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GREECE: THE NOVARTIS SCANDAL IS JUST

THE TIP OF THE ICEBERG


First published in English in August 24, 2018

Greece is important for the pharma industry for its market, and because, as an EU
country, it can influence medicines prices in other countries through "external reference
pricing". It is therefore in the interest of pharma companies to keep drug prices high in
Greece. The struggle of the true Left and the unions is the only way to tackle both
corruption and austerity policies.

French version

GREECE: THE NOVARTIS SCANDAL IS JUST THE TIP OF THE ICEBERG

by Dr Antonis Karavas, hospital doctor,


unionist, "META" unionist group

Translation: Emmanuel (Manolis) Kosadinos

Source: https://rproject.gr/article/skandalo-novartis-i-koryfi-toy-pagovoynoy

Disclaimer: The publication on this blog of some cartoons with provocative or excessive content does not,
in any case, support the theses of the websites from which they were reproduced. Any caricatural
cartoon, by definition, is an exaggeration intending to stimulate the debate on the subject treated.

Athens, 02/22/18

Drug industrialists keep the feast going on at the expenses of the Greek working class and
people.
The feast of the Pharmaceutical Industry, financed by the growing profits generated by the
pharma business, is a permanent situation in Greece taking place at the expenses of the Greek
working class and people. Despite the reduction in government spending on
pharmaceuticals following the implementation of the memoranda, the collapse of public
spending has led to the gradual displacement of the cost of health services to the back of
the users; thus the majority of out of pocket payments are directed towards the earnings of
the pharmaceutical industry.

The restructuring of the pharma sector in the era of capitalist crisis aims to reduce public
pharmaceutical expenditure, without harming the capitalists of the branch while preserving their
profits. This change is occurring constantly and necessarily to the detriment of all other participants
of the drug market: by a sharp increase of out of pocket payments, by the reduction in the
quantity and quality of medicines supplied to hospitals, by brutal cuts in expenditures of the
pharmaceutical industry and massive layoffs , by a sharp reduction in the profits of
pharmacies, closures of pharmacies in the perspective of converting pharmacists into employees
of supermarkets and shopping centers on a 600 euros monthly salary basis.

The margin of profits of the pharma industry remains immense in Greece

The withdrawal of the State from pharmaceutical expenditure by the continued reduction of
reimbursement by EOPYY/ ΕΟΠΥΥ (1) has led to a dramatic increase of out of pocket payments
for medicine of insured persons. During the current governance, supposedly "Left wing" but
actually applying Right wing policies, the average rate of copayment has increased from 12%
to 28% for generics and more than 50% for drugs under license! The cost of medical drug
expenditure has become unbearable for retirees and the poor working class. The result is that
thousands of people are no longer able to buy their medicines, so they take them irregularly or
even stop them completely!

It is quite widely known that all pharmaceutical companies have sought to establish privileged
relationships with senior officials of all governments and that they even keep special departments
to develop and cultivate such relationships in order to occupy the best position in the Greek
market of pharmaceuticals and the highest prices.
It is significant that, until recently, the Greek Ministry of Commerce was the one competent for fixing
the prices of medicines, not taking into account any scientific criterion for making decisions. The
case of a Novartis anti-cancer drug is very instructing: it has obtained by agreement the multiple
price of that of an equivalent drug, containing a similar active substance. Moreover, in the
composition of the official Commission that negociates the prices of drugs the drug manufacturers
(through the Association of Pharmaceutical Companies of Greece - ΣΦΕΕ / SFEE) are
overepresented, while the employees of the pharma industry and of the Health Services are absent.

In recent years this authority has been transferred to the Greek Ministry of Health. By implementing
the latest "all in one" law bill (introducing a large package of neoliberal austerity measures) the
Greek government created a commission for "Health Technology Assessment (2) - HTA" (the use
of the English term as such by the Greek administration illustrates the country's neoliberal cultural
colonization from the memorandum and thereafter) whose function will be "the evaluation and
reimbursement of medicinal products for human use", making proposals to the Minister of Health
for authorizing access to the market of new drugs, periodically assessing those already in
circulation as well, with no involvement of the Greek National Agency for Medicinal Products (EOF /
ΕΟΦ), which was until now the competent authority at the scientific and health level for these
questions.

Greece is important for the pharmaceutical industry not only for its market, but also because, as a
country of the European Union, it can influence the prices negotiated by the drug companies in
other countries through the "external reference pricing (ERP)" clause
(3). It is therefore in the interest of the pharma companies that the prices of their pharmaceutical
products remain high in Greece. This explains why the "clawback" clause
(4), which in some countries requires the insurance funds to recover part of the margin on sales, is
comparatively high in Greece. This is accepted by the pharma companies so that the market
price of the drug in Greece is still kept high. It explains why that discount (rebate) can reach
25% in Greece, while in other countries where applied (Spain, Great Britain, etc.) it varies from 5%
to 10%. Nevertheless, the benefits of the drug industry are not the least affected because
their margin of profit is immense!

Big pharma corporations give ruthless battles to defend their markets

Commercial competition

The unveiling of the Novartis alleged bribery scandal comes out in the context of a growing
alignment of the interests of Greek capitalism with those of American imperialism.
The multinational pharma corporations are empires of immense power that do not yield markets to
their competitors and rely on their "mother State" to defend and develop their markets. When
Bayer, a German company, seriously threatened to invade the US pharmaceutical market with a
very competitive antilipidemic medicine, its rivals, through the US judicial system, attributed to that
drug the death of two patients, forcing Bayer to withdraw from this class of drugs.
Novartis, a firm representing German and Swiss interests, quickly rose through the ranks and
attracted the attention of US multinationals, which in the past have inflicted to Novartis a series of
judicial hassles, followed by fines.
Now, under the Trump presidency, those multinationals intensify their attacks, discovering an
unexpected ally, the pretendedly leftist SYRIZA government, which attempts to politically exploit the
alleged participation of prominent government officials of the PASOK (Social Democrats) and of
New Democracy (Right wing party) pretending to battle against corruption, in an ultimate effort of
political self-rescue while sinking in unpopularity because of its austerity policies.

The SYRIZA government, since having rejected the option of confrontation with the capitalists, is
condemned to wander between antagonistic capitalistic influences, whose only common
denominator is the wish to continually reduce social spending. On the complete opposite of such an
option, the building up of a broad social alliance of the working people, the employees and
scientists of the Health services, would be the necessary step and instrument to confront
the multinationals of the drugs industry, to work out and put to practice, in alliance with a
government of the true Left, the popular control over the pharma industry and thus
challenge the blackmail of the capitalists. It is in this direction that the Radical Left must today
strive.

Greece: The employees of the pharma business strive to defend their fundamental labor rights

What should a truly radical Left project stand for

The way to realise this project is to immediately develop public and social services for
pharmaceutical care, under workers control at all levels: research, production, wholesale,
distribution.

 The pillar of such a reform should be the immediate commissioning of a modern public
pharmaceutical industry under social control and the creation of a State Pharmacy
which initially would provide basic medicines at low cost, and gradually expand at the
expense of private capitalist sector. The chemical and pharmaceutical sector has been
highly developed for many decades in Greece. There is a valuable workforce and know-
how to move towards a modern national pharmaceutical industry through nationalization
without indemnity of those pharmaceutical companies being in cessation of activity
and the over indebted ones.
 This measure should be accompanied by other anti-capitalist measures in order to control
the drug companies: audit, reimbursement of debts to the State and to the social
insurance funds, end of tax immunity, ban on parallel exports, capital controls, etc.
Novartis, for instance, has modern, valuable medicines for multiple sclerosis.

 A truly Left government should not be limited to seek the political responsibilities of the
previous governments, but would force Novartis to compensate the Greek State or accept a
large drop in the price of these drugs and, in case of non compliance of the company,
it should seize the molecule and produce the drug by the State run industry.

 The market of pharmaceuticals and all the activities of the pharma companies should be
controlled by public institutions. For that purpose the Greek National Agency for
 Medicines (EOF / ΕΟΦ) and the Institute for Research and Pharmaceutical
Technology (IFET / ΙΦΕΤ) should be further invested and staffed. Research, continuing
education and training should be supervised and organised by public foundations
and institutions. Actually, those critics who assign responsibility to doctors and other
employees of the Health services for the actual misfunctionnings, knowingly conceal that
the financing of Congresses by the pharmaceutical companies is subject to agreement of
the Greek National Agency for Medicines. This administration, like all other public ones,
should require that companies finance really useful training programs taken from the
agenda of public research and public educational institutions.

 Restoration of the Labor Rights for the employees of the drug industry (collective
agreements, put an end to the layoffs)

The SYRIZA-ANEL government is trapped in the memoranda and the austerity policies that are
planned to succeed them. It is trapped in the constraint of serving capitalist interests and promote
benefits of the pharma companies, through transferring of Health care costs to users, since it
completely integrates the logic of commoditization of medicines. This government, unable to
confront the true scandal of the capitalist pharmaceutical industry, will be nothing more able to
confront Novartis and corrupt officials of previous governments. The risk would be then, that in its
powerlessness, it could choose to scapegoat doctors, health employees and scientists, that is to
say those least guilty in this affair.

Regarding the Novartis bribery scandal, the action of the Left, the unions and the popular
movement should be essential for the denunciation of both corruption, budget cuts in
health and the speculation of the pharmaceutical industry. The aim of this political
struggle should be to make pharmaceuticals a common good, not a commodity, and make
Health services public and accessible to all.
Pro-capitalist governments put forward various regulation systems which are often overridden

Glossary:

(1) EOPYY (ΕΟΠΥΥ) : National Organization for the Provision of Health Services, the Greek
administration, founded in 2011 under the memorandum, by the unification of the health branches
of the 10 main Greek insurance funds. EOPYY is financed by the social contributions of the
employees and employers and by the government. It byes health services from public run hospitals
and health centers and from contracted private doctors and clinics. It also reimburses
pharmaceutical care.
(2) Health Technology Assessment (HTA): the systematic evaluation of properties , effects
and/or impacts of health technologies and interventions. It covers both the direct, intended
consequences of technologies and interventions and their indirect, unintended consequences. In
the field of pharmaceuticals, HTA is used to aid decisions on the reimbursement of
pharmaceuticals or recommendations for their use. Pharmaceutical companies have to provide the
national authorities a full documentation based on HTA criteria in order to obtain market
authorization or reimbursement of their products.
(3) External reference pricing (ERP): the practice of using the price(s) of a pharmaceutical
product in one or several countries in order to derive a benchmark or reference price for the
purposes of setting or negotiating the price of the product in a given country.
(4) Clawback : a special contractual clause by which money already paid must be paid back under
certain conditions. In many drug reimbursement systems (such as in Greece) this clause is applied
to pharmacists and wholesalers who are constrained to pay back a percentage of the price of the
drugs sold to the Public payer. Parallel to that a regressive mark-up is applied proportionally to the
quantities sold.

Read more:

 Overview of external reference pricing systems in Europe (Cécile Rémuzat et al, in


Journal of market access and Health policy, 2015)
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4802694/
 Evidence summary 4 – Use of external reference pricing - WHO Guideline on
Country Pharmaceutical Pricing Policies, 2016
https://www.ncbi.nlm.nih.gov/books/NBK258618/

 Greek pharma industry unites against growing burden of clawback (Brendan


Melck, in IHS Markit Internet review, 2016) https://ihsmarkit.com/research-
analysis/greek-pharma-industry-unites-against-growing-burden-of-clawback.html

 Pharmaceutical regulation in 15 European countries (Dimitra Panteli, Francis


Arickx, Irina Cleemput et al., in Health Systems in Transition, Vol.18, N° 5, 2016)

 Pharmaceutical Regulation in Central and Eastern European Countries: A


Current Review (Pawel Kawalec, Tomas Tesar et al. in Frontiers in Pharmacology,
December 2017) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5741607/

 Overview of pharmaceutical pricing and reimbursement regulation in Europe


(Panos Kanavos, LSE Health and Social care, 2001) http://eprints.lse.ac.uk/21410/

 Qu'en est-il aujourd'hui de la protection sociale et de la santé en Grèce? (Emmanuel


Kosadinos in Mediapart blog) https://blogs.mediapart.fr/emmanuel-
kosadinos/blog/141217/quen-est-il-aujourdhui-de-la-protection-sociale-et-de-la-sante-en-
grece-0

 Novartis bribery claims: Greek MPs vote to investigate top politicians (The
Guardian, 02/22/2018) https://www.theguardian.com/world/2018/feb/22/greece-to-
investigate-top-politicians-over-novartis-bribery-claims

 Greece rocked by claims drug giant bribed former leaders (The Guardian,
02/12/2018) https://www.theguardian.com/world/2018/feb/12/greek-pm-calls-for-
inquiry-into-bribery-claims-against-two-predecessors

 Novartis hit by kickback lawsuits in US (published on Pharmaceutical Market Europe


(PME) website, 04/29/2013)
http://www.pmlive.com/pharma_news/novartis_hit_by_kickback_lawsuits_in_us_473996

 Pricing and reimbursement of innovative pharmaceuticals in France and the new


healthcare reform (Alexander Natz, Marie-Geneviève Campion in Fact; Health economics
and therapeutic pathways 2012; 13(2): 49- 60
https://journals.seedmedicalpublishers.com/index.php/FE/article/view/270/315

URL source: https://blogs.mediapart.fr/emmanuel-kosadinos/blog/240818/greece-novartis-


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