Segment SwitzerlandMARKET ENVIRONMENTBUSINESS PERFORMANCE
In 2019 the Worry Barometer once again showed the extent to which the Swiss are concerned about the rising cost of healthcare. The issue ranked in second place, behind retirement savings. December saw the Federal Council put forward its healthcare strategy 2020 to 2030. This emphasised both the importance of good quality care and the need to check the growth in costs. It pointed out that digitalisation of healthcare is a key part of this, which is why it has to be given targeted encouragement. The need for action in Switzerland is considerable — the country performs poorly on an international comparison.
Price cuts and supply shortages in the drug market
Based on ex-factory prices, the total size of the drugs market in 2019 was CHF 6.1 billion — a slight rise on the previous year despite government price cuts. The review of the last third of the medications on the list of specialities in the autumn marked the end of the latest round of reviews of pharmaceutical prices by the Federal Office of Public Health (FOPH). According to the FOPH, this realised total savings of around CHF 450 million between 2017 and 2019. The Office ordered price cuts on more than half the original products and generics reviewed in 2019. These measures further increased the margin pressure on medications.
Another issue in 2019 was the increasing number of supply shortages for drugs. Reported disruptions in supply have more than doubled since 2016. According to the Federal Office for National Economic Supply (FONES), this deterioration in the supply situation is mainly due to the global shortage of active ingredients, the cost pressure associated with market withdrawals and increasing logistical problems.
Cost-cutting package referred by the Federal Council to parliament
In August the Federal Council referred the dispatch on what is known as the first cost-cutting package to parliament. This puts forward nine measures aimed at slowing cost growth in the healthcare sector: Zur Rose welcomes measures that raise awareness among all market participants, such as the obligation to give patients a comprehensible copy of invoices or the call to tariff partners to introduce measures to manage costs and benefits into their agreements. The company also supports the intended experimentation element that will make it possible to test and roll out innovative cost-cutting projects quickly. With regard to the desired reduction in drug costs, Zur Rose remains committed to ensuring that the economical drug dispensation channels of mail order and medical self-dispensation are not further discriminated against compared to other channels.
Planned distribution margin reduction under the Health Insurance Benefits Ordinance
Under Article 38 of the Health Insurance Benefits Ordinance HIBO the Federal Council is keen to achieve a major distribution margin reduction of drugs and save a further CHF 50 million. Zur Rose is committed to security of supply of medications for the people of Switzerland, and hence supplies the full range of drugs. As a result the company bears the risks associated with holding drugs in the medium to expensive price segment, which consumes a great deal of capital. Other market participants are unable or unwilling to bear these risks in full. Zur Rose has repeatedly drawn attention to the fact that the planned distribution margin reduction puts security of supply at risk and places mail-order pharmacies at a disadvantage: this would mainly affect medications in the medium to high-price segment, which account for a particularly large percentage of the product mix for mail-order pharmacies compared to brick-and-mortar stores.
Integrity and Transparency in Therapeutic Products Ordinance (ITTPO)
The ITTPO came into effect on 1 January 2020 as the executive law provisions for the revised Therapeutic Products Act. Amongst other things, it brings in new arrangements for price discounts and compensation in connection with supplies of medications.
Encouraging electronic prescriptions in Switzerland along the lines of the German model
If higher e-health penetration is to be achieved in Switzerland, electronic prescriptions will have to become standard: this is demonstrated in a recent study by the Bertelsmann-Stiftung*. A comparison of the healthcare systems of 14 countries in the EU and three selected OECD countries ranks Switzerland 14th out of 17 in the e-health index. The leaders are countries where a national e-health strategy has been put in place and electronic prescriptions are standard. So far, electronic prescriptions have barely been used in Switzerland due to a lack of incentives. This is in spite of the fact that patient safety is improved by electronic prescriptions. They increase security against prescription error and counterfeiting and reduce the risk of incorrect medication, with the associated cost consequences for the healthcare system.
*“SmartHealthSystems – Digitalisierungsstrategien im internationalen Vergleich”, November 2018