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Weighted average drug price cuts of 20% for over
4,000 drugs enforced in Greece as of today
  6 September 2010
The government in Greece last week released a new official list of drugs including more than 4,000 that have had their prices reduced in line with the new international reference-pricing system being introduced in the country (The Pharma Letters passim), reports the Greek newspaper Ta Nea, a translated version of which - and analysis - was posted on the web site of consultancy IHS Global Insight.
The weighted average reduction in the price of drugs on the list is nearly 20%, and these prices become effective today (September 6), on the basis of a proposal made by all the organizations 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 of price cuts
Examples are given of price changes in the new Greek price bulletin, many of which are very drastic; in the case of Anglo-Swedish drug major AstraZeneca's prostate cancer drug Casodex (bicalutamide), the price has been reduced by nearly 60%, from 326.58 euros ($419.29) to 131.69 euros and, in the case of French firm Sanofi-Aventis's blockbuster anticoagulant Clexane/Lovenox (enoxaparin), the price has been reduced by 27.7%, from 124.31 euros to 89.81 euros. Others noted by Ta Nea are: a near 35% reduction for Johnson & Johnson unit Janssen-Cilag's plaque psoriasis drug Stelara; a 40.7% cut for Bristol-Myers Squibb's cancer agent Taxol (paclitaxel) and a 37.7% slash in the price of Swiss drug major Roche's Mircera (methoxy polyethylene glycol-epoetin beta) for anemia associated with chronic kidney disease.
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 generic copies which, under the new price schedule, are priced at a maximum of 72% of the price of the originator product. 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, which 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 reduction for the IKA fund, a 23% cut for the OGA and a 17% lowering for the OAEE.
Drug "watch list" created
Additionally, according to the Ta Nea, the Greek government has created a new "watch list" of medicines, 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 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 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 drug can be more than 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. This could be a reaction to the recent move by Danish firms Novo Nordisk and LEO Pharma to remove some of its products from the Greek market, albeit later coming to an agreement with the authorities to reinstate them (TPLs June 1 and 15). The cap will be in effect for a temporary period, until 31 March 2011.
Much-delayed measures to control prices
Public expenditure on pharmaceuticals in Greece has risen from an annual total of 3.22 billion euros in 2006 to 5.1 billion euros 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 newspaper reports.
Outlook and Implications assessed by IHS
Commenting on the Greek report, IHS Global Insight noted that the new prices for more than 4,000 drugs is the first stage of the re-pricing of around 12,000 drugs in Greece, which the authorities had aimed to complete by the beginning of September. This is the realization 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 debut before the highly controversial blanket drug-price cuts introduced in May-June. 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 September 6 - 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. 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, says IHS. Furthermore, the fact that around 8,000 drugs remain to be re-priced presents an ongoing logistical burden to the Greek authorities, and continued disruption for the whole pharmaceutical market.
With Greece's drug prices now referenced to the lowest-priced markets in the EU, this is bound to have effects on the prices of drugs in countries that use Greece as a reference country. However, most pharmaceutical producers agree that this pricing system is much better than the blanket price-reductions introduced several months ago. In Greece's current dire economic situation, the authorities were left with little option other than to implement such drastic measures. They are more severe and painful due to the fact that regulation on the Greek market had, until recently, been so lax, IHS concludes.
Second Danish drug-maker quits Greece over price cut A second Danish pharmaceutical firm has withdrawn its products from Greece as fallout from the government's decision to lower the price of medicines continues. By James Hall Published: 6:43PM BST 30 May 2010 The heavily indebted Greek government has cut the prices of medicines by 25pc. However, Leo Pharma has suspended the sale of two of its drugs because it claims that the price reductions will lead to job losses in Europe.
Kristian Hart Hansen, a senior director of the company, said the 25pc price reduction would encourage similar moves in other countries with large debt problems such as Ireland and Italy, according to the BBC.
Last week another Danish company, Novo Nordisk, withdrew sales of one of its products from Greece for the same reason.
Leo Pharma's drugs in question are thought to be an anti blood-clotting agent and a remedy for psoriasis.
Leo Pharma claims it is owed millions of euros in unpaid bills by Greece. However, Greek government officials are counter-claiming that drugs in Greece are too expensive.
According to the BBC, Stefanos Combinos, the director general of Greece's economy ministry, said that Greece was one of the three most expensive countries in Europe for medicines. He also said that pharmaceutical companies had an obligation to accept price reductions.
Greece is facing financial crisis. At the start of this month, eurozone members and the IMF agreed a 110bn (95bn) three-year bail-out package to rescue the country's economy.
In return for the loans, Greece has started to make wide-ranging, deep and painful austerity cuts. Mr Combinos told the BBC that Greece had been under pressure from the IMF to make severe cuts and anticipated that a compromise on a price reduction could be reached soon.
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