Medical Device Link.

Originally Published EMDM July/August 2003

Med-Tech Market Report

The second-largest market for medical technology in Europe, France is undergoing a period of radical healthcare reform that threatens to have a negative impact on sales of medical devices. With the Social Security system—the main source of funding for healthcare—in deficit, reform of the health insurance system is a priority for the government. Already underway is reform of the hospital sector under the Hôpital 2007 plan, which was published in late 2002. 

Accounting for 16.4% of the European medical technology market, France is estimated to generate sales of around e9 billion, according to Eucomed. Accurate data on the sector are unavailable, notes French industry association SNITEM, whose 200 members account for around 85% of the market.

Despite generating half the sales volume of the German market, France is home to the largest number of medical technology companies. There are an estimated 1500 firms located in France, accounting for 16% of the European total. However, employment levels are comparatively low at around 40,000, accounting for 10.4% of employees in the European industry. This underscores the number of small companies operating in the French market.

With healthcare spending on course to produce a e12 billion deficit for the insurance system this year, the new health minister, Philippe Douste-Blazy, has stepped up the introduction of reforms. Proposals for structural reform of the health insurance system were drafted in June 2004. With a view to reducing spending and increasing revenues, the proposed legislation envisages changes to the reimbursement process, making it tougher for some medical devices to obtain coverage.

A new independent public body, the Haute Autorité de la Santé, will be set up to coordinate healthcare provision policies. Its responsibilities will include the process for evaluating medical technologies and pharmaceuticals for reimbursement. With the focus on containing costs and curbing excessive consumption of healthcare services and products, medical devices deemed to be of limited medical usefulness or insufficiently cost-effective could find themselves not on the reimbursement list.

A slowdown in sales of wound care, homecare products, and life aids is expected to result from government measures to curb consumption by taxing companies’ promotional activities. Targeted because state expenditures on these groups of products have been outpacing growth in spending on other medical devices, manufacturers will face a 5% tax on all promotional expenditures related to reimbursable products within these categories. This comes on top of a 0.24% tax imposed on industry turnover above a threshold, which will be used to help fund the activities of the French regulatory agency AFSSaPS.

While funding in the hospital sector has been boosted by Hôpital 2007, which provided e6 billion investment in facilities over five years, changes in hospital financing will have implications for medical technology. Differences in the funding of public and private hospitals (which provide services under contract to the state healthcare system) have contributed to wide variations in fees. The private hospital federation FHP estimates that fees can be up to 32% lower in the private sector. To redress the imbalance, fixed fees for specific services will be used to calculate hospital reimbursement. The DRG-type system is expected to be fully in place in private hospitals by the end of 2004 and will be phased into public hospitals over the next seven to eight years.

Inclusion of the cost of medical devices in the total reimbursement for medical procedures will put pressure on hospital purchasers to obtain the lowest prices for supplies. Some relief will be afforded to manufacturers of high-cost technologies, such as implantable devices and dialysis equipment, which will be funded separately. While innovative technology is likely to benefit from a more favourable attitude to reimbursing medical advances, expenditures will be constrained by limits placed on the use of such devices.

Copyright ©2004 European Medical Device Manufacturer