The framework agreement between the french authorities and the industry: a tool to adjust drugs expenditure

1. The framework agreement between the french authorities and the industry: a tool to adjust drugs expenditure Chrystelle Gastaldi-Ménager Direction of the Social Security

2. Overview • rapid overview of the price and reimbursement procedure in France • implementation of the Agreement • presentation of the agreement : main objectives and key points • Impact of the agreement on sales expenditures • conclusion

3. Price and reimbursement procedure in France 180 days

4. The economic committee: role • major role in the reimbursement/price procedures : • price negotiation (price/volume agreement) • regulation of drug expenditures based in particular on the framework agreement • drugs : ambulatory and hospital ones • but also medical devices

5. The economic committee: members • a chairman and a vice-chairman • representatives of the directors of the social security and of the general health (Ministry of health ) • representative of the director of hospital admission and the organization of health care (Ministry of health) • representatives from the Ministry of economic, finance and industry in charge of industry, technology, competition, consumption… • representatives of national health insurance bodies • representative of complementary health insurance

6. Implementation of the framework agreement • Social Security Finance Law for 2003 • new article in the social security code • open the possibility for an accord to specify the framework for conventions establishing relations between the Economic Committee and each drug company • 6 month negotiations with representatives of drug companies • 12 meetings • Initially for the 2003-2006 period • initially only for ambulatory drugs • modified and reinforced twice : october 2006 and january 2007

7. Framework agreement: objectives • rapid access by patients to innovative drugs • improved efficiency and rationality in drugs expenditures • sustained effort to avoid all abuse in consumption • promote proper use of drugs a regulation tool which respects the importance attached to maintaining and developing a strong and competitive pharmaceutical industry

8. Several measures/clauses about • exchange of information • monitoring of reimbursed expenses • acceleration of price/reimbursement procedures • specific advantages for innovative drugs, orphan drugs and pediatric ones • monitoring of new drugs (post-marketing studies) • development of generics and reference prices • information for prescribers, promotion and publicity • multiannual company conventions and annual financial regulation

9. Exchange of information • desire of transparency in both sides • improving and sharing information about consumption and prescription of reimbursable drugs • pharmaceutical company are responsible to maintain the GERS database • monthly sales: volume/value, ambulatory/hospital drugs • used by the Economic Committee for its forecasts • on trends in sales of reimbursable drugs • with regards to the application of the regulatory mechanisms • information relating to prices charged in other European countries, reimbursement conditions and volume of sales • creation of a joint monitoring group

10. Acceleration of price/reimbursement procedures (1) • preliminary investigation for centralized marketing authorization drugs • only for drugs with a positive opinion from the EMEA/CPMP • does not exempt the company from making an official application for admission for reimbursement

11. Acceleration of price/reimbursement procedures (2) • price notification procedure for innovative drugs • Company must ask to benefit from a fast-track procedure only • If they have signed multiannual convention • for drugs with a added therapeutic value (level1 to 3, but also level 4 under specific conditions) • pricing application submitted by company must be consistent with prices accepted in Germany, Spain, Italy and UK (updates) • if the Economic Committee has not informed the company of its objection (explicit reasons) within 2 weeks, the application is deemed to be accepted • Commitments to be undertaken by the companies • regarding prices, sales volume, new scientific data, post-marketing studies…)

12. multiannual company conventions and annual financial regulation: principles • Would exempt company from the “safeguard” contribution • “Safeguard” contribution is required when annual sale growth is superior to the growth rate (K rate) voted each yean by the parliament (ex: 1% in 2006) • In exchange company will have to pay rebates • rebates paid must be less than the “safeguard” contribution that company would have paid in the absence of agreement

13. multiannual company conventions and annual financial regulation: 2 types of rebates • rebates by pharmacotherapeutic aggregate • For each aggregates in which the trend in annual sales is greater than the rate determined by the economic committee according to the K rate (fixed by the parliament) • One part of the rebate is paid only by companies whose annual sales trend is greater than the rate set by the Economic Committee • rebates on turnover: • based on any disparity found between their turnover and the threshold set each year by codicil to the agreement • rebates rate is equal to 10%

14. multiannual company conventions and annual financial regulation: main rebate exemptions • Total or partial exemption for innovative drugs • Ex: for drug with added therapeutic value (ATV) level 1, total exemption for 36 months • Total exemption for orphan drugs unless otherwise stated in the agreement • Total or partial exemption for pediatric drugs • Idem innovative drugs but based on ATV level -1 • Ex: pediatric drug with ATV level 3, same condition tha innovative drug with ATV level 2.

15. Impact of the agreement on sales expenditures • Total growth for ambulatory sales: • 6.1% in 2003 (15.8 billion €) compared to 0.7% in 2006 (18 billions €) • no rebates paid in 2006 • Total growth for hospital sales • +7% in 2006 (4.6 billions €) • Hospital drugs concerned by the agreement only since june 2006 • amount of rebates: 60.6 millions € before exemptions, 15 millions € after exemptions (and specific credits).

16. conclusion The framework agreement had permit • To develop and improve the exchange of information between health authorities and companies • To regulate drug expenditures in a way that encourages innovative drugs but also orphan and pediatric ones.

17. Thank you for your attention !