France’s life sciences industry is falling behind its European neighbours, its growth deeply hampered, the French life sciences think tank G5 Santé claims, by abusive paybacks. While the government has demonstrated its willingness to take steps towards levelling its pricing barometers and in so doing tackle medicine shortages and build the country’s medicine sovereignty, the industry remains sceptical.


France’s Downturn

At the October 10th annual meeting of G5 Santé, the French association that represents the interests of some of France’s principal life sciences companies, including Guerbet, Ipsen, LFB, Pierre Fabre, Sanofi, Servier, Théa and bioMérieux, the group unveiled a study demonstrating the adverse effects of France’s drug pricing environment.

If we want to reindustrialize France we need to invest in innovation

Roland Lescure, Minister of the Economy, Finance and Industrial and Digital Sovereignty

“France is falling behind,” said Jacques Marquay, director of BDO, the consulting firm that carried out the study. In effect, according to the study’s findings, France has not kept pace with its neighbours in terms of exports and trade balance and in a comparison with ten other European countries, France moved from 5th place in 2010 to 9th place in 2021.

Between 2010 and 2020, the study shows that the regulated medicine market experienced an average annual growth of close to zero. Following that period of stagnation, net growth rose again in 2022 by 4.1 percent, a result G5 Santé says aligns with the efforts of the 2021 efforts to boost French innovation and healthcare sovereignty. However, the macroeconomic context has since changed with inflation in France shooting up to more than 5 percent over the past two years.


Heavy Paybacks

Through the study, G5 Santé pinpoints what is known as the “safeguard clause” whereby pharma companies pay back the national social security health insurance when their turnover grows faster than the rate defined in the Social Security Finance Act (LFSS). Officially estimated at EUR 1.1 billion in 2022, the safeguard clause represents more than four percent of pharmaceutical turnover excluding early access product discounts.

One of the explanations for the increase in the safeguard clause over the past three years, according to G5 Santé, is what is known as the “amount M,” which is fixed on price estimates and does not allow for recalculations that take into account the economic realities of the drug market.

Consequently, the share of medicines in the national health insurance’s spending target (ONDAM), excluding special measures relating to COVID-19, is decreasing and went from 15 percent in 2010 to 11 percent in 2022.


Tackling Shortages and Building Sovereignty

G5 Santé’s findings are opportune, backing up the willingness the French government has demonstrated towards taking steps to level pricing barometers while tackling the medicine shortages that have plagued France over the past 15 and steadily worsened.

Aimed at restoring France’s sovereignty by producing essential medicines within its territory, French president Emmanuel Macron presented a medicine sovereignty roadmap in June. The proposal recognizes the need to implement an industrial policy and set a fair price to maintain French pharma’s industrial fabric while no longer considering health products as the variable for adjusting health budgets.

The roadmap was followed by an inter-ministerial mission on the regulation and financing of health products in August, which aims to change the safeguard clause, a system G5 Santé considers is endangering the sovereignty of pharmaceutical production as well as the capacity to innovate, limiting it to a maximum of EUR 1.6 billion in 2023 and 2024.


“Sovereignty” Package

According to Roland Lescure, the delegate minister to the Minister of the Economy, Finance and Industrial and Digital Sovereignty in his opening address at the G5 Santé meeting, “if we want to reindustrialize France we need to invest in innovation.”

To this effect, Lescure announced a budget within the framework of the social security financing bill (PLFSS) for 2024 that would be allocated to drug price increases in 2024: “a sovereignty envelope of up to EUR 50 million” that would strengthen the attractiveness of the production of medicines in France and in Europe. “Specifically, to strengthen the attractiveness of the production of essential products in France and in Europe, we will increase the price to allow relocation or avoid relocation and thus secure our supplies,” added the minister.

The announcement comes just ahead of initial debates in Parliament on the draft social security budget, commonly known as PLFSS, for 2024, which would require considerable efforts from drugmakers to achieve price reductions of EUR 850 million on medicines reimbursed by the social security system in 2024.


Industry Scepticism

Didier Véron, president of G5 Santé and administrator of Leem, the French industry association that represents drug companies operating in France, remained cautious about the package.

“It would be a first to have a budget for price increases,” he said. “We must sustain this envelope in the medium and long term,” he maintained, claiming it should turn it into a perennial health sovereignty fund. With respect to the implementation of the announced budget, he asserted: “We are going to be very vigilant,” and stressed that mechanisms to raise drug prices under certain circumstances already exist, but that most requests for increases come to nothing.

The system is running out of steam and we must find a solution

Audrey Derveloy, president, Sanofi France

“We are waiting for clarity,” added Audrey Derveloy, president of Sanofi France. “How will the envelope be distributed, on which products and on what criteria?” This month pharma companies have obtained a temporary 10 percent increase in the price of amoxicillin, the most prescribed antibiotic in France, in exchange for supply and stock targets in order to combat shortages.

While the form the proposed budget will take remains unclear, among G5 Santé member companies the fact that changes must be made is evident. “The system is running out of steam and we must find a solution,” said Ms. Derveloy. For Thomas Courbe, the general director of companies that participated in one of the event’s round tables, “sovereignty, patient access and financing are not separate issues,” and must be tackled as an ensemble. “The pharma industry’s cycle is long, we need stability,” Olivier Laureau, president of the Servier group and the Servier International Research Foundation further argued.


Photo credit: G5 Santé