European governments forced to work within significant budget cuts are choosing to cut spending on drugs to make savings fast, rather than lower spending on hospitals or reorganising health care.
Further to the significant problems in Greece, which has been in recession for five years, Spain, Portugal, Italy and Ireland have all been slashing spending on new medicines.
As a result of the budget cuts, the profit margins of pharmaceutical companies across Europe have been thinning or showing reduced growth for over a year as a consequence of austerity measures brought in to handle the financial crisis.
With less money arriving from European governments, the pharmaceutical industry is looking at financial concerns earlier and devote less money to scientific research for new medicines.
Richard Bergstrom, Director General of the European Federation of Pharmaceutical Industries and Associations, told the New York Times: “The euro crisis is forcing governments to restructure how they think about medications.”
He told InPharm that international reference pricing is threatening Europe’s “long-term innovative capability” as well as restricting access to drugs.
An even greater concern is the possibility that emergency price cuts to compensate for exceptional worsening of the situation, for example in Greece, could result in corresponding cuts in all other Member States, he said.
Over the last year, French hospitals and pharmacies spent 2.2% less on drugs, Italy spent 3.3% less and Spain saw an almost 9% drop in such spending.