The Swiss government and the pharmaceutical industry have agreed a deal under which the prices of around 2,500 medicines will fall on June 1, with estimates savings to patients of up to 720 million Swiss francs over the next three years.

June 1 will see the introduction, for the first time, of reference pricing for medicines in Switzerland. Recent surveys have shown that Swiss drug prices can be as much as 50% higher than in other countries in Europe, while for products still under patent protection, they are generally 12% more expensive than in six comparator countries.

Pharmaceutical manufacturers in the country have strongly opposed the introduction of reference pricing, with lawsuits. However, as part of the new deal, they have agreed to drop these legal actions, and any future price-related lawsuits, in return for government pledges to cut the approval times for new drugs to 60 days. According to industry groups, approvals currently take an average of 200 days.

The agreement will run until the end of 2014, when it will be up for renegotiation, and approximately 800 drug products each year will have their prices adjusted based on the international referencing. In addition, a number of price reductions agreed by the cabinet in March 2012 and based on international comparisons, will now come into effect, under the agreement.

The industry had responded to the March 2012 price cut proposals with a legal challenge, claiming that the imposed prices did not reflect the drugs' therapeutic value.

Announcing the new agreement, Swiss interior minister Alain Berset said it was a "very good, balanced and mutually acceptable solution," while Walter Holzle, president of the association of pharmaceutical companies in Switzerland (Vips), was quoted in local reports as welcoming the government's pledge to significantly shorten the approval times for new drugs. “The agreement represents a major and important step towards implementation of needed reforms in the current price system," he said.

Another industry group, Interpharma, described the price cuts as a temporary concession which had to be agreed in order to reach the deal because they had already been factored in by insurers.

- A report recently released by Interpharma says that the pharmaceutical industry now contributes more than 30% of Switzerland's total exports, and that the sector is directly and indirectly responsible for added value of almost 30 billion Swiss francs, equal to a share of 5.7% of the nation's nominal Gross Domestic Product (GDP).

"Nominal added value has been increasingly burdened by growing price pressure and the development of exchange rates, so the very high growth rates of the past are no longer being equalled at present. Real growth, nevertheless, remains robust and high at over 4%," says the report, which was compiled for Interpharma by Polynomics and BAK Basel Economics.

And Vips reported recently that Switzerland's pharmaceutical market grew around 2% last year, reaching a value of 5.08 billion Swiss francs.