Bloomberg News

French Drugmakers Say Pricing Policy May Hamper Industry

January 31, 2012

(Updates with Lajoux comments in seventh through 10th paragraphs.)

Jan. 31 (Bloomberg) -- France’s drugmakers are concerned the country’s government may cut pharmaceutical prices further this year, the leader of a national industry trade group said.

“It’s hard to be optimistic for 2012, given the budget deficit, a financial crisis that continues and public debt that keeps on rising,” Christian Lajoux, head of Les Enterprises du Medicament industry association, said in an interview in Paris. “The financial crisis has a direct impact on the way the governments handle reimbursement for medicines.”

Sanofi, where Lajoux runs French operations, and other drugmakers in Europe are being hurt by austerity measures as governments rein in health-care spending in an effort to cut deficits. French Finance Minister Francois Baroin has said the government of President Nicolas Sarkozy won’t back down from a policy of containing medical spending.

The government’s target for a balanced budget in 2016 is “untouchable,” Baroin said in a Jan. 25 speech. Prime Minister Francois Fillon yesterday cut France’s growth forecast for 2012 to 0.5 percent from 1 percent previously, saying the slowdown will reduce tax receipts by 5 billion euros ($6.55 billion).

French policy has “already hit a bit too hard on drugmakers with price cuts last year,” Lajoux said during the interview. “If we cut prices further, there will be damage in the industry,” and some small or medium-sized health-care companies may be forced to shut down plants or fire employees.

Cost of Cuts

Drug-price cuts announced in 2011 will cost drugmakers in France about 1 billion euros, double the average of previous years, Lajoux said during the interview. Pharmaceutical companies also have been hurt by an increase in taxes, he said.

“This will have an impact on jobs,” Lajoux said. Some companies already have been “weakened” by last year’s measures, he added, declining to identify the manufacturers.

Les Enterprises du Medicament, which represents more than 270 drug manufacturers operating in France, will work to “keep the dialogue open” with government officials on the “strategic importance” of the industry, Lajoux said.

“There is just as much technology in an anti-cancer drug as there is in an Airbus,” said Lajoux, in reference to airplanes made by a unit of European Aeronautic, Defence and Space Co.

The results of the French presidential elections planned for later this year are unlikely to change the outlook for drug prices, Lajoux also said.

The Socialist Party is considering further lowering the price of medicines should its own presidential candidate, Francois Hollande, win elections in May, said Lajoux, who last week met two Socialist Party representatives to discuss the health-care aspects of Hollande’s program. Hollande has been leading Sarkozy in opinion polls for months.

“Further price cuts would be unacceptable,” Lajoux said today during a press conference in Paris. “They would be opportunistic and we condemn opportunistic measures.”

--Editors: Kristen Hallam, Bruce Rule

To contact the reporter on this story: Albertina Torsoli in Paris at atorsoli@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net


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