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Greece's Austerity Measures Put Patients at Risk


Pharmaceutical Companies withhold medicine from Greece, fearing that the medicine will be exported to other European countries. Greece is penalized for austerity measures it had been forced to implement. -   March 18, 2013
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Greece's Austerity Measures Put Patients at RiskSHIR HEVER, ECONOMIST, ALTERNATIVE INFORMATION CENTER: An acute shortage of medicine in Greece is causing uncertainty and can put patients throughout the country in immediate danger to their health. Large international pharmaceutical companies are intentionally withholding shipments of medicine to Greece in order to protect their profits.

Greece, wracked by an economic crisis, has been threatened by international organizations and by the powerful economies in the European Union. Under external pressure, the Greek government approved extreme austerity measures.

As a direct result of the austerity measures, the standard of living of Greeks has fallen. The average disposable income for Greek households has dropped in 2010 by 11.4 percent, and in 2011 by 10.7 percent. In both years, Greece had the steepest drop in household disposable among all 34 countries of the OECD.

But although the Greek government decided to continue to use the euro as the currency of Greece, preventing it from implementing expanding monetary policies, and although the domestic demand in Greece has plummeted between 2009 and 2012 by 26.9 percent (again, more than any OECD country), the prices in Greece continue to rise.

As a result of sharply raised taxes, Greek households find themselves paying more for their everyday needs. Energy costs have skyrocketed by nearly 50 percent in 2010 to 2011.

One of the reforms implemented by the Greek government in May 2010 in order to reduce public spending was to reduce the prices of 12,500 types of medicine by about 21.5 percent, thereby reducing the costs of financing Greece's health insurance costs. The government expected to save about EUR 1.9 billion per year by reducing drug prices and explained that it had no choice but to take this step.

One of the reasons for the Greek government's decision in 2010 was the fact that in the years leading up to the decision, Greeks have been spending an increasing share of their income on pharmaceutical products. While in 2004 the per-capita expenditure on drugs was USD 460, in 2007 it was already USD 677, a 47 percent increase and more than any other OECD country.

But despite the income generated by the Greek market for the pharmaceutical companies, large corporations, including AstraZeneca, GlaxoSmithKline, Pfizer, Roche, and Sanofi have decided to withhold drugs from the Greek market.

In June 2012, a medicine shortage was reported in Greece. Drug companies accused EOPYY, Greek's main health insurance fund, of owing them EUR 540 million. This February the shortage spread, and affects more drugs and more patients. Withheld drugs include, among other things, treatments for hepatitis, arthritis, bowel disease, hypertension, and high-cholesterol, as well as antibiotics and anesthetics.

Dimitris Karageorgiou, the secretary general of the Panhellinic Pharmaceutical Association, told The Guardian that drug supplies are down by about 90 percent.

At the same time, the Swiss Red Cross reduced supplies of donor blood to Greece, which has not paid its bills to the Red Cross in time.

The reason that the drug companies have decided to withhold the medicine is not just the fact that they will receive smaller revenues from the lower prices. After all, the cost of producing the drugs is a mere fraction of the price to the consumer. The reason is that the corporations are worried that Greeks will export the cheap drugs to other European countries. Because of the E.U. trade rules, the drugs could be exported without customs and sold for a lower price in other European countries, thereby threatening the profits of the corporations also in countries which were hurt less severely by the economic crisis.

Again, we see how membership in the E.U. has turned to be a mixed blessing at best for Greece. The country is punished for having a strong currency which it cannot control, a heavy debt which was accumulated through corruption and false promises, and for implementing spending cuts which were imposed on the government.

~~~

PAUL JAY, SENIOR EDITOR, TRNN: Did the Greek people have any choices here?

DAVID HARVEY, DISTINGUISHED PROFESSOR, CUNY: Yeah, I think they did. I think they should have defaulted.

~~~

HEVER: In a desperate attempt to appease the pharmaceutical companies, the Greek government has applied an export ban on about 60 drugs, and launched investigations against businesses suspected in breaking the ban.

If we look at the five large pharmaceutical corporations withholding drugs from Greece--AstraZeneca, GlaxoSmithKline, Pfizer, Roche, and Sanofi--we find that in 2011 the combined net profits of the five corporations reached over EUR 44 billion, meaning that the Greek government's move to reduce medicine costs in Greece is a drop in the sea compared to the profits of these companies.

For those who worry that drug companies need high revenues from their sales in order to finance the development of new medicine, it should be noted that each of the five large drug corporations has spent a smaller amount on their research and development than their net profits. Each corporation could double its research spending and remain profitable.

But one must remember that the corporations were not set up in order to fight illness. Their purpose is to generate profits for their stakeholders.

~~~

VOICEOVER: The health care landscape is constantly changing. Patients, physicians, and payers demand safer, more effective treatments, while investors search after robust and sustainable business models.

~~~

HEVER: For that purpose they employ scientists who have been trained in government-paid education systems. Greece, incidentally, closed or merged 1,976 schools in 2011 in order to reduce public spending.

The business model of pharmaceutical companies is based on the premise that human knowledge can be owned as property. The corporations maintain their high profits by keeping a monopoly over the right to produce drugs, and keep the formulas for life-saving or life-improving medicine a closely guarded secret for as long as possible. In order to accumulate these formulas, the companies have no qualms about benefiting from the fruits of a public education system. But in times of crisis, as Greece is facing now, the corporations have proven that they put profits over human lives.

This is Shir Hever for the Real News.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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