Warning to Gilead, AbbVie and BMS: France has a new tax for pricey hep C meds

European countries are known for wresting price cuts from drugmakers. Usually, it's a straightforward cost-effectiveness argument. But France has come up with a new strategy: Arm-twisting taxes.

As Reuters reports, the French government says it will tax drugmakers whose pricey hepatitis C treatments pose an undue burden on its healthcare system. The idea--which it calls a "progressive contribution scheme"--would help make sure that patients get access to the latest hep C treatments, officials say.

So here's how it would work: If government spending on hep C drugs tops €450 million ($567 million) this year, France will levy a tax on sales above that cap. Next year, the cap would be €700 million, or about $883 million.

Like many payers, France isn't just worried about the high prices of cutting-edge hep C treatments. It's the overall burden of treating hundreds of thousands of patients. The French price tag on Gilead's ($GILD) Sovaldi--€56,000, or about $70,000--and the expense of its companion meds threatens to cost the healthcare system as much as €1 billion this year by some estimates, Reuters notes.

The new tax will go before French lawmakers this month, with a budget vote due by year-end.

Whether the tax would be calculated company-by-company, or apply to all hep C drugmakers across the board, isn't clear. If it's more individualized, companies producing the next round of new treatments, including Bristol-Myers Squibb ($BMY) and AbbVie ($ABBV), might have more incentive to compete on price in France.

U.S. payers, meanwhile, are hoping that the additional competition from rival meds, with some due for FDA approval later this year, will help push prices down. Apart from that, private insurers and pharmacy benefits managers have been using a variety of tactics to limit spending on the drug, including focusing treatment on the sickest patients.

- read the Reuters news

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