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Greece: New P&R amendment sets off political storm

08 January 2014 Brendan Melck

The legal amendment passed by the Greek parliament on 27 November, which is set to introduce IRP and new maximum price thresholds for off-patent originators and generics, sparked a storm of controversy among Greek politicians. Accusations flew across the political divide about alleged lobbying on behalf of various sections of the pharmaceutical industry.

IRP introduced for generics
The amendment is due to see its first application in the next price bulletin and is slated to be published in January 2014. It states that on losing patent protection originators' prices are to drop 50%. If the price resulting from the calculation of the average of the three lowest-priced markets in the EU for the drug in question is lower than this, then the IRP-based price is to be used. Prices of generics are not to exceed 65% of the price of the off-patent originator, after it has lost patent protection (and been adjusted according to the aforementioned calculations). These rules are to apply to any new off-patent originators and generics, as well as those marketed after 1 January 2012. For drugs marketed prior to that date a series of tiered price cuts are to be implemented. They can change with each price bulletin.

Political row
These pricing measures are at the centre of the political row. On the one side, the coalition government with health minister Adonis Georgiadis in the middle of it all, has been accused by the left-wing political grouping SYRIZA of acting in the interests of multinational pharmaceutical companies (the amendment only features price cuts for generics). Greek pharmaceutical companies are involved almost exclusively in the production of generics--branded generics in particular. SYRIZA has argued that the amendment's emphasis on drastically reducing prices of generics could have a severely damaging impact on these Greek producers, while favouring producers from low-cost production nations. SYRIZA, in turn, has been accused of having directly vested interests in the Greek pharmaceutical industry, with health minister Georgiadis pointing to the advertising of Greek pharmaceutical companies on the SYRIZA-affiliated radio station.

The amendment passed through parliament without the support of SYRIZA, and according to the Greek news source MacroPolis, the left-wing group was not able to put sufficiently convincing arguments up against a policy which will see taxpayers' costs reduced and pharmaceutical companies profits clipped. However, the argument that Greek pharmaceutical companies are likely to be the worst affected by the policy holds some weight. Larger generics producers from outside Greece are likely to be able to afford to sell their products at the reduced prices set to apply under the new amendment with less of an impact on their profits. This leads to concerns not only about the potential liquidation of some Greek producers, but also about the likelihood of drugs disappearing from the market when companies which cannot continue to market them due to economic viability. They may start to withdraw or stop producing them completely.

Financial limits for prescribing
Other significant aspects of the amendment include the implementation of prescribing limits for doctors affiliated to the Greek National Organisation for Healthcare Provision (EOPYY). The operator of Greece's electronic prescription system will be tasked with ensuring that doctors' prescribing is kept within financial targets (set at 80% of the value of prescriptions written by each individual doctor in 2013). Limits are also due to be introduced on the basis of specific specialties and therapeutic groups. Additionally, there are plans to launch risk-sharing and price-volume agreements for high-cost medicines, as well as higher rebates imposed for suppliers of reimbursed drugs.

Hope of EUR480 million savings
MacroPolis reports that Greek authorities are seeking to keep public pharmaceutical spending down to EUR2 billion (USD2.8 billion) in 2014 to meet troika-defined targets. The Greek health minister is hoping to make savings of around EUR 480 million through the measures included in this amendment. Currently, with doctors affiliated to the EOPYY on an extended strike, the focus has been taken somewhat away from the drug P&R amendment. But there is bound to be a lot of controversy and dispute surrounding this amendment in the coming weeks and months.

Problems likely to be ahead
There is a strong chance that the complexity of implementing all the price changes will result in a delay to the publication of the first price bulletin to include these provisions. Groups involved in the Greek pharmaceutical industry - from producers down to retailers - are likely to continue with their strong condemnation of the measures with warnings of job losses and company closures. How much this will influence lawmakers is debatable. Their hands are more or less tied by their commitments to fulfill the requirements of the troika. But with the Greek population - just as its medical and pharmaceutical community - far from convinced about the equality between the safety and efficacy of generics and originators, the implementation of these pro-generics policies and the urge towards increased generic penetration is never going to be a simple matter.

As for the political storm surrounding the amendment, the government side has argued, with justification, that generics in Greece are expensive even compared with much higher income countries. Originator prices - already subject to IRP- are already very low in European terms, and to bring their price down more would increase the threat of product withdrawals. The decision to increase rebates is an alternative way of increasing the contribution of this sector of the industry which avoids any IRP backlash. However, as in many areas of the Greek political debate, the government is painted as merely doing the troika's bidding, while the opposition stands for the interests of Greek people. Irrespective of either of these stances, the observation can be made that Greece's drug P&R policy has, over the past couple of years, merely been in the process of readjustment in line with the country's own economic realities. The trouble is that this readjustment has happened at breakneck pace, and has been driven by outside influences - and so it is doubly unpopular.

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