Social Security Finance Bill 2016 in France: French Government Looks To Make 50% Of Healthcare Savings Through Drug Price Cuts

Dr Steven Bradshaw
Posted: 12/06/2015

With there being a 12.8 million Euro deficit in France’s 2015 budget, the French government announced on 24th September plans for the Projet de Loi de Financement de la Sécurité Sociale 2016 (PLFSS; Social Security Finance Bill 2016). For the second consecutive year, the PFLSS cost-containment measures include a heavy focus on drug expenditure as part of the government’s strategy to bring down the debt.

            The healthcare expenditure focus of the 2016 PLFSS sets out measures to conserve around 3.4 billion within the budget of the health division of the national Social Security. Of this, 50% of the cost curtailment comes from reducing the National expenditure on pharmaceuticals. According to Dr Errard, President of the French Pharmaceutical Companies Association that represents pharmaceutical manufacturers: … drugs represent only 15 % of the total healthcare expenditure [in France], yet now the authorities are trying to cut their savings by half by targeting on this industry. Dr Errard went on to say:  the important changes that this healthcare system really needs have been delayed year after year. The Federation of Pharmaceutical Unions of France report that between 2010 and 2016 price cuts to pharmaceuticals have risen three-fold.

            Specific austerity measures detailed within the 2016 PLFSS bill include price cuts to listed drugs (€550 million), restrictions to the volume and pattern of prescriptions (expected to save €400 million), increased use of generic substitution (€395 million); the bill also mandates restrictions on high-priced hospital medicines (i.e. volume controls on  prescribing drugs that are outside T2A list – this will be monitored by regional public health authorities and is anticipated to save €205 million), attempts to control the cost of comorbidities (€100 million), plus cuts to the pricing of medical devices and other healthcare technologies (€70 million).

            Time is tough for manufacturers in France, due to an ageing population healthcare needs are increasing; however, this is in the face of ever increasing health expenditure cuts. If the pharma industry don’t embrace these reforms, the French government has already indicated that they will fill this funding this gap by imposing increased taxation on the manufacturers. Developing innovative drugs is hugely expensive and the risk is always on the manufacturers’ side until products gets to market, we can wonder whether ongoing price cuts and other disincentives in France and elsewhere will eventually erode the incentive to develop new medicines.

Authors: Emilie Chriv & Dr Steven Bradshaw of Market Access Solutions, London, UK

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Dr Steven Bradshaw
Posted: 12/06/2015

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