The French legal framework relating to medicinal products shortages has been recently reinforced by the Social Security Financing Bill for 2020 no. 2019-1446 dated 24 December 2019 (the “LFSS 2020”).

Despite such provisions being typically uncommon in a financing bill, an amendment of the regulation regarding shortages was to be expected. Although a detailed legal framework had been created by the Law on the Modernization of our Health System no. 2016-41 dated 26 January 2016, shortages in the supply of medicinal products have continued to increase since then.

The LFSS 2020 creates new obligations for the pharmaceutical industry (I) and increases the fines applied if existing obligations are not followed (II), with the aim of enabling better anticipation and management of these situations.

1. Pharmaceutical companies are bound by new obligations to prevent and remedy shortages

First, as of 30 June 2020, any company which holds marketing authorization or which is marketing a medicinal product within French territory (exploitant) shall hold, at any time, a backup stock intended for the French market. The backup stock must be located either in France, or in a Member State of the European Union or of the European Economic Area. A Decree will specify the minimum quantity required to cover national need, on the basis of the volume of medicinal products sold in the last 12 months, up to a maximum stock corresponding to 4 months consumtion.

The regulation has also been amended in relation to medicinal products of major therapeutic interest (the “MITMs”), which are defined as medicinal products for which an interruption of treatment is likely to be life-threatening for patients in the short or medium term, or represents a significant loss of opportunity for patients in view of the severity of the disease or of the potential for the disease to progress:

  • First, both the exploitants and marketing authorization holders (the “MAHs”) of all MITMs shall elaborate and implement a shortage management plan (a “PGP”) whose purpose is to prevent and mitigate shortages.
  • In the same way, both MAHs and exploitants shall inform the French National Agency for Medicinal and Health Products Safety (the “ANSM”) in the event of MITMs shortage or risk of shortage, as soon as they are aware of it. This new measure stems from the possibility that some information likely to have an impact on the supply for the French market is only held by the MAHs, who do not necessarily market medicinal products within national territory (e.g. pharmacovigilance data relating to a quality defect of the marketed medicinal product). That notification should be made via a standard template to be defined by a Decree.
  • The regulation concludes by stipulating that in the event of a shortage or risk of shortage which presents a serious and immediate risk for patients, if (i) the alternatives available within French territory or (ii) the measures communicated by the exploitant do not cover national needs, except in case of force majeure, the General Director of the ANSM will be entitled, after a contradictory procedure, to compel a MITM exploitant to import any therapeutic alternative, in proportion to its share of the national needs coverage during the six months preceding the shortage. This will apply for the duration of the shortage.
  • During the shortage period, the exploitant will have to bear the importation costs and pay the Health Insurance for the additional costs incurred for the reimbursement of the imported medicinal product in the event that the imported product is more expensive. Exploitant will bear these additional costs in due proportion to their respective market shares during the six months preceding the shortage.
  • This new provision for the supply of medicinal products to wholesalers and dispensers is similar to the clause d’achat pour compte currently included in agreements for the supply of medicinal products to hospitals, which obliges a defaulting company that does not ensure the supply of its products to pay the extra cost of purchasing an alternative (whether or not it is imported).
  • A Decree will specify the allocation of liability between the defaulting company and the company from which the medicinal products are imported. Specifications should also be given regarding pharmacovigilance obligations, quality control, packaging and traceability, as well as regulatory obligations when the defaulting company does not have a pharmaceutical establishment that has been previously authorized for an import activity in France.

Pharmaceutical companies holding marketing authorizations in France may need to revise their contractual obligations in order to comply with the above-mentioned rules.

2. Companies risk facing significant fines in case of shortage

Pharmaceutical companies should be all the more reactive to this new legal framework as the penalties incurred in the event of non-compliance have increased.

Pharmaceutical companies are subject to a financial penalty of up to 30% of their turnover in the last financial year for the concerned product, up to €1 million, when:

  • Breaching obligations relating to backup stocks;
  • Ceasing the marketing of a MITM before there is time to put in place alternative solutions to cover the national needs;
  • Not adopting or implementing a PGP, failing to declare to the ANSM the list of medicinal products for which a PGP is developed, or failing to include sufficient measures in the PGP to deal with shortages in medicinal products;
  • Not proceeding with the importation of an alternative to the disrupted medicinal product, as requested by the ANSM; or
  • Not complying with obligations to report shortages to the ANSM as soon as the MAH or the exploitant become aware of any shortage/risk of shortage or not implementing the measures provided for in the PGP.

In addition, the ANSM is entitled to impose a daily penalty for each day of disruption of supply, which is up to 30% of the average daily turnover achieved in France by the company with respect to the concerned product during the last financial year.

As the ANSM will strongly rely on these measures to find a solution to shortages, enforcement is expected to be strict.