Drug rebates: A system that benefits everyone but premium payers

Switzerland's system of pharmaceutical rebates, intended to manage drug costs, has become an opaque and inefficient mechanism that primarily benefits industry players rather than insurance premium payers. For years, regulations and controls have been added to the system, but these 'patches' have failed to address the core problem: the lack of clarity surrounding the vast sums of money involved.

While the pharmaceutical industry's negotiation of rebates is not the issue, the problem intensifies when these arrangements occur within a system predominantly funded by mandatory health insurance. The expectation is that these rebates should reduce costs for premium payers. However, the current opacity means that hundreds of millions of francs can circulate without clear accounting, a situation that contrasts sharply with the meticulous scrutiny applied to every franc of insurance premiums and medical consultations.

Calls for greater transparency have proven insufficient. The complexity of the rebate system, with its myriad of benefit types, exceptions, agreements, and legal subtleties, has become a shield for its opaqueness. This sophistication generates precisely what an obligatory insurance system should avoid: a lack of clarity. This opacity is not an unavoidable consequence but a result of deliberate choices.

Given this structural opacity and the fact that the system does not benefit its financiers, a radical solution is proposed: eliminate the rebate mechanism altogether. The Federal Council itself favored a direct drug price reduction over rebates in 2002. After 24 years, it may be time to finally implement this simpler, more direct approach. When controlling a system becomes nearly as complicated as the problem it aims to solve, it is the system itself that needs to be dismantled.