Novo Nordisk is refusing to reduce prices of its insulin products that are used in pen devices in Greece, in effect opposing government plans to cut pharmaceutical prices by up to 27 percent, outlined at the start of May Also see "Greece Lowers Drug Prices By Up To 27 Percent" - Pink Sheet, 5 May, 2010.).

The company is not planning to withdraw all of its products from the Greek market, however, as might have been the impression gathered from recent lay media coverage.

"Our business in Greece would become loss making and unsustainable if we accepted price cuts on our products of up to 25 percent," a Novo Nordisk spokesman commented in an interview. The price reductions would also have had a knock-on effect to countries that use Greek prices to set their prices, he added. Greek prices for pharmaceuticals are already among the lowest in Europe.

The move is therefore not an example of a pharmaceutical company putting profits before patients, the spokesman argued. The price of Novo Nordisk's older injectable human insulin products, which are marketed in vials, has been cut as requested by the Greek authorities. The company also continues to provide glucagon free of charge - it is the only supplier of this in the country.

Novo Nordisk continues to offer pen device insulins for sale in Greece at the old, pre-decree, price. It recognized that wholesalers would not place orders for the products because they would lose money when they are reimbursed.

The company is hoping that the May price decree will be withdrawn, and that, instead, the Greek price for its products will be calculated as the average of the three lowest prices in other European countries.

Refusing to play ball with the Greek authorities on the pricing of its newer and more popular products is still a radical move for Novo Nordisk and one that has only been replicated by one other company so far.

Fellow Danish company Leo Pharma, which specializes in dermatology, has said that it might withdraw 18 of its 29 products from Greece if an alternative to price cuts is not found. The 18 products are marketed for conditions that have alternative therapies, whereas the Leo products that would remain on the Greek market have no alternatives (Also see "LEO Pharma Pays $1 Billion To Get Its Psoriasis Drugs Back From Warner Chilcott" - Pink Sheet, 23 September, 2009.).

Prices Not Permanent

The Greek government's commerce department has tried to discourage other countries from using the new low prices in Greece in their own calculations.

In a letter to the Greek trade association, the Hellenic Association of Pharmaceutical Companies (SFEE), dated May 19, it claims that the new prices are temporary.

"Therefore current prices valid as per price bulletin No. 1/2010 (the May decree) should not be used as a point of reference for the calculation of prices of pharmaceutical products in other countries," it argues.

The commerce department also says that pharmaceutical companies may apply to the Greek Economy, Competitiveness and Shipping Ministry if they object to the new low prices. The ministry will adjust prices if changes can be justified, although it does not say what justification should be provided.

Bonds To Settle Hospital Debts

Another health care-related economic issue that the Greek government is attempting to tackle at the same time as pharmaceutical pricing is public hospital debts.

The hospitals owe suppliers, including pharmaceutical and medical device companies, more than €5.6 billion, and the government is offering a mix of cash and "negotiable Greek State bonds" to settle the debts. The €230 million in cash is for debts incurred in 2005 and 2006, with the bonds being offered for the remainder of the debt.

- John Davis (j.davis@elsevier.com )

Novo Nordisk Faced Tough Decision in Greece: Cut Prices And Make A Loss Or Oppose Government Plans

More from Europe

More from Geography