The Autorité de la concurrence (“Autorité”) has submitted its preliminary assessment to a public consultation on 10 July 2013 on the state of competition in the area of medicinal products distribution in private practices. This interim report follows the sector enquiry launched in February 2013.

The Autorité has identified competition concerns, namely risks of anticompetitive practices and abuse of a dominant position, at each level of the pharmaceutical distribution chain.

  • Antitrust concerns with regard to pharmaceutical laboratories

With regard to reimbursed medicinal products, the Autorité points to practices that may result in foreclosing generics companies. It specifically condemns disparaging practices (two proceedings are currently in the investigation phase), and practices attempting to delay generic market entry, like the manipulation of marketing authorization procedures, or organized “pay for delay” practices, which consist in a generics laboratory agreeing to delay its generic from entering the market in exchange for compensation from the originator laboratory.

In addition, it has identified risks of collusion among originator or generics laboratories as part of the negotiation of prices with the Comité économique des produits de santé [Economic Committee for Healthcare Products – CEPS] in an attempt to present artificially overvalued manufacturing prices to obtain a price increase. The Autorité encourages the CEPS to notify it of any sign of collusion. It also suspects that agreements exist among generics laboratories not to request generic status and avoid creating a group within the register of generic products in an effort to avoid being subject to the automatic 60% discount applied in this case by CEPS.

With regard to medicinal products that are not reimbursed, the Autorité insists that the preferred direct-sales channel has undesirable effects that, in its opinion, could lead to discriminatory practices between small and large dispensing pharmacies or to the abusive refusal to sell to wholesalers. Moreover, the Autorité has identified tied sales practices between medicinal products which are not reimbursed and generic medicinal products.

  •  Antitrust concerns with regard to buyers and wholesalers

With regard to reimbursed medicinal products, the Autorité has highlighted risks of collusion among wholesale distributors, due to the small number of operators in the market, the financial fragility of the industry, the barriers to entry, especially in France’s overseas departments. In addition, it questions the high prices of originator medicinal products in France and whether there is an advantage in encouraging parallel imports in an effort to achieve lower prices.

It also underscores the difficulties wholesalers face trying to be competitive when it comes to medicinal products which are not reimbursed due to the differences in discounts between direct sales and wholesaling, and it consulted with operators about the opportunity to increase, for purposes of correcting this, the wholesalers’ compensatory purchasing power.

  • Antitrust concerns with regard to dispensing pharmacies

The Autorité calls the attention of dispensing pharmacies to the Order of 20 June 20131, which came into force recently and which outlines the framework for selling medicinal products. Even before the Conseil d’Etat annuled the provision limiting the scope of online sales to “pharmacies’ medication products” (“médicaments de médication officinale”), the Ministry of Social Affairs and Healthcare had indicated to the Autorité’s departments that this point would be amended in the public health code in the course of the year, and that the medicinal products designed to be marketed online will include all medicinal products not subject to a mandatory doctor’s prescription.

To compensate for laboratories’ refusal to sell to pharmacist groups, pharmacists have developed the practice of having one pharmacist submit a group order, in view of the retrocession to dispensing pharmacies located within the same customer catchment area. The Autorité pointed out that this practice is illegal under the public health code and consulted with operators about the opportunity of legalizing these retrocessions. It added that this practice may also lead to the exchange of pricing information in each dispensing pharmacy.

The Autorité moreover focuses on the practice of “disguised” rebates granted to pharmacists by laboratories on the price of generic products, in the form of a sales compensation to promote medicinal products which are not reimbursed: total rebates granted would thus exceed the maximum rebate allowed for these medicinal products by law.

It also laments the lack of information and advertising with regard to self-medication, while price discrepancies among dispensing pharmacies for over-the-counter medications are significant.

Lastly, the Autorité ruled in favor of partially opening up pharmacies’ monopoly to allow consumers to take advantage of more attractive prices for self-medication and “borderline products” (particularly pregnancy tests).

In 2008, the European Commission also issued a sector enquiry report on competition in the pharmaceutical industry. Nonetheless, the report essentially addressed laboratory practices regarding generic market entry. The sector enquiry by the Autorité therefore goes a step further by studying not only laboratories’ practices, but those of wholesalers and pharmacists too, from a competition point of view.

The Autorité invites any interested party to react to the developments and conclusions set forth in this public consultation document before 16 September 2013. For this purpose, the Autorité lists in a separate document (Background Note No. 8), questions asked in this consultation (http://www.autoritedelaconcurrence.fr/doc/fiche8_questions_juill13.pdf ).