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Drug Prices

Companies to pull products from Greek market after price cuts

by Lisa M. Jarvis
June 7, 2010 | A version of this story appeared in Volume 88, Issue 23

Amid significant drug-pricing pressure in Europe, pharmaceutical companies are taking a hard line with countries that they say have taken price cuts too far.

After Greece unveiled plans to cut drug prices by 25% on average, Novo Nordisk said it would withdraw its most modern insulin products from that country over the next three months. Meanwhile, fellow Danish drug firm Leo Pharma is pulling its dermatology and critical care products from Greece as well. Merck KGaA could be next to go, according to a research report by the investment bank Citigroup.

Withdrawing vital medications might seem like an extreme decision, but Leo Pharma points out that Greek drug prices, already the lowest in Europe, are also the reference point for prices in several other European countries.

Leo Pharma is in talks with Greek authorities to come up with an alternative to pulling out of the country. For now, the company says it sees “no other solution” than to withdraw some of its products from the Greek market. “A price reduction on our products of up to 37% will have severe consequences on our total business,” the firm says.

Many European countries are struggling under debt and aiming to reduce health care costs by lowering drug prices. Last week, the French government said it would cut $120 million from its health care budget by trimming drug prices, and Italy said it was snipping generic drug prices by 12.5% and would limit reimbursement on branded drugs. Spain just passed a bill reducing drug prices by 7.5%, except for drugs for rare diseases, which will be trimmed by 4.0%, according to the Citigroup report.


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