FRANCE UNVEILS NEW PLAN TO CUT DRUGS BILL

French Health Minister Xavier Bertrand has announced a 13% drug price cut, effective January 1, 2006. The move is expected to deliver significantly higher savings for the government than previously promised, with the price cut alone set to cut state reimbursement spending by EUR450mn (US$541.52mn). Overall, the government hopes that its pharmaceutical sector cutbacks will reduce annual state expenditure on drugs by EUR2.1bn (US$2.53bn).

Both branded and generic drugs will be affected, but under the new plans pharmaceuticals are to be reimbursed based on the generic price two years after listing in France. Under the reference pricing system, generics will also be priced at a minimum discount on the branded drug of roughly 40%. The much-criticised drug sales tax will also be increased, generating an expected EUR300mn for the state.

Additionally, there will be an expansion of the system whereby drug firms are obliged to compensate the government for overspends beyond agreed volume-sales restrictions. The plan should cost drug firms at least EUR400mn in two payments, scheduled for April and year-end 2006.

Recent months have seen a flurry of attempts to cut drug spending in France. Health officials claim the new initiatives will show that "drug firms as well as patients" face "austerities" under the reforms. However, there will be suspicions that drug manufacturers are bearing most of the burden, with reimbursement spending growth already set to be limited to just 2.2% per year. Around 350 drugs with "low levels of effectiveness" are also expected to be de-listed.