New rules for the reimbursement of orphan drugs and other unlisted medicines will become effective in Switzerland after 1 January 2024. In principle, only medicines on an exhaustive list (i.e. the list of specialities) are reimbursed. However, in order to give patients access to vital therapies, health insurers must also the cover costs of treatment in exceptional cases, particularly in cases of hardship. This case-by-care reimbursement is particularly important for orphan drugs.
The legislative changes are closely linked to a recent increase in health insurance premiums. With its focus on cost containment, the legislation threatens patient access to important treatments. This raises difficult legal and ethical issues for pharmaceutical companies.
What are the main changes?
Standardised benefit assessment: The assessment of therapeutic benefit will now be based on standardised benefit assessment models. This will ensure that health insurers treat all patients equally.
Mandatory rebates: Depending on the therapeutic benefit, different percentage discounts will be applied to reimbursement. This should reduce the negotiating burden on health insurers and pharmaceutical companies and speed up patient access to treatment.
Transparency: Reimbursement denials must be justified to the treating physician and the patient, but presumably also to the pharmaceutical company. On the basis of this reasoning, the refusal can be challenged in court.
In addition, health insurers are now obliged to inform the Swiss Federal Office of Public Health (FOPH Bundesamt für Gesundheit, BAG) of each cost approval and to disclose the name of the medicinal product, the indication, the benefit assessment and the reimbursement amount. This information will be accessible to third parties. The anonymity of the patients concerned must be guaranteed.
What is the purpose of the change?
Not all medicines reimbursed by the mandatory health insurance (MHI, obligatorische Krankenpflegeversicherung, OKP) are included in the list of specialities. Exceptionally, the MHI also covers the cost of medicines for which the conditions for inclusion have not been assessed by the FOPH. This reimbursement is based on a case-by-case assessment in order to give patients equal access to urgently needed medicines that are expected to have a high therapeutic benefit in the treatment of a serious illness and for which there is no alternative treatment. Such treatments often include orphan drugs for rare diseases for which marketing authorisation and reimbursement approval have not yet been granted in Switzerland. Health insurers estimate that around 50,000 applications for reimbursement in individual cases were submitted in Switzerland in 2022 of which 80% were approved.
Health insurers have considerable discretion in deciding whether to grant coverage . This requires the medical officer to carry out a benefit assessment, which may require consultation with a clinical expert. In addition, the health insurer has to negotiate the price with the pharmaceutical company for each individual cost approval. This results in different prices so that equal access to life-saving therapies is no longer guaranteed. The changes in the law are intended to improve equal access to essential medicines, reduce the burden of price negotiations and increase transparency.
Will the legislative changes achieve their objectives?
The standardised benefit assessment is linked to the assessment of hardship in individual cases. Analogous to the OLUtool (OLU = Off Label Use) developed by the medical officers, the therapeutic benefit is to be assessed in relation to therapeutic progress: Very high therapeutic benefit (benefit category A), high therapeutic benefit (benefit category B), expected high therapeutic benefit (benefit category C) and moderate, low or no therapeutic benefit (benefit category D).
The benefit category affects the level of reimbursement and mandatory price discounts. Depending on the therapeutic benefit, different price reductions are applied. The different discounts are intended to ensure that the costs are proportionate to the therapeutic benefit. However, this approach to cost containment threatens to unnecessarily delay or even deny access to life-saving therapies. This is because of the far-reaching implications for pharmaceutical companies:
Impact on the international pricing structure: Pharmaceutical companies run the risk that the government-imposed discounts will affect price negotiations abroad. In order to prevent the Swiss discounts from negatively influencing foreign prices, pharmaceutical companies may refrain from supplying Swiss patients, at least until they have concluded price negotiations with the foreign authorities.
Effects on domestic price negotiations: Also with respect to the inclusion on the speciality list in Switzerland, there is a risk that the government-imposed price discounts will affect the reimbursement negotiations with the FOPH. In order to avoid negative effects, the pharmaceutical company may refrain from supplying Swiss patients until the reimbursement conditions are finalised.
Implementation uncertainties: If a medicine is not yet included in the speciality list, it is unclear how the discounts are to be calculated. The required comparison of foreign price (Auslandpreisvergleich) is often not possible due to the lack of a reference price, especially if pricing models are used.
Uncertain funding of therapy trials: An increasing number of medicines are approved with limited evidence. However, if a drug is expected to have a major therapeutic benefit but is its benefit uncertain in the case of the individual patient, a therapy trial may be necessary (benefit category C). In these circumstances, marketing authorisation holders run the risk of having to pay for the entire treatment cycle (i.e. trial phase and treatment if therapy is successful). Given this unequal distribution of risk, it seems uncertain whether therapy trials will be supported by marketing authorisation holders.
Most importantly, and irrespective of the standardised benefit assessment, the medical officer will continue to have wide discretion in determining the therapeutic benefit. On the contrary, the benefit assessment will become even more important in the future because it will determine the mandatory price discount and thus the amount of reimbursement. Disputes over benefit assessment are therefore inevitable. For reasons of due process, disclosure of the health insurer's decision cannot be limited to the patient and the attending physician. Because of its impact on the reimbursement, the decision must also be made available to the pharmaceutical company.
It is already foreseeable that the new rules on reimbursement will delay access to life-sustaining therapies in individual cases. There is a significant risk that patient care decisions will be driven by financial considerations. There are no easy solutions for pharmaceutical companies. On the contrary, as court rulings in neighbouring European countries show, they can expect to be held liable by patients and their families if they refuse to provide life-saving therapies to those in need. The fact that pharmaceutical companies do not qualify as service providers provides will make little difference in terms of criminal liability. The revision is therefore in danger of failing in its main objective.
Is billing as an additional charge to in-patient treatment an alternative?
Inpatient treatment is excluded from exceptional reimbursement in individual cases. The costs of hospital and nursing home care are reimbursed on a flat-rate basis, which is determined according to the tariff system for inpatient hospital services (SwissDRG). These must be set in relation to the services provided and on the basis of uniform tariff structures throughout Switzerland. The tariff partners may, however, agree that special diagnostic or therapeutic services are not included in the flat-rate, but may be invoiced separately. The purpose of such a surcharge (Zusatzentgelt) is to reimburse certain services in accordance with the logic of an individual service tariff that cannot be adequately covered on a flat-rate basis (e.g. the reimbursement of expensive drugs, blood products, implants or other cost-intensive treatment methods). The surcharge is not an "additional" charge, but a supplementary payment outside the per-case flat rate, which is intended to contribute to a performance-related differentiation of the total payment for inpatient treatment. The surcharge is an integral part of the financing of the case fee. The costs covered by the additional charge are deducted from the flat-rate payment.
National agreements on additional charges must be approved by the Federal Council. One example of such an agreement is the additional charge for CAR-T therapy with Novartis' Kymriah® (tisagenlecleucel). This is based on an agreement between the Swiss health insurers Helsana, Sanitas, KPT, Swica, Assura and CSS and the hospital association H+. The Federal Council approved the agreement on 6 December 2019 for a limited period. The same applies to the CAR-T therapy with Gilead's Yescarta® (ciloleucel). As of 1 January 2020, these therapies have been included in Annex 1 of the Healthcare Services Ordinance (HCSO; Krankenpflege-Leistungsverordnung) and will be evaluated from 1 January 2023 to 31 December 2024. Since 1 July 2022, this has also applied to CAR-T therapy with Tecartus® (brexucabtagen autoleucel).
The terms of these agreements are not available to the public. The Swiss Federal Administrative Court rejected a request for disclosure of the net remuneration or pricing models actually paid for the cell transplants (decision A-2459/2021 of 27 July 2023, appeal pending before the Swiss Federal Supreme Court, decision not final).
The advantages of an additional fee for inpatient treatment compared to reimbursement on a case-by-case basis should not be underestimated. As an additional charge, it can be regulated uniformly for the whole of Switzerland in a collective agreement. This price is binding for all health insurance companies. There is no need to negotiate the cost of treatment with each health insurer separately for each case. Price details are not available to the public. However, the agreement of an additional charge is limited to in-patient treatment. The question of whether the additional charge is a viable alternative to exceptional reimbursement in individual cases depends on the distinction between outpatient and inpatient treatment. However, in the absence of established case law, the additional charge is certainly an alternative to the reimbursement of medical therapies in individual cases that is worth considering.
Outlook
The reimbursement of orphan drugs and other treatments for rare diseases raises sensitive legal and ethical issues. The new regulation on the exceptional reimbursement in individual cases is closely linked to the increase in premiums. As a result, cost containment is at the forefront of the legislators' minds. However, the changes to reimbursement threaten to worsen patient access to new drug therapies. This will raise difficult legal and ethical questions for pharmaceutical companies.
For more information on the reimbursement in individual cases and how the legislative changes could affect your Swiss-based company, please contact your CMS client partner or CMS expert.
