Foreign price comparison and therapeutic cross comparison

The nine reference countries

The foreign price comparison under Art. 65b of the Health Insurance Ordinance uses nine countries: Germany, Denmark, the Netherlands, the United Kingdom, France, Austria, Belgium, Finland and Sweden. What is compared is not the pharmacy price but the ex-factory equivalent of the same pack, or the closest comparable pack.

Where a product is absent in one country, that country drops out and the average is taken across the remaining ones. Comparability is what counts: the same amount of active substance, the same dosage form, the same pack size, and the same holder or a company of the same group.

Exchange rate and price adjustments

Foreign prices are converted into Swiss francs at an average rate. Under Art. 34c para. 2 of the Health Care Benefits Ordinance the twelve-month average exchange rate applies, not the spot rate. That smooths currency swings, but it also means a stronger franc only feeds into prices with a delay.

• Deducted from the foreign price: that country's value added tax.
• Deducted: wholesaler and pharmacy distribution shares at the relevant trade level.
• Deducted: statutory manufacturer rebates to payers, where known and documented.
• Result: one ex-factory equivalent per country, from which the average is taken.
• Conversion: the twelve-month average exchange rate under Art. 34c para. 2 KLV.

The therapeutic cross comparison

The therapeutic cross comparison sets the product against medicines with the same indication or a similar mode of action, normally from the same IT group. Pack prices are not compared. What is compared is daily treatment cost, derived from the maintenance dose recommended in the professional information.

Comparator selection is the most frequently contested point in the procedure. What governs is therapeutic equivalence and presence on the Specialities List, not market share. Where no comparator exists, the FOPH relies on the foreign price comparison alone.

How the two comparisons produce the price

Where both comparisons exist, the FOPH as a rule weights them equally at 50 per cent each. The resulting average is the economically sustainable ex-factory price. If the requested price sits above it, the FOPH cuts it, with any granted innovation premium added to the therapeutic comparison before weighting.

The distribution share and value added tax are then added to the ex-factory price, and from that the FOPH sets the pack's public price.

The innovation premium and its limits

An innovation premium lifts the sustainable ex-factory price above the comparison level. It requires demonstrated therapeutic progress over the existing standard, is capped at 20 per cent and is granted under Art. 65bter of the Health Insurance Ordinance for no more than 15 years.

• Demonstrated means controlled trials with clinically relevant endpoints, not surrogate markers alone.
• Its size follows the extent of the progress, not the development cost.
• The premium is reassessed at every review and removed once the period expires.
• When it falls away, the ex-factory price drops back to the plain comparison level.

The tolerance margin in the three-yearly review

Every three years the FOPH recalculates both comparisons under Art. 65d of the Health Insurance Ordinance. So that every small currency movement does not trigger a ruling, a tolerance margin applies: where the Swiss ex-factory price exceeds the calculated level only slightly, it stays unchanged.

1. The FOPH asks the authorisation holder for updated foreign prices and comparison data.
2. Both comparisons are recalculated, the therapeutic one where comparator products exist.
3. The result is set against the ex-factory price in force, allowing for the tolerance margin.
4. Where it is exceeded, a price cut ruling follows, normally effective on 1 December.
5. The ruling can be appealed to the Federal Administrative Court.