France – Pharmaceutical Market – Distribution (extract)
Summary
The majority of drugs are distributed from manufacturers to patients through retail pharmacies, which are usually stocked by pharmaceutical wholesalers. In some cases though, manufacturers sell directly to pharmacies. Products are also sold directly from manufacturers to hospitals.
Details of the drug distribution chain in France for 2003 are as follows:
[Chambre Syndicale de la Répartition Pharmaceutique, "La Répartition Pharmaceutique en France", June 2004]
Wholesalers
Background
By law, all wholesalers (grossistes-répartiteurs) have to carry at least 90% of medicines with marketing authorisation. In 2003, there were 11 wholesalers in France. The four largest - OCP, Alliance Santé, le réseau CERP and PHOENIX Pharma - accounted for a 99% market share by value. [Chambre Syndicale de la Répartition Pharmaceutique, "La Répartition Pharmaceutique en France", June 2004]
Reimbursed drugs accounted for 86% by value of wholesalers' turnover in 2003. [Chambre Syndicale de la Répartition Pharmaceutique, "La Répartition Pharmaceutique en France", June 2004]
Margins
New margins
Wholesalers' margins for reimbursed drugs were changed as of 21st February 2004. The revisions included the creation of a new third price band for higher-priced drugs. This was in preparation for the transfer to the retail sector of many drugs previously dispensed through hospital pharmacies (see 'Dispensing to out-patients: Rétrocession' and 'Prescribing restrictions: Overhaul of the hospital-only (RH) category', below).
Details of the new margins are as follows:
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10.3% of the manufacturer's selling price (MSP), excluding VAT, for the first euro22.90
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6% for any part of the price in the range of euro22.91 to euro150
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2% for any part of the price exceeding euro150.
[PharmaQuery News, 01.03.04]
There are no set wholesaler margins for non-reimbursed products, but an average value is around 17%. However, these products are subject to high price discounts. [Personal Communication, Chambre Syndicale de la Répartition Pharmaceutique, August 2004]
Old margins
Prior to the 2004 changes, wholesalers' margins for reimbursed drugs, as of 1st September 1999, were as follows:
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10.74% of the manufacturer's selling price (MSP) excluding VAT, for the first euro22.90
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6% for the remainder of the price (ie above euro22.90)
[Personal Communication, Chambre Syndicale de la Répartition Pharmaceutique, February 2002; Journal Officiel, 29th April 1999]
Discounts
Wholesalers' discounts are limited for reimbursed drugs. Wholesalers can offer pharmacists maximum discounts of 2.5% of the retail price for branded products and also for generics included in the reference pricing (TFR) groups. Discounts of 10.74% of the manufacturer's selling price (MSP) are permitted for all other generics.
A temporary maximum rate of 6% of the retail price for reference priced drugs was introduced under the 2003 Finance Law and was applicable until the end of June 2004.
[Personal Communication, LEEM, August 2004; www.csrp.fr, "Contribution à la maîtrise des dépenses de santé", 2004; Loi de Financement de la Sécurité Sociale 2003, 24th December 2002]
Taxes
Wholesalers must make an annual social security contribution (tax on direct sales) to the Agence Centrale des Organismes de Sécurité Sociale (ACOSS), which is responsible for the social security system's finances. Since January 2004, the contribution comprises:
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1.90% of each wholesaler's turnover
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2.25% of the difference between the wholesaler's turnover for the current year and for the previous year.
In 2003, this amounted to a total contribution of euro305 million. [Chambre Syndicale de la Répartition Pharmaceutique, "La Répartition pharmaceutique en France", June 2004; Journal Officiel, Loi de Financement de la Sécurité Sociale 2004, Article 15, 19th December 2003]
Other areas discussed in detail in the distribution section:
Retail pharmacies
Background
Margins
Generics
Taxes
Hospital pharmacies
Dispensing to in-patients
Dispensing to out-patients: Rétrocession
Prescribing restrictions: Overhaul of the hospital-only (RH) category
Price structure
Parallel trade