On February 25 2013 the Competition Authority launched an inquiry into the competitive functioning of the pharmaceutical distribution sector. In the context of stimulating competition through government support for generic medicines and the online distribution of medicines, the authority intends to examine each level in the medicine distribution chain to decide whether it is truly competitive, contributing to lower prices and enhanced service and innovation.
The authority's investigation - which more or less equates to a sector inquiry by the European Commission - will focus on three main actors: pharmaceutical companies, wholesale distributors and pharmacists. It will also consider online sales of medicines.
The first level in the medicine distribution chain, pharmaceutical companies negotiate the prices and volumes of reimbursable medicines marketed in France with the Economic Committee for Health Products. For these products, the authority will consider whether this legally binding framework is sufficiently flexible to achieve a level playing field. For non-reimbursable medicines whose price can be freely fixed, the authority will examine potential barriers to lower prices resulting from relationships between pharmaceutical companies and wholesale distributors on the one hand, and pharmacists on the other.
The authority further notes that the penetration of generics is still insufficient in France. The expiry of many pharmaceutical patents within the next two years should encourage their development - provided that pharmaceutical companies do not engage in illegal anti-competitive practices.
The activity of wholesale distributors is largely organised within regulated margins and in accordance with public service obligations on the holding of stock. The authority will consider the impact of direct sales development by pharmaceutical companies on the economic difficulties faced by wholesale distributors.
The authority will also examine the types of competitive pressure in which wholesale distributors may engage in the import and export of medicines. Electronic commerce between member states could be part of this review.
The lowest level in the medicine distribution chain, pharmacists have become key players in government policy on the promotion and development of generic medicines. Recognising that French consumers are less enthusiastic about generics than those in other European countries, the authority will focus on the necessary improvements to stimulate competition between originators and generics.
It will also decide on the intensity of competition for non-reimbursable medicines, the price of which has increased by some 47.8% since 1998, compared to a 24% reduction in the price of reimbursable medicines. In this regard, the authority will examine the ethical rules to which pharmacists are subject with regard to commercial freedom - in particular, advertising - as well as the role of professional bodies and commercial offer practices.
The final issue that the inquiry intends to cover - the online sale of medicines - will be considered by the authority within the context of the implementation of the EU Falsified Medicines Directive (2011/62/EC).
The authority had already expressed doubts to the government regarding the draft implementation limiting online sales to only those drugs which consumers can themselves pick up from the shelves of stores (Opinion of December 13 2012). The government has ignored this advice; but on February 14 2013 the Supreme Administrative Court, in proceedings for interim measures, suspended the implementation of the online sales provisions and considered that their compatibility with the directive raises serious doubts, since the directive offers the possibility of online sales for all medicines that are not subject to prescription.
Unusually, the authority will submit its first conclusions to public consultation in Summer 2013. This consultation will enable the authority to render an opinion taking into consideration the reactions of sector players before the end of the year.
In its final opinion, the authority may identify obstacles and recommend that the government implement certain measures in order to improve the competitive functioning of the sector.
The French Competition Authority is not the only such body to take a close look at the pharmaceutical sector. The authorities of several other member states are investigating or have investigated this sector. Recently in the United Kingdom, the shortage of some prescription-only medicines led to a May 2012 report which concluded that the shortage was mainly due to parallel trade in other member states. Further, at European level, following its sector inquiry in 2008 to 2009, in 2012 and 2013 the European Commission opened several procedures against pharmaceutical companies suspected of delaying the entry of generics on the market.
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