A list of measures intended to make up for the EUR250 million overspending on pharmaceutical reimbursement in Greece so far this year has been proposed by the troika, as part of talks on the latest tranche of the country's bailout
IHS Global Insight perspective | |
Significance | The troika has put forward a list of measures intended to balance the drug reimbursement overspending that has already hit EUR250 million this year, as part of talks on the latest tranche of Greece's bailout package. |
Implications | The planned application of the clawback system, controversial in the light of the significant amounts owed by the Greek state to pharmaceutical companies, appears to have been suspended, which has made it necessary to seek the equivalent in savings by other means. |
Outlook | Closer monitoring of prescriptions and a possible cap on the value of those issued by individual doctors would be likely to have the effect of reducing spending on innovative and off-patent branded medicines, and increasing the use of generics. However, considering the lack of a generics culture in Greece, and patients' brand loyalty, it may simply mean that many Greeks will pay out increasingly high co-payments to ensure that they continue receiving the medicines they are used to taking. |
Troika proposes measures to balance drug budget overspending
Officials from the Greek Ministry of Health (MoH) have admitted that planned pharmaceutical expenditure has already been overshot by EUR250 million (USD323.8 million) this year, reported Greek newspaper Ta Nea. Since the Panhellenic Association of Pharmaceutical Companies (SFEE) has rejected the planned application of the pharmaceutical clawback system to cover the excess spending, particularly as the Greek state owes pharmaceutical producers around EUR2 billion, the so-called troika of Greece's creditors – the European Central Bank, the European Union, and the International Monetary Fund – has reportedly insisted on an alternative package of measures in order to make up for the expenditure in excess of the planned pharmaceutical budget. This is associated with the latest round of negotiations between the troika and the Greek government, relating to the latest tranche of the bailout package – worth EUR31.5 billion – and involves cost-cutting measures to be carried out in 2013-2014.
The measures that the troika is reportedly demanding to be implemented are:
- Tightening the monitoring of prescriptions, and in the event that it continues to exceed the pre-determined monthly budget by EUR25 million or more, as it does at the moment, a ceiling on the value of prescriptions per doctor should be introduced.
- The merger of all social insurance funds into the National Organisation for Healthcare Provision (EOPYY) is to be completed.
- A simplification of procedures is to be carried out, allowing the quicker entry on to the market of new generics.
- The implementation of the new drug price schedule, reportedly due to have been introduced on 15 September, is to take place (it is expected that this will happen in the next few days)
- Pharmacy margins on reimbursed drugs are to be reduced to 15%, and to EUR30 on products priced at EUR200 or more.
New drug price schedule set to save EUR300 million per year
Greek health news provider Iatropedia quoted Deputy Health Minister Marios Salmas as saying that the new drug price schedule would save EUR300 million at least on an annual basis and that there would be a reduction in the number of patent-expired medicines on the list. The source also reported that the expected addition of new innovative medicines, including those for the treatment of cancer, on the new drug price schedule, was not expected to happen now, as a result of the government's concerns about the increase in drug-reimbursement expenditure. This has reportedly been the cause of much concern for certain cancer patients in particular, with treatments that are already available in other European countries not now expected to be added to the Greek list.
Pharmacists expected to reject margin cut
Meanwhile the SFEE has responded to the proposal for margin cuts to pharmacies by saying that the EUR30 margin proposed for drugs costing more than EUR200 would mean that pharmacists would not be able to cover the tax on the drug, and therefore they would not accept the proposal. Latropedia also reported that pharmacists have emphasised that they will not accept any further reductions to their profitability.
Outlook and implications
It appears that the plans to implement the clawback system – which would have involved pharmaceutical companies covering the costs of state overspending on reimbursed medicines – have been suspended and other alternatives have taken their place. In the case of the plan to tighten the monitoring of prescriptions, in theory this should not be excessively challenging, considering the fact that there is a prescription monitoring system in place in Greece, as well as an electronic prescription system – although the latter has been subject to technical problems, exacerbating opposition from doctors (see Greece: 14 August 2012: Plans for Deeper Cuts to Greek Pharma Budget Agreed with Troika As EOPYY Unveils Prescription Monitoring System). However, such spending reductions would inevitably mean Greek patients having to settle for generic versions of medicines, which they may be unwilling to give up, simply due to their attachment to certain brands. If prescription by international non-proprietary name and reimbursement only up to the price of the cheapest product in a drug group is properly implemented in Greece, it will be associated with major increases in the co-payments that patients will have to make in order to keep taking their preferred medicines. This is an eventuality that is as equally unpalatable for the Greek authorities as the one in which doctors continue to prescribe more expensive medicines rather than generics because it means unnecessary expenditure by citizens that could be freed up for other areas of the economy. Also some patients may opt to stop treatment rather than changing their medicine for a cheaper version (see Greece: 4 September 2012: EUR1-bil. savings predicted from INN prescription and reduced positive list, Greek pharma association appeals).
The fact that the government has seemingly given up on the clawback system is a positive, but the alternative plans are little better. The planned reduction in pharmacy margins, in the light of the major challenges experienced by Greek pharmacies in recent months, connected with payment delays by the EOPYY, would appear provocative. This will, if implemented, have a knock-on effect on pharmaceutical producers, as pharmacies are likely to seek greater discounts from wholesalers, who, in turn, will look for greater discounts from producers.