Speech by SFEE’s President, Mr. Konstantinos M. Frouzis

(Session: “Reforming Greece to restore growth, employment and competitiveness. Evaluating the progress over the last year, obstacles still to overcome”)


Intercontinental Hotel, Athens
16 April 2013

Ladies and Gentlemen,
Mmes and Messrs Ministers,
Good morning,

Thank you very much for your invitation to speak at this year’s Economist roundtable. I would like to congratulate the organizers of this event, which provides an important forum for an exchange of views and a review of current developments, enabling, above all, to reach conclusions that can prove useful in the process of restarting the economy.

This becomes all the more important at the current juncture, when more than ever we must regroup forces and move with careful steps in an effort, jointly undertaken by the government, the private sector and other stakeholders in the pharmaceutical sector, to define a new roadmap for a reversal of the recession.

Our common and overarching objective is to restart the economy. Steps have already been taken towards improving the key statistics of the Greek economy. These figures and indicators are reflected in the real economy. With regard to the pharmaceutical market, 2012 was a year when the government failed us, Greek and multinational companies alike, in all of our three shared goals, although it had our support.

These three goals refer to: (i) ensuring the access of patients to innovative medications and treatments; (ii) sound entrepreneurship and higher employment; and (iii) further rationalizing public pharmaceutical expenditure. The government focused on this third goal and called upon us for support for achieving it. We did provide that support, but we continue to see this goal as necessary but not sufficient by itself. As a policy it is rather short-sighted, counter-productive from a growth perspective, lacking a far-reaching vision or an intelligent design.

Nevertheless, we did our duty towards the Greek society and economy, helping to bring public pharmaceutical expenditure down from €5.5 billion in 2009 to €2.5 billion in 2013 (a reduction of €3 billion or 55% in four years!). However, this has not been enough to turn the unfavourable climate around.

Dear friends,
The pharmaceutical industry is one of the most important and promising sectors and a key driver of growth in our country. A study by McKinsey & Company identifies it among the six “rising stars” that can lead to an increase in GDP in the years ahead. Moreover, according to IOBE/FEIR, the economic footprint of the pharmaceutical sector (including wholesale and retail trade, exports to over 100 countries and the associated indirect impact) corresponds to €7.5 billion or 4% of the Greek GDP.

No lesser is the sector’s role in employment — especially given the declining path of employment in the last two years as a result of erroneous strategic choices by recent governments. The industry directly employs 23,000 people and generates as many as 135,000 jobs indirectly in the broader area of pharmaceutical-related occupations.

This is a huge economic footprint, which holds immense growth opportunities for the country, provided that we stop bringing about our own ruin! Common sense is urgently necessary, and in this respect, Messrs. Ministers and Mr. Reichenbach, your contribution can be crucial.

So we are here to discuss the day after and seek ways to reverse the recessionary trends. As far as we are concerned, this can only be achieved through the restoration of trust and credibility — nothing more, nothing less. Clearly, we are not quite there yet. In this context, Mr. Reichenbach, Messrs Ministers, let me draw your attention to the following points:

1. Implementation of legislation: There are many instances of the government’s failure to comply with its own enacted legislation including errors in pricing that deliberately remain uncorrected contrary to the law, thereby causing serious problems to the market. The consequences are multiple, such as supply shortages, re-exports, market distortions, etc.

2. The government seems to be fighting a war on innovation and research. For two and a half years now, no new medicinal products have been authorised in the Greek market. This has led to a number of distortions, rendering Greek patients to second-class citizens compared with their EU counterparts who already have access to innovative medications; a strong downward effect on employment; less investment and clinical trials; and less conference activity as a source of information for health professionals. In fact, the headquarters of many companies are very skeptical about the country’s innovation agenda, if there is one.

3. Although the country has secured the cash necessary for the payment of public sector arrears, virtually no payment has been effected, and the government’s standard excuse is that the relevant procedures take time. The will is there, but in practice there is no progress. The true reason is the indifference of some government officials. The term “fast-track”, which the Minister mentioned earlier, is probably unknown to most of the government officials who are apparently authorised to apply “fast-track” procedures to speed up the functioning of the system, but this never seems to happen! Meanwhile, as we are all striving to collect the arrears of 2011 (those of 2012 have not been paid either), the 2013 debts have begun to accumulate, too! This is thus a time bomb, and time is ticking away and pressing us all!

Messrs Ministers and Mr. Reichenbach, we suggest that you centralise all payments of hospitals at one point, i.e. the Ministry of Health. It is totally inefficient and unacceptable that suppliers are paid separately by each hospital and that in over 100 hospitals suppliers queue up to receive their dues. This is totally unproductive and does a disservice to transparency.

4. E-prescribing and e-governance: This is the most important legacy you could leave. Steps have been taken in this direction and, indeed, controlling the volumes and quality of prescriptions will be the key to rationalising expenditure over the next years. We stand ready to support and further advance this effort of the government.

5. The much-promoted target of 1% of GDP for pharmaceutical expenditure: this 1% target would apply to countries with normal GDP developments and certainly not to Greece which has been in recession for six years and seems set to face a seventh year of GDP contraction. In an economic environment like this, pharmaceutical expenditure, hence primary care, cannot be linked to GDP. This link is already leading to the collapse of primary care, which has adverse implications for patients and causes hospitalisation costs to soar. We suggest that pharmaceutical expenditure should instead be linked to an absolute level per citizen and that the expenditure target should be defined in terms of per capita spending rather than GDP. This would help restore a sense of equity and solidarity among EU citizens and build a Europe of citizens.

Mr. Reichenbach and Messrs. Ministers,
I think I have made a clear point about what you, as a government, could set as your goals. A critical factor of success in the effort to restart the economy will be the ability to restore trust and credibility. This process would, in my opinion, be best followed up by you personally and your colleagues rather than being delegated within the government.

Thank you very much for your attention.