Pharmacy discounts on generic medicines in France: is there room for further efficiency savings?
BACKGROUND
In France control of pharmaceutical expenditure has been a policy priority for many years and generic policies have featured prominently on the policy agenda. Measures including reference pricing, generic substitution and international non-proprietary name (INN) prescribing have been introduced in recent years. Generic manufacturers and wholesalers may offer discounts, rebates or promotions to pharmacies in order to gain an edge over their competitors, but their true extent is unknown.


OBJECTIVE
To identify the amplitude of discounts on generic medicines, and whether wholesalers or generic manufacturers offer these beyond officially negotiated margins and allowable discounts, by conducting a pilot study.


METHODS
Data on net prices were acquired for all available presentations of 11 generic molecules selected across different therapeutic categories included in the 40 most selling generic products in 2005. Data were obtained via a questionnaire survey followed by interview with selected pharmacies (n = 4) and whole-salers (n = 2). Pharmacies and wholesalers participated in this study subject to confidentiality and anonymity.


RESULTS
Pharmacies usually prefer to buy generic products directly from manufacturers rather than from wholesalers in order to avoid paying additional margins imposed by wholesalers. Discounts are mostly price-related and generally vary from 20 to 70% off the wholesaler selling price (WSP), on top of the officially allowed 10.74%. Discounts on the ex-factory price (EFP) are much lower, typically around 7.5%. Discounts are prohibited for branded products, beyond the officially allowed ceiling of 2.5%. While horizontal integration among pharmacies is disallowed, pharmacies may form purchasing groups allowing them to realise greater discounts from suppliers.


CONCLUSIONS
Overall, the evidence suggests that discounts occur in France beyond what may be allowable and their extent can be significant. If general discount levels for generic medicines are as high as this pilot study suggests, then this may imply that health insurance in France may be overpaying for commodity generic medicines.
Kanavos
Panos
P
LSE Health, London School of Economics and Political Science, UK. p.g.kanavos@lse.ac.uk
Taylor
David
D
D017046:Cost Savings; D016568:Drugs, Generic / Q000191:economics*; D005602:France; D010594:Pharmacies / Q000191:economics*; D010865:Pilot Projects
D016568:Drugs, Generic