Reference Pricing for Generics: Unplanned Consequences of Planned Swiss Regulation

Reference pricing of pharmaceuticals became common during the 1980's in Europe as a response to ever-increasing Health Care Expenditure (HCE) and pharmaceutical expenditure in particular (see Lopez-Casasnovas and Puig- Junoy [1] for an early review including also Australia, British Columbia, and New Zealand). The most recent initiative is by the European Commission, who seeks to harmonize reference pricing between the member states of the European Union [2]. Although not a member of the European Union, Switzerland too has a reference pricing scheme, which its Federal Office for Health (FOH) seeks to modify for generics. Rather than using a copayment of 10 percent on low-cost and a 20 percent copayment on high-cost generics, the planned new scheme would set the benchmark at the 25th percentile of the price distribution and make patients pay out of pocket for the full excess of price over this benchmark in addition to a basic 10 percent copayment.