Dive Brief:

• Swiss medtech companies have lost barrier-free access to the European Union single market, forcing them to meet stricter requirements when exporting to the region.

• Switzerland is outside of the EU but has enjoyed barrier-free access to the market under the terms of bilateral agreements. However, failure to update a Mutual Recognition Agreement ahead of the implementation of the Medical Device Regulation has re-erected old barriers.

• The Swiss Medical Technology Association said the change will cost the industry it represents CHF 114 million ($126 million) to meet new administrative requirements and CHF 75 million a year on an ongoing basis.

Dive Insight:

Technical barriers to trade between the EU and Switzerland came down in 2002. The trading partners worked to tighten their ties over the subsequent years, culminating in a draft 2018 treaty that would see Switzerland routinely adopt the rules of the EU single market. However, sections of the Swiss population opposed the plans and the government walked away from the deal table this week.

Medtech is among the first casualties of the change in the relationship between Switzerland and the EU. The industry was governed by a bilateral MRA that needed to be updated for MDR. Given the inability to form the broader Institutional Agreement, MDR arrived without the MRA being updated. 

Like post-Brexit Great Britain, Switzerland is now a third country for the purposes of the regulation of medical devices. Swiss Medtech, which said medtech had become "a tactical 'ball' in the political game between the EU and Switzerland," warned its members that could happen in 2018, leading to preparations for a hard split. 

The preparations and ongoing bureaucracy are expected to add to the cost of running a company in Switzerland. In a statement, Beat Vonlanthen, president of Swiss Medtech, said the industry can cope with the additional costs but cautioned against viewing the regulatory change in purely financial terms. 

"Switzerland will lose a tremendous amount of investment attractiveness compared to EU countries due to the third-country bureaucracy. Anyone who simply states that the administrative costs are bearable is completely ignoring how tough the international competition is," Vonlanthen said.

The Swiss Medtech president outlined two scenarios in which Switzerland could suffer. First, the country may become less attractive to non-European companies. A Swiss location used to open up the EU market. Now, non-European companies may decide it makes more sense to open a site in one of the 27 EU member states that still give them unimpeded access to the single market.

Second, Vonlanthen is concerned that Swiss startups may locate their headquarters in the EU. The concerns raised by Vonlanthen echo the case people in the U.K. made against the vote to leave the EU. While Brexit has happened, Vonlanthen is still hoping Swiss-EU ties can be reinstated.

"We hope that the last word has not yet been spoken. Both sides must be interested in a pragmatic solution to maintain seamless patient care in Switzerland and the EU. I expect politicians to put the health care of their own people above tactical negotiating interests," Vonlanthen said.