Nathan Jessop
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The French pharmaceutical sector is a recognised force within the healthcare system. As well as representing a source of medicines,
it is a major employer and contributor to the economy. However, the pharmaceutical industry has grown increasingly concerned
that its contributions to the nation are being taken for granted and has been using the French Presidential campaign as an
opportunity to highlight its views.
On 1 March, the Alliance for Research and Innovation in Health Industries (ARIIS) issued a petition asking all presidential
candidates to support the industry in the national interest (1). ARIIS represents a collaboration between different companies
in the healthcare sector, pharmaceutical and diagnostic, to make the sector a greater priority for the government. Since political
candidates are engaging with French businesses about how to revitalise the faltering economy, the pharmaceutical industry
hopes that its views will make an impact. Even the Socialist party, which has argued for more intensive cost cutting in the
healthcare sector, has met with representatives of the pharmaceutical industry.
Unfairly targeted?
Pharmaceutical companies operating in France have long expressed concern that they are being unfairly targeted by the government
as part of its cost-containment drive to reduce healthcare expenditure. According to the French pharmaceutical industry association,
Les entreprises du médicament (LEEM), which represents more than 270 pharmaceutical manufacturers nationally, price cuts in
2011 cost the industry €1 billion (2). It also suggested that cost-containment policies dissuade companies from making further
investments in France and that companies are already looking at cutting jobs – although it has declined to name which companies.
A longstanding complaint has been that, over the past two decades, a series of taxes have been introduced with a specific
focus on the pharmaceutical industry. LEEM has calculated that these measures account for 5.5% of annual turnover, in addition
to other burdensome levies imposed upon all industrial sectors (2, 3). Officially, the taxes are described as "contributions",
and were introduced to reduce the French health system's huge deficit, for which the pharmaceutical industry was partly blamed
because of high product prices (4). Pharmaceutical companies have rejected such accusations, pointing out that since they
must negotiate in advance with the government about product pricing, the government is fully aware of, and involved in, the
decision-making. The industry believes that the government should pay more attention to the non-pharmaceutical costs within
the healthcare system.
Pharmaceutical-specific tax rates have increased steadily, and are likely to continue to do so for the foreseeable future.
They secure substantial revenue for the government, which is struggling to deal with the eurozone crisis (highlighted by the
January 2012 loss of its top AAA credit rating from Standard & Poor [5]). These types of industry-focused taxes are likely
to continue in a bid to avoid imposing tax rises on the general population. Currently, 13 pharmaceutical-specific taxes generate
vital revenue for the government, but are an irritant to the industry since they can represent between 50% and 100% of companies'
annual corporate income tax (4, 6).
The Promotion Tax is a tax on promotional expenses for medicines that have a marketing authorisation in France and are included
on the official list of reimbursed medicines. As the government reimburses much of the product costs in France, there has
been a steady drive to curtail the promotional activities of pharmaceutical companies, with the costs associated with medical
representatives, such as salaries, being a favoured tax target. Initially, the Promotion Tax rate was set at 5%, but it is
now charged at 19–39%, depending on the nature of the company's promotional expenses. Currently, it brings in between €130
million and €165 million per year for the government. The types of activities deemed eligible for the tax are frequently disputed
between the industry and the government. For example, the government stated that all advertising would be subject to Promotion
Tax and indicated that this even included pens and giveaways bearing logos and trademarks at conferences (4).
Not surprisingly, the level of promotional activities has sharply declined because of a combination of government pressure
and company desire to minimise their exposure to such taxes and other restrictions. Recently, a proposal to allow limited
television advertising for over-the counter medicines was rejected at a joint industry–government forum, as the two parties
could not agree about how such measures should be governed (7).
