4.5.2026
SL Insight Newsletter #32
The Indermitte Presentation: When the authorities aren't familiar with GENEROUS
Marcel Boller
At the Health Insurance Days 2026 in Interlaken, Jörg Indermitte, Head of the Pharmaceuticals Division at the Federal Office of Public Health (FOPH), gave an official presentation titled “Drug Prices – Balancing Access and Affordability.” On slide 23, he categorically rejects three arguments put forward by the pharmaceutical industry regarding Swiss prices. What the presentation completely overlooks is the GENEROUS reference pricing mechanism, which directly incorporates Swiss list prices into U.S. Medicaid negotiations.
What Indermitte says on slide 23—and what he leaves out
On slide 23, Indermitte lists three arguments put forward by the pharmaceutical industry and counters each one with a rhetorical question.
The first argument is: “Switzerland’s prices are too low when adjusted for purchasing power.” Indermitte retorts: “Adjusting for purchasing power on globally traded goods based on factory-gate prices? Are you trying to pull the wool over our eyes?”
The second argument is: “Europe/Switzerland does not contribute enough to the costs of research and development.” Indermitte counters: “Is this about research and development or profit maximization? Who is to blame for the (far too) high prices in the U.S.?”
The third argument is: “We will no longer supply Europe/Switzerland with new drugs.” Indermitte responds: “Why would you want to drive away your second-largest market?”
Throughout the entire 26-page presentation, there is not a single reference to GENEROUS, to MFN obligations toward CMS, or to the question of how the publicly available Swiss SL list price is factored into foreign reimbursement negotiations.
Why these rebuttals miss the point
The GENEROUS model (GENErating cost Reductions fOr U.S. Medicaid) is a negotiation framework led by CMS in which international drug prices are used as a reference for U.S. Medicaid discount negotiations. The reference countries are the G7 nations plus Denmark and Switzerland. Several major pharmaceutical companies have entered into Most Favored Nation (MFN) agreements with CMS, committing to apply GENEROUS to all newly launched products.
Against this backdrop, Indermitte’s three rebuttals miss the mark entirely.
Regarding the first argument (purchasing power parity adjustment): Indermitte portrays the application of purchasing power parities to drug prices as absurd. However, purchasing power parity (PPP) is not an argument invented by the pharmaceutical industry—it is the method that CMS officially and mandatorily applies in the GENEROUS model. In the model, all international reference prices are adjusted for GDP based on purchasing power parity before the second-lowest net price is set as the U.S. Medicaid reference value. While Switzerland has a high nominal GDP per capita, the PPP adjustment factor means that, after adjustment, Swiss drug prices are systematically among the lowest in the GENEROUS basket.
Regarding the second argument (R&D funding): Indermitte’s counter-question (“Is this about R&D or profit maximization?”) creates a false dichotomy that misses the actual point. For companies bound by the GENEROUS agreement, the primary reason for higher Swiss prices is neither R&D funding nor profit maximization, but rather a contractual obligation to CMS: The MFN deals oblige the signatory companies to apply GENEROUS to all future innovative products. A lower Swiss FAP is not a local concession for these companies, but a global reference price with US Medicaid implications that cannot be contractually ignored.
Regarding the third argument (security of supply): Indermitte’s question (“Why do you want to drive away your second-largest market?”) fundamentally misunderstands the incentive structure. Europe as a whole is the second-largest market—Switzerland alone is marginal in terms of volume. A company with a GENEROUS obligation that delays a Swiss listing or demands a higher factory price (FAP) does not do so in order to leave the Swiss market. It does so because a publicly visible lower Swiss price, after PPP adjustment, is incorporated into the GENEROUS calculation as the second-lowest reference value and triggers significant U.S. Medicaid consequences that it cannot contractually ignore.
Why this has significant implications for Switzerland as a pharmaceutical hub
As long as the FOPH does not include the GENEROUS mechanism as an institutional variable in its price assessment, it will systematically deem pharmaceutical price demands—which are structurally driven by U.S. regulation—to be excessive and motivated by vested interests. This has two concrete consequences. First: Companies with MFN exposure will increasingly delay or avoid Swiss listings. Second: The Schnegg Task Force on “Life Sciences Location” will not be able to develop viable solutions as long as GENEROUS is not included in the FOPH’s institutional analysis.
