Health Minister Favours More Rx-to-OTC Switches Under Proposed Restructuring of French Pharmacies

French Health Minister Roselyne Bachelot Narquin has come out in favour of offering non-reimbursable pharmaceuticals for sale as over-the-counter (OTC) products in pharmacies across the country, resurrecting a long-standing debate that had in recent years slipped to the bottom of the pile. Describing patients as consumers, whose expectations have changed with time, Bachelot Narquin said that it made sense for people to have "family" medicines readily available without the need to first consult a physician, with particular emphasis on drugs that are ineligible for reimbursement.

In previous years, the pharmacists' representative group l'Ordre des Pharmaciens had set up a working group designed to assess the feasibility of just such a move, and had agreed that several prerequisites were essential before a wider uptake of OTC drugs could be envisaged, namely:

• a feasibility study by the Haute Autorité de Santé (HAS);
• a clearer delineation between reimbursable and non-reimbursable drugs;
• a strict definition of which products are suitable for being sold OTC; and
• reductions to the prices of these drugs, in agreement with their manufacturers.

Bachelot Narquin has not set out a clear timeframe for implementing the prescription (Rx)-to-OTC switch, but according to Le Moniteur des Pharmacies, leading French pharmacists are now convinced that it is only a matter of time. Of the points above, price cuts to potential OTC drugs would be an unavoidable necessity, given the pricing disparity between OTCs and prescription-only drugs. Some of France's leading pharmaceutical companies are at risk here, particularly those that have recently seen some of their best-selling drugs stripped of their reimbursement status or had their reimbursement levels significantly reduced under cuts made in 2006. One case in point is Ipsen, which has already been forced to sell off the French marketing rights to its circulatory drug Ginkor Fort after reimbursement cuts in March 2006 prompted a huge downturn in sales (see France: 23 August 2007: Ipsen Sells Off French Rights to Loss-Making Ginkor Fort in US$14.2-mil. Deal), but is believed to have other products affected by the cutbacks. Another is Servier, whose circulatory drug Daflon saw a 20% year-on-year (y/y) drop in sales volume during 2006.

A recent study by Mutualité Française found that the leading drugs affected by the March 2006 reimbursement cuts all saw heavy double-digit losses to their sales over the remainder of last year (see France: 26 June 2007: Medicines Dropped from French Reimbursement List in 2006 See 50% Y/Y Drop in Prescriptions). In order to counter this, many firms have ended up increasing the prices of the drugs affected in order to offset their losses; the Mutualité Française report highlights a 36% average rise in prices of the drugs hit by the reimbursement legislation between February and December 2006. While not all drugs listed in March 2006 have become non-reimbursable, many of those reduced to a 15% reimbursement threshold are expected to see this level eliminated within a year.

One Step on the Road to Genericisation?

The prospect of further price cuts to drugs that are already experiencing heavy losses to sales is matched only by the speculation that transferring the status of non-reimbursable drugs is merely one step on the road to the genericisation of these products. For now, Bachelot Narquin has said that she is in favour of preserving the "monopoly" of brand-name pharmaceuticals that are still patent-protected, although she hinted that this was more for the sake of reassuring consumers of the quality and safety of the drugs in question. As it stands, France is currently subject to pan-European legislation implemented in 2003, which adds one extra year of patent protection to the existing 10 years in cases where drugs are switched from Rx to OTC status.

Outlook and Implications

With France's OTC market including an increasing number of non-reimbursable products, the Health Ministry's proposal would effectively add to this trend by making all or most non-reimbursable drugs available OTC. If this occurs, price-cuts for the drugs affected would be unavoidable, undoing the efforts of the pharmaceutical industry to offset losses triggered in 2006. Companies such as Ipsen, which has spent much of the past year devising a strategy to move away from reliance on Ginkor Fort and a further price cut on another drug, Tanakan, have already established plans to diversify their sources of revenues, mainly by targeting other markets (see France: 31 August 2007: Ipsen Set for U.S. Boost as FDA Approves Somatuline). Similar moves from other companies affected by eventual change in OTC legislation cannot be ruled out, although this depends to what degree other firms are reliant on their non-reimbursable drug sales for profits.