" and the measures that make health care "more expensive and worse".

Measures that leverage "cheaper and better" are regarded as "fair + solidary + payable" and we support those.

Reference prices, however, are pushing the healthcare sector towards "more expensive and worse".

Why more expensive - this is a measure that promises savings of between 190-480 million CHF?

Reference prices start with the medicines which account for about 30% of the costs, but make up the largest share of adequate good quality care. This area of medicines of patented drugs is hardly a cost push factor. The price-reducing measures of the BAG of recent years are already impacting these 30% of the drugs. On the one hand, the ongoing review of the admission conditions of drugs to the specialty list should continue to be prioritized. On the other hand, we consider the changes to the KLV as of March 1, 2017, which affect the higher deductible on drug prices, to be sufficient. The implementation of these measures must be followed up and evaluated.

With the reference price measure, the patent-protected drugs, which cause more than 50% of the costs and are exponentially price-pushing, are spared. The increase in costs can be attributed, among other things, to patented drugs for cancer and autoimmune diseases. No patented medicines are included in the reference prices and despite the fact that they have a much smaller supply they account for the majority of the drug costs.

Hence, overall costs increase, because reference prices only have a marginal effect on the overall development of costs in the area of medicines.

In fact, the incentives are set in such a way that both original manufacturers, service providers and often patients have an interest in replacing reference-price drugs with more expensive patent-protected drugs. Measures, that assess the area of patented drugs, are missing. It is urgent to hold the discussion on the "medicines cost pool" in the field of patent-protected medicines. Is the reference price discussion meant to distract from the central levers in the healthcare system?

Reference prices hide only in the short term and only partially the increase in overall costs. Any short term savings disappear in the long term.

This means that we are talking about a measure whose side effects are greater than the benefits for premium payers and patients.

Sustainable austerity, which aims to be fair, solid and payable, looks different. Reference prices are inefficient for premium payers and patients.

Why worse - what about security of supply?

In addition to pharmacies, medical practices and original manufacturers, in particular the generic manufacturers are affected by the austerity measures. However, today there are relatively few generics on the Swiss market compared to other countries. Reference prices promote this situation, i.e. they reduce the generic offer in Switzerland. The risk of closing down of smaller suppliers, from the manufacturer to the service provider, is increasing and the interest in entering the market, or offering a wide range of products, is decreasing. This also increases supply risks.

Drug shortages are a growing phenomenon and often affect generics as well as other drugs with expired patent. So, exactly the drugs which the reference prices are aimed at. In individual cases supply problems arise because the supplier’s business no longer makes economic sense. Established but vital generic drugs need to be provided in such cases through costly and often expensive alternative care routes, and sometimes prevent or delay important therapies.

Does the Bundesrat not contradict itself in its intentions to promote generic drugs and to ensure safety in the supply of medicines?

Market concentration, small numbers of suppliers, economic pressure and lack of economic incentives and stockpile reduction are factors promoted by reference prices while increasing supply risks. In the long term, this will push up prices.

We do not consider this to be fair, solidary or payable.

Why worse - what about the therapy safety?

Reference prices result in a change of medication. A change in reference prices in turn causes another medication change. The patient has no choice, unless he pays himself. In the literature, medication changes are associated with treatment problems and additional expenses for the drug readjustment. Changing a well-adjusted therapy is associated with medication errors and negative for compliance. These side effects cause additional costs. Reference prices thus cause indirect costs, the extent of which is unknown, but negatively influence the therapy's safety.

Patients are expected to face the increased costs of reference prices, supply problems, and drug therapy problems.

Do you consider that fair, solidary and permanently affordable?

What is our position toward reference prices?

As mentioned above, we see the austerity measure of reference prices contrary to the objectives: sustained cost containment, generics promotion, safe use of medicines and safe supply of medicines.

The premium payers and patients not only bear the resulting overall cost increase and the new risks in care and therapy, they also pay out of their own pockets and have no choice.

The austerity reference prices lead to additional costs, higher premiums and poorer benefits. Thus, reference prices are unfair, unsolid and increase healthcare costs.

Therefore, we reject the measure reference prices. 

Basically, we support sustainable action by the Federal Council in the medication cost block. However, we see a need for discussion and action on patent-pending medicines, regulation on market access and market withdrawal, transparency of pricing and adjustment of pricing factors, and the follow-up of existing measures.

Sources (in German):

  • Bericht Sicherheit in der Medikamentenversorgung -BAG 2015
  • Bericht Regulierungsfolgenabschätzung zur Einführung eines Referenzpreissystem 2018
  • IQVIA Kerndaten zum Gesundheitswesender Schweiz 2019
  • Bericht 38 Massnahmen des Bundesrates zur Kostendämpfung im Gesundheitswesen