New Greek Price Bulletin Shows Weighted Average Price Cuts of 20% for over 4,000 Drugs

The Greek economy released a new official list of drugs on Tuesday (31 August), including over 4,000 drugs that have had their prices reduced in line with the new international reference-pricing system being introduced in the country, reports Greek newspaper Ta Nea. The weighted average reduction in the price of drugs on the list is nearly 20%, and these prices are due to become effective from next Monday (6 September), on the basis of a proposal made by all the organisations included in the drug-price committee. This includes the Hellenic Association of Pharmaceutical Companies (SFEE), which represents pharmaceutical producers in Greece. The interval before the application of the new prices will allow wholesalers and pharmacies to implement these prices.

Examples are given of price changes in the new price bulletin, many of which are very drastic; in the case of U.K. pharma AstraZeneca's prostrate cancer drug Casodex (bicalutamide), the price has been reduced by nearly 60%, from 326.58 euro (US$419.29) to 131.69 euro, and in the case of French firm Sanofi-Aventis's blockbuster anticoagulant Clexane (enoxaparin), the price has been reduced by 27.75%, from 124.31 euro to 89.81 euro.

Generics to Be Maximum of 72% of Originator Product's Price

Among the over 4,000 drugs included in the list are reported to be 1,350 generics, which under the new price schedule are priced at a maximum of 72% of the price of the originator drug. As well as the implementation of the new price schedule, an important aspect of the drug-pricing policy of the Greek government is the implementation of an electronic prescription system; this will enable the authorities to check on the prescribing of doctors, and enforce a stricter policy of prescribing cheaper (mostly generic) products. The latest figures show that pharmaceutical expenditure of the Greek social security funds went down significantly in July, with a 27.5% year-on-year (y/y) reduction for the IKA fund, a 23% reduction for the OGA, and a 17% reduction for the OAEE.

Drug "Watch List" Created

The Greek government has created a new "watch list" of medicines, reports Ta Nea, on the basis of which medicines will now be priced in the country. This features a database with 240,000 pharmaceutical products available in the European Union (EU), and employs complex algorithms to compare and match reference products. Prices of pharmaceutical products in Greece will be reviewed three times per year on this basis.

Ceilings on Price Increases and Price Reductions

On the day following the public announcement of the new price bulletin, the Greek finance minister announced a decision of the Greek market authorities to the effect that, under the new price schedule, no increase to the wholesale price of any medicine can exceed 10%, and no reduction to the wholesale price of any medicine can exceed 40%, reports Ta Nea. The source reports that this decision was taken in order to prevent any potential withdrawals of drugs from the Greek market by drug producers because of excessively low prices. The cap will be in effect for a temporary period, until 31 March 2011.

The cap will feature a sliding scale depending on the price of a drug. The caps for each price band are as follows:

• drugs priced at up to 3 euro:10% on increases, 15% on reductions
• drugs priced at 3–5 euro:10% on increases, 20% on reductions
• drugs priced at 5–10 euro: 5% on increases, 25% on reductions
• drugs priced at 10–15 euro:5% on increases, 30% on reductions
• drugs priced at 15–40 euro: 5% on increases, 35% on reductions
• drugs priced at 40–50 euro: 5% on increases, 40% on reductions
• drugs priced over 50 euro: 5% on increases, no ceiling on reductions

IHS Global Insight assumes, on the basis of the previous major drug-pricing change in Greece, that these prices refer to prices per unit, rather than for each package.

Much-Delayed Measures to Control Prices

Public expenditure on pharmaceuticals in Greece has risen from an annual total of 3.22 billion euro in 2006 to 5.1 billion euro in 2009, and according to Ta Nea, the prices of drugs in all EU member states have not been taken into account properly by the Greek authorities; more often, prices of four or five countries were looked at, despite the fact that under the law, prices in all EU markets were supposed to be considered. This has resulted in a situation where Greece has become the third most expensive country in the EU for originator drugs, the source reports.

Outlook and Implications

The new prices for more than 4,000 drugs is the first stage of the repricing of around 12,000 drugs in Greece, which the authorities had aimed to complete by the beginning of September. This is the realisation of the reversion to the pricing system—based on the calculation of drug prices with reference to the average price in the three lowest-priced markets of the EU with competent authorities issuing drug-pricing information—which was due to be introduced before the highly controversial blanket drug-price cuts introduced in May-June (see Greece: 5 May 2010: Temporary Blanket Drug Price Cuts Will Have Dire Consequences, Warns Greek Pharma Association). It is assumed that the prices involved are ex-manufacturer prices.

Although it is reported that the SFEE was involved in the proposal to introduce the prices on 6 September—indicating that its members assent to the price changes—there have been reports of pharma companies disputing the price reductions proposed by the Greek authorities (see Greece: 31 August 2010: Several Pharma Companies Oppose Some of Prices Proposed in Greek Drug-Price Overhaul). Although no information concerning protests by pharmaceutical companies appears to be surfacing in the Greek media, it cannot be ruled out that there will be some disruption to the smooth implementation of the price reductions. Furthermore, the fact that around 8,000 drugs remain to be repriced presents an ongoing logistical burden to the Greek authorities, and continued disruption for the whole pharmaceutical market.