The French Competition Authority (“FCA”) is currently investigating the intensity of competition in the supply of pharmaceuticals.  The investigation was launched in February 2013 and concerns all levels of the medicinal distribution chain (pharmaceutical suppliers, wholesalers and retailers).

In July 2013, the FCA submitted to public consultation its initial assessment of the pharmaceutical sector.  The FCA raised multiple concerns at every level of the distribution channel.  The main areas of concern identified by the FCA are as follows:

  • Generic entry: Generics represent only a quarter of pharmaceuticals sold in France (by volume) while in Germany and the UK they account for two-thirds of the market.  The FCA expresses concerns that manufacturers may engage in anti-competitive conduct in order to disrupt generic entry.  It refers to several EU and French precedents in which pharmaceutical companies were fined for abuse of dominance in relation to generic entry (e.g., AstraZeneca and Lundbeck cases).  It is also concerned that originators and generic suppliers may collude not to request the relevant Government agency to grant a generic status to certain proprietary medicines.
  • Pricing of pharmaceuticals: In France prices of pharmaceuticals reimbursed by social security are subject to tight regulation.  The FCA acknowledges that there is no clear evidence that pharmaceutical prices in France are higher than in neighbouring countries.  Nevertheless, it expresses concerns that prices can be set at an artificially high level, e.g., if suppliers collude when negotiating with the price-setting public authority.  The FCA also notes that manufacturers offer significant rebates to retailers and queries whether these rebates are passed on to customers.
  • Parallel trade: The FCA contends that French wholesalers do not have sufficient bargaining power.  Moreover, parallel trade (i.e., imports by wholesalers of products acquired in countries with low pharmaceutical prices) is insignificant: in 2012, it accounted for only €15 million of sales of pharmaceuticals in France.  The FCA inquires on the means of encouraging parallel trade.
  • Lack of price competition at the retail level: In France retail distribution of medicines is constrained by a double monopoly: medicines can be sold only by a qualified pharmacist (pharmacist monopoly) and only in a pharmacy (pharmacy monopoly).  The FCA argues that the removal of the “pharmacy monopoly” would lead to stronger price competition and lower prices for OTC pharmaceuticals.  This would mean, for example, allowing certain medicines to be sold by pharmacists in supermarkets and other retail outlets.  The FCA is also in favour of developing online trade in OTC pharmaceuticals.

In its preliminary report the FCA examines multiple other issues and scrutinises French laws relating to marketing authorisation, pricing, reimbursement, and distribution of pharmaceuticals.  The report contains 50 questions for stakeholders.

It remains to be seen what action the FCA intends to undertake with regard to the issues that it has identified.  The FCA has the mandate to pursue antitrust violations;  however, while it refers to the risk of such violations, the FCA’s preliminary assessment does not identify any actual infringements.  Moreover, the vast majority of concerns raised by the FCA relate to the rules set by French legislation (cf., e.g., concerns relating to pharmacy monopoly).  The FCA’s scope of action in this respect is limited: it can only issue a non-binding opinion encouraging the legislator to amend certain rules.

Stakeholders have until 16 September 2013 to comment on the FCA’s preliminary assessment.  The FCA intends to conclude the inquiry and to issue its final opinion by the end of the year.