Greece's cost reduction initiatives spurring drug shortages

on Thursday, January 12, 2012

Greece's cost reduction initiatives spurring drug shortages Greece's financial woes are well known by now, but the European nation's struggles are even affecting prices of medications, Bloomberg reports.

Greece famously tottered on the edge of economic destruction in 2011, as its budget deficit and massive debt load resulted in the ouster of the country's ruling administration. The nation's borrowing costs soared, as investors abandoned debt auctions for fear the country would default on its obligations.

As a result, Greece accepted a bailout package from the European Union and the International Monetary Fund that mandated it control its ballooning budget deficit. The financing helped calm global markets – at least for the time being – but officials were forced to implement sweeping austerity measures. They also raised taxes and created new ones altogether, all in an effort to avoid insolvency.

The drama has played out in headlines across the globe, but what does it actually mean for Greeks? While nations do not function exactly like businesses, there are many similarities. Greece essentially filed for bankruptcy protection, and its austerity measures are much like the business cost reduction initiatives companies carry out during times of fiscal strain.

Moreover, while companies battling insolvency routinely overhaul spend management and indirect spend, and refine supply chain management, Greek lawmakers' authorization of tax increases and approval of state expenditure cuts will ultimately have a similar effect.

While some economists assert such measures will have long-term positive effects on the Greek economy, there is no denying that in the short-term they are imposing stiff penalties on Greek citizens.

In the wake of the austerity measures, for example, Greeks have struggled to procure nearly all kinds of medications. Medicines such as the blood-thinner Clexane, the asthma treatment Flixotide and even aspirin have all but vanished from the country, according to data from the Panhellenic Association of Pharmacists.

In total, more than 50 percent of the 500 most widely used medications in Greece are currently affected by such shortages. While conceding the country's healthcare sector has been affected by its economic crisis, Greek lawmakers denied accusations that it is a "tragedy."

"It would be unrealistic to deny that there are many difficulties regarding all public services due to the financial crisis," Greek Ministry of Health secretary general Nicolaos Polyzos affirmed recently. "However, this cannot justify characterizing the current picture of [the] health sector in Greece as a ‘tragedy."

There are myriad factors driving up the costs of medications, but experts said the Greek government's policy of setting drug prices has contributed to the uptick. As a part of its cost reduction measures, Greece announced lower drug prices last year, but such policies have spurred wholesalers to sell supplies outside of the country, as they work to garner heftier prices for their products.

Greece's problems are particularly dire, but officials would do well to work with supply chain consulting firms if they want to reduce the amount of shortages currently plaguing the nation. Its healthcare system is so expansive – and government coffers so strained – that many wholesalers, drug manufacturers, hospitals and pharmacies must wait long periods of time before they receive payment. As a result, many such healthcare providers have had to scale back their business, or look elsewhere to drive sales.

"Wholesalers simply do not have the money anymore to play bank to the pharmacies," European Association of Euro-Pharmaceutical Companies secretary general Heinz Kobelt told the news provider.

While drug shortages have become more common in the U.S. over the past few years, they have largely resulted from manufacturing and procurement problems. In Greece, the problem is more acute, underscoring the systemic issues  complicating its path toward recovery.


 

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