With a stark change in public policy, the French healthcare system is facing a major overhaul. At stake is the relationship between big pharma and the French administration.
On the 6th of May, France elected Francois Hollande as their new President, the Socialist Party representative, following 10 years of conservative reign. This election has raised significant concerns within the financial world, as Hollande’s challengers doubt his ability to foster healthy relationships with the private sector. The Comité Economique des Produits de Santé (CEPS), the committee which sets price/volume agreements to cap revenue by pharmaceutical product, is tasked with implementing cost containment policies provided by the ministry of health. The pharmaceutical industry is therefore anxious since healthcare business in France is primarily controlled by the government.
Marisol Touraine, a trained economist and long-standing member of the National Assembly(1), was nominated as the new Health Minister on the 16th of May. Her primary responsibility will be to implement Hollande’s healthcare programme. The programme carries two main parts that will impact pharmaceutical businesses: the reduction of inequality in access to care and the need to reduce healthcare spending.
Improving access to care
The French healthcare system guarantees free access to care to everyone regardless of individuals’ earnings, although inequalities remain. Rising healthcare costs have forced previous governments to pass several acts designed to allow co-payments for drugs (€0.50 co-payment per pack(2) with a cap of €50 per patient per year), hospitalizations and consultations. However, low income earners are exempt from those co-payments, whilst average earners still contribute. According to the Socialist party estimates, 15% of the population can no longer afford healthcare and another 25% postpone care and treatments. Overall, some 40% do not receive adequate healthcare in France(3).
Reducing inequalities is a socialist motto. In 1999, former Prime Minister Lionel Jospin created the Couverture Maladie Universelle (CMU), universal health coverage to guarantee healthcare to the poorest(4). Although the CMU has been heavily criticized by conservatives due to concerns over its costs, it has significantly contributed to the pharmaceutical industry by enlarging the client-patient pool.
Marisol Touraine will be tasked with taking measures to help the 40% of the population currently struggling for access to standard care. These measures are likely to boost the pharmaceutical industry. Based on the success of the CMU programme Marisol Touraine is likely to extend the population eligible for CMU coverage to part of average earners and students(5).
Reducing healthcare spending
According to the socialist party, the hospital debt has risen from €15.9 billion in 2007 to €24 billion in 2010, and the Social Security (the public institution responsible for financing healthcare and social measures) deficit has escalated from less than €10 billion in 2007 to over €20 billion in 2010(6). According to the World Health Organization, France allocates more than 11% of its GDP to healthcare through public funds(7).
In an international context of economic crisis, where European governments have to justify public expenses, the need to address the imbalance between healthcare expense and income is a key focus, which will further pressure the industry to provide value.
Optimising healthcare resources
Socialists are facing a challenging problem: on the one hand they made a promise to financially support 40% of the population who have a limited access to care; but on the other hand, they have to demonstrate their ability to at least contain or even reduce healthcare spending.
They could increase or create new taxes for the pharmaceutical industry in order to increase income, but it is unlikely to offset rising expenses. Additionally, imposing new financial impediments on the pharmaceutical industry could lead to more job insecurity. With unemployment rate at a historical high since 1999(8) (10.2%(9)), such measure should not be considered by the new government. Furthermore, if investment prospects are curtailed by the French government, providing innovation and value will become even more challenging for manufacturers.
They could consider reducing the cost of pharmaceutical products; a policy that has been enforced repeatedly by previous governments(10). However, Pharmaceutical companies have warned European governments that no drug can be launched at unsustainable prices(11), despite the compensation that large volumes in major European markets such as France can offer. As far as French companies are concerned (Sanofi, Pierre Fabre and Servier), reducing drug prices would force them to align domestic prices with prices set outside of France which would create a competitive disadvantage.
The new French government needs to engage the pharmaceutical industry in order to develop reasonable, constructive and sustainable reforms. Free-pricing came to an end in Germany in 2011 and France is looking to start alternative pricing methods from 2013. High facial prices and secret price-volume agreements will remain relevant to most marketed drugs but Marisol Touraine might decide to tackle the rising costs of provisioning orphan drugs by implementing risk-sharing agreements. This will come as a shock for manufacturers of high price/low volume products particularly.
Further cost containment measures could be achieved by reducing the number of products financed outside of the hospital DRG system (Tarification à l’Activité (T2A) excluded pharmaceuticals). Currently, very expensive products are directly financed by the Social Security to relieve hospital budgets. Since hospitals are not forced to negotiate prices at local level, the Social Security has to foot the bill. Some medicines could be de-listed from the “Liste en sus” (Ex-T2A) in response to the availability of generics or biosimilars, or T2A included based on usage. The regional health agencies will pay a greater role in rationalising prescribing, managing and controlling off-label use, and ensure efficient use of healthcare resources.
The nomination of Marisol Touraine, concomitant with the worsening of the economic crisis, will see the French authorities move away from simple payment systems to contractualisation schemes with the pharmaceutical industry. Orphan drugs with annual costs of €100,000+ per patient will no longer receive preferential status (such as price notification) without solid clinical trial design, demonstrated positive clinical outcomes and a very limited patient population. 2012 will be a turning point in pharmaceutical pricing policy in France. Companies should anticipate a paradigm shift and initiate open discussions with French decision makers.
2011 French healthcare reforms reinforced the role of the drug safety agency, formerly known as Agence Française de Sécurité Sanitaire des Produits de Santé (Afssaps) now named Agence Nationale de Sécurité du Médicament (ANSM). The Transparency Committee is transforming the approach to evaluating drugs and working on developing a new composite index. The Index Thérapeutique Relatif (ITR) is to replace the SMR and ASMR, and the approach to assigning comparators will be redefined. Health economics is also expected to play a greater role in the ITR evaluation(12). Market access, pricing and reimbursement in France is changing dramatically. Since, France is expected to be the 5thpharmaceutical market by 2013(13), it will be crucial for pharmaceutical companies with significant activity in Europe to adapt with the reorganisation of the French market.
5 Rapport d’information sur la santé et la protection sociale des étudiants (3494, 6 décembre 2006), Laurent Wauquiez
7 WHO country report France, online database
9 OECD statistics, online database, access 7thJune 2012
13 IMS Health Market Prognosis, Sept. 2009
30% of pharma executives expect business as usual, as they admit to expecting blockbuster-type...
Lucy Brake speaks to Mike Rea, CEO of IDEA Pharma, about how he believes real world evidence...
Dr Jean-Michel Cosséry, the new UK managing director and vice president for its Northern Europe hub...