To fix Greece’s debt woes, generics are just what doctor ordered
Here’s a simple way to prune Greece’s debt load: use fewer brand-name drugs.
The land of Hippocrates taps fewer generic medicines (and reaps lower savings) than any other European nation at the moment. Not ideal for a country negotiating its third bailout.
Greek pharmacies last year continued to dispense a majority of branded medicines from overseas, according to data from IMS Health Holdings Inc., which tracks drug consumption. Novartis AG’s Diovan, which keeps blood vessels from narrowing, and Pfizer Inc.’s cholesterol-buster Lipitor still dominate, years after their expired patents opened the door for generics.
That’s because Greece doesn’t require doctors to prescribe cheaper alternatives, according to Per Troein, IMS’s vice president of strategic partners. The branded drug dominance is hobbling authorities’ efforts to comply with the terms of the last rescue.
“If they’re going to save money, they need to have prescription guidelines,” Troein said by phone. “The first- line treatment in many cases should be an off-patent product.”
Diovan, for instance, accounted for 82 percent of prescriptions in the fourth quarter, according to IMS. By contrast, the medicine makes up only 4 percent of pharmacy sales in Germany after it lost patent protection in Europe four years ago. The Lipitor original commands 29 percent of the market in Greece, compared with just 5 percent in Germany.
Blame drugmakers
Lipitor, which went off patent in 2012, costs about 11.51 euros ($12.49) for a pack of 14 tablets of 40 milligrams each in Greece, 27 percent more than the generic version, IMS data show. Diovan costs about 7.22 euros, or 48 percent more than the generic, for a pack of pills that are 320 milligrams each.
Even so, branded drugs account for 51 percent of medicines dispensed in Greece, the most among 20 European countries studied by IMS in a report published last month. The daily treatment cost in Greece for seven key drug classes is the third-highest in Europe, behind Switzerland and Ireland, the IMS data show.
Panagiotis Kouroumplis, who became health minister after the Syriza party came to power this year, blames drugmakers. He was among the cabinet ministers to retain his position after Greek Prime Minister Alexis Tsipras last week replaced officials who rejected austerity measures needed to appease creditors.
“Efforts to increase the penetration of generics in the Greek market did not yield fruit mainly because of the fact that the interests of the pharmaceutical companies which promote the brands are very powerful,” Kouroumplis said in an e-mailed response to questions earlier this month.
Target missed
Medicines are one of Greece’s biggest imports, alongside fuel, cars and electronics. Foreign-made drugs make up about 88 percent of Greece’s pharmaceutical market, according to IMS.
Part of the reason the debt-laden nation has been slow to embrace generics is that the country has traditionally had low prices for branded drugs relative to the rest of Europe, and relatively high ones for generics, according to Troein.
Greece slashed its pharmaceutical bill to 2 billion euros last year from 5.6 billion euros in 2009 as part of a requirement by creditors to limit drug spending to 1 percent of gross domestic product. Still, while prices for original branded drugs have been cut in half since 2008, prices for generics have had only modest declines, according to IMS.
Kouroumplis’s predecessor, Adonis Georgiadis, set a target last year to increase the share of generics to at least 30 percent by the end of 2014, and to triple it to 60 percent by the end of 2015. By the ministry’s own measure, Greece failed to meet the 2014 deadline as the generic penetration rate remained at about 20 percent.
Distorted market
“We cannot claim that the policies adopted were very effective,” said Elpida Pavi, a senior lecturer in health economics at the National School of Public Health in Athens. “There still is a pharmaceutical-market distortion in favor of off-patent rather than generics.”
Meanwhile, foreign drugmakers operating in Greece have said they’re continuing to supply products that can save lives, but that they’re owed more than 1 billion euros by the government in unpaid bills.
They’re also under pressure to cut prices. Drugmakers have been required to give mandatory discounts and to pay back any spending on pharmaceuticals that exceeds the 2 billion-euro cap. So-called rebates and clawbacks amounted to 530 million euros last year, according to Natalia Toubanaki, a spokeswoman for the Hellenic Association of Pharmaceutical Companies.
“If you add that to the outstanding debt, it is not a very nice situation for pharma companies here,” Toubanaki said.
[Bloomberg]
