SFEE’s Press Release regarding the accumulation of debts at IKA and military hospitals

Press Release

Halandri, February 14, 2012


• Pharmaceutical companies are may go out of business in the event of a haircut of the bonds they have acquired in settlement of overdue hospital debts.

• There is a noticeable risk of shortages in the supply of medicine.

Debts accumulated at IKA and military hospitals have reached explosive levels, coming close to €0.5 billion. SFEE is sounding a note of warning that, unless the government addresses the problem very soon, the supply to these institutions with pharmaceuticals will be in immediate danger.

The situation appears out of hand, especially at IKA, which seems to have informally suspended payments to pharmaceutical companies. End-2011 data that SFEE has collected from its members paint a very bleak picture:

– IKA’s total accumulated debts for pharmaceuticals supplied amount to €343.5 million.

– In 2011, IKA purchased pharmaceuticals worth €313 million. This means that the payments in arrears to suppliers have accumulated for a period of over one year.

– In 2010, IKA purchased pharmaceuticals worth €276 million, of which 16.8% remains unpaid.

– It is very worrying that invoices totaling 8.778 million issued before 2010.are also outstanding.

Equally alarming is the accumulation of debts at military hospitals, with overdue obligations to suppliers now exceeding €100 million! Given that annual purchases of pharmaceuticals by military hospitals represent an amount of roughly €40 million, it appears that pharmaceutical companies have not been paid for more than two years now.

Particularly in 2011, the problem seems to have spiraled out of control, as military hospitals paid only 15% of their pharmaceutical purchases for that year. In more detail, data as at 31 December 2011 show that:

• The outstanding debts of military hospitals to suppliers amount to €59 million, invoiced during the period from 1 January 2010 to 31 December 2011;

• Of this amount, €26.53 million were invoiced in 2010 and €32.54 million in 2011;

• In addition, there are debts of €52.506 million from invoices issued before 2010.

SFEE has proven in practice its awareness of the critical situation our country finds itself in. Over the past two years it agreed to painful and often unfair measures, doing its part to rationalize public pharmaceutical spending.

Pharmaceutical companies have already suffered a substantial financial loss by the very acquisition of the bonds in question; they have faced an increasing tax burden in the form of extraordinary levies, income tax, VAT, etc.; and more recently they agreed to offset an amount of €262 million representing the 2011 rebate and the reimbursement list ticket against their own claims on the government.

The President of SFEE, Mr Dionysios Filiotis, stated in this respect: “The accumulation of new debts, on top of past debts which in the context of the PSI are at risk of not been paid after all, will spell catastrophe, and it is quite probable hundreds of pharmaceutical companies and firms in the healthcare sector in general may already be facing the spectre of going out of business. The bonds that the government issued to pharmaceutical companies in settlement of their overdue claims are currently at risk of becoming worthless. We are sending a distress signal and appeal to the government for an effective solution to the problem before it is too late”.