The French Competition Authority issues its recommendations to lower prices of pharmaceutical products

Almost one and a half years after the launch of the sector inquiry (see here), the French Competition Authority ("FCA") has released its conclusions on the functioning of competition in the pharmaceutical sector.

The FCA's recommendations mainly focus on increasing competition for over-the-counter pharmaceuticals at the retail level and the revision of the remuneration scheme of wholesalers. 

Decreasing prices of over-the-counter pharmaceuticals 

While supporting the preservation of pharmacists' monopoly in selling prescription medicines, the FCA formulated a number of recommendations aimed at (i) enhancing competition between pharmacists and (ii) decreasing the prices of over-the-counter pharmaceuticals. 

  • Facilitating the online sales of over-the-counter pharmaceuticals and personal care / beauty products, by authorizing pharmacists to:   
    • Use paid internet referencing and comparator tools; 
    • Pool their sale services under a single website; 
    • Store the products intended for online sales in premises separate from their physical points of sale;
  • Authorizing pharmacists to advertise personal care/beauty products and propose promotional actions as well as loyalty rebates for such products; 
  • Authorizing the delivery of certain health products (in particular, over-the-counter pharmaceuticals and in vitro diagnostic medical devices such as blood glucose meters) by retailers other than pharmacists; it being specified that the retailers should comply with the following conditions:  
    • The health products must be displayed in a dedicated selling space; 
    • A qualified pharmacist must be present during all opening hours; and
    • The pharmacist should not be incentivized by sales targets.  

The FCA further recommends that pharmacists be empowered to provide certain medical acts and services (including vaccinations, detection of certain diseases, basic medical advices, and delivery of prescription drugs in case of benign diseases).

Disconnecting the wholesale margin from the price of pharmaceuticals

The remuneration level of wholesalers has been repeatedly called into question, as it is would not compensate for the public service obligations imposed upon wholesalers. The wholesale margin, which exclusively relies on the pharmaceuticals' prices, does not take into account the significant logistical costs borne by wholesalers as a result of their public service obligations.

The FCA therefore proposes to modify the calculation of the wholesale margin, so as to determine it on the basis of either:  

  • The volumes of products sold by wholesalers; or 
  • A lump sum, which would be adjusted according to the marketing specificities of the pharmaceutical concerned (e.g., for drugs subject to cold chain and for narcotic drugs). 

Considering the significant financial impact it might have on the French public health insurance system, the FCA recommends that a thorough analysis be carried out before introducing such a modification of the wholesale margin calculation.

The FCA also issued some recommendations regarding biomedical laboratories, including encouraging the creation of large groups of biomedical laboratories, authorizing them to extend their geographical footprint, and authorizing price discounts offered to other biomedical laboratories and public hospitals.  

While the government is likely to take over some of the FCA recommendations, such as the extension of the pharmacists' scope of activities, it might prove more reluctant as regards the opening up to competition of over-the-counter pharmaceuticals.

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