French Industry Rages Over €1.7bn Drug Savings Plan

The French pharmaceutical industry has reacted angrily to a set of government cost-saving measures, including price cuts and sales rebates, that it says will cost it almost €1.7bn ($1.9bn) next year.

The measures, part of the Social Security financing bill (PLFSS) for 2016, were announced by the health minister, Marisol Touraine, on Sept. 24. She said they would help to keep the increase in health spending within the 2016 target of 1.75%, which requires overall health care savings of €3.4bn, compared with €3.2bn in 2015.

But she insisted that the price cuts imposed on the industry – totaling some €550bn – would free up resources elsewhere and "allow us to assume the high cost of innovative treatments so they are accessible to all patients."

The industry body, Les Entreprises du Médicament, begged to differ, saying industry was "again the victim of a profoundly short-term budgetary vision," and that the measures, which disproportionately affected pharma firms, would "paralyse" the performance of the French life sciences industry.

The drug spending measures are part of a wider drive to balance the Social Security accounts. The government says that the social security deficit fell between 2013 and 2014, and has continued to decline this year, partly as a result of a slowdown in health care spending, although it notes that the health care sector sill shows the highest deficit within the social security budget.

The annual PLFSS invariably includes some savings proposals targeting the industry, and this latest one is no exception. It outlines the following measures and the savings they are expected to achieve:

The Hepatitis C Effect

Touraine said that the government had managed to reduce the Social Security deficit by more than €8bn between 2011 and 2015, despite events like the arrival of the very costly hepatitis C medicines last year. These resulted in a significant growth in drug spending in 2014, but the allowed increase in the ONDAM (the annual national health spending target) was still respected, she noted.

In 2015, even though the cost of the hepatitis C drugs has continued to rise with a new generation of more effective products, the healthcare spending increase target will again be respected, the minister insisted.

As for the planned drug price cuts – the products involved have not been identified – she said the savings would allow new, more expensive drugs to be reimbursed. "Bringing down the prices of medicines is not only a budgetary objective, it is also a question of financing innovation," she declared. Cutting prices "allows us to take on the high cost of innovative treatments so they are accessible to all patients. I mentioned just now the treatment of hepatitis C. I could also mention cancer, where major innovations are expected."

She pointed out that in last year's PLFSS the government adopted a special price regulation mechanism for the hepatitis C drugs, involving a complex sales rebate system, as well as a general sales rebate scheme for companies that do not have an agreement with the pricing committee (Comité Economique des Produits de Santé; CEPS). "These will continue in 2016," she said.

Measures will also be taken, she continued, to encourage both community and hospital prescribers to make more use of generics, with a big public communications campaign on generics due to be launched during the first half of 2016. "From price cuts and wider use of generics, we expect €1bn of savings in 2016, which is about the same as last year."

Avastin "Victory"

The minister also took the opportunity to publicize what she called her "victory" in putting in place the temporary use authorization (Autorisation Temporaire d'Utilisation; RTU) for the reimbursement of Roche's Avastin (bevacizumab) in the unapproved indication of wet AMD, which became effective at the beginning of September, much to industry's chagrin (Also see "European Notebook: Salmonson Stays At CHMP Helm; Sandoz, AstraZeneca Build New Biologics Facilities" - Pink Sheet, 28 Sep, 2015.). The country's top administrative court recently rejected Roche's request to block the RTU.

"Some doubted – or pretended to doubt – my determination to push this through," she said. "The road was long, and littered with pitfalls and obstacles. We have overcome them. It is a victory that I am happy to welcome, because it shows that determination pays."

Determination may well pay, but so, it seems, will the pharmaceutical industry when all the planned health care measures take effect next year.

Leem said the measures in the PLFSS, like the other savings plans put in place over the past few years, "will in no way correct the structural deficit of the health insurance." Its chairman, Patrick Errard, said that Leem had for three years now alerted the authorities to the need to implement real structural reforms of the health system.

"Beyond its lack of effect on the structural causes of the deficit in the social accounts, the pressure being put on pharmaceutical companies has a harmful impact on activity in the sector, which is widely recognized as strategically important for the national economy and employment," Leem declared.

It cited for example a downturn in the pharmaceutical trade balance last year, which showed a surplus of €6bn last year compared with almost €9bn in 2013, and a fall in employment in the French pharmaceutical sector, which "for the first time in 10 years fell below 100,000 people." Moreover, it added, the 224 pharmaceutical and biotechnology facilities in France invested a total of €810m in 2013, down by €120m over the 2010 figure.

Pharmaceutical companies, like many other sectors in health area, "want nothing more than to be associated with a real reform of the health care system," the association declared.

[Editor's note: This story is also published in Scrip Intelligence. "The Pink Sheet" DAILY brings selected complementary coverage from our sister publications to subscribers.]