Prescription Drug Markets in France and the U.S.

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April 2, 2013 by Mark Chanel

By Mark Chanel, MSc in Management Consulting 3 student

As someone interested in consulting in the global healthcare market, I decided to take a look at some of the differences between France and the United States as related to prescription drugs. Having experience in that industry, I was interested to see what one could learn about the two systems and if it was possible to improve either one.

As an American, who has always heard that the United States has the highest prescription drug prices in the world, I wanted to actually validate that information. I picked two well-known brand drugs and determined that, at least anecdotally, prices are MUCH higher in the U.S.

  • A 10ml vial of Lantus 100 UI costs a French consumer about $57. That same bottle in the U.S. costs about $133.
  • A 5mg tablet of Abilify costs a French consumer about $5 per pill. That same pill in the U.S. costs about $22. [1]

However, a very interesting fact is that only about 13% of medications sold in France are generic. [2] My personal experience tells me that roughly 70% of the medications dispensed in the U.S. are generic, and some statistics on the internet indicate this percentage could be as high as 75% [3]. What are the drivers behind this?

As pharmacies in France have the same rights of generic substitution as in the U.S., one needs to look at the physicians who are writing the prescriptions. A recent article in the French newspaper Les Echos seems to put the blame for the high brand dispensing rates on the influence of French drug representatives from the big pharmaceutical companies [2]. However, I can think of two other reasons that are far more interesting.

  • Physicians could simply be taking care of their patients, making sure they get they get the best possible care. This could mean choosing the newest branded medication available, even when a proven generic would work just fine, or indicating that they want the prescription dispensed as written for the brand medication, even when a generic formulation is available.
  • Consumers could be indifferent, as the prices for brand name drugs are relatively close to their generic alternatives. Take for example brand Lipitor (Tahor) that sells for about $0.69 per pill in France now, versus its generic, Atorvastatin, that sells for $0.42.  [1] Consumers could simply be willing to pay the extra $8 per month for peace of mind to not switch to a generic.

Regardless of the actual reasons, the effects of this would appear to be an extension of the natural patent life-span for a branded drug, meaning the brand medication still generates significant revenue even after the patent has expired. Does this mean that pharmaceutical companies could actually increase their long-term profits in the U.S. by reducing their prices? Could the government of France save money by educating physicians or by changing the rates consumers need to pay if a generic is available? The answer to this last question is yes, and it has already started to happen.

It would appear everyone has room to improve here. With the U.S. Government spending $60 Billion  [4] per year to subsidize prescription drug costs for Medicare Part D alone (not to mention premiums and out-of-pocket costs by consumers), and continued budgetary pressures ahead, healthcare consultants need to recommend out of the box thinking to improve the situation and stay ahead of the curve. France, which has its own budget pressures, needs to be equally as cost conscious. As a consultant, we need to look at what works in the world, and how to change it to make it work in our respective countries. While intentionally lowering drug prices in the U.S. may seem counterproductive to increasing profitability for the pharmaceutical companies, the case can be made and should be investigated.

[1]        Vidal, “Eureka Santé,” 22 January 2013. [Online]. Available: http://www.eurekasante.fr/medicaments.html. [Accessed 23 March 2013].

[2]        V. Collen, “Génériques: la France veut rattraper son retard,” Les Echos, p. 16, 26 February 2013.

[3]        CVS Caremark, “CVS Caremark Insights Report,” [Online]. Available: http://www.cvscaremarkfyi.com/blogs/cvs-caremark-2012-insights-report-reviews-pbm-trends. [Accessed 23 March 2013].

[4]        K. Piper, 10 December 2012. [Online]. Available: http://www.piperreport.com/blog/2012/12/10/medicare-part-spending-key-drivers-reduced-drug-benefit-costs/. [Accessed 23 March 2013].

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