(French news in
February 2000, Monthly, Issue No.
issues available for on-line consultation)
A revised Foreword to FRANCE NOW
French population: 1999
The day after pill
Region-wise Population 1990-99
The 35-hour week
Fine-tuning unemployment doles for partial or
Glaxo Wellcome and SmithKline Beecham merge
The Bank of France turns 200
Coface goes public
Centre Pompidou opens again
Reform of French Justice Cancelled
Keeping chemists down
Social Security Financing Act
Medef huffs and puffs
Le mano gris
The Indo-French thought group
Enter Florence Parly into Sautter's old shoes
Looking after the French expatriates
Permitting foreigners to teach in medical schools -
The INSEE (France's Statistical and
Economic Research Institute) has published the results
of the census of the French population in 1999. The
total works out to 60.2 million, up from 58.1 million
in 1990. Out of today's 60.2 million, 58.5 million
live in mainland France (including 260,000 in Corsica)
and 1.7 million live in Overseas Departments
(Guadeloupe, Guyana, Martinique and Réunion).
The region with the highest population is Ile de
France, almost 11 million, about 18% of the total
French population. It includes the city and department
of Paris which has a population of 2.1 million. Ile de
France is followed by Rhone Alpes (main city: Lyon),
Provence-Alpes-Côte-d'Azur (Marseille, Nice),
Nord-Pas-de-Calais (Lille) and Pays-de-la-Loire
The fastest growth rate, since 1990, has been in
Guyana, 37% over nine years and in the overseas
departments. In mainland France, growth rates are
significantly lower. Among the regions,
Languedoc-Rousillon at 8.5% growth over nine years is
followed by Alsace, 6.8% over the same period. Within
the regions, specific departments may have grown
faster elsewhere. Haute-Garonne (Toulouse) in the
Midi-Pyrénées grew at 13%, faster than the 12.8%
growth in Herault Department (Montpellier) in the
Languedoc-Roussillon region. Other double-digit growth
departments were Haute-Savoie (Annecy), Seine-et-Marne
(near Paris) and Var (Toulon).
Three regions have even experienced a negative
growth rate: Limousin (including Limoges) and Auvergne
(including Clermont-Ferrand) located right in the
middle of France and Champagne-Ardennes, slightly
further North. At departmental level, 23 out of
France's hundred departments saw a negative growth
rate over the nine years. The highest depopulation was
in Creuse (in Limousin) and Cantal (in Auvergne). Even
Paris saw a negative growth rate.
Region-wise Population 1990-99
('90 to '99)
('90 to '99)
||Sub-total Mainland France
||Sub-total Overseas Departments
The 35-hour week
It has finally come. Not for
all, but for many. The 35-hour week has arrived for
all enterprises having more than 20 salaried employees.
As usual, some sectors will be excluded, but they will
be the exceptions that confirm the rule.
Since 1997, the government has been talking about
this. It has taken two and a half years to implement
this much. It will take another two years before the
small enterprises will also have to restrict the
work-week to 35 hours.
this was done to stimulate employment. Rather, to
share the employment with the unemployed. Not without
opposition from employers. Because they could gloat in
the situation where they could tell their employees
that there were millions without a job and that the
employees would do well not to ask for a raise. And
opposition from incompetent managers who could not
figure out how they would manage with more people and
less time per person. The State subsidised consultancy
services to these managers explaining how the 35-hour
week would work. There was also opposition from all
who pointed out that the cost to the company would go
Initially, since June 1998, the contractual
parties, the employers and the employees, were asked
to negotiate the manner of reducing the work-week. The
government even started a system of exoneration of
social security charges as an incentive to those who
reduced the work-time, which actually meant a
reduction in the total cost of enterprises. Half the
enterprises responded to the incentives and either
reduced the work-time or are in the process of
negotiating this. Two and a half million salaried
people have been covered by about 20000 individual
corporate accords and about a hundred accords
conducted by branch of activity. The total private
sector employment is around 14 million.
Already, about 150,000 jobs are attributed to the
progress made till December 1999. 85% of this is due
to new jobs created and the balance 15% due to jobs
preserved (which would otherwise have been lost). Most
employees are happy with the quality improvement in
their life and work situation.
This is the background to the new law, passed last
month, heralded by that of June 1998 and awaited by
the work populace. It takes into account the results
of all the experiments conducted during the initial
incentive-based phase. And now it makes it obligatory
for all but the smallest of companies (less than 20
employees) to establish a 35-hour week. A one-year
adaptation period is granted with a special regime of
supplementary hours. A special treatment is also made
for managers and for those working part-time.
Moreover, it seeks to make permanent a system of
reduction of employers' share of social security for
all those who have reduced the work week to 35 hours.
This means that large enterprises would have a
comparative labour cost advantage vis-a-vis the small
enterprise who wishes to exploit its staff for 39
hours every week! The latter should therefore think
seriously and get into line as soon as possible,
instead of holding out obsessively till 2002. This
exoneration is a supplementary exoneration to the one
made in the law for financing social security for
those earning less than 1.8 times the SMIC.
For enterprises with less than 50 salaried
employees, the accords are by branch. For larger ones,
the accords are for each individual enterprise.
For those earning the SMIC, on full time or
part-time, the government has found a way of ensuring
that they get the same monthly wage as earlier.
The law was challenged before the Constitutional
Court which struck down some of its provisions. First,
the provision requiring all enterprises to first try
out a 35-hour week proposal before any layoffs, was
declared unconstitutional because the legislator had
neither determined what constituted the "trying
out" nor what would be the penalty for not doing
A tax on supplementary hours worked to fund the
reduction of social security charges was considered to
be unequal treatment of workers. Those working
supplementary hours were to be paid a 25% bonus if
they were on a 35-hour week but only a 15% bonus if
they were on a 39-hour week, the difference of 10%
going into a fund to finance the reduction of social
security charges. The employer paid 25% in both cases,
but the workers of the 39-hour week worked longer and
effectively paid the tax by getting less for their
supplementary hours. The annulling of this provision
means a loss of FF 7 billion of expected receipts and
this would create a disequilibrium in the Social
Security Financing Act which had been counting on this
receipt. President Chirac therefore hesitated before
signing the law.
Finally, the disposition requiring that all
contracts signed since June 1998 which do not respect
some of the provisions of the second law should be
modified within a year, was annulled since the first
contract was legal when it was signed and remains
legal till a new accord takes its place.
Next month's France Now will include a resumé of
the details of the law.
Reform of French Justice
In 1996, French President
Jacques Chirac (RPR, right-wing) initiated a movement
to reform French Judiciary. The actual reform was put
into motion by Socialists in 1997. Two laws have
already been passed: one, in December 1998, stimulated
the development of Departmental Counsels to aid poorer
people to access justice; and a second, in June 1999,
allowed the prosecutors to use alternative procedures,
instead of systematically requiring the intervention
of an examining judge.
A critical factor to the reform was the delegation
of increased powers to the Conseil Supérieur de la
Magistrature (CSM), reducing the control of the
Minister of Justice. Since the CSM is constituted by
the constitution, a constitutional reform was required
to be voted in requiring a three-fifths majority of
the combined assemblies after the amendment bill was
approved by the two houses independently. While the
socialists voted this in the National Assembly, the
opposition controlled the Senate and managed to dilute
the reform to a restructuring of the CSM and, if
anything, reducing the power of the magistrates.
It would seem logical that the Senators would vote
for the law which they had amended in the Senate. But
no, the opposition decided that their role was to play
the opposition and defeat any bill of the ruling party,
even if the President is a leader of the opposition
party. In fact, Mme Alliot-Marie has clearly distanced
herself from Jacques Chirac to indicate her opposition
to the law.
The position of the opposition is considered "stupid"
by some political analysts. But Mme Alliot-Marie, the
new President of the RPR, needs to take into account
various factors. One, the opposition has to oppose.
Second, the opposition lost credibility in 1993-97 due
to the Chirac-Juppé duo systematically bringing in
socialist measures when voted in on a right-wing
ticket, trying to show that they were fairly central,
in order to crowd out a future Socialist return. This
backfired, the RPR lost its right-wing support, and
the Socialists came back to power. Now, for the next
legislative elections, the RPR wants to distance its
image from both Juppé and Chirac. Third, if the
opposition can create enough chaos, they can undermine
the credibility of the Socialists.
Why did the Socialists accept to withdraw the
Amendment? First, there was lack of support from some
coalition partners. This, however, could have been
whipped in or bought out. Second, the diluted
Constitutional Amendment (see our December 1999 issue)
reduced the power of judges, instead of increasing it,
as was initially proposed. All the proposed laws which
are to follow (see below) also go in this direction.
So, the overall balance would not be maintained. Even
the nomination of the prosecutors was not conferred to
the CSM; only the possibility of confirming was. The
educated French public would soon have noted that by
reducing the power of magistrates, in all the laws,
the French politician is trying to keep himself above
the law. Already considered corrupt, this absolute and
relative reduction of the power of the justice may have
had repercussions in the next elections.
What about Jacques Chirac? First, the failure of
the constitutional amendment was obvious. So, Jacques
Chirac decided to propose its cancellation. Lionel
Jospin agreed and consented to countersign the
cancellation decree. Second, Jacques Chirac is aware
that his popularity increases if he does nothing. To
be reelected for a second term, this is all he needs
to do. The French are quite happy, perhaps amused, to
have him as their President, at least to provide a
symbolic counterweight to Socialist abuse of unbridled
power, perceived from the Mitterrand era. This "maintain
status quo" attitude also satisfies the vested
interests who are merely keen that the boat should not
be rocked and that their business continues as usual.
They would therefore back him for Presidency in the
Since this amendment was a foundation stone to the
wider reforms of French justice, many other aspects of
the reform will now be put aside, because the whole
cannot stand up if a part of the foundation is eroded.
The other proposals are:
1. Currently, justice is often perceived as a
political decision. The Minister of Justice can
intervene and direct the prosecutors. A bill proposes
that the Minister of Justice should no longer be
empowered to give directions for specific individual
cases. He would, of course, be allowed to give general
directions and orientations to apply to all cases. As
a counter party to their increased power, if the
Public Prosecutors classify a case, they must notify
the plaintiff indicating the reasons. Plaintiffs could
then appeal to the General Prosecutor. A major step
for the foundation for this measure required that the
nomination of the General Prosecutor be independent of
the Minister of Justice and be made by the CSM. But
this was already diluted by the Senate to
"confirmation by the CSM". Without the
complete independence of the General Prosecutors, the
proposed law loses a large part of its force.
2. The presumption of innocence is proposed to be
widened. Currently, an examining judge can detain an
accused by an arrest warrant. This power is proposed
to be transferred to a special judge for provisional
detention. At the same time, the suspects and civil
parties can now ask the examining judge to conduct all
the operations that they consider necessary. The
duration of the examination has to be fixed in
advance. Most important, the accused can have an
opportunity to consult a lawyer from the first hour
during which he is detained. The text also prohibits
photographing people in handcuffs and undignified
positions. This text has been passed by the Assembly
and is pending in the Senate.
3. A bill lying with the Assembly permits
plaintiffs and defendants to appeal to a commission
against the behaviour or impartiality of the
Social Security Financing
The law for financing this
year's social security has been passed. One article
and parts of two others voted by Parliament were
declared unconstitutional by the Supreme
Constitutional Court (Conseil constitutionnel). The
law contains 44 articles divided into two main
chapters: resources and expenses.
The two tables summarise the total receipts and
expenses of the different regimes.
Breakdown of receipts in
billions of French Francs
A total surplus of about FF 21 billion is expected
in 2000 as compared with a budgeted surplus of FF 10
billion for 1999.
The breakdown of total
expenses in billions of French Francs
|Illness-maternity, invalidity, death
Some of the provisions of the act are listed below.
New or increased taxes and contributions
* A "Fund for the financing of the Reform of
the Employers' social security contributions" has
been created. It is expected that the fund will have
expenses of around FF 100 billion per year. For 2000,
the budgeted expense is about FF 65 billion. Of this,
FF 40 billion is for existing exonerations of social
security charges related to employees with low
salaries. The balance FF 25 billion pertains to
incentives given for employers to shift to the 35-hour
week and for new reduction of social security charges
in view of a "Reform".
The receipts of this fund would include a fraction
of the duty on tobacco (FF 40 billion), the new social
contribution on the profits of enterprises, (FF 4
billion), a tax on polluting activities (FF 3
billion), 47% of the duty on alcohol, and the balance
would be State contributions of various sorts.
* The employers already receive an exoneration of
social security paid on those earning low salaries, up
to 1.3 times the SMIC. This has been extended to those
earning up to 1.8 times the SMIC. For this, the
government needs to find funds to replace
contribution. So it has decided to impose a surtax,
named "Social Contribution" which would be
3.3% of the corporate income tax. This would apply
only to enterprises with a turnover of more than FF 50
million. Neither the forfeit tax not franking tax
credits can be knocked off against this contribution.
However, an abatement up to FF 5 million has been
The government expects to obtain FF 4 billion from
this measure and this will be transferred to the new
"Fund for the financing of the Reform of the
Employers' social security contributions".
* Last year, the government introduced the General
Tax on Polluting Activities. Now, the base of this tax
is being enlarged to include detergents, pesticides
and specified polluting installations. The entire
receipts of the tax (expected at about FF 3 billion)
are being earmarked to the "Fund for the
financing of the Reform of the Employers' social
* The receipts of the CSG and 40% of the duty on
alcohol are given to the Medical Insurance Funds to
compensate them for the reduction in the employees'
contribution to social security at the time of
introducing the CSG. The basis of allocating the money
has been simplified and the percentage of duty on
alcohol given to medical insurance funds is being
raised to 45% in view of the introduction of the
Universal Medical Coverage.
* The" Social solidarity contribution on
Companies" is a tax of 0.13% on the turnover of
enterprises whose turnover exceeds FF 5 million. The
proceeds are given to the Medical Insurance and Old
Age insurance funds of non-salaried non-agricultural
workers. A penalty is charged if the tax is paid late.
Now, permission has been given to the Director of the
taxing organism to waive part or all of the penalties.
Encouraging new enterprises
* The medical insurance contribution of
non-salaried non-agricultural workers and the old-age
insurance of artisans, industrials and commercial
professionals is based on their income. During the
first two years of their activity the income cannot be
known and the tax base is estimated on the basis of
forfeits. These forfeit bases are provisions and are
actualised later. However, if the base is estimated at
a very high level, it discourages entrepreneurs from
entering the market, since there will be high medical
and old-age contributions to be paid, while the actual
situation in the first two years is likely to be a
Now, it has been decreed that this provisional
tax-base should be restricted to 18 times the monthly
family welfare allowances base during the first year
and to 27 times this base for the second year.
* Young farmers (18 to 40 years old) have been
granted a partial reduction of their social security
contributions for the first three years as long as
their farm holding is less than a specified size. The
reduction is 65% during the first year, 55% during the
second and 35% during the third. Nevertheless, a
ceiling on reductions and a minimum contribution will
be fixed by decree.
The four principal sections concern the different
branches of social security (family welfare, old-age,
A. Family welfare
* The base for calculating family welfare
allowances is indexed to the expected increase in the
consumer price index (including tobacco), actualised a
year later. For 1999, the expected increase was 1.2%
but the actual increase was about 0.5%. So, the
indexed increase for 2000 has to be lowered by 0.7%.
The increase in the CPI for 2000 is expected at 0.9%.
The indexing for the base for social security should
be reduced by 0.7% to stand at 0.2%. Nevertheless, the
government has decided to increase this indexation by
0.3% to a total of 0.5% so that lower-income families
share the benefits of economic growth.
* To benefit from any of the family welfare
allowances, the child is subject to a common age
limit. This limit is determined by regulation and is
currently at 20 years. The parliament has decided to
increase the age limit to 21 years for two of the
allowances (complementary allowance and housing
allowance) for children born on or after 1.1.1980.
* Last year a reserve fund had been created within
the fund for old-age solidarity (FSV) to take care of
France's major social security headache: more and more
retired people drawing pension thanks to increase in
life-span and reduction of retirement age. The excess
of the Social Solidarity Contribution of Companies is
poured into this reserve fund. This reserve fund is
also financed by surpluses from the solidarity section
of the FSV. Now, the surpluses from the funds managed
by the CNAVTS (the old-age fund for salaried workers)
are also going to be placed in this reserve fund. FF 3
billion are also being taken exceptionally for 1999
from the CDC (Caisse des Dépôts et Consignations).
* The base for calculating old-age allowances is
also indexed on the expected increase in the consumer
price index (including tobacco), actualised a year
later. For 1999, the expected increase was 1.2% but
the actual increase was about 0.5%. So, the indexed
increase for 2000 has to be lowered by 0.7%. The
expected increase in the CPI for 2000 is 0.9%. The
indexing for the base for old-age allowances should be
reduced by 0.7% to stand at 0.2%. Nevertheless, the
government has decided to increase this indexation by
0.3% to a total of 0.5% so that lower-income families
share the benefits of economic growth.
* In view of the unemployment problem (2.7 million
officially unemployed), retired people drawing a
pension are not allowed to work for remuneration. This
provision is being continued for the next year.
Moreover, if the provision is not extended, working
people could start asking for their retirement
benefits from the age of sixty, causing a huge funding
problem for the old-age branch of social security.
A commission is examining the issue to come out
with a comprehensive law on the subject of retirement,
pre-retirement schemes and working alternatives,
instead of the annual extension of the prohibition of
cumulating work and pension.
* 1700 members of the Geometricians and
Agricultural Experts Fund find themselves in an ageing
profile, unable to assure their future complementary
pensions. The government has therefore decided, with
the consent of all the various funds, to merge them
into a larger (63000 members) and more solid
complementary fund of liberal professions. However,
some aid from the basic pension fund of liberal
professionals to the complementary fund would still be
needed. The law has allowed this transfer.
Medical insurance expenses for all the basic
compulsory regimes are budgeted at FF 658.3 billion
for 2000, an increase of 4.5% over the budgeted 1999
expenses and 2.5% over the actual expenses of 1999
estimated at FF 643 billion. The breakdown of this
includes FF 288 billion for private consultancy
practices, FF 253 billion for public hospitals, FF 42
billion for private clinics, FF 45 billion for
socio-medical expenses and FF 15 billion for expenses
abroad (mostly in the overseas departments).
* The State pays for the Free and Anonymous
Detection of Illnesses (such as AIDS) costing about FF
27 million per year and the Centres for Family
Planning and Education costing FF 3 million per year.
For simplification, these are being transferred to the
medical insurance organisations.
* Since 1970, the French State pays for the fight
against alcoholism and drug addiction, including
sanitary relief accorded to alcoholics and addicts.
From January 2000, the cost of the detox treatment
will be assumed by Medical Insurance organisations.
This includes the cost of the patient living in the
treatment centre. The patient is not charged anything
for the treatment. The State will reimburse the cost
by way of an annual transfer to the Medical Insurance
funds. The transfers are expected to cost FF 73
million. The State will continue to finance the rest
of the expense, such as equipment required for the
treatment centres, directly.
* FF 2.5 billion of the medical insurance
expenditure, is accounted by health centres (centres
de santé). Health centres are essentially day care
centres. There are about 1,454 health centres. Of
these 29 are medical centres, 377 are dental centres,
691 are nursing centres and 357 are polyvalent. In
all, they employ 15000 medical and paramedical staff
and another 5000 people from other disciplines.
Till now, they could be managed by any legal
entity: associations, mutual funds, congregations,
social security funds, collectivities, commercial
enterprises, foundations, hospitals, etc. But from now
on, they have to be managed either by nonprofit
organisations or by territorial collectivities. They
have to be certified by an administrative authority to
be authorised to dispense medical treatment. The 20 to
25 existing profit-making centres, run by insurance
companies, have been allowed to continue.
The Medical Insurance funds provide the health
centres a subsidy to repay a part of their medical
insurance contribution for the professionals they
employ. This is similar to the exemption for doctors.
But profit-making centres will not get this benefit.
In return, the health centres exempt their patients
from paying the part which in any case will be
reimbursed to the patient by the medical insurance
organisation. This eases the paperwork of the Medical
Funds who provide a global cheque to the Health
Centers instead of a payment to each patient.
The relationship between the health centres and the
medical insurance funds will be determined by a
national accord. This accord will determine the
obligations of each party, including conforming to
nationally determined tariffs for the different
medical acts. The accord will also determine
preventive action to be taken by the health centres
and how they are to be reimbursed for this. The
national accord will be applied to those health
centres who wish to adhere to it.
* Last year, the government had started a system of
conventions with doctors (generalists and
specialists), organising rules of good conduct and
malpractices, and including a global budget for the
expense linked to the profession.
This year, the government is extending this type of
budgetary control to paramedical staff, notably
nurses, massage-physiotherapists and laboratory
analysts. A global expense will be fixed for all the
medical professions together. Within this global
budget, the different parties and funds can decide the
allocation for each branch, region, etc. The
government will review the actual expense against the
budget at the end of every four months (April and
August). Individual tariffs and the total budget are
no longer decided contractually between the doctors
and the funds: they will now be unilaterally imposed
by the funds or by the government. Doctors who are not
bound by the convention have to nevertheless apply the
regulated tariff to beneficiaries of the Universal
Medical Coverage Scheme. They may also be subjected to
an individual ceiling for each act or an annual
ceiling for all excesses from the regulated tariff.
The medical transportation (eg., ambulances)
expense is also being reorganised to include rates for
each act of transport, with a global budget.
A special feature is the creation of a medical
network of different specialists who could be called
in to treat chronic and serious illnesses. A global
charge could be determined for the illness and each
participant could be paid on a contracted rate for the
illness, instead of being paid for each act.
New experimental forms of remuneration are also
permitted to doctors for public health services,
preventive care, and their continuing education.
* The Medical Insurance funds are also permitted to
reduce the quotation relating to any medical or
paramedical act by up to 20%. This is a new measure
expected to reduce the total medical expense, in
addition to the two existing measures: reducing
medical tariffs and reducing unnecessary acts.
* For doctors, special efforts are being made to
control the value of prescriptions. On the average, a
doctor costs FF 1.6 million of which a third are his
honorariums and the rest are the medicines he
prescribes. The latter have been rising at 5%, much
faster than the honorariums (1%). Last year, the
government had tried to penalise a doctor for
exceeding budget limits on the growth of his
honorarium and prescriptions. The Conseil d'Etat had
declared this unconstitutional. Otherwise, FF 6.7
billion of the excess prescriptions would have formed
the basis of a penalty. This year, therefore, the
government is doing the reverse. An incentive will be
provided to the doctor on the basis of savings made on
* Doctors are reimbursed part of their
contributions for medical insurance, old-age and
family welfare. The paramedical staff is reimbursed
only for their contributions to medical insurance.
These reimbursements may be increased if the medical
staff agree to certain good practices. These practices
which the medical staff have to observe, compulsorily,
include evaluation, continuing education, letting the
medical control authority supervise their activity,
prescribing bulk drugs instead of branded medicines,
desisting from unnecessary and illegal practices, and
observing the recommendations of good practices.
Optional features include creating new networks of
professionals, committing to certain activity levels
and allowing the Medical Insurance Funds to direct his
activities. In short, the increased reimbursement of
social security costs to doctors is in return for
sacrificing their independence.
* For according an employee leave on medical
grounds, the doctor now has to explain why the
employee should be accorded this leave. He has to do
this also for prescribing reimbursable transport.
* 5% of French people account for half the medical
expenses, 10% for 60% and 25% for 80% of the expenses.
This means that some sick people are consuming a lot,
paid by everyone else. An average French person
consumes FF 12,000 per year of medicines. The 10%
large consumers are those who consume over FF 16,000
per year, usually consuming an average of FF 48,000 of
medical care. Most large consumers are old people with
many diseases or young people with serious ailments.
Half of the large consumers are reimbursed up to 100%,
in view of their illness. But the other half need to
be examined and their expense reduced, if possible.
From 1.1.2000, to control people who are large
consumers of medicines, if the expenses presented for
reimbursement seem particularly high, the medical
control services of the Medical Insurance Fund can
call the patient and propose an appropriate treatment
in consultation with the patient's doctor.
* A "fund to help the quality of care given by
private practitioners' consultancies" was created
last year with a budget of FF 500 million to help
develop new networks and practices leading to
improvement in medicare. The fund has not yet started
operating. Nevertheless, another FF 500 million is
being poured in.
One wonders if the excess of the taxpayers money is
being hidden in these non-operational funds, instead
of being refunded to the taxpayer through lower taxes.
* Non-certified pharmaceutical enterprises who have
grown faster than the budgeted growth in medical
expenses have to pay a tax. The rate of tax is
determined by the rate of budgeted growth. It was
supposed to be the rate of budgeted growth vis-a-vis
previous year budget. This would have been 4.5%. At
this growth rate, a tax of 2.3% was supposed to be
imposed on non-certified pharmaceutical companies. But
the government decided to limit this to a comparison
of budget 2000 with expected expenses of 1999. Even
this would have been 2.5%. The government then decided
to take into account only private practitioners'
consultancy expenses, which are growing only at 2%.
For 2000, the tax would therefore be 1.3%, that
associated with taking the medical sector growth rate
The advantage to these pharmaceutical enterprises
is considerable. It makes one wonder if the government
found it difficult to impose the higher rate of tax
because it would not have got the consent of the
enterprises. In which case, the credibility of
maintaining the rate structure is in question.
Admittedly, the government and parliament are not
experienced in handling the social security budgets
since they took this over only two years ago, but the
principles they need to apply are the same as those
for any budgetary control. Once targets have been
fixed and consented, and the associated penalties too,
these must be implemented. Otherwise, the credibility
of the budgetary process is lost. Obviously, now, the
pharmaceutical enterprises will feel it is better for
them if actual sales for 2000 far exceed the budget
for 2000 because this will lead to an increase in
budget for 2001 and less tax, besides, of course, the
fact that higher sales mean higher profits. In other
words, the perceived budgetary commitment will have
* In 1996, the government had imposed a levy on the
pharmaceutical industry based on their sales of
reimbursable medicines, deduction being made for R
& D expenses incurred in France. The EU found this
went against the EU treaty. To avoid reimbursing the
proceeds of the tax, the government is levying an
exceptional contribution to cover the 1.2 billion
francs collections of 1996.
The new levy is payable by pharmaceutical
enterprises whose group turnover in France exceeds FF
100 million for reimbursable medicines. The rate will
be between 1.2% and 1.3% of their 1999 French sales of
* All non-medicine medical dispositions are
governed by the TIPS (Le tarif interministériel des
prestations sanitaires). This includes 8000 types of
items, each having one to a dozen brands, certified
and reimbursable, all at different prices. The items
are divided into four kinds: treating material and
healing applications (eg., beds, injections); external
aids (cavities, reading glasses); implants and implant
equipment (cardiac stimulants) and vehicles for the
physically disabled (manual, electric). The
reimbursement is normally limited to 65% of the
tariff, but in some cases it can be 100%. But the
prices in the market are generally far superior to the
tariff base on which the reimbursement is calculated.
About FF 10 billion is reimbursed by the CNAMTS and
another FF 3 billion by the other medical insurance
funds on the TIPS. The average growth rate is about
15% per year for the last few years. Part of the
growth is because of a transfer effect: since care at
the domicile is being preferred to care at the
hospital (since it is much less expensive), the
medical dispositions are classified as individual
reimbursable expense instead of featuring in the
hospital's budget. Nevertheless, the government wants
to bring some clarity to the field.
From 2000, therefore, it is reorganising the
committees which approve the dispositions included in
the reimbursement list. One committee will look at the
technical aspects, another at the economic aspects and
fix the basic tariff. It will also suggest a price to
be fixed by the minister.
The unusual feature is that all enterprises who
grow at a rate faster than that approved, will have to
pay a tax to subsidise the Medical Insurance Funds if
they want to continue to get the benefit of their
products being included in the list of reimbursable
More categories of workers coming into contact with
asbestos have been included in the disposition
relating to early retirement.
* Our thanks to medical journalist Vincent Bargoin
for reading through this article.