Yianna and Tassos are anxious. Life running a pharmacy in Athens has never been straightforward, but now — with Greece crippled by debt and the ensuing, painful medicine of austerity — the couple’s job has got tougher. “Greece is going through a humanitarian crisis. The abscess has burst,” said Yianna, who asked not to be fully identified. “This is not only a problem for Greece, it’s a problem that other people from the same family — Europe — should see.”
As Greece struggles to settle its bills, payments to pharmacies have been delayed, supplies of some drugs are apparently running low and patients have had to dig deep to pay for their medicines. Last week, Tassos said a cancer patient in need of medicines costing about €2,100 (£1,700) used money they had been saving for their funeral expenses to pay for them.
The battle to secure life-saving drugs is just one painful element of Greece’s festering debt crisis; it has also left drug-makers with a headache as they try to maintain supply of vital medicines to the country, but still balance their books as bills go unpaid.
Across Greece, Portugal, Spain and Italy, estimates suggest that drug-makers could be owed as much as €12bn, while causing them further pain was a move by Greece to cut prices to curb its drug bill. Although Greece represents just under 1pc of the world drug market, companies have taken steps to limit their exposure to the country while also keeping up the flow of medicines.
After several hospitals had taken up to two years to pay their bills, Roche decided in 2010 to provide certain hospitals with products for the amount they were able to pay. But, it also has a programme for all public hospitals, irrespective of their debt situation, to receive critical drugs. Roche said it was constantly in discussions to find “mutually acceptable solutions with regard to outstanding debts and to ensure the continued flow of medicines to hospitals and patients” and its overall volume of supply of anti-cancer medicines is about the same as last year.
Britain’s biggest drug makers, AstraZeneca and GlaxoSmithKline, both stressed their commitment to maintaining supply and are continuing to meet demand as normal. Glaxo added that it continued to receive payment on past debt and was not demanding cash on delivery. Across the eurozone as a whole, Astra is reviewing payment plans with public hospitals, such as moving from an annual to quarterly review of credit limits.
But with Greece’s predicament deteriorating and the potential for it exiting the euro becoming ever greater, the pressure to consider contingency plans for the chaos of a currency switch is intensifying. There have been suggestions that drug-makers could have a scheme ready to put in place at short notice that could bridge the gap by supplying critical medicines for a few months. “Increasingly, they are looking at [contingency plans],” said Simon Friend, global leader for pharmaceuticals at PricewaterhouseCoopers. “If you went back six months, they may have been talking about it. Today, they are seriously looking at what the implications would be.”
Those implications could be manifold, not least the impact on the distribution chain. Drug-makers, like other businesses, would be grappling with a new currency and there are fears that a return to the drachma could push down prices.
Observers warn that a depression in Greek prices could curb prices across Europe due to “reference pricing”. Under this scheme, European countries use Greek prices as part of a benchmark when negotiating with drug-makers. Stephen Whitehead, chief executive of the Association of the British Pharmaceutical Industry, said it was “entirely inappropriate to reference a market in crisis which is not paying its bills and where the industry is losing money yet continues to meet its moral obligations”. He added that the UK Government had “never pursued a reference approach in price-setting”.
With prices under pressure, Mr Friend also suggested that there was a risk of parallel trade, when drugs are sold on to countries where prices are higher. But Heinz Kobelt of the European Association of Euro-Pharmaceutical Companies, which represents parallel distributors, said there was no evidence of an increase in such exports. He added that wholesalers in Greece must give local pharmacies priority supplies, ensuring that Greek patients always come first.
But even as manufacturers strive to keep medicines flowing, there are concerns that if the situation worsens, companies could potentially stop supplying medicines. “Pharmaceutical companies are now finding themselves at the heart of a moral and ethical dilemma — would it be acceptable to stop supplying life-saving drugs to a country if it cannot afford to pay for them?” said Chris Stirling, head of European pharmaceuticals at KPMG. However, companies such as Novo Nordisk have already realised the pitfalls of this approach. Two years ago, it was criticised for halting deliveries of certain insulins for around a month after Greece cut the price by more than a quarter. The stand-off ended when Athens agreed to smaller price cuts. Pharmaceutical insiders stress that manufacturers have a moral obligation to keep up the flow of drugs. “It’s not in anyone’s interest if the pharmaceutical industry looks at Greece and decides not to supply,” said a source. “That would make life even more difficult in what is already a grim environment.”