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EFPIA offers to cap Greek drug costs as debts escalate

Comes as Merck KGaA halts Erbitux supplies over unpaid bills

Greece flag

The European Federation of Pharmaceutical Industries and Associations (EFPIA) has offered to cap the cost of medicines it supplies to Greece in an attempt to solve the problem of unpaid drug bills and rising levels of debt in the country's healthcare sector.

The news comes just as Merck KGaA has followed through on its earlier threat to stop supplying some medicines to Greece after losing patience with unpaid bills.

According to Reuters, EFPIA has set a ceiling on out-patient pharmaceutical expenditure of €2.88bn in 2012, provided the Greek government commits to paying off outstanding debts and not allowing additional arrears to build up.

Pharma companies would pay back any overspend of the allocated budget, with each firm liable for a share proportional to their share of the market in Greece, says the news agency.

The financial turmoil in Greece shows no sign of abating, with figures releases last week indicating that the country's economy will shrink by nearly 5 per cent next year while government debts are set to rise to 189 per cent of economic output.

The continuing economic pressure - coupled with stringent austerity measures imposed by the EU as a condition of bailout funds - has meant that many Greek hospitals are falling further and further behind in payments to their pharma suppliers.

Meanwhile, Merck's chief financial officer Mathias Zachert told German newspaper Boersen-Zeitung that it had suspended shipments of cancer drug Erbitux (cetuximab) to Greece because of non-payment of bills, following in the footsteps of other pharma companies such as Roche and Biotest.

Zachert stressed that the action only involves Erbitux - which is used to treat colorectal and head and neck cancer, and for now is still available in pharmacies. The drug is Merck's second biggest product with sales of €440m in the first half of this year.

Zachert told Boersen-Zeitung that some EU governments such as Spain have taken measures to reduce hospitals' debts to the pharma industry, but the situation in many austerity-hit EU countries remains difficult.

Halting shipments is not the only weapon in the pharma company's arsenal when seeking to get settlement of unpaid invoices. Merck said in July it might block planned R&D investments in Portugal after unpaid drug bills swelled to "tens of millions of euros".

5th November 2012

From: Sales



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