The pharmaceutical sector continues to be scrutinized by the French Competition Authority (FCA). In a 20 November 2017 decision, the FCA has announced the launch of a new sector inquiry which, according to the FCA itself, will be wide and will focus on two areas: the pharmaceutical distribution chain and the process of setting medicines’ prices.

A wide investigation of the whole pharmaceutical sector

The investigation covers only medicines, excluding medical devices. All pharmaceutical companies are likely to be concerned, whether they sell reimbursed or OTC medicines, dispensed through general practice or hospital prescription.

The FCA will target some companies who may receive requests for information (RFI) and/or invitations to attend to interviews with the FCA staff.

In addition, company which would not have received a RFI could still participate in the sector inquiry by getting in touch with the FCA.

The FCA should publish a sector inquiry report in the course of 2018.

A monitoring of the previous investigation into the whole distribution chain

The FCA intends to update the findings of its 2013 sector inquiry regarding the pharmaceutical distribution chain to analyse whether competition conditions have evolved since then.

The FCA deplores that only few of its recommendations have led to concrete effects but intends to steer towards new recommendations focusing on intermediaries (wholesale distributors, pharmaceutical purchasing groups).

Moreover, the FCA points out the effects of direct trade on prices.

In this context, the FCA may revisit the way pharmaceutical companies sell OTC medicines to pharmacies, and is likely to investigate how pharmaceutical companies manage parallel trade since the undertakings subscribed by some of them towards the FCA ten years ago.

The first review of market access pricing negotiations from an antitrust perspective

For the first time, the FCA intrudes into the process of setting medicines’ prices.

The FCA mentions that it will review the content of pricing agreements with the French Economic Committee for Healthcare Products (CEPS) to study the mechanism of contractual rebates. It may propose to amend price setting rules for less regulation and in favouring price settings by competitive mechanisms.

The FCA shall also investigate pricing vis-à-vis of hospitals, as it already notices that prices offered in calls for tenders tend to systematically align on maximum prices negotiated with the CEPS without offering any commercial rebates.

Generic medicines (and probably biosimilars) are not left aside, as the FCA notes that the heavy discounts granted to dispensing pharmacies rarely benefit customers and the French National Health Insurance. The FCA might end up in favouring a free competitive price setting mechanism between originators and generics.

The FCA final report will thus address important topics for the pharmaceutical industry, which will echo various stakeholders’ calls for reform into the sector. Moreover, if the FCA discovers practices which may infringe competition law rules, it could at a later stage decide to open subsequent investigations targeting certain practices or companies.