Compared to other members of the OECD, the French pharmaceutical market is characterized by low prices complemented by high demand (Le Pen 1996). Pharmaceutical firms are free to set prices for all drugs not covered by the National Insurance plan, the Sécurité Sociale. The pricing committee, Comité Économique du Médicament (CEM) sets prices of covered drugs sold through non-hospital channels. The Ministry of Health determines the list of reimbursable drugs and the level of coverage for each drug. The CEM determines drug prices based on anticipated therapeutic benefit, anticipated sales volume, and other considerations. During the 1990’s, the French government instituted a number of innovations in an attempt to control drug expenditures. These included:
- A series of mandatory “good practice procedures" for physicians called Références Médicales Opposables (RMOs);
- An agreement between the state and the industry (Syndicat National de l’Industrie Pharmaceutique or SNIP); and
- A definition of enforceable regional spending targets (objectifs opposables) (Le Pen 1996; Lecomte and Paris1998; Pauriche and Rupprecht 1998).
The agreement between the industry and the state was designed to reduce sales volumes in exchange for price increases. This agreement was negotiated with each pharmaceutical company and outlined the conditions for permitting price increases. In return, the companies agreed to reduce promotional expenditures, promote “proper drug use” and provide information about its activities. The regional targets (objectifs opposables) represented negotiated agreements between the Sécurité Sociale and the physician associations. Separate targets were negotiated for specialist and general practitioner fees and drug prescriptions. In case of regional overspending, local physicians could be required to compensate the Sécurité Sociale for the excess spending. Despite the reforms, the French remains heavy consumers of prescription drugs relative to their OECD neighbors. The principal impact of the reforms appears to have been a slight shift toward less expensive drug products for treatment of medical conditions where RMOs have been implemented (Le Pen 1996; Lecomte and Paris 1998; Pauriche and Rupprecht 1998).
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