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French Government Moves to Cut 2012 Healthcare Budget

Published: 11/8/2011
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As part of a EUR65-million austerity plan, French prime minister François Fillon has announced that healthcare spending will be reduced to 2.5% year-on-year growth for 2012.



IHS Global Insight Perspective

 

Significance

To preserve its top-level credit rating, the government of France yesterday (7 November) proposed new budget cuts and tax increases worth EUR65 million.

Implications

As part of the austerity plan, pharmaceutical companies will be requested to further contribute to cost-containment efforts, with additional price cuts expected during 2012.

Outlook

Overall, savings of about EUR2.7 billion will be triggered in the French healthcare sector during 2012.

French prime minister François Fillon yesterday (7 November) announced a second austerity plan in less than three months. Overall, the government seeks to unlock savings of EUR65 million (USD89.5 million) by 2016, with the healthcare sector set to contribute as soon as 2012. As part of the austerity plan, the national target for expenditure in public healthcare (ONDAM) has been reduced to a maximum 2.5% year-on-year (y/y) spending growth, down from 2.8% y/y (see France: 23 September 2011: France Unveils 2012 Draft Budget, Targets Pharma Spending). While savings of EUR2.2 billion were planned as part of the 2012 Law Project on Social Security Financing (PLFSS), the reduced ONDAM will require additional savings of about EUR500 million in the healthcare sector, bringing total savings to EUR2.7 billion during 2012. Additional cost-containment measures will be included in the PLFSS 2012 within two weeks, the government said.

No details were given by the government, but cost-containment efforts should primarily consist of price cuts, with most probably in the generic sector where prices remain largely higher than in neighbouring countries, reports France Soir. This would add to the EUR670-million price cut planned as part of the PLFSS for 2012.

Outlook and Implications

The new austerity plan follows the lowering of France's 2012 growth projection from 1.75% (August estimates) to 1% and comes as its triple-A credit rating is under pressure. The government aims at achieving a balanced budget by 2016. In healthcare, French health minister Xavier Bertrand today announced that price cuts on generics and patented medicines could unlock one-third of the planned EUR500-million savings, according to French newspaper Le Monde. Such a measure would bring total pharmaceutical price cuts to EUR840 million for 2012, by far the highest level of price cuts in the past few years. As about 64 medicines are set to lose their reimbursement during 2012 due to their insufficient clinical value (SMR; see France: 7 October 2011: France Publishes List of Drugs As Part of First Wave of Reimbursement Removal), no further delisting has been mentioned by the government for 2012. A move towards a complete delisting of drugs with insufficient SMR rating is not excluded in the medium term but will probably not happen before the 2012 presidential election. Higher out-of-pocket payments would be a direct result of such a measure, and the government is currently unwilling to transfer further healthcare cost onto patients' shoulders.

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