The Greek pharmaceutical market is surrounded by considerable uncertainty after the country's citizens rejected the latest bailout offer from its lenders. Parallel exporters are also claiming that the European pharma industry association's planned emergency restrictions on parallel drug exports from Greece in the event of a euro exit are self-serving.
IHS Life Sciences perspective | |
Significance | The "no" vote delivered in the Greek referendum on the latest bailout programme leaves the pharmaceutical sector in the country in a state of considerable uncertainty and instability, while parallel exporters have accused the European industry association EFPIA of following self-interested motives in calling for restrictions to parallel drug exports from Greece in the event of a euro exit. |
Implications | The Greek government is reported to be planning to negotiate changes to pharmaceutical policy, with the lenders' latest proposals on more price cuts part of the package rejected in the referendum vote. |
Outlook | The Greek government has very little time to negotiate a new agreement with its lenders; the uncertainty and instability in the country's pharmaceutical market will remain severe until such an agreement is reached, or a definitive decision on a euro exit is made. In the latter eventuality, the instability and uncertainty will certainly intensify considerably. |
Greek government plans to negotiate new pharmaceutical policy
The decisive "no" vote in the referendum in Greece on the latest bailout programme means that the future of the pharmaceutical industry in Greece – and the future of pharmaceutical pricing and reimbursement (P&R) policy in the country – is now surrounded by a significant amount of uncertainty.
According to Greek medical news source Health Report, following the no vote, the Greek government plans to negotiate for a change in pharmaceutical policy, rejecting the P&R-related measures promoted by Greece's lenders, which, the source states, would mainly affect Greek companies. The source reports that the indications are that the lenders will continue to push for the implementation of these policies – including across-the-board prescription by international non-proprietary name (INN), as well as mandatory reduction of the maximum price of off-patent originators, on patent expiry, of 50% (see Greece: 26 June 2015: Greece's lenders call for greater reductions to drug prices).
Lack of agreement would see producers reduce presence, withdraw products
According to Health Report, domestic and multinational pharmaceutical companies say that if no agreement is reached between the Greek government and its lenders then the situation in the market will change radically. The source reports that many companies have stated anonymously that they will have to reduce their staff in Greece, and might be obliged to withdraw medicines from the market. This is in spite of official statements that they are determined to continue supplying the country uninterrupted.
Parallel exporters reject EFPIA's "self-serving" emergency proposals
Meanwhile, at the European level, the recent appeal by the European Federation of Pharmaceutical Industries and Associations (EFPIA) for emergency actions to prevent drug shortages in Greece – which included a call for temporary restriction on parallel exports – has prompted a strong response from the European Association of Euro-Pharmaceutical Companies, which represents parallel traders (see Greece - Europe: 1 July 2015: Europe's innovative pharma association warns of drug shortages in Greece and negative IRP effects of potential euro exit). As reports EU news source politico.eu, the association has written to Vytenis Andriukaitis, the European health commissioner, accusing pharmaceutical manufacturers of exploiting the potential occurrence of a new crisis in Greece for their own commercial ends. The association is reported as stating that the shortages in Greece are the result of liquidity problems and manufacturers intentionally reducing supply, and not due to parallel trade.
As politico.eu reports, the parallel traders' association told Andriukaitis that, in its view, even if the Greek authorities were to reintroduce the drachma, a new and fragile currency would not result in a great deal of opportunity for EU arbitrage on medicines as because producers would continue to issue invoices in euros.
Outlook and implications
The new Greek government and the Greek people have now rejected the latest bailout offer from the country's lenders – the European Central Bank, the European Union, and the International Monetary Fund – including new cuts on the prices of off-patent and generic drugs, as well as across-the-board INN prescription. The Greek pharmaceutical industry, which is dominated by producers of branded generics, has claimed that similar cuts implemented previously are particularly damaging for domestic producers as they cannot sustain the lower prices that major multinationals can, due to their larger volumes. Therefore, the Greek government's promise to support the domestic pharmaceutical industry appears – in this context – to have been kept.
However, the Greek authorities have very little time in which to find a new deal with their lenders, with Greek banks running out of money quickly. The level of trepidation and uncertainty which this situation creates within the pharmaceutical sector is hard to overstate. Greek citizens are likely to be stocking up on medicines in fear of what may come if no deal is reached – which in itself creates the danger of shortages further along the line. Statements made anonymously by pharmaceutical companies that they may withdraw products or reduce their presence in Greece if no deal is reached only exacerbate worries about future shortages.