The Wall Street Journal | Ed Silverman
Despite
the uncertainty facing the Greek economy, the leading pharmaceutical industry
trade group in Europe maintains that shipments of medicines will continue. At
the same time, the group is pressing the European Commission to take steps to
ensure that prices and supplies are not disrupted if Greece introduces its own
currency.
In
response to questions, a spokesman for the European Federation of
Pharmaceutical Industries and Associations says supplies are continuing and
that “we have discussed no limit, at present.” Drug makers are owed about $1.2
billion by hospitals and other payers, he says, adding that talks about
supplies are expected to be held this evening, given the fast-changing nature
of the Greek economic crisis.
Meanwhile,
the trade group has written Vytenis Andriukaitis, the
European Commissioner for Health, to express concerns that the crisis could
lead to shortages caused by an “excess” in parallel trade. This involves
products purchased, typically by wholesalers at a low price and then shipped to
another country to be sold at a higher price. The practice is permitted in the
European Union’s single market.
The
EFPIA spokesman says that, Greece adopts its own currency, it “could depreciate
quickly” and prompt wholesalers to steer drugs to other European countries.
This would create “significant room for EU arbitrage on medicines,” the group
wrote. “…Irrespective of action taken by individual companies, [this may] give
rise to medicines shortages [in Greece] that would be a threat to public
health.”
The
letter goes on to insist that the pharmaceutical industry’s “legitimate
commercial interests” should be “ minimized.” The EFPIA argues that “any
abnormal effective price reductions in Greece would spread around Europe,”
since European countries often refer to pricing in certain countries to set
prices within their own borders. This would, effectively, lower revenue for
drug makers.
We
asked the European Commission for comment and will update you accordingly. [UPDATE:
An EC spokesman writes us to say "we don't speculate on the possibility of
any member state leaving Europe or the Eurozone, as we consider it a
hypothetical scenario and it's not our job to speculate on the basis of
hypothetical questions. A response to EFPIA letter has not been sent, but there
have been contacts between EFPIA representatives and
(the Directorate-General for Health and Food Safety) officials to
understand fully their concerns. The commission keeps monitoring the situation
of pharmaceutical trade in the EU."]
For
their part, a trade group for parallel traders is incensed. In its own letter to the commissioner, the European
Association of Euro-Pharmaceutical Companies complains that drug makers are
using concerns over shortages and risks to public health as cover for efforts
to bolster profits.
“The
wealthy pharmaceutical industry is exploiting the potential advent of [a]
crisis in Greece for their own commercial purposes in portraying a medicines shortage
in the country in the coming weeks and months,” the letter states. The trade
group adds that “the same unsubstantiated claims have periodically been raised”
in the past during financial crises.
But
the group maintains that parallel trade of pharmaceuticals has dropped by more
than one third since the Greek financial crisis emerged three years ago.
Instead, the trade group argues in its letter that shortages can be traced to
liquidity problems in the supply chain and moves by drug makers to reduce supplies
in order to thwart parallel trade.
The
trade group also suggests that if prescription drug prices in Greece were to
fall, it would not lead to a jump in exports for several reasons. In their
view, drug makers would maintain existing supply quotas and wholesalers have
“public service obligations” to supply Greek hospitals and pharmacies. “Not a
single box more would be exported under these circumstances,” they write in
their letter.
In
response, an EFPIA spokesman declined to comment on the specifics of their
letter, but did say that “we do not agree with their stance. We are pointing to
a hypothetical, yet concerning, situation that might develop.”
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