Annual report 2018

Galenica annual report 2018 | 31 Political environment Drug price reduction measures Three years after inclusion in the so-called specialities list (SL), all drugs are subjected to a price review by the Federal Office of Public Health (FOPH). The assessment is based on the criteria of efficacy, suitability and cost-effectiveness and for several years now has also included a therapeutic cross-comparison (TCC) and an international price compar- ison (IPC). As part of the current three-year review period (2017– 2019), the prices of more than 400 drugs on the specialities list (SL), i.e. medicines reimbursed by compulsory health insurance, were reviewed at the end of 2017. This resulted in price reductions of almost 19% on those drugs reviewed, a total of around CHF 225 million. This was a much higher volume than the originally announced average annual price reductions of around CHF 80 million per year (CHF 60 million for SL medicines and CHF 20 million for generics), which would have meant a total of CHF 240 million over the entire three-year period (CHF 180 million for SL medicines and CHF 60 million for generics). The focus of the review in 2017 was mainly on high-priced medicines such as cancer drugs at an exchange rate of EUR/CHF 1.09. Price reductions of CHF 100 million were announced at the end of 2018 based on an international price comparison at an exchange rate of EUR/CHF 1.11. The FOPH will publish the effective savings from the 2018 price reduction measures in the course of 2019. The current three-year review cycle ends in 2019. Outlook The current tariffs from the service-based remuneration for pharmacists (SBR IV) are limited by the Federal Council until mid-2019. Swiss pharmacy association Pharmasuisse and health insurance associations are negotiating a new SBR V contract or an extension of the existing contract, with the results expected in the second quarter of 2019. As part of the Federal Council’s efforts to curb cost growth in the healthcare sector and eliminate false incentives, the FOPH has sent further proposals for consultation to the associations: for example, proposals for adjusting the joint distribution share (distribution margin) of wholesalers and pharmacists. Accordingly, price categories would be reduced from six at present to three in future, and the fixed and per- centage shares restructured. At the same time, a consultation on the reference price sys- tem has been launched, in which the maximum prices of generic drugs are to be regulated with regard to reimbur­ sement by health insurers. Implementation would require amendment of the Health Insurance Act (KVG). According to the associations involved, an amendment to the law would not enter into force until 2021/2022 at the earliest. Share of healthcare costs accounted for by medicines 5% 10% 15% 20% Italy Germany France Belgium Switzerland USA Austria Sweden Netherlands Denmark 17.9% 14.3% 14.1% 13.9% 13.0% 12.2% 12.2% 9.1% 7.9% 5.6% Source: OECD Health Data 2017, basis 2015 Galenica