Pharmaceutical industry
The American market, hen with gold eggs threatened by Donald Trump
With prices up to four times higher than elsewhere, the United States is a crucial market for Swiss pharmaceutical groups. This windfall is today threatened by the aggressive rhetoric of the American president.
The pharmaceutical industry justifies the high price of drugs in the United States, in particular by research and development costs.
Urs power
- The American pharmaceutical market generates interesting beneficiary margins for Swiss companies.
- Federal advisers meet the pharmaceutical industry due to Donald Trump’s threat to impose exorbitant customs duties on drugs.
- American drug prices are almost three times higher than in other OECD countries.
President Donald Trump announced that he would impose customs duties up to 250% on drugs if pharmaceutical companies did not significantly reduce their prices. This aggressive rhetoric highlights the high prices of drugs, which ruin certain Americans.
Donald Trump’s request to pharmaceutical companies arouses concern in Switzerland. This Thursday, the federal councilor Elisabeth Baume-Schneider and the federal advisor Guy Parmelin will meet representatives of the Swiss pharmaceutical branch. According to estimates of informed circles, the main themes will not only be the requirements and threats of Donald Trump, but also the question of the Swiss economic place in domestic politics.
Pharma criticizes the disadvantages of location in Switzerland
The pharmaceutical industry denounces the slowness of the Federal Office for Public Health in pricing. “According to the Health Insurance Ordinance, this should normally be done within 60 days, but last year, it took an average of 189 days,” explains René Buholzer, director of the interpharma interest group. Other sites would be much more attractive in this regard.
The price of medicines in Switzerland is also a source of tension. At the end of June, Roche has thus withdrawn a cancer drug After the Federal Public Health Office required a price reduction deemed excessive.
It will be difficult to meet the requirements of Donald Trump during this meeting. Indeed, policy cannot impose prices on businesses. In addition, René Buholzer recalls that competition law prohibits companies from agreeing on prices.
Prices up to four times higher
Medicines prices are undeniably abnormally high in the United States. A Study of the American think tank Rand Corporationpublished in February 2024, compared the American pharmaceutical rates to those of other OECD countries. Result: all drugs combined, the prices charged across the Atlantic exceeds on average 2.78 times those of the reference countries.
The gap was even more striking for brand medicines, the prices of which were 4.22 times higher in the United States. Even with the discounts, the differences remain significant, although abused.
On the other hand, if we are only interested in generics, the United States is not always the most expensive. The Swiss, for example, pay more for these products.
Why prices are higher in the United States
The heart of the problem lies in the absence of public negotiation of drug prices in the United States. In most developed countries, health authorities or national health insurance funds collaborate with pharmaceutical companies to set prices and exercise control over them. This mechanism is largely lacking in the United States.
This leaves great freedom to pharmaceutical groups to set prices. Under the chairmanship of Joe Biden, Medicare Public Health Insurance, which covers retirees, has certainly obtained the right to negotiate prices, but to a limited extent. The impact on prices remains for the moment restricted.
Pharmacy benefit managers also have a decisive influence on prices. These intermediaries manage medication benefits for sickness insurance. They negotiate discounts with pharmaceutical companies, but often do not affect them on patients or insurance in order to ensure income. Their detractors criticize them for a lack of transparency and a preference for more expensive brand medicines, which would allow them to obtain more important discounts.
The public NGO Eye also criticizes pharmaceutical laboratories for exploiting the ease that the American system offers to extend patent protection. This practice allows them to maintain high prices over long periods. Sometimes these groups block the arrival of inexpensive generics by using legal proceedings or by paying compensation to their competitors (Editor’s note: so-called “pay-for-delay” practice). The objective: to preserve their substantial margins.
Faced with the criticisms of Public Eye on the extension of patents, René Buholzer, of Interpharma, replied that it concerns increasingly sophisticated drugs. According to him, the latter involve significant research costs and offer real added value to patients and the health system.
Are the Swiss pharmaceutical firms of the profiteers?
Interpharma prefers not to decide on the practices of certain companies. The fact remains that the American market is of crucial importance for Swiss pharmaceutical groups present internationally. According to Interpharma, 27% of all drug exports took over the United States last year, exceeding all other countries. Given the high prices of drugs, this market is particularly profitable.
From the point of view of the pharmaceutical industry, the right margins compensate for the costs and risks linked to the development of new drugs. They also make it possible to invest in the research and development of new active substances.
Oliver Classen, by Public Eye, questions this assertion that the high American margins are necessary for research and development. At least, to such an extent. It points to the high profits of companies and the generous dividends paid to shareholders. “The Swiss pharmaceutical industry has been operating the American health system for decades for decades, and Swiss policy contributes to maintaining this maximization of profits.” Politics would be right today under pressure. Because it is up to the US government to protect its consumers.
René Buholzer stresses that developing a new drug costs an average of 2.5 billion francs. In addition, 95% of research projects do not lead to a marketable medication. According to him, the margins make it possible to cover this risk. He also explains that market conditions favorable in the United States means that new innovative products are often available to it first.
Translated from German by Olivia Beuhat.
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