Another Greek Crisis: A Drug Shortage

Reimbursement fraud costs Greece €500 million a year

In crisis-wracked Greece, even finding aspirin can be a pain. The Panhellenic Association of Pharmacists says Greece is running short of almost half its 500 most-used drugs.

The Greek government sets drug prices, and public insurers cover most of the bills submitted by the manufacturers and the wholesalers that supply hospitals and drugstores. The economic crisis made cost-cutting an imperative. Over the last year and a half, the government has cut drug prices, in some cases by up to 25 percent. The aim was to trim a national health bill that totaled more than €13 billion ($17 billion) in 2010, or about 5 percent of GDP.

The result, drugmakers say, has been an acceleration in the siphoning of their products out of Greece as wholesalers send their shipments to countries whose governments still pay higher prices. Reimbursement fraud and strained public finances aggravate the problem.

Greek pharmacists say they now spend their days pleading with drugmakers and wholesalers to hunt down medicines for clients. Chain-smoking in her tiny back office, Athens pharmacist Aggeliki Matsouki describes calling other pharmacies for Famvir, an oral herpes drug made by Novartis. “If I can’t find a prescription drug, I try to borrow it from colleagues. We exchange medicines. The whole system is dysfunctional.”

Heinz Kobelt, secretary general of the European Association of Euro-Pharmaceutical Companies, says he’s seen boxes of Bayer’s Aspirin in Poland that originated in Greece. “Even Polish people pay more than Greeks for aspirin,” he says. Mike Rulis, a spokesman for Danish drugmaker Novo Nordisk, says his company stopped selling some of its higher-priced insulins in Greece for about a month in 2010 after the government cut prices by about 25 percent. Novo now ships in the same volume as before the cuts, but pharmacists are running short of insulin, Rulis said. That could mean the drugs are being diverted to other markets.

Citing figures he says he got from the Health Ministry, Richard Bergström, director general of the European Federation of Pharmaceutical Industries and Associations, says fraud costs Greece more than €500 million a year, as drugs shipped elsewhere are submitted for reimbursement to public insurers, who believe the medicine had actually been sold to Greek hospitals and pharmacies. The Health Ministry did not respond to repeated requests for comment.

Insurers now often delay payments to pharmacies, which can’t pay suppliers on time. Wholesalers used to front pharmacies the money for deliveries. Now that drugmakers are increasingly demanding upfront cash from the wholesalers, wholesalers are asking pharmacies to do the same. “Wholesalers simply do not have the money anymore to play bank to the pharmacies,” says Kobelt.

Public insurers owe pharmacists some €330 million for drugs bought since April, says Dimitris Karageorgiou, vice-chairman of the pharmacists’ association. Payment can take three months to a year, say pharmacists; not all can afford the wait. An invoice provided to Bloomberg News shows Roche Holding requesting €926 in advance from a pharmacy for NeoRecormon, a medicine that treats anemia in chemotherapy and chronic kidney disease patients. Roche extends credit to pharmacies and in some cases has extended credit limits to ensure patients can get drugs, says Daniel Grotzky, a company spokesman. “This might be a pharmacy which has used up its credit line,” he says.

Last year, Roche switched to a payment-on-delivery policy for hospitals with a history of nonpayment. Before getting tough, Roche had accepted Greek government bonds as payment of 400 million Swiss francs ($426.7 million) owed by Greek hospitals. Last July, Roche Chief Financial Officer Alan Hippe said the company sold its bonds at a 26 percent discount.

Pharmacies now pass the bill to patients, some of whom have stopped costly treatments, says Ioannis Theodorakis, chairman of the Association of Persons with Multiple Sclerosis, whose office is steps away from Syntagma Square, where protesters lob Molotov cocktails in anger over budget cuts. “It’s a difficult decision to make because you can’t play dice with your health.”


    The bottom line: Constrained by budget cuts, public insurers owe Greek pharmacists some €330 million for drugs bought since April.

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