Drugmakers are putting together a plan for how to keep medications flowing to Greece if the economy collapses and payments become uncertain.
With the possibility of a financial default escalating there, drugmakers are working with European authorities to avoid a crisis, according to Reuters in an exclusive report. They are said to be studying the 2002 default in Argentina as a blueprint.
Because Greece is a small market, it is believed that most drugmakers can work with the country on delayed payment basis for awhile. But something has to be done, because the country has almost no domestic production, importing nearly everything and also buying mostly branded, not generics. As a result, its drug costs per capita are substantial, Reuters reports.
"There's a moral obligation to continue to supply," said Simon Friend, global pharmaceutical leader at PricewaterhouseCoopers. "Greece is not a big market, so most drug companies can absorb it … the reputational damage would, I think, more than outweigh the economic cost."
Novo Nordisk ($NVO) found that out last year, when it withheld insulin from the market for about a month after the government slashed its payment rate 25%. Still Novo got the government to settle for a smaller reduction. It is reportedly now on c.o.d. with the country's state-run hospitals. Others, like GlaxoSmithKline ($GSK), have not changed payment policies. Roche ($RHHBY), which makes most of the world's cancer drugs, requires payment upfront from slow-pay hospitals but does not require that for drugs like CellCept, or its HIV medication, a spokesman told Reuters.
Still, there have been some drug shortages in the market and drug manufacturers are reportedly owed about €1.21 billion ($1.5 billion), the story says. And in a country where bribery and corruption are prevalent, drugmakers worry that if they keep supplying on credit, drugs might get diverted and sold in markets that can afford full rates.
- read the Reuters exclusive