France: Controversial referencing procedure for medicines

Social Security Financing Bill for 2023

In brief

The Social Security Financing Bill for 2023 ("Draft Bill") was introduced on 26 September 2022. It is currently being debated in parliament and is expected to be voted on by the end of 2022. Some of its proposed measures have a potential strong economic impact on health industries and concerns are being raised.


Contents

In more detail

In the context of a permanent increase in the volume of medicines reimbursed by the social security system and the significant increase in the costs of innovative therapeutics, the French government is seeking to introduce new cost regulation tools. 

Among other measures, one of the most controversial measures of the highly criticized Draft Bill is in Article 30, which provides for the possibility of implementing a "referencing procedure" for medicines aimed at periodically listing certain medicines for reimbursement purposes. Calls for tenders would be organized for a given therapeutic area in order to select for reimbursement only two or three medicines meeting certain criteria mainly: sufficient volumes to guarantee security of supply, proposed pricing conditions, sustainable development goals, and security of the supply. 

The products selected through this periodic listing procedure would be the only reimbursable medicines for the therapeutic area in question. In return, pharma companies marketing the selected products will have to commit to supplying minimum quantities and ensuring the coverage of the French territory. The other medicines will no longer be reimbursed. 

Similar procedures already exist in other European countries, such as Sweden and the Netherlands. 

According to the French government, this referencing procedure should lead to significant savings on the products concerned by the referencing. Indeed, to be selected, pharma companies will be encouraged to lower their prices.

However, the pharma industry has identified several negative consequences of this measure that would have the following effects: 

  1. Affect the stabilization of patients suffering from complex pathologies and thus worsen their conditions of care and life.
  2.  Increase the delocalization of production chains (and encourage medicines produced at low cost outside Europe).
  3. Increase the risk of shortages due to insufficient production capacity of the selected suppliers.

In the latest discussions, the French government seems to have heard the concerns raised by the stakeholders. Through an amendment to the text, the French government backed off on this measure in order not to implement the referencing procedure initially envisaged, but instead, to propose, as a first step, to submit a report to the French Parliament in order to give the legislator more visibility on the advantages and possible limits of such referencing system, with a view to a possible proposition in a future Social Security Financing Bill. This report, in light of existing procedures in other countries and their results, should highlight the impact that such a measure could have on shortages and prices. It will also focus on the advantages that such a measure could represent to encourage the return of production to the French territory.

While the Draft Bill aims at encouraging innovation, ensuring access to medicines at the best price and securing the supply of the French market, according to the president of the French Pharmaceutical Industry Association: 

"This Social Security Financing Bill of rationing and renunciation confiscates the growth of the sector […]. It undermines the innovation policy, the recovery of health independence and the access of the population to medicines in a context of inflation totally ignored by the public authorities".

New developments and a significant number of amendments are highly expected by the pharma industry.


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