Explore the key implications of the 2025 LFSS and the latest CEPS annual report on the French drug and medical device pricing and market access environment.
The 2025 LFSS (annual Social Security Financing Law) and the latest CEPS annual activity report published in February 2025 and December 2024, respectively, provide insights into the changing French P&MA environment.
What are the key learnings from the latest CEPS report focusing on 2023?
In 2023, litigation surged, drug price increase requests spiked, and savings from price reductions remained flat. Meanwhile, the fast-track program continued to attract little attention, and key rebate data remains pending until Q1 2025.
- Increase in litigations in 2023:
- The number of new litigations surged in 2023 (25 vs.13 in 2022), with 81% concerning drugs and over half tied to safeguard clause clawback payments. Out of the 21 litigations closed in 2023, only 10% were decided in favor of the manufacturer.
- Little appetite for the “fast track” program for drugs:
- No new applications were submitted in 2023 (vs. three applicants in 2022), showing the program’s limited appeal.
- The “fast track” program aims to simplify and speed up market access for certain drugs (e.g., ASMR I-III with CEESP report confirming cost-effectiveness and no methodological concerns, ASMR V requesting price lower than comparator), enabling a price agreement within 15 business days of initial offer submission.
- No new applications were submitted in 2023 (vs. three applicants in 2022), showing the program’s limited appeal.
- High volume of drug price increase requests:
- After CEPS showed increased openness to price adjustments under Article 28, there was a significant jump in price increase requests from manufacturers (74 in 2023, three times more than in 2022).
- More than 30% of the drugs which submitted price increase requests in 2023 were deemed eligible, leading to an additional €11 million in spending.
- No growth in savings generated from price decreases in 2023:
- Total savings from price decreases for drugs in 2023 matched 2022 levels (€842 million, below the 2023 target of €850 million).
- Medical device price cuts saved €75 million in 2023, a decrease from €144.3 million in 2022 and €25 million short of the 2023 LFSS target.
- Pending key information on rebate activity:
- CEPS did not include aggregated statistics on rebates and contract types for 2023 in the December 2024 publication and the data is expected in Q1 2025.
- In 2022, the overall discount level for the 170 drugs with a rebate-generating contract was 25% and most savings were generated by straight discounts or price volume agreements (94%).
- Two contract-related learnings for drugs were shared in the incomplete report published in December 2024:
- Performance-based contracts remain extremely rare in France (no new deals signed in 2023).
- The CEPS doctrine now formally recognizes the ongoing practice of converting budget cap contracts to simple discount schemes in specific circumstances.
- CEPS did not include aggregated statistics on rebates and contract types for 2023 in the December 2024 publication and the data is expected in Q1 2025.
What are the key insights from the 2025 LFSS?
The 2025 LFSS introduces tighter cost-saving measures, heightened focus on drug shortages, and additional criteria for the CEPS price-setting process. Moreover, new policies aim to increase biosimilar uptake and promote domestic drug manufacturing.
- Increased cost-saving measures balanced with higher spending targets:
- The 2025 healthcare spending target (ONDAM) has been set at €265.9 billion, reflecting a 3.4% increase vs. 2024.
- Cost-saving measures continue to intensify, with the LFSS 2025 targeting more than €1 billion in savings from drug price reductions (up from €850 million in 2024) and €200 million from medical device price savings.
- No major shift in policy observed in the safeguard clauses, with the new 2025 thresholds set at €27.25 billion for contribution “M” (higher than €26.4 billion in 2024) and €2.26 billion for “Z” (down from €2.31 billion in 2024).
- The safeguard clause is a mechanism to support adherence to the annual national healthcare spending target (ONDAM) via clawback payments shared by manufacturers for expenditures exceeding the preset thresholds (i.e., contribution “M” for drugs and “Z” for medical devices).
- Heightened focus on addressing drug shortages:
- With over 3,000 drug shortages reported in 2023, LFSS 2025 aims to prevent drug shortages through several key strategies:
- Penalties for failing to maintain security stocks have increased from €1 million to €5 million and can reach up to 50% of revenue [Article 75 – effective immediately].
- Drug shortage protocols are expanded to products that are considered at risk of shortage, either due to observed stock levels or expected seasonal demand (e.g. antibiotics during flu season) [Article 75 – effective immediately].
- A new financial penalty will apply to manufacturers failing to report MITM product (drugs of major therapeutic interest) availability details in the designated information system [Article 76 - application pending decree].
- With over 3,000 drug shortages reported in 2023, LFSS 2025 aims to prevent drug shortages through several key strategies:
- Boosting biosimilar and hybrid drug uptake:
- The law increased the commercial discount ceiling for biosimilar and substitutable hybrid products at the pharmacy level, to further incentivize substitution by pharmacists (ceiling aligned with generic products at 40%) [Article 33 – effective immediately].
- The amount of time that a biosimilar product must be on the market before it can be substituted at pharmacy level was reduced from 2 years to 1 year [Article 77 – application pending decree].
- Additional criteria for CEPS price-setting process and deadline for annual report submission:
- Prices of medicines purchased via public procurement (i.e., nationally by Santé Publique France or by joint European purchases) will now be taken into consideration during CEPS price negotiations [Article 75 – effective immediately].
- The location of manufacturing sites must now be considered by CEPS when determining drug prices, potentially incentivizing domestic production [Article 75 – effective immediately].
- The CEPS is now required to submit its annual report to Parliament by September 30th of the following year [Article 78 – effective immediately].
How do these insights affect France’s pharma sector?
These developments reinforce pricing pressure and cost-containment strategies, underscoring the market access challenges for pharmaceutical companies in France today. 2025 will be a critical year as we await the publication of the complete CEPS report, the implementation of the new LFSS, and the results of the ongoing CEPS framework agreement renegotiations.
You can speak directly to our team of experts in Simon-Kucher if you want to learn more about these updates. Reach out to us today.
With contributions by Marine Richard and Rose Mary Salloum!
