LONDON – The pharma industry is calling on the European Union (EU) to prevent price reductions spreading around Europe if Greece leaves the Euro and introduces a new, devalued currency.

With reimbursement bodies in 26 of the 28 member states of the EU referencing other European countries in medicines price negotiations, it is seen as inevitable that price reductions in Greece would push prices down elsewhere.

To prevent that, the industry is asking the EU to foster a political agreement that member states will not refer to Greek prices.

"In addition to the imperative of securing patient access to medicines in Greece, under the worst-case scenario of a Greek exit from the Eurozone, it is important that economic consequences for the legitimate commercial interests of pharmaceutical companies are also minimized," said Richard Bergström, director general of the European Federation of Pharmaceutical Industries and Associations (EFPIA) in a letter to the EU Health Commissioner, Vytenis Andruikaitis.

The industry is already significantly exposed to the Greek financial crisis, with EFPIA member companies owed €1.1 billion (US$1.2 billion) by Greece as of May.

After the 60:40 vote to reject the terms of a proposed financial bailout in a referendum on Sunday, there are now serious doubts about whether the country will remain part of the Euro currency zone, which currently includes 19 of the EU's 28 member states.

FUELING A GREY MARKET

Were Greece to leave the Euro and introduce a new currency, the value of that currency is likely to depreciate rapidly. Although outside the Eurozone, Greece would remain a part of the EU's single trading market and apart from the pressure in terms of reference pricing, lower prices of medicines in Greece would fuel a grey market of drug exports.

Aside from consequences for EFPIA companies, Bergström points to both risks for Greece and problems for Europe's pharmaceuticals market as a whole.

"In the worst case scenario of a Grexit [Greek exit] we believe the integrity of the medicines supply chain may be in jeopardy," Bergström said, asking for a meeting with Andruikaitis to discuss the situation and draw up contingency plans.

Disruption of the business environment in Greece, including technical breakdown in the infrastructure supporting transactions and uncertainty about the validity of contracts, is likely to lead to problems throughout the country's economy. "The Greek medicines supply chain is complicated compared to other European member states and therefore we think that the supply chain may be particularly vulnerable to the sort of disruption described here," Bergström said.

There are several hundred wholesalers involved in the purchase and distribution of medicines in Greece, a supply chain that is far more fragmented then elsewhere in Europe, according to EFPIA.

Existing price differentials mean parallel trade is already a feature of the EU single market. However, Bergström said a Euro exit by Greece and the possibility of extreme depreciation of a new currency makes for unusual circumstances. Irrespective of action taken by individual pharma companies this could give rise to medicines shortages in Greece.

Under the worse-case scenario of a Grexit, the economic consequences for the pharma industry must be minimized, Bergström said. "It is certain that any abnormal effective price reductions in Greece would spread around Europe."

While EFPIA member companies have been putting in place contingency plans to ensure commercial operations continue to function normally in Greece, European competition laws bar the pharmaceutical industry from taking coordinated action to prevent disruption to the supply of medicines.

RISK TO PUBLIC HEALTH?

Bergstrom called for talks with the EU to discuss temporary measures to mitigate "a significant risk to public health" that would arise if a Grexit becomes a reality.

The financial crisis has already taken a significant toll on access to medicines in Greece, with the industry body, the Hellenic Association of Pharmaceutical Companies (SFEE) estimating that almost a third of Greece's patients have had difficulties getting the medicines they need.

SFEE, which represents 60 Greek and multinational pharma companies, previously established a medicines bank to coordinate aid efforts, and to oversee the safe storage and distribution of free medicines to unemployed and uninsured people.

As Sunday's referendum loomed, SFEE put out a statement saying there was no reason for concern about the supply of medicines. The association and its members will continue to stand alongside Greek citizens and the country to ensure supplies are maintained, the statement said.

While defending its members' interests in the face of the downward pressure on pricing that the financial crisis has generated across Europe, EFPIA is making moves to progress from a price for volume model to one where drugs are priced according to the outcomes/value they deliver.

At a ceremony in Riga, Latvia, last week, Bergström signed a letter of intent with the Latvian government, agreeing to explore new pricing models, including paying for outcomes.

Speaking at the ceremony, Bergstrom said, "Researchers in my member companies have never been as optimistic, or as happy as now. We will see fabulous progress over the next decade."

Citizens in Europe will expect to get speedy access to new treatments coming up the pharma pipeline and Bergström acknowledged this will have a short-term impact on drugs budgets. However, there will be cost-savings for overall health and social care budgets in the mid- to long-term and the aim of moving to pricing by outcomes is to put drug prices in the context of health and care budgets as a whole.

Under the agreement with the Latvian government, there will be a joint effort to develop a methodology that supports the results-oriented uptake of medicines, beginning with cancer drugs. EFPIA is discussing similar agreements with other EU governments.

Editor's note: Biotech has already slipped on Greece debt crisis and market turbulence. Click link to see related story.