France Threatens Intervention on Pharmacy Generics Pricing

The French health ministry is to intervene in generics distribution in the country, according to senior officials. The claims come as lucrative cooperation deals between pharmacies and generics makers have increased in recent years, and distributor margins are reported to have reached as much as 70% per year on a number of leading generic products.

Generics makers are evidently keen to penetrate the French market, and some have been willing to make a loss on distribution, as the country increasingly becomes a European beachhead for international producers. The local generics market, worth some EUR1.17bn (US$1.52bn) in 2004, is currently growing at roughly 30% per year, and the proportion of drugs facing patent expiry is expected to double to about 30% of France's reimbursement list in 2007. Pharmacists have been working hard to promote generic alternatives.

However, despite criticism of possible profiteering by pharmacies, the government's concerns may have more to do with its desire to contain its growing drugs bill, which is only likely to benefit from greater generics penetration in the country. It is at present unclear which mechanism authorities now believe will accommodate both their stated desire for fair competition, as well as the pressing need to restrain costs.