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Greece May Cut $1.3 Billion in Drug Spending This Year

Feb. 14 (Bloomberg) -- Greece must chop spending on outpatient drugs by 1 billion euros ($1.3 billion) this year as a condition of the austerity pact lawmakers passed to win a second bailout.

Patients will make bigger co-payments for medicines, wholesalers and pharmacies will have lower margins, and doctors will be made to prescribe more generic products, according to a draft document of a plan for cuts through 2014, approved by Greek lawmakers this week. The accord between the government and the troika of the European Commission, the International Monetary Fund and the European Central Bank also includes a quarterly “clawback” rebate on drugmakers’ sales in Greece.

Health care is central to budget cuts that Greece’s international creditors are demanding as they reach the final stages of negotiations for a second, 130 billion-euro financing package. Greek pharmacists say belt-tightening so far has contributed to a shortage of almost half the country’s 500 most-used medicines.

“It will be very difficult to see how this can be implemented by the end of 2014,” Martin Koehring, a London-based analyst for the Economist Intelligence Unit, said in a telephone interview today. “This reform is necessary, but the time frame will be difficult.”

Fraudulent Billing

The reform is designed to bring Greek public spending on outpatient medicines to about 1 percent of GDP, in line with the European Union average, by the end of 2014, according to the draft report. In 2010 the health bill totalled more than 13 billion euros, or about 5 percent of GDP.

The proposals include measures to curb fraudulent billing. Reimbursement fraud costs Greece more than 500 million euros a year, according to the European Federation of Pharmaceutical Industries and Associations.

Greece will also seek to boost generic-drug sales to 35 percent of the total volume of medicines sold in the country’s pharmacies by the end of this year, according to the draft report. The total is targeted to reach 60 percent by the end of next year. Part of the plan is to cut prices of copied drugs -- sold in Greece at a smaller discount than in other markets -- to 40 percent of the originals.

To contact the reporter on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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