Competition Council accepts commitments distribution pharmaceuticals

30 October 2007

Romain Ferla

The Competition Council has accepted commitments from four pharmaceutical groups following its investigation into the distribution of medicines. The investigation was prompted by complaints from wholesalers that quota systems favoured incumbent wholesalers.

On April 2002 and on October 2003, the Competition Council received complaints from the union of pharmaceutical products wholesalers (Chambre syndicale de la répartition pharmaceutique) and from a wholesaler, Phoenix Pharma.

Medicine distribution in France is subject to general interest issues, which are set by the public health code. For several years, medicine distribution to pharmacies through wholesalers has been subject to delivery quotas by laboratories. The quotas are determined on the basis of various criteria, which are specific to each pharmaceutical group and notably take into account past sales to pharmacies by every wholesaler.

These quota systems have the legitimate aim of rationalising production and optimising medicine distribution. However, the restrictions imposed by such allocation systems have to be limited to what is strictly necessary for a reliable and optimal supply of the French market, whilst maintaining a real possibility of competition between wholesale distributors.

In this respect, the Competition Council has expressed concerns that certain quota systems implemented by some of the pharmaceutical companies operating in France protect incumbent distributors by focusing on past sales figures or market shares which impedes the entry into the market of newly established wholesalers.

In response to the competition concerns expressed by the Competition Council, the companies Boehringer Ingelheim France, Laboratoires Merck-Sharp & Dohme-Chibret, Lilly France and Sanofi-Aventis proposed commitments, amending their supply systems of medicines so as to increase fluidity, flexibility and transparency.

From now on, the quotas imposed on wholesale distributors may be adjusted according to their business activity since deliveries may exceed the quotas initially fixed. Pharmaceutical groups also commit to improve information to wholesale distributors concerning system operating conditions. Finally, new entrants on the market will be granted distribution quotas so as to be able to start their business activity in satisfactory conditions.

Source: Decision of the Competition Council No 07-D-22 of 5 July 2007