Greek austerity fuels speculation in pharmaceuticals

The race to the bottom in drug prices in Europe has spawned an army of speculators buying medicines cheaply in one country – such as Greece and the UK – to sell in another at a much higher price, according to a report by business intelligence firm GlobalData. The UK drugs watchdog, the National Institute for Health and Clinical Excellence (Nice), has been putting pressure on drugmakers to lower their prices for many years. This has triggered shortages of some medicines. In crisis-stricken Greece, drug prices have been slashed dramatically, resulting in a lucrative carry trade for wholesalers, the report said. Greek price cuts are also being used as a benchmark for pricing in other countries, such as Germany. Germany, the world's third largest drug market, which has recently introduced price controls similar to the UK's Nice. When Sir Andrew Witty, the boss of GlaxoSmithKline and president of the European Federation of Pharmaceutical Industries and Associations, wrote to European leaders in June, he noted that the pharmaceutical industry had, through price cuts and discounts, contributed more than €7bn (£5.5bn) to Greece, Ireland, Italy, Portugal and Spain in 2010 and 2011 – equivalent to 8% of the industry's annual turnover in those markets. GlaxoSmithKline has been hit by price cuts averaging 7% imposed by European governments as part of austerity measures.