Companies ensuring the operation in France within the meaning of Articles L. 5124-1 and L. 5124-2 of the French Public Health Code of one or more pharmaceutical specialties reimbursable or covered by health insurance, are liable for the contribution relating to the amount M (“Contribution M”) or “safeguard clause” when the sum of the tax-free turnover achieved by these companies is greater than an amount M determined by law.

The “safeguard clause” is a financial regulation mechanism for the reimbursable pharmaceutical specialties market, introduced by the Social Security Financing Act in 1999 (Articles L.138-10 et seq. of the French Social Security Code) with an objective to limit health insurance expenditure and ultimately “sanction” the operators which contribute the most to this expense.

In our opinion, this contribution should not have been triggered for 2019 due to an error in the recognition of income receivable under temporary authorisations for use (“ATU”) and post ATU rebates for the assessment of turnover achieved by pharmaceutical companies within the meaning of Article L.138-10 of the French Social Security Code.

We believe that the chances of success of such an action are relatively solid, especially since several reports from the Court of Auditors on Social Security accounts have highlighted the issue.

We are available to further discuss the substantive arguments and the various procedures to be initiated.

If you wish to discuss these topics, please contact: Bertrand Delaigue