On 20 November 2017, the French Competition Authority (FCA) launched a sector inquiry into medicinal products and medical biology (biomedical) laboratories in France. As previously announced, the inquiry aims to address the challenges that the sector entails for the French insurance system and public health and to assess the feasibility of more competitive conditions with the aim of reducing health expenditure. More specifically, the inquiry focuses on:
1. The pharmaceutical distribution chain
The FCA will assess the current competition and regulatory conditions across the pharmaceutical distribution chain and, in particular, the role of intermediaries (wholesaler distributors, purchasing group networks and pharmaceutical purchasing organisations).
In this respect, the new inquiry echoes the FCA’s 2013 sector inquiry within the sector of distribution of human medicines in private practice, which found that pharmaceutical companies offer weak discounts of non-reimbursable medicines (which prices are not set by law) to intermediaries thus favouring direct-to-pharmacy sales. This might prevent pharmacies ordering fewer quantities from offering competitive prices due to a lack of bargaining power vis-à-vis pharmaceutical companies. Furthermore, the outcome of the 2013 sector enquiry recommended a controlled opening of the market of over-the-counter sales of non-prescription medicines to competition and softening the regulatory conditions for their online sale, provided certain conditions were met.
Under this new inquiry, the FCA will reassess its previous recommendations, which the Government only partially took into consideration, and explore new ones with the aim of stimulating competition. New recommendations might include innovative business models (pharmacy chains, pharmacy ownership opened to investors – a measure that was recently taken in Italy –, etc.), new advertising rules for pharmacies, as well as new provisions regulating pharmacies’ online sales (storage outside the pharmacy premises, a single website for various pharmacies, etc.).
The FCA will extend the inquiry to biomedical laboratories and assess whether possible recommendations or even the reorganisation and modernisation of the sector are deemed convenient from a competition viewpoint.
2. Price setting of medicinal products
The FCA will review the price setting mechanisms for reimbursable medicinal products and, in particular, whether those should be modified with the aim of offering competitive prices while protecting public health. The FCA may consider the feasibility of new price setting parameters, for example, to reward innovation or bring prices towards the competitive benchmark (set by medicines within the same therapeutic class or by generics).
Furthermore, the sector inquiry will examine possible effects across the distribution chain of discounts granted to pharmacies on generic medicines.
Finally, the FCA will assess the extent of the hospitals’ bargaining power when tendering for medicinal products so as determine whether the existing regulatory framework or incentives could be modified for the benefit of competition.
While the exact timing of the sector inquiry remains uncertain, the FCA generally issues its non-binding public opinions within 10 to 18 months of the launch of an inquiry. In this case, the opinion might include recommendations for public authorities and/or private operators aimed at softening regulatory constraints in the pharmaceutical distribution chain and at analysing the existing regulatory and price setting mechanisms.