Launching of a sector-specific inquiry in the medicinal products and medical biology sectors

The FCA is once again taking an interest in the health sector and on 21 November 2017 launched a sector-specific inquiry into the functioning of competition in the medicinal products and medical biology sectors.

The Financial Conduct Authority (FCA) has already dealt with the medicine sector on several occasions, but it would be useful for it to update its previous opinions, especially regarding the 2013 sector inquiry on the functioning of competition in relation to the distribution of medicinal products for human use in private practice.

The FCA’s ambition remains the same: to carry out an assessment in order to make recommendations to facilitate competition in the distribution of medicine products, thereby boosting upstream innovation, to give intermediaries the opportunity to play a role of a counter purchase power, and to allow pharmacists to be better equipped to deal with new competitors.

The FCA will also check to see whether its previous recommendations have been implemented and/or have produced the expected effects. 

The investigation will focus on two distinct areas: an assessment of the competition conditions in the distribution chain for pharmaceuticals, and an examination of price fixing in relation to reimbursable and non-reimbursable medicinal products.

In the first area of the inquiry, the FCA will be interested on the one hand in the distribution chain for pharmaceuticals, and on the other hand in the pharmacists’ profession.

The FCA wishes to examine the potential for modification of the economic and competitive balance between the pharmaceutical companies and the distribution intermediaries, especially regarding the role of intermediaries in relation to price fixing of medicine products.

In line with its previous recommendations (in its opinion dated 19 December 2013) regarding non-reimbursable medicinal products, the FCA will also examine the possibility of a controlled opening-up to competition of dispensing chemists’ monopoly on the sale of non-prescription medicines. Furthermore, to help the pharmacist’s profession to evolve, the FCA will also examine what conditions could enable the development of online sales of non-prescription medicines.

Finally, the FCA includes the activity of medical biology laboratories within the scope of its inquiry.

In the second area of the inquiry, the FCA will carry out an analysis of the methods for setting the price of reimbursable medicine products in France, and will take into account several related parameters such as: the need to pay for the innovation on which new medicinal products depend; and the possibility of fixing prices that are closer to the prices observed in a competitive relation concerning medicine products of a same therapeutic class or generics. The FCA will also take into account rebates negotiated with CEPS (Comité économique des produits de santé) under the price agreements. 

Finally, the FCA will focus on the bargaining power of hospitals over the pharmaceutical companies, especially regarding the exception in relation to funding for innovative and particularly expensive medicine products, namely the "liability tariffs" set by the CEPS. 

The FCA proposes that any person interested in participating in this sector inquiry should do so through a dedicated mailbox.

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