The Pharmaceutical Intellectual Property and Competition Law Review: France
The main particularity of the French system is the coexistence of administrative and judicial authorities for the pharmaceutical field. While some issues only concern the administrative authorities, others, such as patent litigation may be brought before judicial authorities. The French system is also characterised by a high degree of specialisation of judges and of counsels on regulatory, patent or competition issues.
Legislative and regulatory framework
i Regulatory Framework
The French Public Health Code and Regulation EC No. 726/2004 of 31 March 2004, laying down EU procedures for the authorisation and supervision of medicinal products for human and veterinary use and establishing a European Medicines Agency, are the main legislation providing for authorisation and pricing.
The French Social Security Code also provides specific rules related to pricing.
These rules set forth provisions related to the authorisation, supervision and pharmacovigilance of medicinal products for human use.
No medicinal product can be placed on the French market unless a marketing authorisation (MA) has been granted according to a national procedure, a centralised procedure or a mutual recognition procedure.
In this context, the French Health Agency (ANSM) assesses the therapeutic claim, the proposed treatment indications and the recommended dosages.
The ANSM also checks the chemical, biological or microbiological quality of the active substance of the product, and assesses the adverse reactions effects linked to its use and their frequency.
After the MA grant, if the laboratory wishes the medicinal product to be reimbursed by the social security system, it must file a request before the French National Authority for Health for examination by the Transparency Commission. The role of this commission is to establish the level of the rendered medical service, which will be a decisive factor in setting the reimbursement rate, as well as the level of improvement in rendered medical service (ASMR), which will be a decisive factor in setting the price of the product. The level of ASMR, depends on the amount of additional effect compared to the best pre-existing strategy at the arrival of this medicinal product, and also on the efficacy and tolerance ratio of the new medicinal product.
After the Transparency Committee has given its opinion on reimbursement, the file is sent to the Economic Committee for Health Products (CEPS).
The Social Security Code provides the rules for fixing the price of medicinal products reimbursable by social security. The sale price is fixed by agreement between the CEPS and the laboratory. The pricing mainly takes into account the ASMR by the medicinal product, the prices of the medicinal products having the same therapeutic aim, the sales volumes planned or observed, and the foreseeable and actual conditions of use of the medicinal product. Medicines that provide neither ASMR nor savings in the cost of medicinal product treatment cannot be accepted for reimbursement by the social security system.
The purchase of medicinal products by public hospitals are subject to regulations provided for by the Public Health Code (approval for local authorities). According to the French Public Procurement Contract Code, this purchase must be made through a public tender. Consequently, the supply of medicinal products to public hospitals is not free; it must comply with the provisions of the French Public Procurement Contract. Public Procurement Contracts are generally concluded for a four-year period.
ii Regulatory litigation
To be marketed in France, a medicinal product (including generic, biological, biosimilar or hybrid medicinal products) must obtain an MA granted by the Director General of the ANSM.
An MA may be challenged by a third party, in particular by the originator manufacturer in the case of a generic or hybrid product. The claim must be lodged before the Administrative Court within two months following either the notification made by the ANSM to inform the holder of the MA for the princeps that an MA has been granted for a generic or hybrid product, or the official publication of the MA (should the claim be lodged by a person other than the holder of the MA for the princeps or should the MA not concern a generic or hybrid medicinal product).
Two main actions may be initiated concomitantly: an action challenging the legality of the MA on the merits and seeking the revocation of the MA and, additionally but not necessarily, emergency proceedings seeking the temporary suspension of the MA.
Two main kinds of illegality could be invoked by the claimant:
- substantive irregularity: these arguments will concern substantive issues affecting the content (direct violation of the rule of law) or the grounds of the decision (legal error, factual error or error in the legal qualification of the facts) or even affecting the purpose of the decision (misuse of power); or
- procedural irregularity: these arguments will concern irregularities that do not affect the content of the administrative decision, but only the manner or form, or both, in which it was prepared and issued. These include issues of jurisdiction, form and procedure.
The average length of such proceedings is 18 to 24 months for the proceedings on the merits and three to four weeks for the emergency proceedings.
iii Patent regulation
French patent law rewards the inventor with an exclusive right of 20 years from the filing date.2
The following acts, when occurring on French territory, constitute patent infringements:3
- making, offering, putting on the market, using, importing, exporting, trans-shipping or holding for such purposes a product that is the subject matter of the patent;
- using a process that is the subject matter of the patent or, when the third party knows, or it is obvious in the circumstances that the use of the process is prohibited without the consent of the owner of the patent, offering the process for use;
- offering, putting on the market, using, importing, exporting, trans-shipping or holding for such purposes a product obtained directly by a process that is the subject matter of the patent; and
- supplying, or offering to supply to a person other than a person entitled to work the patented invention, the means of implementing the invention with respect to an essential element thereof where such third party knows, or it is obvious from the circumstances, that such means are suitable and intended for implementing the invention.
Exceptions to patent rights in France are listed in Article L.613-5 of the IP Code. In particular, French law provides:
- a research exemption at Article L.613-5(b) that aims at enabling scientific research during patent validity and covers all patents, including pharmaceutical patents;
- the 'Bolar exemption' (Article L.613-5(d) of the French IP Code), which provides that the rights conferred by the patent do not extend to studies and trials required for the purpose of obtaining an MA for a medicinal product, as well as the acts necessary for carrying out those studies and trials and for obtaining the MA. This provision is understood as being broad in scope, applying to work conducted for authorisations of generic and novel drugs and covering acts performed to obtain an MA for any medicinal products, and MA granted anywhere (including countries outside the EU). It is clearly an incentive to perform research in France.
The starting point of the statute of limitation for patents infringement actions (as the industrial property titles) is 'five years from the day on which a right holder knew or should have known the last fact enabling him/her to exercise this right'.4 Nullity actions, however, are not time-barred.5
iv Patent litigation
Pharmaceutical patent and supplementary protection certificates (SPCs) litigation are increasing each year in France. This past 10 years, French courts have rendered around 170 decisions on pharmaceutical patents.6
These cases are handled by a specialised IP court. Litigation concerns both patents and SPCs, for marketed products but also for products about-to-be launched. Compound patents are rarely litigated; litigation focuses more on life-cycle management patents and SPCs (formulation, dosage regimen, process, combination, second medical use, etc.). A preliminary injunction (PI) litigation generally lasts from a few days (in exceptional circumstances) to two to three months. An action on the merits usually takes from 18 to 30 months.
The top six plaintiffs in France are AstraZeneca, Teva santé, Mylan, Biogaran, MSD and Ethypharm.7
Pursuant to a recent law,8 opposition may be filed against any French patent before the French Patent Office (first instance) and the Paris Court of Appeal (appeal). This applies to any French patent with a mention of its grant published in the French Official Bulletin of Industrial Property as of 1 April 2020.
v Encouragement of innovation
From a fiscal point of view, the best-known French tax incentive is the R&D Tax Credit, which allows companies to benefit from a tax relief that can be offset against corporate income tax for three years, and from a refund after this period. This credit is equal to 30 per cent of the annual R&D expenses incurred by the company up to €100 million and 5 per cent over this limit,9 including:
- the staff expenditure for researchers and research technicians;
- expenses incurred for clinical trials;10
- epidemiological studies carried out for research purposes but not required by the state authorities;11
- certain subcontracted research expenditures such as the fees charged by subcontractors agreed by the R&D Ministry for clinical trials (including when these expenses are incurred in other European Union countries); and
- patent expenses, with supporting documentation if expenses exceed €2 million.
Furthermore, a new IP tax regime was enacted in France for the taxation of licence revenue (royalties, licence fees from licences and sublicences, capital gain from the disposal of assets held for at least two years and transferred to an unrelated party) at a 10 per cent rate if the eligible IP assets and the eligible expenses are located in France. The regime may be elected for eligible assets (including patents, the related SPC and industrial manufacturing processes directly linked to a patent), or for products or family of products. The eligible net income is calculated after the deduction of expenses directly related to the IP asset.
Other measures also aim to support the R&D efforts made by innovative companies. Thus, R&D expenses incurred for the preparation of MA files (including subcontracting expenses when they cannot be assimilated to the acquisition of scientific and technical files, which must be capitalised)12 as well as patent filing expenses13 are considered as an inseparable extension of scientific and technical research operations, and as such benefit from the option provided between capitalisation of the expenses incurred, or immediate deduction, which is advantageous in terms of cash flow for companies.14
From a competition point of view, French competition law does not provide for specific rules regarding the pharmaceutical sector. Whether they involve anticompetitive practices such as resale price maintenance, disparagement or 'pay-for-delay' agreements, all are covered by the main provisions of competition law: for instance, Articles L.420-1 and L.420-2 of the French Commercial Code. For merger control, there are not specific rules for the pharmaceutical sector. General principles of Articles L.430-1 to L.430-10 of the French Commercial Code apply for merger control in France.
i From a patent point of view
There is no patent linkage in France: a generic company can obtain an MA, a reimbursement price and can launch its product before the expiration of the originator company patent rights; and the grant of an MA is not an infringing act.
Nevertheless, an originator company can inform the CEPS of the existence of one or more patents or SPCs (and expiration dates) protecting its specialities (the speciality must be either reimbursed or approved for hospital use). These statements are available to any pharmaceutical company, including generic laboratories that so request.21
No request for reimbursement of a generic speciality shall be performed more than six months before the declared date of termination of intellectual property rights if it has been notified to the CEPS. However, a pharmaceutical laboratory that considers that it can market a generic speciality without infringing the declared rights may apply for the registration of the corresponding generic speciality. In this case, it must inform the CEPS, which shall inform the originator company of the speciality referred in the list and shall implement the registration procedure. The CEPS will inform the patentee of the price request (only if said patentee has listed its IP rights before it).
Case law mentions that the MA grant, and the inscription of the generic into the list of reimbursable medicines, are not infringing acts. However, if the price request to the CEPS takes place more than six months prior to the expiration of the IP right, it may constitute a sufficient 'imminent threat' to obtain a PI.
ii From a regulatory point of view
For a generic or hybrid product, the MA may be granted before the expiration of the intellectual property rights attached to the reference speciality concerned. The applicant for this authorisation informs the holder of these rights concomitantly with the filing of the application.
The protection of competition comes under the jurisdiction of the French Competition Authority (FCA) and the Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF).
The FCA is an independent administrative authority. It can conduct investigations, impose sanctions and injunctions on infringing companies, review mergers, and publish opinions and recommendations on competition matters on its own initiative or at the request of public authorities. Legal action could be brought before the FCA by the Minister for the Economy, companies, local authorities, professional organisations and bodies, trade unions, consumer associations and mayors within the framework of their prerogatives in the field of commercial urban policy.
Within the Ministry of the Economy, the DGCCRF ensures the functioning of markets and the benefits for consumers and businesses. The DGCCRF (and its regional branches) acts for the respect of competition rules, economic protection of consumers, and the safety and conformity of products and services. It communicates indications of competition malfunctions to the FCA and is in charge of the investigation if the FCA fails to do so. It has the power to issue injunctions and to settle anticompetitive practices of local scope and monitors competition in all areas of public procurement (public contracts, public service delegations, etc.).
The FCA has conducted various sectorial inquiries in the pharmaceutical field and rendered numerous decisions on this sector. For instance, the FCA published in 2019 a sectorial inquiry regarding the distribution of medicinal products and the chemical pathology field.22
In January 2019, the FCA concluded that the legislative and regulatory framework applying to pharmacists, biologists and intermediaries in the medicinal products distribution chain, unduly restricts, on certain well-identified points, their capacity for development. Therefore, the FCA issued in its opinion proposals to support the modernisation of pharmacies and biomedical laboratories and thus, to enable them to seize all the available development opportunities. These recommendations considered the legitimate public health requirements and observations made by healthcare professionals and public authorities, including the Ministry of Health.
A merger can involve the merger of two previously independent undertakings, the acquisition of control of one undertaking by another or the creation of a full-function joint venture.
Mergers that do not have a community dimension and exceed the following thresholds are subject to French merger control:23
- the combined worldwide turnover exclusive of tax of all the undertakings party to the concentration exceeds €150 million;
- the combined worldwide turnover exclusive of tax of at least two of the undertakings concerned in France exceeds €50 million; or
- the operation does not fall within the jurisdiction of the European Union.
Two practices can be identified in the pharmaceutical sector: vertical and horizontal (cartel) anticompetitive agreements and abuse of dominant position.
The most current practices are usually observed with dominant undertakings and with specific practices such as disparagement, pay-for-delay agreements and predatory prices. There is no recent decision dealing with the pharmaceutical sector (the last was rendered in 2017 and dealt with disparagement).24
Decision No. 17-D-25 of 20 December 2017 dealt with practices implemented in fentanyl transdermal systems. A generic laboratory (Ratiopharm), which wished to market a fentanyl generic, brought an action before the FCA.
The FCA imposed a fine of €25 million to the originator company (Janssen-Cilag) for having first delayed and then limited the development of generics of its drug.
In a decision rendered in 2019,25 the Court of Appeal confirmed the decision of the FCA and in particular the possibility for the FCA to assess the merits, from a competition law standpoint, of a pharmaceutical firm's intervention and communications with health regulators. It further pointed out that this prerogative does not amount to granting the FCA the ability to challenge the legality of health authorities' decisions.
On the contrary, in this case, the finding of an abuse was based on the conclusion that Janssen's exchanges with the ANSM had nothing to do with a scientific debate, which remains the prerogative of the ANSM, but merely aimed at reopening a legal debate that had in fact already been closed. As there was nothing left to be discussed, the Court considered that the FCA was right to conclude that Janssen's actions, far from being motivated by public health considerations, were in fact only aimed at delaying generic entry and preserving its position on the market.
Outlook and conclusions
From a competition law point of view, there have been no recent decisions in France. The pharmaceutical sector is subject to the general provisions of French competition law, which is harmonised at the EU level.
On regulatory and patent aspects, usual activity has been going on, with no major discrepancy between the French and EU approaches. From a patent litigation point of view, the vast majority of pharmaceutical litigation cases across Europe have a French branch; French courts deal with numerous pharmaceutical cases, and render high-quality decisions.
1 François Pochart is a partner at August Debouzy.
2 Article L.611-2 French IP Code.
3 Articles L.613-3 and L.613-4 of the French IP Code.
4 Article L.615-8 French IP Code.
5 Article L.615-8-1 French IP Code.
6 Darts Insights: research of patent cases (judgments and decisions only) in France between 31 December 2010 and 22 June 2020, and in the pharmaceutical field.
7 Darts Insights: research of patent cases (judgments and decisions only) in France between 31 December 2010 and 22 June 2020, and in the pharmaceutical field.
8 The PACTE law for the growth and transformation of companies on 11 April 2019, passed on 22 May 2019.
9 Article 244 quater B of the French Tax Code.
10 French Tax Authorities guidelines BOI-BIC-RICI-10-10-10-20 Nos. 100 and 440.
11 Administrative Guidelines BOI-BIC-RICI-10-10-10-20 No. 460.
12 CE, 8e et 9e ss-sect., 30 October 1995, req. No. 154403 Sté Pierre Fabre SA.
13 CE, 4 March 1996, req. No. 150223, SA Laboratoires Syntex.
14 Article 236-I of the French Tax Code; French Tax Authorities guidelines BOI-BIC-CHG-20-30-30.
15 Article 1635 bis AE of the French Tax Code.
16 Guidelines of the INPI, Part C.VII.2.1.3 or Articles L.611-11 and L611-16 of the French IP code.
17 Paris Court of Appeal, 26 May 1983, Ela Medical.
18 Article L.611-3 French IP Code.
19 Article 13 of Reg. 469/2009 as amended by Reg. 2019/933.
20 Article 13.3 of Reg. 469/2009 and 36 of Reg. 1901/2006.
21 Article 3 of the framework agreement between the CEPS and the pharmaceutical companies. In the same way, Article L.5121-10 of the French Public Health Code stipulates that the holder of an MA must inform the Director General of the ANSM.
23 Article L.430-2 of the French Commercial Code.
24 See also Decision No. 13-D-21 of 18 December 2013 (Schering-Plough-Subutex) relating to practices implemented on the French market of the high-dose buprenorphine marketed in cities; and Decision No. 13-D-11 of 14 May 2013 (Sanofi-Aventis-Plavix) on practices implemented in the pharmaceutical sector.
25 Paris Court of Appeal, Decision, div. 5 Ch 7, Judgment, 11 July 2019.