Orphan drug pricing in Switzerland: foreign price comparison and therapeutic cross comparison
Prices for reimbursed medicines are set by the Federal Office of Public Health when it examines efficacy, appropriateness and cost-effectiveness. Cost-effectiveness rests on the foreign price comparison and the therapeutic cross comparison, both of which are difficult for orphan drugs.
Who sets the price and on what basis
Price setting is part of the listing decision, not a separate negotiation. When the Federal Office of Public Health examines a medicine for the specialities list it assesses efficacy, appropriateness and cost-effectiveness. Cost-effectiveness is examined through two instruments, the foreign price comparison and the therapeutic cross comparison.
The pricing decision therefore sits with a different authority than the authorisation. Swissmedic assesses quality, safety and efficacy under the Therapeutic Products Act, while efficacy, appropriateness and cost-effectiveness for listing purposes are assessed by the Federal Office of Public Health under the Health Insurance Ordinance.
The foreign price comparison
The foreign price comparison sets the Swiss price against the price of the same product in reference countries. It is the more mechanical of the two instruments, because it works from prices that already exist. For a product launched in Switzerland early in its global sequence, however, there may be few or no foreign prices to compare against.
Orphan drugs are affected more than most products by that gap. Small markets are often not launched simultaneously, and a product intended for a few dozen Swiss patients may reach Switzerland well before or well after the countries used in the comparison, which leaves the instrument with a thin basis.
Launch sequencing therefore has a direct pricing consequence. A company that lists in Switzerland before the countries used for comparison changes the evidence base available to the authority, which is a strategic decision rather than a purely operational one.
The therapeutic cross comparison and why it is hard for orphan drugs
The therapeutic cross comparison positions the product against therapeutic alternatives already reimbursed in Switzerland. For orphan drugs comparator therapies are often missing altogether, since many rare diseases have had no authorised treatment. That absence makes the therapeutic cross comparison difficult and puts more weight on the foreign price comparison.
- No established comparator: there may be no reimbursed therapy for the same indication.
- Indirect comparators: alternatives may differ in mechanism, population or administration.
- Small evidence base: trial data in rare diseases rest on small patient numbers.
- Consequence: greater reliance on the foreign price comparison and on negotiated price models.
Documenting the absence of a comparator is part of the dossier. Where no reimbursed therapy exists for the indication, that should be stated and evidenced rather than left to be inferred, because the alternative is a comparison against a therapy that does not really correspond.
How the public price is built up
The price a patient or insurer sees is not the price the manufacturer receives. The public price consists of the ex-factory price, the distribution margin and value added tax. Discussions about affordability that quote only one of the three components talk past each other, so the distinction is worth keeping explicit.
| Component | What it covers |
|---|---|
| Ex-factory price | The price attributable to the marketing authorisation holder. |
| Distribution margin | The share attributable to distribution in Switzerland. |
| Value added tax | The tax added on top to arrive at the public price. |
Only the ex-factory price is attributable to the marketing authorisation holder. Communications that compare a Swiss public price with a foreign ex-factory price therefore compare different quantities, which is a recurring source of confusion in debates about orphan drug costs.
Price models with refunds
Where the two comparison instruments cannot settle a price, price models with refunds are common for orphan drugs. The listed price stays in place while part of the amount is refunded, which lets a listing proceed despite uncertainty about the appropriate level. These arrangements are a standard feature of the orphan drug landscape in Switzerland.
They also change the shape of the negotiation. Instead of arguing a single number to completion, the parties agree a listed price together with a mechanism that corrects it, which is easier to reach where the therapeutic cross comparison has no comparator to work from.
For a marketing authorisation holder the practical implication is that the published public price and the effective net price can differ. Any internal forecast should distinguish the two rather than treating the listed figure as revenue.
What this means for the listing strategy
A pricing dossier for an orphan drug is largely an argument about comparability. The applicant has to explain what the therapeutic alternative is, or why there is none, and to make the foreign price comparison usable. Preparing that argument alongside the authorisation dossier avoids a gap between authorisation and reimbursement.
- Map the therapeutic alternatives reimbursed in Switzerland for the indication, and document their absence where there are none.
- Assemble the foreign prices available for the same product and note where the launch sequence limits the comparison.
- Model the public price as ex-factory price plus distribution margin plus value added tax, rather than a single figure.
- Prepare for a price model with a refund where the comparison instruments leave the level open.
- Keep the individual-case route under Art. 71a to 71d KVV in view for the period before a listing exists.
None of these steps is a formality for a product with very few patients. The dossier has to make a case about comparability that the two standard instruments cannot generate on their own, which is why pricing work starts well before the authorisation decision.
Frequently asked questions
Which two instruments determine cost-effectiveness?
The foreign price comparison, which sets the Swiss price against prices for the same product abroad, and the therapeutic cross comparison, which positions it against therapeutic alternatives in Switzerland. The Federal Office of Public Health examines cost-effectiveness alongside efficacy and appropriateness when deciding on a listing.
Why is the therapeutic cross comparison problematic for orphan drugs?
Because comparator therapies are often missing. Many rare diseases have had no authorised treatment, so there is nothing reimbursed in Switzerland to compare against. That absence makes the therapeutic cross comparison difficult and shifts weight to the foreign price comparison and to negotiated price models.
What does the public price consist of?
The ex-factory price, the distribution margin and value added tax. Only the ex-factory price is attributable to the marketing authorisation holder, so revenue forecasts based on the public price overstate what the holder receives.
Are price models with refunds usual for orphan drugs?
Yes. Where the foreign price comparison and the therapeutic cross comparison cannot settle an appropriate level, price models with refunds are common. The listed price remains published while part of the amount is refunded, which allows a listing to proceed despite residual uncertainty.
Does orphan drug status affect the price?
Orphan drug status is a Swissmedic instrument and concerns authorisation, not pricing. Price setting sits with the Federal Office of Public Health in the listing procedure under the Health Insurance Ordinance. What the status changes is the route and the timing of authorisation, not the pricing criteria.