Greek Crisis Calls: Time for Pharma to Step Up
Pharma must prove its patient centric credentials by offering a solution based on compromise and collaboration.
Greece is in a full-blown healthcare crisis. With insurance coverage linked to employment, the number of uninsured has risen dramatically, unfortunately alongside a large decrease in the government’s ability to subsidize support. This is no small problem, as Ioanna Pertsinduo, a health worker with the charity Praxis that has been delivering emergency primary care, described to us. “Close to 27% of the population is unemployed and after two years without work, people lose their insurance.”
As a consequence, The School of Public Health in Athens reports, more than 20% of the population has cut back on medical support. The data on public health makes for a depressing read. There are sharp increases in the incidences of TB, Malaria and HIV, while lifestyle changes are also driving increases in child obesity, and suicide.
The Syriza government rose to victory on a mandate that included the commitment to tackle the care crisis head on, however, a recent history of annual cuts to government expenditure have created negative multiplier effects that act to make the spiral harder to reverse. Increases in unemployment depress taxed contributions while further stretching the costs to the state of delivering care. Changes in consumption due to reduced income are obviously expensive to change, but these alongside cuts to preventative care only act to create more expensive problems further down the line.
Need to improve efficiency
Beyond the politics of austerity, Greece faces an indisputable need to improve the efficiency of healthcare. As Panagiotis Kouroumplis, the Greek health minister, observed in April 2015, Greece has been spending nearly 4 times the amount per capita on healthcare than the European average. The dilemma becomes: how can Greece reduce expenditure while meeting the needs of its citizens?
One issue is the deeply ingrained consumer (and worryingly prescriber!) mythology that cheaper generic alternatives cannot deliver quality as a substitute to branded products. Similar cultural preferences were actually dominant across Southern Europe pre-crisis, but while others acted quickly to shift towards generics as a strategy to reduce costs, Greece didn’t. Commenting on this fact, Richard Bergstorm, the President of EFPIA noted, “Greece is where Spain and Italy were 10 years ago in terms of market structure.”
As a preventative measure, the government has taken steps to cap pharmacy expenditure on pharmaceutical products at €2bn, almost 1/3 of the expenditure within 2009. Unsurprisingly, in part as there still hasn’t been a shift towards consumption of generics, such a contraction in expenditure has been hard to realize; Greece over-consumed over the budgeted amount by €600m in 2014. This creates obvious pressures on the suppliers of pharmaceuticals, as deliveries are going unpaid at a time where the government owes more than €1bn when factoring in supply from 2013, and early 2015. Within this context, it is Bergstorm’s perspective that it is important to find a way to offset these debts to avoid conflict between government and pharma.
Tackling healthcare expenditure with a crude cap may give immediate budgetary relief, but it is obviously unsustainable. Manufacturers are now requesting cash on delivery, or only supply wholesalers with a good track record. The implication here of course, is that if the money is not there, the patient is not going to receive the treatment. Left this way, this creates a deadlock that nobody wants. The government could violate its electoral promises, pharma risks public backlash, and most importantly the poorest in Greece who are already living through desperate conditions get squeezed a little bit harder.
In addition to humanitarian indecency, the economics of such a deadlock are nonsensical. An unhealthy population is an unproductive population, while the peculiar strength that pharma brands currently have in Greece could very quickly evaporate if the public turn to blame manufacturers for withheld care.
EFPIA, the government and relevant EU stakeholders are of course working on a resolution, and it is clear that compromise will be required from all parties. Bergstorm reports that pharma want an increase in the budget cap to a more realistic $2.5bn, while the government are requesting more flexibility in pricing, especially for more expensive therapies such as those in Oncology.
The economics of investing to tackle the healthcare crisis now instead of in the future should be persuasive to government, and while there are strategies that will require stakeholder collaboration, there are some clear steps they can take independently.
Cutting costs through control of pharmaceuticals is politically palatable, and a globally common approach; but these are always just a fraction of total healthcare expenditures. Part of the problem with supply is driven by the inefficiency of Greece’s market delivery system. Greece has 130 wholesalers, 10 times the EU average, and more than 12,000 pharmacies: (Bergstorm points to Sweden as a comparable county in population and density, yet there are only 1,300!). Syriza should take the opportunity to distinguish policy from populism and act to reduce this excess. Although employment could be affected through consolidations, the tradeoff in order to encourage a market delivery model based on volume will allow for cheaper care delivery removing the pressure on the costs, and therefore supply, of pharmaceuticals.
The government should also act to support those who are seeking to plug the gap in frontline care, charities such as Praxis. Pertsinduo spoke about the frustrating restrictions that prevent overseas NGOs from donating needed medical equipment and drugs, while she also pointed to the onerous drug registration processes that is also preventing the necessary generic manufacturers from entering the market.
This should be tackled, as it would support another key government priority: the implementation of an e-prescription system designed to encourage the prescription of generics. This hit stumbling blocks when attempted by the previous government, and it is important that this administration gets it right; it is a viable strategy to tackle the issue of ingrained consumption preferences.
By taking serious action on these other issues, the government will also be in a much stronger position to have the conversation on price with pharma. If industry sees the commitment to open the market to generics, they will of course have greater incentives to protect brand penetration by discussing price.
Pharma needs to show leadership
This shouldn’t be the case of the carrot or the stick however, and it is our position that if pharma wants to commit to patient-centricity then these are the issues that it must take leadership on. Greece has been shamefully treated by the financial community with punitive debt repayment expectations that will hinder not promote recovery, and Pharma should not make the same mistake. The concerns raised to deflect price negotiation have centered around parallel trade and reference pricing; while there is some foundation, there are routes around this.
Pharma can play a huge role in tackling this humanitarian crisis through donated products; this would be powerful statement of its commitment to patient centricity that will also not harm commercial interests.
Bergstorm points to the extensive patient support programs that were in place in the USA prior to the adoption of Obamacare, and Pertsinduo agrees that this could be a viable route to delivering support in the short-term. Broader reaching pricing discussions must also be had, with potential in a system of ‘duel pricing’ that features a declared public price alongside confidential discounting. This would reduce the risk that small price movements within Greece could have outsized effects due to its common utilization as a reference price in other markets.
The political support for this form of assistance is also clearly there within pharma. The industry as a whole has a good track record to extending support to underserved markets. In the case of Greece, Roche and Pfizer have both taken leadership here, through donating products worth a combined value of €3m. But pharma can, and should be encouraged to do more. Greece is a small market and it is in a position just now where it can’t pay. Pharma can play a huge role in tackling this humanitarian crisis through donated products; this would be powerful statement of its commitment to patient centricity that will also not harm commercial interests. Donations will protect the position of branded products in a market that is pushing to increase generic use, and they will not undermine the pricing of brands in other markets.
The government must also nurture this spirit and prioritize strategies that reach out to create a space for mutual discussion; current pricing management has occurred through opaque and changing fixed price legislation, alongside the application of claw-back rebates that have felt far from structured.
It is a story that ultimately calls for collaboration. The government should engage, not repel willing partners, and pharma should recognize the pressures that come in crisis and act to ensure that patients are not deprived of essential care. Both parties should take the risk and invest now to ensure that Greece makes a swift return to prosperity, something that will benefit all. It isn’t so much of a choice as a requirement; the alternative is intolerable, and completely preventable human suffering.
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