Pharma Prices in Greece Amid Economic & Political Turmoil: Deadlock Between the Government and Drug Industry
As Greece continues to experience major economic - and now political - turmoil, the pharmaceutical industry has been hit hard by various government measures that have been brought in to limit healthcare expenditure, and notably drug expenditure.
This week I've been using our global pharmaceutical pricing database - PharmOnline International - to analyse drug price trends in Greece since the beginning of 2012, in light of the austerity measures that have been implemented.
Overall, pharmaceutical companies are facing extremely hostile conditions:
Beginning 2012: Discounts Provided by Pharmaceutical Companies to Government Increase in Value and Number
Despite the fact that the government sets drug prices, pharmaceutical companies must give the government discounts on the listed prices of their drugs. The discount is a percentage of reduction on the manufacturer price - which serves as a basis for reimbursement by the National Healthcare Insurance.
Prior to 2012 the discount was set at 4% of the manufacturer price. Beginning 2012, this discount was up to 9%.
Additionally a new discount was implemented in January 2012, which is directly linked to the sales of each drug sold on the market. This additional discount ranges from 2% to 8% for products exceeding €2,500,000 in sales on a quarterly basis. Only those drugs generating less than €400,000 in sales (quarterly) are exempt.
March 2012: Pharmaceutical Companies Are Asked to Write Off Greek Debts
The government has generated significant debts, notably in the hospital sector, resulting in delays in drug funding. As such, pharmaceutical companies with a portfolio including a great number of hospital products were in an extremely difficult position. For instance, Roche threatened to stop delivering drug to hospitals that have failed to pay back debts.
Pharmaceutical companies were urged to accept government bonds instead of payments - an uncomfortable solution for the industry, made worse by the significantly decreased value of those bonds. Yet, pharmaceutical companies have had no choice but to accept this.
April 2012: New Price Cuts for the Majority of the Prescription Drugs on the Greek Market, Few Innovation Brought Onto the Market
At the beginning of April, the first Greek price bulletin of 2012 was published. Prices decreased for the majority of the prescription drugs on the market: price cuts were experienced for around 80% of the funded drugs on the market. The average price cut stood at around 9% (in terms of retail prices), according to our data.
What's more, hospital drugs were even more impacted: a larger part of hospital drugs experienced a price cut, which was larger on average. Indeed, around 90% of the hospital drugs experienced a price cut which averaged around 16%.
The price increases were probably implemented in a bid to prevent parallel exports, and consequent drug shortages.
Source: PharmOnline International (POLI)
Finally, it should be noted that few innovative drugs were brought onto the Greek market. This was already seen with the former price bulletin, published late 2011 and probably demonstrates that pharmaceutical companies might no longer consider Greece in their immediate launch sequencing strategies, or might delay the launch in this country in a bid to prevent the price falling in other countries using Greece as a reference country for drug pricing.
Low Prices Trigger Drug Shortages As seen earlier and as demonstrated with the specific examples below, prices of drugs have significantly decreased over time.
As a consequence, prices in Greece are often reported to be among the lowest in the EU, which in turn encourages wholesalers to export drugs abroad, ultimately leading to drug shortages. The govermenent has recently published the list of 36 drugs that are in shortage in the country, on which around one third do not have equivalents on the market. Additionally the Hellenic Association reports that there are shortages in as many as the 500-most consumed drugs in the country.
Source: PharmOnline International (POLI)
There's no doubt that conditions are extremely difficult for pharmaceutical companies operating on the Greek market, with significant price cuts for large numbers of drugs requested on a regular basis. The issues are compounded by obligatory discounts, as well as the government's use of discounts to further lower drug prices. Additionally, pharmaceutical companies have no choice but to accept the government bonds, the values of which have significantly decreased over time.
Conditions are even more extreme in the hospital market, a prime example being Roche's threat to stop delivering drugs for certain hospitals. Even if drugs are still on the market, it is likely that if the government continues to be that stringent, other companies might actually stop delivering drugs to certain hospitals.
The data from this blog post is taken from our global drug pricing database PharmOnline International (POLI)
Posted 18 May 2012
- The impact of Medicare coverage for anti-obesity interventions
- National Academies report adds fuel to fire in raging US drug pricing debates
- Amsterdam triumphs: Is the Netherlands a Trojan horse for pricing and drug approval reform in Europe?
- Will Argentina's public healthcare reform finally accelerate?
- Value in healthcare: Insights from ISPOR
- Better diabetes treatment can save Medicaid over $4 billion per year
- So, was this worth the wait?…the UK government finally responds to last year's Accelerated Access Review
- Visit us at ISPOR 2017 Glasgow!