The French Solution - How Drugs are Valued in France.

France has a well-established health-technology-assessment system, dating back to the 1980s. The country is also a key price-reference point in Europe. As of 2017, at least 20 E.U. nations reference the list-price established by France for drug products, followed by Belgium, Denmark and Spain (18 nations).

Market-access in France has two parts. First, the country's Ministry of Health (Ministre Santé et Sécurité Sociale) sets a reimbursement-level and negotiates a price that reflects the added therapeutic value of a product. Second, the country uses a budget-cap to control national drug expenditures.

France sets its maximum reimbursement-level and price for new drugs based on a cardinal metric system reflecting the product's added-value. Each drug product receives two ratings: one reflecting the product’s actual medical benefit (SMR - Service Médical Rendu), which determines the reimbursement level, while the improvement of medical benefit (ASMR - Amélioration du service médical rendu) determines whether a price premium can be achieved or if a discount will be required.

Once launched in France, all drugs products have to be assessed by HAS (the Haute Autorité de Santé) before inclusion on a positive list of reimbursed products.

France has bargaining power with drug manufacturers. The French government runs the country's universal healthcare program, which makes it by far the largest purchaser of drugs. The Transparency Committee (Commission de la transparence, or CT) within HAS is responsible for assessing new drug products. The Committee first renders the 'actual benefit' of a new product answering the question - should the drug (or device) be reimbursed in France? This rating (SMR), amongst others, is based on the severity of a condition or disease and the product's curative potential. There are three levels of reimbursement: Important (65%), Moderate (30%) and Mild (15%). Products with insufficient evidence are not included in the positive list.

Drug pricing in France is based on a five-point scale indicating a product's added therapeutic value – the ASMR.

Each ASMR rating has a potential impact on the (premium) price possible for a product in France. An ASMR of I to III means faster access with price notification instead of negotiations – as long as pricing is consistency with European counterparts. An ASMR of IV may possibility lead to a premium price but ASMR V products can be listed only if the costs are less than the comparators – in the range of 5 to 10 percent lower.

Over eighty-five percent (73) of new drugs launched each year in France between 2009 and 2016 offered minor to no improvement.

From 2009 through 2016, the Transparency Committee evaluated about 85 new medications per year. Less than 2 drugs (1.4 average) per year obtained an ASMR I rating. Sixty percent (51) of drugs offered no improvement.

The ratings (along side economic assessments from the Commission d’Evaluation Economique et de Santé Publique or CEESP) establishes the parameters within which the Comité économique des produits de santé (or CEPS) must negotiate maximum prices in France.

The CEPS negotiates prices so that they are neither higher nor lower than the highest or lowest prices in the United Kingdom, Germany, Italy, and Spain. For each new medication, the CEPS negotiates a five-year contract with the manufacturer that specifies the price and anticipated sales volume. Once a list price has been set based on the value of the drug, CEPS negotiates a confidential discount (10% to 30%), which is paid as a rebate to the Central Agency for Social Security Organizations.

France prohibits any further price increases after a new drug’s launch, and after five years, lowers prices and obtains additional discounts based on market competition. France also requires manufacturers to pay rebates if spending exceeds a national pharmaceutical budget-cap cap set by it's Parliament. The country recently announced a parliamentary amendment that will require drug manufacturers to disclose any public R&D funding when negotiating drug prices.

Can the United States learn from how drug prices are set in France? Yes. No matter the metric, drug prices in the U.S. are extreme. Will pharmaceutical companies risk turning their backs on the country if Americans decide to regulate drug prices. Highly unlikely. Drug Manufacturers have often warned that French-style centralized price regulation in the U.S. will results in restricted access to medicines and impact patient well-being. It hasn’t in France. And, the U.S. is the world's largest market for prescription drugs, which makes the American government's potential bargaining power enormous.