* France first EU country to allow biosimilar substitution
* Govt, industry working on decrees to make law applicable
* Measure limited to new prescriptions and retail pharmacies
* Impact of new measure uncertain but drug industry worried
By Natalie Huet and Noëlle Mennella
PARIS, April 10 France is going out on a limb with a plan to push the use of cheap copies of biotech drugs, triggering alarm among companies in Europe's second-biggest pharmaceutical market behind Germany.
The government quietly introduced the measure allowing pharmacists to substitute prescribed brand-name biotech drugs with cheaper, similar versions in its 2014 healthcare budget.
The move, which still needs a decree to come into effect, could cut the cost of providing complex biological medicines to patients with conditions like cancer, kidney disease and rheumatoid arthritis. But it poses a threat to makers of original products that are particularly reliant on sales of such drugs, such as Roche and Amgen.
France is the first European country to pursue biologic substitution, and governments across the continent, grappling with rising healthcare costs, may be tempted to follow if the measure is a success. But there are still major uncertainties as to whether it will really move the dial in encouraging use of so-called biosimilars, which have been slow to take off.
In particular, it only applies when patients are starting out on a new course of treatment and doctors will still be able to demand the original branded product on their prescriptions.
Nonetheless, the move goes further than efforts by other countries to encourage use of cut-price biosimilars, including a scheme of regional quotas for use of biosimilars in Germany.
"It's significant because it is the first such law in Europe to specifically permit pharmacy substitution, but it remains to be seen how much impact it will have in practice," said Maarten Meulenbelt, a partner at law firm Sidley Austin in Brussels.
"Depending on how it is implemented, it could have a knock-on effect by encouraging other EU member states to consider whether to do the same."
BIG PHARMA LOBBYING
Large drugmakers including Sanofi, Roche, Amgen and Hospira, furious not to have been consulted before the law was passed, are now meeting with government officials, doctors and pharmacists to discuss the decree's details.
The working group is due to give non-binding recommendations in June, and a decree could come a few months later. A spokeswoman for France's health administration declined to comment on how the talks were progressing.
"The fact that the government surreptitiously introduced this measure has deeply upset the industry," said Philippe Lamoureux, head of French pharmaceutical trade association Leem. He said the measure would make France a less attractive investment destination for pharmaceutical companies.
"We often complain that France and its regulations are incomprehensible and unpredictable, but what happened with biosimilars is a caricature of that."
Biotech drugs are among the most expensive on the market, often costing tens or even hundreds of thousands of dollars a year per patient. That represents big profits but also big potential savings if they can be swapped for cheap copies.
Eight of the world's top 10 prescription drugs by revenue are now biotech products, according to Thomson Reuters data. Pharmaceutical companies have been banking on these drugs in recent years to help offset the hit of patent losses on chemical drugs that are easier to copy.
Creating copies of biologic drugs is tricky because they are produced in living cells, so copycat versions can only ever be "similar", not exact replicas as with simple chemical drugs.
For France, whose healthcare budget and public deficit have ballooned in recent years, encouraging the use of biosimilars costing some 20-30 percent less than the original product could mean savings worth looking at.
Claude Le Pen, an economist at Paris-Dauphine university who works for IMS Health, estimates biosimilars could save France between 500 million euros and 1 billion euros ($690 million -$1.4 billion) by 2020, by which time patents will have expired on a raft of biotech drugs.
But substitution will only apply to retail pharmacies, significantly limiting the potential for savings, since over 40 percent of biotech prescriptions are filled in hospitals.
The measure also implies cumbersome checks for pharmacists, which could be an obstacle. Given the little incentives they have in selling cheaper drugs, the government should instead focus on educating prescribers and patients, says Le Pen.
"If a pharmacist tells a patient with breast cancer 'I'm going to change the treatment your doctor prescribed', you can imagine she might get worried," he said. "The government is putting the cart before the horse in trying to bypass the prescriber, who is in fact the key to success."
Paul Greenland, vice-president for biologics at Hospira, which recently launched the first antibody-based biosimilar in Europe, believes biosimilars will ultimately find success with time - and practice.
"The more doctors use these products, the more confident they are that biosimilars are really no different from the original biologics," he said. ($1 = 0.7234 Euros) (Additional reporting by Ben Hirschler in London; editing by Tom Pfeiffer)