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Failed EU-negotiations: What about the Swiss healthcare system?

After seven years of negotiations on a framework agreement with the EU, Switzerland announced on 26 May 2021 that it would no longer take part in such talks, citing substantial differences on central points. The abrupt end to negotiations raised many unanswered questions about Switzerland’s future, including the effect on the Swiss healthcare system.

15.06.2021 Matthias Stauffacher  •   Dr. Christoph Willi, LL.M.

Christoph Willi and Matthias Stauffacher comment on the following questions raised in discussions with stakeholders to the Swiss healthcare system:

What are the implications for the Swiss healthcare system?

On 26 May 2021, the Federal Council broke off negotiations with the EU on the institutional agreement. It is still too early to be able to conclusively assess the impact of the breakdown in negotiations. Much depends on whether Switzerland will succeed in entering into new negotiations with the EU, at least in certain areas. However, the EU Commission made it clear to Switzerland early on that it would not conclude any new agreements without the framework agreement and that it would no longer update the existing agreements. The Swiss medical devices industry is the first industry sector affected by this policy stalemate. Due to the failed negotiations on the framework agreement, the EU Commission has refused to update the agreement concerning participation in the European internal market for medical devices. As a result, Switzerland loses the opportunity to monitor the safety of medical devices in cooperation with the European authorities. Depending on the supply of safe and high-quality medical devices from the European market, these consequences also affect the Swiss healthcare system: Switzerland imports 54% of the medical devices it needs from the EU. In an open letter to the Federal Council, the industry association Swiss Medtech warns that one in eight medical devices could be missing from the shelves of Swiss healthcare facilities as a result of the failed negotiations.

Why is an update of the MRA so important?

Since 1999, Switzerland has enjoyed equal access to the European market for medical devices due to the Mutual Recognition Agreement (MRA) between Switzerland and the EU. This is one of the bilateral treaties between the EU and Switzerland. This agreement cleared the way in terms of technical barriers to trade in the relationship between Switzerland and the EU and established effective and efficient market surveillance in cooperation with the EU authorities. This also benefited the Swiss health sector.Due to the new medical device regulation that came into force in the EU and Switzerland on 26 May 2021, the MRA should have been updated. However, due to the EU's refusal to update the MRA through negotiations, Switzerland will be considered a third country as of  26 May 2021. In dealing with new medical devices, Switzerland  will therefore be on an equal footing with Turkey, China or the USA. Karoline Mathys, member of Swissmedic's Executive Committee, speaks of a turning point:

« With regard to new products, the situation is comparable to that of the UK after Brexit. It should not be overlooked that medical devices are possibly only the beginning of a development that will sooner or later also affect other areas of the internal market or EU cooperation. »

Karoline Mathys, member of Swissmedic's Executive Committee

What are the implications for the Swiss healthcare system in the absence of an MRA update?

The MRA provided the Swiss healthcare system with privileged access to the European single market for medical devices. Due to the MRA no longer being fully operational, manufacturers, importers and distributors will have to fulfill additional obligations if they want to trade EU medical devices in Switzerland. These include additional notification and registration obligations, the manufacturer's obligation to appoint a Swiss authorised representative, and the indication of the Swiss importer on the product, the packaging or a document accompanying the product.

These additional obligations cause unnecessary bureaucratic effort, which does not provide any additional safety to patients but must ultimately be paid for. Due to the associated increase in costs, industry insiders fear that foreign manufacturers might refrain from making their products available in Switzerland. They are therefore warning of supply bottlenecks.

What are the consequences for the safety of medical devices?

Another consequence of the exclusion from the European single market for medical devices is that Switzerland will not have access to the European database for medical devices -Eudamed. This database, centrally managed by the EU Commission, is one of the most important innovations of the new medical device regulation, and it functions to increase the safety of medical devices. It provides the authorities with rapid access to information on manufacturers and their authorised representatives, on products and certificates of conformity, as well as data on clinical trials and serious incident reports (vigilance). These precautions enable authorities to react promptly to risks and to order measures to protect patients.

Denied access to Eudamed, Switzerland faces difficulties to ensure an orderly supply of safe medical products. In the past, the surveillance of medical devices placed on the market in Switzerland was based on an extensive exchange of information within the European network of authorities. This has now been called into question and, since 26 May 2021, has been limited to publicly accessible data from Eudamed. This means that Swissmedic, as the federal authority responsible for enforcing the Medical Devices Ordinance, lacks essential information to ensure an orderly supply of safe medical devices in Switzerland. This loss will not be compensated for by the changes made by the Federal Council to the Medical Devices Ordinance. The latter now stipulates that serious incidents must also be reported to Swissmedic. The obligation to report, however, is limited to incidents that have occurred in Switzerland. This obligation to report, which is limited to Swiss incidents, in no way outweighs a comprehensive obligation to report and provide information within the framework of a pan-European network of authorities. In the worst case, Swiss authorities can only intervene when Swiss patients are directly affected by serious incidents, even though the inadequacy of a medical device has long been known from incidents in neighboring countries. According to Swissmedic, Switzerland now must set up a completely independent market surveillance system and its own database to ensure product safety. Swissmedic says it is working on this. But if defective hip implants turn up somewhere in the EU, for example, Switzerland will hear about it with a delay - possibly only when the defect becomes public. The possible consequences: "Defective products will remain on the market longer - with possible consequences for patient safety.”

Is the voluntary implementation of EU legislation a solution?

The Federal Council has chosen this path by recognising EU declarations of conformity. This unilateral measure can avoid additional regulatory burdens and improve the domestic supply of EU products. However, voluntary compliance with EU legislation does not give Switzerland equal access to the EU single market. In particular, it does not give Switzerland access to European market surveillance. The safety of imported medical devices is therefore not guaranteed, and Swissmedic cannot react quickly enough to protect Swiss patients. By no longer being able to participate as an equal partner in the European single market for medical devices, Switzerland's ability to carry out efficient and effective market surveillance is limited.

Should Switzerland forego the additional measures?

Medical devices from a foreign manufacturer may only be placed on the market in Switzerland if this manufacturer  has appointed an authorized representative established in Switzerland. The authorized representative is the manufacturer's representative and contact person for the Swiss authorities. He is jointly and severally liable with the foreign manufacturer for any product defects. This is to ensure that Swiss patients do not have to sue a letterbox company in a faraway country if they have suffered harm as a result of a product defect. In view of the limited market surveillance, it is not an option for Switzerland to release EU manufacturers from their obligation to appoint a Swiss authorized representative. This would further weaken the authorities' ability to act.

Furthermore, medical devices placed on the market in Switzerland by a foreign manufacturer must be labelled with the address of the importer and authorized representative established in Switzerland. Even though these labelling obligations cause additional work, they are essential so that users and patients know who to contact in the event of harm.

What has the Federal Council done to maintain the supply of medical devices?

A few days before the negotiations on the framework agreement failed, the Federal Council made selective changes to the Medical Devices Ordinance (MepV) to reduce the negative impact on the supply side. These changes include the extended transitional periods during which the EU manufacturers appoint a Swiss authorized representative. Depending on the risk class, different transition periods apply until the end of December 2021, March or July 2022. These different transition periods are intended to give Swiss trading companies and importers additional time to look for substitute products if their existing suppliers should stop supplying the Swiss market. The measures, which have a selective effect, cannot disguise the fact that they only provide a temporary respite. The loss of cooperation with the EU will not solve the problem of the safety and quality of medical products.

Christoph Willi
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Dr. LL.M. Christoph Willi

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