I. In a nutshell

On April 10, 2019, the Swiss Government issued two ordinances providing details on how to comply with the newly revised provisions on integrity and transparency in the sector of therapeutic products. The revised ordinances will enter into force on January 1, 2020.

II. How does this affect you?

The new compliance prerequisites are considerable and time until January 1, 2020 is limited.

Companies ranging from manufacturers of therapeutic goods to hospitals will have to:

  • appoint a manager in charge of integrity and transparency compliance;
  • implement internal reporting processes; and
  • review and amend existing discount and remuneration arrangements.

III. Background: revTPA and revHIA in March 2016

The revision process of Swiss legislation on therapeutic products has been underway for nearly 10 years. The Federal Assembly finally adopted the revised Therapeutic Products Act (revTPA) and the correlating changes to the Health Insurance Act (revHIA) in March 2016. The comprehensive package that entered into force January 1, 2019 also includes revised rules on the prohibition of undue material benefits in the sector of therapeutic products:

  • The new art. 55 revTPA states that persons prescribing, dispensing or using prescription drugs professionally as well as organizations employing such persons may not claim or accept undue material benefits for themselves or for the benefit of a third party. Conversely, it is forbidden to promise or grant undue material benefits to such persons or organizations. However, the revTPA also provides for a number of admissible material benefits: benefits of modest value, contributions for research, further education and training, fees for services and price discounts or reimbursements granted on the purchase of therapeutic products. Additionally, art. 56 revTPA implements the obligation that all discounts and reimbursements granted on the purchase of therapeutic products must be shown in the receipts, invoices and accounts of both the seller and purchaser. This documentation must be disclosed to the competent authorities upon request.
  • Furthermore, art. 56 revHIA states that while service providers and insurance companies are generally obligated to pass on price discounts and reimbursements to the patients, they may now agree on not passing on discounts to patients in full but to instead use the non-allocated funds for national programmes to demonstrably improve quality of treatment in the interest of public health.

As these provisions entail a number of open and ambiguous legal terms, parliament commissioned the Swiss Federal Council, the executive body of Switzerland, with the task of implementing detailed ordinances.

IV. New Ordinance on Integrity and Transparency in the context of Therapeutic Products (OITTP)

Among other things, the new ordinance brings clarity regarding ambiguous legal terminology, implements detailed requirements for the permissibility of financial incentives and sets new standards for compliance.

1. Integrity

The OITTP's provisions on integrity only apply to prescription-only drugs. The scope includes all medical personnel who prescribe, supply, professionally use or purchase prescription-only drugs or who have a say in its purchase and to all legal entities employing medical professionals, as well as associations of medical professionals. In addition, the scope is not limited to specific beneficiaries. The granting and promising of undue advantages in the sense of the ordinance is generally prohibited.

The OITTP clarifies that granting or promising advantages of modest value is permissible, if the advantage is related to the professional activity of the medical professional or benefits the patients. The limit is set at CHF 300 per medical professional per year. Discounts and reimbursements are permissible if they do not influence the choice of therapy. In the OITTP a discount is defined as the difference between the actually paid price and the higher factory selling price.

Contributions to organizations for research, teaching or further education and training of specialists is permissible if contributions (i) do not target individual medical professionals, (ii) are based on written agreements; (iii) are used exclusively for the set out purpose; (iv) are not subject to any conditions or obligations regarding prescription-only medicines; (v) are transferred to an account within the organization, to which medical professionals do not have exclusive access; and (vi) are shown in the accounts of the organization as well as published in an appropriate manner. Furthermore, the assumption of participation fees for education and training events is generally permissible, provided that the specialists pay a contribution of at least a third of the total cost out of their own pocket.

Fees for services in the sense of an appropriate remuneration are permitted if agreed on in advance and in writing. Compensation is generally permissible for logistics and storage costs and storage risk; teaching, expertise and consulting activities; reports on practical experience; participation in advisory bodies and advisory boards. This non-exhaustive list opens up a wide range of activities for which remuneration is allowed. Unanswered, however, remains the question of when compensation is deemed to be appropriate. This question arises, for example, with regard to turnover-related compensation, as it is commonly agreed on in the wholesale trade.

2. Transparency

All discounts and refunds granted for the purchase of therapeutic products must be documented in the company's business records and on request be disclosed to the Swiss Federal Office of Public Health (FOPH). This transparency obligation applies to all parties involved in the trade of therapeutic products, including, manufacturers wholesalers, purchasing cooperatives and service providers such as hospitals, pharmacies and doctors. The obligation is not limited to prescription medicines, but applies to all medicines and medical devices. An exception is made for "low risk"- medicines available on a retail basis and Class I medical devices (e.g. plasters etc.).

3. New Compliance Standard

Companies must now designate a compliance manager responsible for integrity and transparency. Said person will be responsible for liaising with the FOPH and in charge of preparing and keeping the necessary documentation. This obligation applies to all companies that manufacture or distribute therapeutic products. The responsibility for the implementation of the revised legislation will pass on to the FOPH. It is to be expected that the FOPH will be more vigorous than the current enforcer Swissmedic, as the FOPH has already announced an increase in personnel to this end.

V. New Health Insurance Ordinance (HIO)

Insurers and service providers may now agree on not passing on discounts to patients in full but instead to use the funds to sponsor national programmes of public health. Art. 76a HIO specifies that such agreements are only permitted, if (i) the service provider and the health insurance company agree in writing; (ii) more than half of the discounts are passed on to the patients (i.e. at least 51%); and (iii) the part not transferred is demonstrably used to improve the quality of treatment in the interest of public health. Additionally, such agreements must be disclosed to the FOPH.