Generic pricing rules on the Specialities List

What price gap Art. 65c of the ordinance requires

Art. 65c of the Health Insurance Ordinance asks a generic not for its own efficacy evidence but for a price gap to the originator. The gap is staged: the larger the originator's Swiss turnover in the four years before patent expiry, the lower the generic's ex-factory price has to be.

The reasoning is simple. In a high volume market, development and registration costs spread across many packs, so a lower unit price remains bearable. In a niche with few patients the same discount would be prohibitive and no generic would reach the market at all.

The figures above reproduce the ordinance scale and serve as orientation only. What binds is the wording of Art. 65c in its current version together with the implementing provisions of the Health Care Benefits Ordinance, because thresholds and percentages have been adjusted several times.

Why the originator price falls as well

Patent expiry ends the originator's special status. Under Art. 65e of the ordinance the FOPH reviews the admission conditions as soon as protection has lapsed and cuts the originator's ex-factory price. The cut happens whether or not the authorisation holder files anything.

The foreign price comparison then counts only those reference countries where the patent has also expired. Because prices there fell once generics entered, this pushes the Swiss price down further. The therapeutic cross comparison afterwards brings the newly listed generics into the calculation.

For the originator holder the price therefore drops in two steps: first through the post-patent review, then in the rhythm of the three-yearly review under Art. 65d. A holder who wants to pre-empt the cut can request a voluntary price reduction and avoid a formal decision.

What the foreign price comparison does for a generic

For a generic the foreign price comparison is not the main lever, but it works as a corrective. The primary yardstick stays the gap to the Swiss originator price. Where comparable generics in the reference countries are markedly cheaper, the FOPH can weigh that finding and cut further.

The reference countries are the same as for the originator, the comparison runs at ex-factory level and is converted at the applicable rate. It becomes awkward wherever foreign generic prices arise from tenders or rebate contracts, so that the published price is not the price actually paid.

• Primary test: the percentage gap to the originator in Switzerland.
• Secondary test: the price level of comparable generics in the reference countries.
• In addition: comparison with already listed products containing the same active substance.

Distribution share: why very cheap generics are unattractive

The distribution share combines a percentage supplement on the ex-factory price with a fixed supplement per pack. At a very low ex-factory price the percentage element stays small, so a pharmacy earns less in absolute francs on a cheap pack than on the dearer originator. That is exactly what slows dispensing down.

The distribution share revision shifts weight from the price-linked supplement to the per-pack supplement. Remuneration then follows the work involved rather than the price, and the incentive to dispense the more expensive product largely disappears. For expensive products the distribution share falls in return.

In practice the public price is not a plain function of the ex-factory price. Two generics with the same ex-factory price but different pack sizes end up at different public prices, because the fixed supplement applies once per pack.

The differentiated co-payment as the demand-side lever

Pricing rules act on supply; the differentiated co-payment under Art. 38a of the Health Care Benefits Ordinance acts on demand. If a product with the same active substance is priced above a threshold formed from the cheapest third of those products plus a supplement, the insured person pays 40 rather than 10 per cent.

For an authorisation holder that threshold is the real target price. A generic just below it is dispensed without discussion; a product just above it loses volume, because pharmacy and practice would have to explain the extra cost. The threshold moves with every new admission in the group.

• Medically justified exception in the individual case: the co-payment stays at 10 per cent.
• The deductible is untouched by the differentiated co-payment.
• The threshold is group specific and must be rechecked after every monthly edition of the list.

Co-marketing medicines and how they are priced

A co-marketing medicine rests on the authorisation of a base preparation, is identical to it, but is sold under its own name and often by a different authorisation holder. It is not a generic, because it went through neither its own documentation nor its own authorisation procedure.

Its price therefore follows the base preparation: the ex-factory price may not exceed that of the base preparation, and every cut on the base preparation feeds through. For the differentiated co-payment it counts like any other product with the same active substance when the threshold is formed.

The timetable a generic manufacturer should plan

A company that wants to be listed and able to supply on day one after patent expiry starts roughly two years earlier. Swissmedic authorisation and the SL admission request run in sequence, the FOPH decides within 60-day windows, and any admission takes effect on the first day of a month.

1. Roughly 24 months ahead: assemble bioequivalence data and the Swissmedic dossier, check the patent position and any supplementary protection certificate.
2. Roughly 12 months ahead: file the authorisation request with Swissmedic, build the distribution and wholesale set-up.
3. After authorisation: file the FOPH admission request with the price proposal and evidence of the gap under Art. 65c.
4. During assessment: await the Federal Drug Commission opinion and answer FOPH questions inside the running deadline.
5. After the decision: wait for publication of the packs and time delivery to the first of the month.