Forget worries about access to credit. The euro crisis continues to affect pharmaceutical companies in far more direct ways--and the pain isn't expected to taper off soon, Reuters reports. In fact, drugmakers have grown so worried about continued price cuts, they're asking European officials to take a hard look at drug-payment policies regionwide.
In his capacity as president of the European industry association, GlaxoSmithKline ($GSK) CEO Andrew Witty (photo) wrote two top European health officials to warn about the unintended consequences of ongoing price cuts. Countries both rich and not-so-rich have slashed their spending on pharma products, with Germany establishing a prove-your-worth pricing system for new meds and Greece slashing drug prices 27% on average. And now, drugmakers are expecting France and Italy to come up with their own austerity pricing.
Witty was one of the pharma execs who warned about the European pain early on, saying the sort of price cuts that tend to happen in one or two countries a year were coming at a more frequent pace. Now, spending cuts in some countries are rippling across the region as reference pricing resets the price tags on some meds, such as GSK's own asthma drug Advair (sold as Viani in Greece) and AstraZeneca's Symbicort. And in-crisis countries such as Greece, Spain and Portugal are more than $13 billion in debt to drugmakers.
"The pressures on innovation are now immense ... I believe it is time to review current pricing and reimbursement practices, in the light of the ongoing crisis," Witty wrote in his letter to the European Federation of Pharmaceutical Industries and Associations, which was obtained by Reuters. Analysts were more blunt, saying that the European situation is tough and getting tougher. Hanspeter Spek, Sanofi's global operations chief, was even more stark during an analyst call last week. "I don't expect anything good in Europe," he said.
- see the analysis from Reuters