Greece Debt Crisis Now Hits Drugmakers

The Greek government is cutting the prices on 1,551 medicines by up to 27 percent and the move may cause prices elsewhere in Europe to fall as parallel trading picks up. Meanwhile, the Hellenic Association of Pharmaceutical Companies, which reps local and international drugmakers, says the cuts may cause shortages and is considering legal action.

The cuts will "cause a dangerous domino effect on prices of medicines in several European countries, where Greece is a country of reference for the pricing of medicines," the trade group says in a statement. Many European countries set maximum drug prices in relation to prices in other EU states, including Greece.

After growing 64 percent in recent years, growth in the Greek pharma market is expected to drop to 1.5 percent this year and to total just 3.7 percent between now and 2014. The Greek government wants prices to reflect neighboring countries - Romania spends $528.30 per capita and Bulgaria spends $489.90, while Greece spends $3,092, according to PharmaTimes.

"Greek prices were already among the lowest in Europe, so cutting them again will ratchet up the pressure even further in terms of profitability for companies," Brendan Melck, an analyst at IHS Global Insight, tells Reuters. The new pricing will result in a weighted average price reduction of 21.5 percent, ranging from 3 percent for products with a wholesale value of 1 to 5 euros up to 27 percent for drugs priced above 100 euros.