Greek Pharmaceutical Bill Passed Foreseeing Wide-Ranging, Significant Cost Containment

Pharma Cost-Containment Bill Passed

Greece's parliament has passed a bill on public pharmaceutical spending that is set to result in significant cost containment for the country's social insurance funds, and which has been implemented as a condition of the country's bailout by the so-called "troika" of the EU, European Central Bank, and International Monetary Fund (IMF).

Main Measures of New Bill

The bill foresees the implementation of a wide-ranging series of measures over the coming months, while according to Greek pharmaceutical news provider Farmakopoioi, eight decrees are to be issued in the coming days relating to some of the main measures. Among the most significant in the bill are:

• The pharmaceutical expenditure of all social insurance funds cannot be higher than EUR2.880 million (USD3.837 billion) in 2012; spending is divided evenly month-by-month and if at the end of each quarter it has exceeded the allocated amount, pharmaceutical companies will be liable to cover the excess. Details of this will be provided by the General Secretariat of Social Security.
• From 1 April, all doctors prescribing for patients covered by social insurance funds must prescribe on the basis of international non-proprietary name (INN) in the case of medicines used in the top 10 therapeutic areas by consumption. After 1 June, prescription by INN becomes mandatory for medicines used in all therapeutic areas—i.e. for all medicines on the positive reimbursement list.
• Social insurance funds will reimburse the cost of the cheapest medicine with a given active pharmaceutical ingredient (API), and the patient will have to cover the difference out-of-pocket for any medicine more expensive than this.
• Pharmacists must convert handwritten prescriptions into electronic format, and doctors will be charged EUR1 for each prescription written by hand.
• Pharmacy margins are being reduced and a new system of regressive margins for inpatient and outpatient medicines is to be introduced.

Inappropriate Prescription Becomes Criminal Offence

As reported by Greek business news provider Kerdos, inappropriate prescription—defined by the terms of the bill to mean prescription other than by INN, and prescription of a more expensive medicine when a cheaper one could be prescribed—is to be considered a criminal offence from now on. Greek health minister Andreas Loverdos has expressed his intention to wage "war" on a "coalition of interests" that wants to discredit generics and prevent an increase in their use in Greece, as reported by Greek newspaper Ta Nea. The source reports Loverdos as refuting the concerns of those who say generics contain APIs that were produced in countries such as India and China, stating that originators also contain APIs produced in these countries, and questioning what the difference is between them, in terms of safety.

Outlook and Implications

Greece's health minister has a major task on his hands to win round a highly sceptical public, not to mention an embattled pharmaceutical industry, on the implementation of the measures in this bill. On their own, the measures would not appear outrageous in many other EU countries, but the challenge faced by the Greek authorities is that these measures are new to Greece, where the laissez-faire approach of past governments has allowed the country's healthcare system to become bloated and unsustainable. The Greek healthcare and pharmaceutical sectors are now being asked to take in one go all the cuts that have been introduced over time in other countries. For this reason, the level of opposition and resistance to the measures can be expected to be very high.

Even though the Greek National Organisation for Medicines has attempted to reassure Greeks of the safety of generics—and, as indicated above, the country's health minister has refuted concerns over their safety—it is not going to be a simple process to persuade either the Greek public or the medical community of this.

For pharmaceutical companies, the fact that the bill is calling for them to pay back any spending above the stated limit in each quarter is very negative, especially considering the fact that many multinational and Greek producers are owed considerable amounts by Greek public hospitals in particular, and multinationals that have been paid in Greek government bonds have seen their value plummet. Additionally, the reduction of the Greek pharmaceutical reimbursement budget is also negative, although this can hardly be unexpected.