French pharmacy: regulated margins, dispensing fees and inventory accounting

Quick answer. A French community pharmacy combines three revenue streams: reimbursable medicines (margin set by a national regulated scale on the manufacturer price, 2.1% VAT), non-reimbursable medicines and parapharmacy products (10% or 20% VAT), and dispensing fees paid per act (€0.61 per prescription, €1.68 for patients under 3 or over 70 in 2026). The third-party payer system turns a large share of sales into receivables from health insurance bodies, and inventory — valued at acquisition cost — must be physically counted and written down for expired items.

A community pharmacy operates within an administered economic model, combining a regulated commercial margin with fee-based remuneration. Since 1990, the margin on reimbursable medicines has been degressive and smoothed; the current scale has applied since 1 January 2020 (order of 12 November 2018 amending the order of 4 August 1987). In parallel, the national pharmacy agreement has phased in dispensing fees since 2015, decoupling part of the pharmacy's income from the price of medicine boxes.

Recently, a pharmacy owner consulted us: his accounts merged margin and fees into a single revenue account, did not split sales by VAT rate, and did not track third-party payer receivables. Analysing the pharmacy's true profitability was impossible. This article details the accounting mechanics of these three streams. For questions of legal structure, owner remuneration, pension or performance-based payments, see our complete guide to community pharmacy, to which this article is the accounting companion.

On reimbursable medicines, the pharmacy does not choose its margin: the regulated degressive margin scale (MDL) is computed in successive brackets of the manufacturer price excluding tax (PFHT), under a national schedule:

Economic consequence. The margin in euros is capped on expensive medicines: above €1,930 of PFHT, each additional euro of price generates no further margin. As the share of high-priced medicines grows, turnover swells with no additional margin: the overall margin rate mechanically declines even though real profitability is unchanged. Steering a pharmacy by its overall margin rate is therefore misleading — analyse margin in euros, stream by stream.

The margin is computed line by line at the point of sale, which requires pharmacy management software (LGO) correctly configured and kept up to date with the scale and administered prices.

Generic discounts: a cap under close watch#

On generic medicines, manufacturers may grant commercial discounts capped by article L138-9 of the French social security code. The cap, long set by ministerial order at 40% of PFHT, had been lowered to 30% by an August 2025 order that was suspended and then contested; the 2026 social security financing act finally wrote a 40% cap for generics (20% for biosimilars) into law, applicable from 1 January 2026, with the trajectory beyond 1 July 2026 still under discussion. These discounts change neither the selling price nor the regulated margin: they reduce the real purchase cost and therefore increase the pharmacy's effective margin. Check the cap in force before each round of negotiations with generic manufacturers.

Dispensing fees are paid when reimbursable medicines are dispensed, on top of the margin. Amounts in force in mainland France (the age-related fee was increased on 1 January 2026):

Mandatory health insurance covers 65% of most of these fees (100% for the complex-prescription fee), the balance falling to supplementary insurers or the patient.

Accounting treatment. Three practical rules:

1. track the fees in a dedicated revenue sub-account, separate from goods sales, to isolate this per-act income in the profit and loss statement;
2. recognise them at the date of dispensing, not when the insurance funds pay;
3. apply the VAT regime of reimbursable medicines: the special 2.1% rate, as evidenced by the official amounts excluding and including VAT published by the health insurance fund.

A pharmacy may collect, sometimes on a single receipt, products under three VAT rates — a textbook case of several VAT rates on one invoice:

This split is mandatory in the accounts (sub-accounts of account 707 by rate) and must be guaranteed at source by the till or LGO, using software certified or attested as compliant with the French anti-VAT-fraud rules (article 286 of the tax code). On audit, the administration asks for the breakdown of turnover by rate: a faulty product-file configuration exposes the pharmacy to VAT reassessments.

Under the third-party payer system, mandatory health insurance (AMO) and supplementary insurers (AMC) pay the pharmacy directly instead of the patient — a mechanism comparable to the third-party payer at the optician, but on a far larger scale. Management points:

• dedicated receivables: track AMO and AMC billings in separate customer sub-accounts, by paying body, to know the expected balance at any time;
• billing rejections: a rejected transmission (expired entitlements, wrong insurer) must be identified, corrected and re-invoiced quickly, or it turns into a bad debt;
• regular reconciliations: payments received from insurance funds must be reconciled with the LGO transmission logs; a persistent gap signals an anomaly.

The collection lag — from a few days to a few weeks depending on the funds and insurers — bears directly on cash: the higher the third-party share, the larger the receivables balance.

Inventory is the pharmacy's strategic current asset. French chart-of-accounts rules apply:

1. Valuation at acquisition cost, using weighted average cost (CUMP) or first-in, first-out (FIFO) — LIFO is prohibited.
2. Physical count at least annually, to measure shrinkage (breakage, theft, input errors) and secure the balance-sheet value.
3. Write-down of expired and unsellable items: an impairment charge (account 6817) against an inventory impairment account (39), reversed (7817) when the items are destroyed or removed.
4. Rotation management: inventory often represents in the order of one to two months of purchases; its euro weight makes it a major cash lever. On a sale of the business, the valuation of a pharmacy always involves an independent physical count and a discount on slow-moving products.

Pharmacies with a high share of expensive medicines#

A pharmacy dispensing many high-cost treatments will see its overall margin rate erode while its margin in euros grows. The dashboard should present margin by stream (reimbursable, non-reimbursable, parapharmacy, fees) rather than a single rate.

New pharmacy missions#

Vaccination, screening, pharmaceutical consultations: these missions generate their own income, to be tracked in accounts separate from goods sales. Their VAT regime depends on the nature of each service and its insurance coverage — a point to validate case by case with your adviser rather than by analogy. The ROSP (public-health objectives remuneration), paid annually by the health insurance fund, is likewise a revenue stream in its own right, separate from dispensing fees, to be isolated in a dedicated account — its mechanics are covered in the complete guide cited in the introduction.

Small structures and simplified regimes#

The micro regime and the VAT base exemption are in practice out of reach for a pharmacy: the thresholds (€85,000 of sales for the exemption) bear no relation to a pharmacy's volumes, and third-party payer tracking requires full accounting anyway — unlike the standard accounting of a micro-business.

• VAT split at 2.1% / 10% / 20%: audit the product file and till configuration periodically; any gap exposes you to VAT reassessment.
• Dispensing fees: isolate them in a dedicated revenue account and recognise them at the dispensing date; check current amounts on ameli.fr.
• Third-party payer: AMO/AMC receivables tracked by body, rejections reprocessed without delay, monthly reconciliation between LGO and accounts.
• Inventory: annual physical count, write-down of expired items as identified, shrinkage monitoring.
• Generic discounts: a 40% cap on PFHT written into law by the 2026 social security financing act (article L138-9), with the path beyond 1 July 2026 still under discussion — verify before each annual negotiation.
• Electronic invoicing: all businesses, pharmacies included, must be able to receive electronic invoices from 1 September 2026.
• VAT recodification: from 1 September 2026, the VAT provisions of the French tax code are recodified into the goods and services taxation code (CIBS); the articles cited here keep their substance under new references.

The most common flaw in pharmacy accounts is not an input error: it is an accurate but silent set of accounts, where regulated margin, fees and parapharmacy sales merge into a single revenue line. The owner then steers by the overall margin rate — an indicator the very structure of the regulated scale renders misleading as soon as the product mix shifts.

Recently, we restructured the chart of accounts of a Paris pharmacy: sales split by VAT rate, fees isolated, third-party receivables tracked by paying body. The owner discovered that dispensing fees represented 18% of his overall margin — a stable, price-independent component he had never measured. Combined with rigorous inventory tracking in Pennylane, this stream-by-stream view changed his purchasing and negotiation decisions. That is precisely the role of a pharmacy-specialised accountant: making administered accounts speak.

Hayot Expertise advice. Require a monthly profit and loss statement split into four streams: sales at 2.1% (regulated margin), sales at 10%, sales at 20% (parapharmacy) and dispensing fees. Track third-party receivables by paying body with systematic follow-up of rejections, and plan an annual physical inventory with write-down of expired items. Structured bookkeeping by stream and tax support turn regulatory accounting into a management tool.