SL Insight Newsletter #22

With the planned cost-based models, a volume-based reimbursement mechanism will be introduced as a new standard instrument in the list of specialties. For the industry, it is not so much the nominal rates (up to 40%) that are decisive as the implementation: How will sales be calculated, when will products be aggregated, which data sources will apply, and how practicable are the planned exceptions? This article highlights the key questions – with a view to forecasting, contracts, data, and implementation.

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1) Revenue basis & threshold logic: "FAP minus refunds" is open to interpretation

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key message

The threshold is linked to sales based on the ex-factory price minus refunds. In practice, the model stands or falls on a clear definition of which refunds are included in the threshold calculation and how time allocations (sale vs. refund/settlement) are made.

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Typical uncertainties

• Which refunds count toward the threshold (only SL pricing models or only the cost-based model—or other mechanisms in the sales channel as well)?
• How is it periodized: "sales year" or "refund year"?
• Which data sources are authoritative when the FOPH consults additional sources (e.g., insurers, service providers, wholesalers)—and how are data conflicts resolved?

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What does this mean for Pharma X?

Pharma X expects sales of just under CHF 15 million in year 1. However, some of the reimbursements will not be settled until the following year. Without clear accrual rules, Pharma X may "unexpectedly" slip over the threshold in the following year – or vice versa – and must therefore be doubly conservative in its planning. The result: additional uncertainty in budget impact and internal price approvals.

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2) Aggregation & anti-circumvention: Active ingredient families and "de facto" corporate affiliations as a black box

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key message

The bill aims to prevent circumvention by aggregating revenues based on active ingredients ("identical" or "only slightly different") and corporate structures—in some cases also for de facto economic connections. This is the area open to the greatest interpretation and thus the biggest source of dispute and planning.

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Typical uncertainties

• What does "only slightly different" mean in practice (salts/esters/isomers/prodrugs/line extensions, dosage forms, combinations)?
• When does the FOPH assume a corporate connection or "economic dependence" (licensing chains, co-marketing, supply/distribution models)?
• What cooperation obligations and disclosures are required—and how far do they extend into group structures?

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What does this mean for Pharma X?

Pharma X has two products with closely related active ingredients (lifecycle management). Commercial planning and teams operate separately. Under the aggregation logic, both sales are combined, which means that Pharma X falls into higher reimbursement tiers much earlier. In addition, Pharma X must disclose how economic control is actually exercised for a licensing/distribution structure. Result: Portfolio and structural decisions suddenly become relevant to the threshold.

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3) Exceptions, data requirements, and enforcement: "Escape hatch" on paper, CFO data in reality

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key message

The model includes corrective measures for individual cases (reduction/waiver) that appear reassuring at first glance. At the same time, they are linked to restrictive clauses (e.g., therapeutic alternatives, recent price increases, international comparisons) and very extensive documentation requirements—including audited business data and scenario analyses. At the same time, the operational complexity of executing refunds is increasing (indication code, data flows, replacement mechanisms).

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Typical uncertainties

• How narrowly or broadly is "therapeutic alternative" interpreted—and how reliable is it to obtain an exemption in the first place?
• What CFO-level information is required (contribution margins, license flows, cash flow scenarios) and how is it protected?
• How robust are the enforcement processes in practice (coding/INDCD, reimbursement triggers, dependence on data quality at service providers/insurers)?

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What does this mean for Pharma X?

Pharma X argues that reimbursement jeopardizes profitability in the Swiss market. However, Pharma X must submit detailed contribution margins, license fees, and scenarios for the exemption dossier and have them audited. At the same time, the exemption threatens to fail due to "therapeutic alternatives." The result: the company is faced with the choice of disclosing highly sensitive group finance data or accepting reimbursement as a quasi-fixed cost mechanism.