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Secret discounts leave patients at drugmakers’ mercy

A new study by the University of Zurich has found that using confidential discounts on cancer and other drugs does little to make them available faster and at more affordable prices. This comes amid debate over a plan to keep more drug prices under lock and key in Switzerland.

Switzerland has been a model of transparent drug pricing. In 2019, Nora Kronig, deputy director of the Federal Health Office, told SWI that the country is “one of the only countries that is fully transparent about prices. There are no secret deals”.
This appears to be changing according to a study by the University of Zurich published on Wednesday in the Lancet, which found that Switzerland has been increasingly using rebates – a discounted price offered by pharmaceutical manufacturers – since 2012. Starting in 2019, some of the discounts were kept secret.
The number of drugs with a rebate increased from one in 2012 to 51 drugs by October 2020. Of these, at least 14 had no information available to the public about the amount of the rebate or the price paid to pharma manufacturers. Most of these are for cancer drugs.

“With these rebates, we don’t know what is being used to determine the price, which is dangerous,” said University of Zurich professor and lead author of the study Kerstin Vokinger. “Doctors and patients no longer even know what the actual prices are. The patient has the right to know what their therapy will cost.”
The study comes as Switzerland and many other countries sign confidential Covid-19 vaccine deals with pharmaceutical manufacturers, raising questions about whether limited vaccine supplies are being divided among the highest bidders. Meanwhile, more expensive treatments such as gene therapies priced in the millions are putting more stress on health systems, leading many countries to seek new ways to cut costs.

Vicious cycle

Switzerland, along with many of its European neighbours, uses external reference pricing to set drug prices. This typically involves using the price of a drug set in a group of countries as a benchmark. This is intended to ensure that the country receives a price comparable to what other countries are paying.
In the last several years, many European countries including the United Kingdom, France and Germany started agreeing on rebates or discounts for certain drugs – a practice that has been in place for decades in the US. This means that the external reference or listed price isn’t the actual price paid.
“This creates a vicious cycle,” said Vokinger. “The external reference pricing system only works if all countries participate.” As more countries introduce rebates, the others have little choice but to follow suit.

Busting the access myth

Governments have argued that rebates help bring down healthcare costs and make drugs available more quickly. René Buholzer, managing director of Interpharma, the pharma industry umbrella association in Switzerland, defended the practice on Swiss public television, SRF
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“These models are used wherever we have complex problems that we can’t solve with the current pricing system. Faster access must be the goal,” said Buholzer this week.
This was echoed by a spokesperson at Roche who told SWI that the company uses “tailored pricing solutions to ensure as many patients as possible have access to our innovation".
However, the University of Zurich study contradicts this argument. It found that offering rebates typically takes twice as long for the price to be negotiated and for the drug to go from approval to being put on the specialty list, allowing it to be reimbursed by health insurance. For drugs with rebates, the median number of days to fix the price for drugs with rebates was 302 compared to 106 for those without rebates.

This content was published on February 19, 2021 - 11:00
February 19, 2021 - 11:00
Jessica Davis Plüss