In February 2013, the French Competition Authority (“FCA”) launched an inquiry into the pharmaceutical sector, examining each level of the medicinal distribution chain (pharmaceutical suppliers, wholesalers and retailers).  The FCA is likely to focus on a broad range of issues, including:

  • Generic entry: The inquiry will likely examine pay-for-delay arrangements and other issues relating to generic entry.  Both the FCA and the European Commission are currently investigating several cases relating to practices allegedly aimed at disrupting generic entry.   The FCA has also indicated that, following the sector inquiry, it may publish specific guidance on practices affecting generic entry.
  • Parallel trade: In 2007, the FCA cleared  (subject to certain commitments) the quota systems implemented by several major pharmaceutical companies.  Quota systems are aimed at rationalising wholesale distribution and limiting parallel trade.  The FCA may use the sector inquiry to revisit the issue of parallel trade and re-examine the quota systems.
  • Direct sales: The inquiry will also examine direct sales systems (also known as direct-to-pharmacy or DTP systems), whereby pharmaceutical companies sell products directly to retailers/pharmacies.  The FCA has indicated that such systems may have an anticompetitive effect on wholesalers.
  • Online sales: There is an on-going debate in France with regard to the online sales of pharmaceutical products.  In December 2012  the French government decided that online sales should be limited to over-the-counter (“OTC”) medicines that can be purchased without consulting a pharmacist (so-called “free access” medicines).  The FCA disagreed and argued that this limitation was not consistent with EU Directive 2011/62, as retailers should be allowed to sell all OTC medicines online.  The Conseil d’Etat (French supreme administrative court) sided with the FCA and issued an interim order suspending the implementation of the legislation relating to online sales.  The FCA indicated that it would revisit the issue of online sales as part of its sector inquiry.
  • Pricing: The FCA will also consider other means of boosting price competition in the pharmaceutical sector.

The FCA’s broad description of the scope of the inquiry is troubling, as it indicates that the authority may be engaging in a “fishing expedition” with no specific objective other than uncovering incriminating information about the pharmaceutical sector.  It should be noted that the pharmaceutical sector inquiry conducted by the European Commission in 2008-2009 led to the opening of antitrust investigations against several pharmaceutical companies.

The FCA aims to publish its preliminary conclusions in the summer 2013, after which stakeholders will be given the opportunity to comment.  Thereafter, the FCA intends to conclude the inquiry and to issue its final opinion by the end of the year.