The pain is far from over
for pharma companies in Greece, as new cost-containment measures for the sector
come into force. As part of its efforts to cut spending in the wake of its
latest EU bailout, parliament has passed a new law limiting drug spending by
the country's social insurance funds to €2.88bn (US$3.8bn) this year. The industry
itself will be liable for any overspend.
The new law also makes it a
criminal offence for doctors to prescribe drugs by brand rather than generic
name. This draconian measure will apply to the top ten therapeutic classes from
April 1st, and then to all drugs on the reimbursement list from June
1st. The country's reimbursement scheme will only cover the generic
cost, with any additional cost to be covered by the patient. In addition,
doctors will be fined if they fail to prescribe via the new electronic
prescription system, while pharmacy opening hours will be extended.
The aim of these measures
is to slice €1bn off the country's drugs bill this year. In December 2011,
while Greece was negotiating its latest bailout, the EU and IMF reportedly
asked for drug spending to be reduced to 1% of GDP. The Greek National
Organisation for Medicines declared this goal was unrealistic. If the latest
measures do succeed in cutting spend to €2.88bn, then that will amount of
around 1.4% of Greece's projected €199bn in GDP this year.
The government also wants
to raise the market share of generic drugs, which is currently one of the
lowest in Europe at around 16% by volume in 2009, according to the European
Federation of Pharmaceutical Industries and Associations. Critics attribute
this low share to the minimal difference between generic and branded drug
prices, as well as incentives in the pharmacy sector which favoured more
expensive drugs. The government has already moved to limit pharmacy profit
margins to a flat fee, a measure that is expected to cut the number of
pharmacies by 30% over the next few years.
These and other measures
have already proved highly controversial. In May 2010, in the wake of previous
austerity measures, pharma prices were cut by a weighted average of 21.5%,
prompting protests from pharmaceutical producers. Two Danish pharmaceutical
companies, Novo Nordisk and Leo Pharma, withdrew a number of their products
from the Greek market (they reversed this action only after the government
eased the price-cuts slightly).
Despite this, the
government introduced a new referencing pricing system in September aligning
Greek prices with the average of the three lowest-priced EU countries. The
effect was to cut prices by a further 20%. As a result, Greece now has some of the lowest pharma prices in Europe,
a fact that has prompted a huge parallel trade with other EU markets. Moreover,
many hospitals have failed to pay for the drugs they have received, with debts
to pharma companies deepening every month.4
This latest announcement
will lead to more controversy and further deter launches in the pharma sector.
The government is clearly prepared for that, however. According to Pharma
Times, ministers have in any case been contemplating banning new drug launches
until such drugs have been accepted for reimbursement in 8-10 other EU
countries. Though that measure would probably exclude cancer drugs, the main
losers would be Greek patients.