Generic Medicines and Branded Medicines in France

Every yin has its yang, the day its night, and every cost, its benefits or profits.

Everything in this life has this opposing force that makes up a long journey. If you travel correctly, though, great things are waiting for you at the end of the rainbow.

And people say it all the time. What makes us human is our ability to experience and undergo struggle. The struggle is what helps us to achieve greatness at the end of the day. As the famous retired Navy SEAL Jocko Willink always mentions, “Discipline equals freedom”.

Freedom, whether in the form of love, knowledge, or profits, always comes at the end of the day. Hard work must always pay off.

But when things are not properly rewarded, the government, as always, has to “meddle” in society or in the economy to fix things; it is necessary. In this case, the government has to interfere to be sure that the implementation of patents and licenses is applied to people discovering, in this case, breakthrough drugs.

Both in the United States and in France, patents are awarded for a total of 20 years, in which the original developer—and now manufacturer—, has the exclusive right of producing that specific drug (which is now branded by the way), thus, ensuring that this person will receive great sums of money for his achievement, during the next 20 years.

This system also works as an incentive. It gives people, especially researchers and investors, the impulse to pursue the development of a new drug for any key therapeutic area (hypertension, diabetes, asthma, cardiovascular disease, depression, among others). Of course, the result is not very attractive for the public since there is a high chance that the new branded drug will be charged for a higher price compared with the case in which it is supplied in the market by different pharmaceutical companies. In this last case, markets will make sure that the price reaches equilibrium, and due to competitiveness, it is very likely that prices would go down.

But, really, what would you say if I told you that, after decades of working relentlessly to produce a new idea or a new product that you know for a fact it is going to make a tremendous change in some area of the people’s lives, you will receive almost no monetary compensation for what you just did?

That’s why patents, licenses, and intellectual property exist. Innovation needs protection and a proper reward after hard work.

However, people benefit from the existence of generics. In its original definition, a generic medicine generally consists on the mass production of medicine that already had its patent expired, thus enabling any company or any individual to make use of the formula to produce this positive drug and supply it to the public who may need it. In the case of France, through le Ministère des Solidarités et de la Santé, they have been promoting a campaign lately about the need to foster and boost the production of generic drugs across the country. This will help people to pay for common drugs more easily.

Actually, a key fact to consider about France and the generic medicines is that France’s generic medicines market shares are the lowest in all of Europe. This clearly shows that, recently, France hasn’t worried a lot about the availability of generics in its market. This may be due to the effectiveness of its health care system which has been classified as the best in the world by the World Health Organization in the past and is a source of pride for the French people.

But wait, what does the health care system have to do with generics?

Well, simple. Since every part of the chain that composes the provision of health care, from manufacturers and pharmacies to Pharmacy Benefit Management (PBM) companies, and then private insurance companies are so well integrated and coordinated, that it is possible to offer cheaper prices for original, branded medicines, for the people.

It is a well-known fact that countries such as the United States make a really bad use of their money when it comes to health care, and it ends up being more expensive, less effective, and worse for the people.

By the way, the reason we mention the United States so much is, first because of its geopolitical relevance, and because of the polemic nature of its health care system. A figure that can illustrate how much the US spends money and gets so little in return, is the more than 17% of its GDP that is directly allocated to health care, specifically its Medicare, Medicaid, and Obamacare (2010 Affordable Care Act ). And still, the system is so deranged at its core, that prices of drugs and treatments do not reflect their real costs anymore—for a multitude of reasons, that are outside of the scope of this article—, ultimately bringing prices as high as the height of the Alps.

On the other hand, France only spends approximately 11.7% of its GDP on healthcare, just a little less than what Switzerland and Sweden spend on health, for example. However, their systems are not as acclaimed as the French one.

There are, nonetheless, several strategies a manufacturer will apply to protect its business. As Niccolò Machiavelli mentioned on his famous book: “The end justifies the means”, or, as pop culture’s recently adopted phrase tells us from the Avengers: Endgame trailer: “Whatever it takes”.

Regarding this, writer Will Kenton at Investopedia mentions a strange and uncommon strategy that manufacturers are willing to do to protect their new branded drugs:

“Some manufacturers may even create a generic version of their brand-name drug, either by manufacturing it themselves or contracting it out to another manufacturer. This strategy makes sense because insurance company policy often dictates that a generic, when available, must be prescribed. Generics are sold at a discount from brand-name drugs, often about 80% less. Because of competition, margins on generic drugs can be very thin. As recently as 2015, it was estimated that generic drugs had saved U.S. consumers about $1 trillion over the previous decade.”

But France is doing ok overall if one analyzes not only its health care, but also the main indicators affected as a consequence. According to the OECD’s Health at Glance 2015 Edition,

“Japan, Spain, Switzerland, Italy and France are among the countries that have the highest life expectancy at birth and at older ages, although France does not perform so well in terms of life expectancy at birth for men, reflecting higher mortality rates among younger and middle-aged men.”

The only worrying figure, alongside most countries in the developed world, is the increasingly old population that is starting to silently become a majority in France. This will definitely bring some problems along and maybe intensify the government’s efforts to push for more generic medicines in the market.

Now, let’s look closer at the process to follow if you want to get a patent for your newly discovered idea, whether it be new software, a new invention, or just a new drug for treating opioid addicts.

The first thing you would have to do is to apply for the patent. During this phase, you must describe your medicine and define what does it treat and how effective can it be according to your research. A positive thing is that this submission can be done in any language despite taking place in France, a country that only has recognized French as its official language, across the national territory. However, the corresponding document translated into French shall be submitted before three months have passed.

After that, the French Patent Office will examine the submission and could reject it if the claim cannot be applied in the industrial field, or if it is basically not a treatment designed for humans or animals. Also, you must describe thoroughly the effects of your drugs to avoid this rejection, which could be worse than your former crush’s rejection from high school.

Then, if getting a patent that lasts 20 years if your objective, you must request a search report as well and pay more fees for the submission process, where the corresponding references should be cited, and then provide a technical argumentation. After some time, the agency will issue its opinion on the matter. If it lacks the innovation you mention your new drug has, your entire application can be rejected. If not, you’re granted the patent! (After some observations that can be issued as well).

And now, going a little bit deeper into the pharmaceutical market in France, Statista offers an insightful statistic that, as they say, “shows the distribution of generic drugs in the French pharmaceutical market in 2016, according to value and volume. In volume, generics made up for more than 35 percent of pharmaceutical drugs sold in France in 2016.” This is really good since it shows that France has been successful during these last years in promoting generics into its market. The data was originally provided by France’s National Agency for Medicines and Health Products Safety (ANSM).

Apart from the genetic counterpart, the statistic gathers together the original molecules, which account for more than 11% of the total generic drugs pharmaceutical market in France. Maybe worrying, or just a normal figure, is the one corresponding to almost 53% of generics not listed in the ANSM’s directory. This shows that there is a big, big market out there of generic medicines that probably has not undergone the required testing to be approved and then sold to the public.

Even more disturbing can be the fact that, in value, these generics not listed in the ANSM account for more than 69%, and the generics properly listed account for only about 19%.

But, anyway, it is a really complicated market to understand in its entirety. Worse situations can be found in countries like China or India, where intellectual property from other countries is ignored altogether. What we mean is that, for example, China lacks the necessary agencies that can oversee and protect patents accordingly. This is where the World Trade Organization from the United Nations should enter to promote a stronger system of certificates, patents, and licenses.

This has enraged numerous countries. Recently, the angriest one may be the United States which, under the administration of Donald Trump, has pledged to justly enforce these intellectual property rights at the cost of a dangerous trade war with one of the countries that are projected to become the next main economic power in the world in the next decades.

India, located in Southern Asia, is another case worth to analyze. There, the Indian government has failed or deliberately applied a Patents law that has shortened the duration of these exclusive rights to a maximum of 7 years. Because of the lack of rewards or protection from the central government, India is now recognized by their application of reverse-engineering processes to discover the components of new breakthrough drugs, and start producing them with lower costs.

And the government openly endorses this. In fact, the Medical Council of India started to ask physicians in 2002 to prescribe drugs only by their generic names. From its society’s welfare perspective, this may be an attractive move that ensures that the more of 1330 million people living under the government of Narendra Modi are having affordable access to drugs that can benefit their lives.

In conclusion, France’s progressive implementation of generic medicines to outnumber branded medicines is already underway. What started in 1995 as a plan from the government (the Health Plan) has already shown significant results. Initially, agreements were made with manufacturers for them to sell their different drugs and medicines at 70% of the cost included in brand medicines. In this way, prices were fixed and the population started to achieve more welfare.

Regarding France’s current position and its future in the market from brand and generic medicines, the Generics and Biosimilars Initiative Journal mentions that:

“Rottembourg and Nasica-Labouze believe that France’s persistence in price-fixing generics, and the preclusion of any system of competition, is one reason why it has taken so long for the generics market to develop in France compared with other countries in which competition between manufacturers has led to bigger price reductions”

Maybe, as always, allowing the market to adjust can end up benefiting everyone in the country, and thus generating more welfare in the long run.