New pricing agreement in France includes provisions on biosimilars pricing for the first time.

Alexis Vaujany

On 5 March 2021, the President of the Economic Committee for Health Products (CEPS) and the President of the French pharmaceutical industry association (Leem) signed a new three-year framework agreement in the presence of the French Minister of Health. This framework agreement defines conventionally the rules for setting the price of medicinal products in compliance with the legislative framework and includes for the first time provisions on biosimilar pricing. It is one of the essential tools of the government’s health policy and shows the priority given to contractual relations with the industry.

The CEPS and Leem are major actors in the medicine lifecycle in France.

The CEPS is an interministerial body under the joint authority of the ministers responsible for health, social security and the economy, and is mainly responsible by law for setting the prices of medicinal products and the prices for medical devices for individual use covered by general health insurance.

The Leem is the main interlocutor of political decision-makers since it represents 98% of total medicines turnover in France. The Leem aims at promoting the industrial attractiveness of France and at conducting a health policy focused on patients’ needs that takes into account both the return of therapeutic innovations and the objective of controlling health expenditure.

  1. The novelties of the new framework agreement

The new framework agreement was signed more than five years after the previous one. It follows the latest joint mission letter of the Ministry of economy and the Ministry of health issued on 19 February 2021, but also takes into account the joint letters of mission of 2016 and 2019.

In the latest letter, of 2021, the Ministers have requested the CEPS to conclude a new agreement with the Leem taking into account the economic and therapeutic evolution of the pharmaceutical market in France and Europe as well as the Covid-19 pandemic and its consequences. The Ministers have set up various recommendations in the aforementioned letter which were implemented in the framework agreement, inter alia:

  • in general and for the diversity of actors: to seek, with the constant desire to enable the health system to have a diversified offer, fairness of treatment between them;
  • in the context of the budget constraint: to take into account the conditions of efficiency of the products, and even the broader efficiency of the care pathways in which they are included as well as ensuring continued availability of longer established treatments with proven efficacy (Article 11 and 12);
  • in the context of the multi-annual dimension of the framework agreement: to base the relations with companies on a multi-annual perspective from the point of view of anticipating future innovations and their potential impact on the health system, and to ensure the fair remuneration of the new contribution of innovative therapies by taking into consideration the scientific opinions of the Haute Autorité de Santé (HAS) (Article 4 and 15);

The HAS is tasked with the evaluation of health products from a medical and economic perspective. It issues appraisal scientific opinions that aid public authorities in reimbursement and pricing decision-making with regards to the national health fund. The HAS evaluates the clinical benefit of medicines, medical devices, procedures and other health technologies, assessing added benefit over existing therapeutic strategies.

  • in the procedural context: to streamline negotiations to speed up market access and availability to patients according to public health priorities. To this end, the negotiation process (Article 9) as well as the price comparators and reference costs (Article 10) have been detailed and a “fast-track” process introduced together with the corresponding criteria allowing a price to be fixed within 15 days (Article 14).
  • for exporting companies from Europe and the French territory: to be considered as assets when they effectively secure availability of a product at the best conditions over time (Chapter III);

The new framework agreement also:

  • clarified in writing some of the practices that the CEPS had put in place in the past few years, including the pricing practice of generics, that was previously only included in the annex of the 2015 framework agreement (Article 24);
  • clarified some of the obligations applicable to the pharmaceutical industry, notably in the interest of transparency and symmetry of information regarding the communication of all information that the CEPS and the relevant pharmaceutical company hold on public investments and company contributions to public bodies, sales and use data, expenditure tracking and saving performance (Article 2);
  • introduced the price fixing modalities for specific types of medicines including innovation medicines (Article 15(c)), biosimilars (see (II) – Article 25), hybrids (Article 26); and
  • updated and adapted provisions on price predictability and stability (Article 17), e.g. guaranteeing the price stability for up to three years for all medicines, except for medicines the indications of which have received an ASMR 1 to 3 and the price of which was fixed in reference to European prices.

This new framework agreement has three main objectives:

  • to allow patients to have rapid access to innovations by providing for accelerated procedures;
  • to contribute to securing the production of medicines in France; and
  • simplify the market access procedure.

In this respect, the CEPS and the Leem also agreed on biosimilars pricing modalities for the first time.

  1. The provisions of the new framework agreement on biosimilars pricing

In the 2015 framework agreement, the pricing scheme for biosimilars was not anticipated and was to be the subject of an amendment to the agreement. However, no agreement was reached.

Biosimilar prices could not follow the pricing scheme applicable to generics. Indeed, the R&D costs of biosimilars are much higher than those of generics. Consequently, this is the first time that a framework agreement between the CEPS and the Leem includes the modalities of fixing and regulating the prices of biosimilar medicines included in biosimilars groups.

Article 25 of the new framework agreement provides with these modalities which stem from the practice (and reports) of the CEPS in recent years and include (i) discount rates, and (ii) regulation modalities, for both the general pharmacies market (“pharmacies de ville”) and the hospital pharmacies market.

  • The discount rates applicable to the biosimilar and its originator

According to Article 25, the discount rates are defined as follows:

  • for the general pharmacies market: 40% for the biosimilars and 20% for the originator from the date of commercialisation of the biosimilar.
  • for the hospital pharmacies market, an identical rate of 30% for both the biosimilar and the originator upon registration of the biosimilar on the lists provided for in the Social security code (“liste en sus” and “liste retrocession”).

Similarly as for generics, the framework agreement provided that in the event where the CEPS had negotiated a price reduction of the originator during the year preceding the marketing of the biosimilar (general pharmacies market) or the registration of the biosimilar on the different lists (hospital pharmacies market), the discount rate would apply to the price in force before the reduction in question.

  • The price regulation applicable to the biosimilar and its originator

According to Article 25, the modalities of price regulation for the biosimilar and its originator are defined as follows:

  • for the general pharmacies market:
    • the price regulation dates are at months 24 and 42 after the commercialisation of the first biosimilar; and
    • is based on the breakdown of the respective market shares of the biosimilar and originator that is established on the basis of the volumes of sales recorded by GERS at the regulation dates;

A discount is applied to both medicines according to their observed market share and the below table:

Market share of the originator Discount rate of the originator Discount rate of the biosimilar
0% – 40% 5% 15%
40% – 60% 10% 10%
60% – 100% 15% 5%

 

At month 60, the CEPS may proceed to price convergence by reducing the gap between the price of the originator and its biosimilar.

  • for the hospital pharmacies market:
    • the price regulation dates are at months 24 and 48 after the registration of the biosimilar on the lists provided for in the Social security code.
    • a minimal discount of 10% is applied to the identical price of the originator and the biosimilar.
    • this discount may be increased based on the observed purchase prices of the concerned medicines by the health care establishments, up to a maximum of 30%, taking into account the minimum discount level granted between the purchase price and the reimbursement rate. The discount applied may not result in a lower price than the highest recorded purchase price.
      • however, at month 48, for medicines whose highest observed purchase price would be lower than or equal to 50% of the applicable price, the discount rate may be increased by the difference between the minimum discount observed and the 50% threshold.

The CEPS decisions may take effect three months after their publication in order to provide predictability for tenders.

Finally, similarly as for generics, derogations from these pricing regulation modalities exist:

  • In the case of medicines for which the aforementioned modalities would render it impossible to develop a biosimilar offer (upon justification);
  • At the request of the company, in the event of a litigation that would not allow the marketing of biosimilars under fair competition conditions, the discount on the originator will only apply after the litigation has been resolved. In return, the CEPS and the company exploiting the originator agree on a rebate, intended to compensate for the additional cost incurred by the absence of a discount as from the arrival of the biosimilars, which would be called upon in the event that the recourse fails.
Share
Read comments below or add a comment
Comments published on the Life Sciences Hub do not necessarily reflect the views of Allen & Overy or its clients.

Leave a comment

Your e-mail address will not be published. Required fields are marked *