When does the interaction between the pharmaceutical industry, authorities, doctors, pharmacies and patients work?
The pharmaceutical industry, the state, doctors and pharmacists, but also patients, play a decisive role in this market. What is the impact of the interaction between these different players?
8.4
The market for pharmaceuticals is characterised by strict regulation, a high level of innovation and a strong focus on the benefits and costs of medicines. Medicines offer considerable health benefits by enabling the treatment of diseases, alleviating symptoms and improving quality of life. Their effectiveness is a key factor in therapeutic progress. Accordingly, they are subject to strict legal requirements to ensure safety, efficacy and quality. At the same time, drug costs play a significant role. Research and development of new active ingredients require high investments, which often leads to high prices for new drugs. Drug prices, access and advertising are therefore heavily regulated. In addition to strict regulation, there is also intense competition. On the one hand, when it comes to the development of new drugs and therapies. On the other hand, generics that come onto the market after patents for original preparations have expired.
Every fourth Swiss franc spent on medication
Medicines account for around a quarter of total expenditure on basic insurance, although the exact proportion is unknown. This is due to the fact that although medication is also used for inpatient hospital treatment, the costs for this are not shown separately in the statistics. If, on the other hand, the medication was purchased from a pharmacy, doctor or hospital outpatient clinic, the costs are known. In 2022, the cost of medicines therefore totalled at least CHF 8.4 billion, with pharmacies accounting for the largest share at CHF 4.4 billion. What is special about this is that medication purchases from doctors account for a relatively large proportion in an international comparison. This is due to the fact that some cantons allow so-called "self-dispensing", i.e. the direct dispensing of medicines by doctors in their practices. We have written several research papers on this topic, the latest of which can be found here [Link].
71 %
931
1/3
From a health economics perspective, the pharmaceutical market is interesting because many decisions are made jointly by the players. In the case of prescription drugs, for example, patients must always consult a doctor in order to obtain access to the medication. Which preparation they receive depends on the doctor, but may also depend on the pharmacist. As doctors and pharmacists earn money when dispensing medication, they may not always have an incentive to dispense the cheapest preparation. Especially if there are several preparations with the same active ingredient, i.e. generics are available, financial interests may prevail. The prescribing behaviour of doctors and the dispensing behaviour of pharmacists, as well as prices, in turn have an influence on how much turnover and profit pharmaceutical manufacturers make. The pricing behaviour of the industry, if it has any leeway, therefore depends on the behaviour of the other players. In turn, prices also have an influence on whether a drug is available on the market at all. Today, there are no drugs for many diseases because research and development is simply not worthwhile. On the other hand, producers could withdraw from a market if prices fall too low after patent expiry. The various interests of the stakeholders give rise to a large number of conflicting objectives with regard to innovation, costs, access, etc. With our research, we contribute to a better understanding of these conflicting objectives and thus enable policymakers to make informed decisions.