French Care for Everyone Means Unwanted Generic Medicine

Anita Manfredi got 18 mud baths, nine massages and 12 spray showers at a spring water spa last month. The French state footed two-thirds of the $1,022 bill.

“The treatment has done me a lot of good,” says Manfredi, a retiree who suffers from arthritis and has taken a three-week retreat at the southern French spa town of Dax for the past four years. “I no longer have flare-ups.”

Manfredi isn’t the only lucky recipient. Homeopathic remedies, support tights, taxi rides to the hospital for country dwellers and vaginal-muscle retraining for new moms are among benefits reimbursed by the health-care branch of France’s social security, known as assurance maladie. Treatments like Manfredi’s are funded to prevent patients from worsening and requiring more expensive drug treatment.

Consider all that a vestige of French exceptionalism. Even as countries from Spain to Greece gut their health-care systems to slash ballooning debt, President Francois Hollande’s government is betting France can preserve its own state-funded insurance by continuing to trim at the edges. And why not? The French health-care system is one that works: the population leads longer lives with less heart disease than in the U.S.

The perks, which foreigners may view as extravagant, are probably here to stay. Hollande, the socialist president elected in May, mostly plans to keep a lid on costs, much like his predecessor Nicolas Sarkozy. His government aims to eke out savings by enforcing the use of generics -- which the French view with suspicion -- and rein in the price of care, medicines and transport.

Tick Tock

Unlike neighboring Spain, France can opt for incremental change because it’s less strapped for cash and its health-care system is still functional, despite a deficit that runs in the billions of euros each year.

Average life expectancy is 81.3 years, at least two years more than in the U.S., according to the Organization for Economic Co-operation and Development. Adults are less likely to live with diabetes or die from heart disease and the rate of infant deaths in 2010, the latest year on record, was almost half that of the U.S., the data shows.

The looming recession, which threatens funding, coupled with a steady increase in chronic diseases like diabetes, which strain finances over time, may soon dent that reality, says Willy Hodin, who heads Groupe PHR, an umbrella organization for 2,200 pharmacies.

“Reform is needed fast,” Hodin says. “The most optimistic believe this system can survive another five to six years. The less optimistic don’t think it will last more than three.”

Trouble is, any attempt to change established rights to education and health-care don’t go down well with the protest- prone local population.

Generic Mistrust

“The French consider health-care a basic right,” says Claude Le Pen, an economist who teaches at Dauphine University in Paris. “Any radical change would create social tensions.”

So Hollande’s government is leading a more targeted charge -- by pushing generic drugs and fighting inflation.

The French so far haven’t embraced generics, with many patients opting to stay with the branded medication they trust.

The rate of generic substitution -- the number of times a patient buys a cheaper copy of the medicine prescribed -- was 71 percent in June last year, Caisse Nationale de l’Assurance Maladie or CNAM, which oversees health-care policy, said in a July report. In Germany, substitution runs as high as 96 percent. The goal is to reach a rate of 85 percent by the end of this year, though it’s requiring some arm-twisting.

Made in China

Patients can no longer refuse the generic offered by pharmacists unless they are willing to pay for the alternative (an advance that Assurance Maladie will later refund). And pharmacists who sell too many branded drugs face trouble.

Jean-Christophe Girardeaux and his mother Jacqueline, who co-own a pharmacy in Airvault, a town of about 3,000 residents in western France, lost their right to offer clients immediate social security reimbursement for one month in September after they failed to sell enough generics.

“The pressure grew slowly, with social security controllers asking us when would we start to substitute like others pharmacists did,” the younger Girardeaux said in a telephone interview. “We’ve had tons of problems, tons of checks.”

A front-page article in newspaper Le Parisien last week voiced doubts about generics’ efficacy by citing patients who had suffered side effects before returning to the brand-name drug equivalent and saying 80 percent of ingredients are imported from Asia, with poor quality control.

Violating Freedom

Girardeaux calls the government’s push for substitution “crazy” -- and his view isn’t unusual. The number of people in favor of generics dropped five points to 57 percent over the past year, according to an Ifop opinion poll published this month by Groupe PHR. Forty-six percent of the 1,009 people surveyed said they felt the increased generics push was a violation of their freedom.

France has also imposed cuts on generics and branded medicines, and drugmakers including Sanofi (SAN) are feeling the pain. Cuts announced in 2011 have cost drugmakers about 1 billion euros, according to LEEM, a trade group representing pharmaceutical companies. Cuts on prescription medicines will help France save another 530 million euros next year, Health Minister Marisol Touraine said Oct. 1.

Assurance Maladie employees were also dispatched to brief doctors on the need to adopt “more reasonable prescription practices,” according to Mathilde Lignot-Leloup, who is responsible for the management and organization of care at the CNAM. Together, the measures resulted in savings of 1 billion euros ($1.32 billion) last year, she says.

Adieu Mercedes

One of the next steps is to cap transport costs.

In rural France, a majority of the travel to hospitals is handled by taxis who bill Assurance Maladie for their service at a discounted rate.

Jonathan Guersoni, a cab driver in the Burgundy region, says 95 percent of his revenue comes from shuttling patients to and from medical centers for treatments ranging from chemotherapy to dialysis. He carries one client, who suffers from renal failure, three times a week in his grey Mercedes E- Class to a hospital 50 kilometers (31 miles) away, earning about 900 euros. Other rides take him as far as Paris or Dijon.

When it’s time to negotiate a new discount in 2014, Guersoni says he fears health authorities will demand 15 percent, more than double the current markdown.

“If we don’t apply these tariffs, we can no longer carry patients,” says Guersoni, who goes by the nickname Joe le Taxi. “I am really worried. I may have to get a cheaper car.”

Because it’s financed by payroll taxes, the French system’s funding swells only during good times. With unemployment at a 13-year high, the government is trying to find other ways to pay for health-care.

Nutella Tax

“The big challenge right now is to obtain even better results for our system with fewer resources,” says Jean-Louis Touraine, a Socialist lawmaker and a former head of the social security’s medical committee. “We have to use our imagination.”

Hence the Nutella amendment, a planned measure that may impose a 300 percent tax on palm oil, the ingredient used in many spreadable foods including the chocolate-hazelnut spread. France also plans to raise taxes on goods deemed unhealthy, such as beer, next year. The proceeds will be used to pay for social security.

‘Explosive Issue’

At first glance, the numbers suggest tinkering to limit costs and lift funding is working well enough.

The cost of medicines reimbursed by the state, stripping out hospitals, was stable for the first time last year, CNAM said on Dec. 6. Public spending on health services and products grew only 1.9 percent between 2000 and 2010, compared with 3.8 percent across the European Union, according to the OECD. And the health-care system’s shortfall next year is projected to be about 5.1 billion euros, down from 11.6 billion in 2010.

“We’ve done a lot of work on the cost front,” says Frederic van Roekeghem, head of the CNAM. “The French are sincerely attached to this system, which we are trying to preserve.”

But the deficit forecast for next year may be too rosy because it’s based on the assumption the economy will grow 0.8 percent, double the rate estimated by the European Commission.

France’s system in its current form “is simply unaffordable, unsustainable, and the manner in which it’s financed is a huge burden on the economy,” says Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. Yet any attempt to change that “is an extremely politically and socially explosive issue,” he says. “The French are not being realistic.”

Even the smallest demands are met with resistance by some patients. Manfredi, who attends the spa in Dax each year free of charge, bemoans measures that charge patients 50 cents for every medicine they buy and one euro for seeing a doctor.

“I have no idea where the euro ends up. It’s not normal,” says Manfredi. “It makes me angry.”

To contact the reporter on this story: Albertina Torsoli in Paris at atorsoli@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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