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TO RUEHC/SECSTATE WASHDC IMMEDIATE 8414
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RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 02 PARIS 000237 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EB/TPP/IPE JOELLEN URBAN 
STATE PASS USTR 
COMMERCE FOR ITA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EIND EINV EUN KIPR FR
SUBJECT: FRANCE SPECIAL 301 2010 ANNUAL REVIEW 
 
Refs: A) Paris 336 B) Paris 1499  C) Paris 1560  D) Paris 1267  E) 
Paris 1729 
 
PARIS 00000237  001.2 OF 002 
 
 
¶1. (SBU) Summary.  Post has reviewed PhRMA's Special 301 submission 
on France and recommends against inclusion of France on the 2010 
Special 301 Watch List.  France has, in fact, improved the 
pharmaceutical R & D environment and post sees no evidence of lack 
of IPR protection or market access.  France has also been at the 
forefront of copyright protection and anti-counterfeiting on the 
Internet,  establishing Europe's first graduated response 
enforcement mechanism and a public-private sector charter against 
online counterfeits.  End summary. 
 
PhRMA Concerns 
-------------- 
 
¶2. (SBU) As we reported in 2009 (ref A), France is cutting costs on 
state health insurance spending on pharmaceuticals, making for a 
challenging environment, particularly for less innovative 
prescription drugs. 
Pricing and distribution margins on non-reimbursable pharmaceuticals 
are unregulated in France.  Pharmaceutical companies that do not 
seek to include their products on the list of drugs to be reimbursed 
by the state health insurance can market products immediately upon 
receipt of market authorization (either via the centralized European 
procedure or via national procedure).  The GOF is employing 
different strategies to limit the cost of its reimbursable drug 
program, including aggressive use of generics and campaigns to 
reduce consumption. 
 
¶3. (U) Companies wishing to get a drug included on the reimbursable 
list first approach France's "Transparency Committee."  Made up of 
epidemiologists, pharmacologists, medical doctors and other experts, 
the Committee assigns an "innovation" rating from ASMR I to ASMR V 
(I representing a "major therapeutic advance," V "no treatment 
benefit") based on clinical criteria.  Once the ASMR rating has been 
assigned, price negotiations with the Economic Committee for Health 
Products (CEPS) ensue.  Innovative outpatient drugs are considered 
in an accelerated process, which who is now extended to all the 
drugs up to ASMR III and some low-cost ASMR IV drugs.  Maximum delay 
for setting a price during the registration of a new drug is 180 
days.  According to a 2008 working paper by the Institut de 
Recherche et Documentation en Economie de la Sante (IRDES), the 
average was 164 days in 2007. 
 
¶4. (U) IRDES also noted that the structure of pharmaceutical sales 
in France has changed in recent years to favor more expensive 
products.  IRDES concluded that French patients and doctors both 
"seem to prefer innovative and expensive drugs, even when less 
expensive ones are as effective," and that the possibility of higher 
prices for innovative specialties "makes France an attractive 
location for the early commercialization of innovative therapies." 
Therefore, notwithstanding the GOF's cost-cutting measures and 
reliance on generics, innovative new drugs benefit from accelerated 
access to the reimbursable list and are still preferred by doctors 
and patients. 
 
¶5. (SBU) Furthermore, as noted favorably in PhRMA's Special 301 
submission, President Sarkozy personally re-convened the relatively 
inactive Strategic Council for Health Industries (ref B) that 
brought together himself, five government ministers, and 15 CEOs of 
major U.S. and other foreign pharmaceutical and medical device 
companies to discuss how the health sector can become an engine of 
economic recovery in France.  During the meeting, the GOF announced 
it will begin to allow pharmaceutical companies to charge two prices 
for drugs: one fixed price for drugs reimbursed by government health 
services and an unregulated price for non-reimbursable drugs and/or 
exports.  This pricing strategy would prevent parallel imports that 
undercut market strategy and sales in export markets, a key issue 
for U.S. firms.  Sarkozy and the CEOs also signed an agreement for a 
newly-established 140 million euro (USD 208 million) investment fund 
for innovative firms in the medical biotech sector.  Finally, the 
GOF mandated that there be counterfeiting specialists in all 
pharmaceutical companies capable of providing information in real 
time, and over the Internet, to authorities at ports and airports. 
 
 
¶6. (SBU) These measures, along with the fact that no pharmaceutical 
companies have requested post's assistance with IPR or market access 
issues, support post's conclusion that France should not be included 
on the Special 301 Watch List for failure to protect the 
intellectual property rights of, or allow market access for, 
pharmaceutical products.  When asked throughout the year about 
PhRMA's longstanding concerns, American firms operating in France 
responded that they are able to work with the applicable 
 
PARIS 00000237  002.2 OF 002 
 
 
constraints.  While some companies such as Abbott Labs choose to 
create a larger base of operation in Ireland than in France, these 
decisions are based on Ireland's more liberal fiscal policies, good 
transportation connections, and English-speaking population rather 
than a lack of market access in France. 
 
France's Aggressive Copyright Protection 
---------------------------------------- 
 
¶7. (U) In other areas, such as copyright protection, France has also 
been a trailblazer in 2009.  The GOF passed the "Creation and 
Internet law" that introduces a new legal framework to deter and 
sanction online piracy. (Ref C and D)  A signature feature is the 
graduated response ("three strikes") to illegal downloading wherein 
a public authority (HADOPI) will issue escalating warnings to 
illegal downloaders that, if unheeded, could result in a cut-off of 
Internet access.  Despite strong political opposition and repeated 
legal challenges, a reformulated version of the three-strikes 
provisions will go into effect in 2010, with the first warnings to 
be issued this summer.  The GOF also convened a commission to 
develop a legal alternative to illegal downloading and financing 
cultural content creation (ref E).  Unfortunately, one idea 
developed was to tax online ads (the "Google tax") as a way to 
compensate authors (mainly publishers) for their losses.  This idea 
is still alive in 2010.  President Sarkozy is taking an 
anti-competitive approach and French authorities are now studying 
whether Google abused its dominant position in the online 
advertising market. 
 
Anti-Counterfeiting Efforts 
--------------------------- 
 
8.. (U) France also developed Europe's first charter against 
counterfeiting on the Internet, signed by Minister of Economy 
Christine Lagarde, major trade federations (Unifab), individual 
corporations (Nike, Chanel, and L'Oreal), and two e-commerce 
companies (Priceminister and 2xmoinscher).  Although nonbinding, the 
charter calls for better methods to detect fakes and to inform 
clients of the e-commerce companies' obligation to guarantee the 
authenticity of goods sold on their sites.  While American giants 
Ebay and Amazon did not sign, the charter demonstrates that the 
government takes an active role in promoting anti-counterfeiting 
efforts. 
 
9.. (SBU) Comment:  France is at the forefront of IPR protection in 
Europe and may, in the case of aggressive three strikes laws, may be 
more stringent than the U.S.  France's national health insurance 
cost containment efforts do not deny adequate and effective IP 
protection to the U.S. pharmaceutical industry, nor do they prevent 
fair and equitable market access.  Post will continue to support 
U.S. pharmaceutical industry efforts to expand markets in France, 
but recommends against France's inclusion on the 2010 Special 301 
Watch List. 
 
PEKALA