drug detours In Europe, Medicines Take a Winding Road

A German journalist follows the path of a package of pills that has been reimported from Greece – and discovers a system of parallel imports throughout the European Union, a tortuous route that can lead to shortages and gouging.
The price of some medications differs widely across Europe.

 

This story begins with a visit to a Greek hospital. There, in the emergency room of Athen’s largest hospital, the Evangelismos, I see an emaciated man bent over in pain but getting no attention from anyone.

Standing nearby are exhausted and overworked doctors, who smoke cigarettes during their brief break. They say there is not only a lack of medical personnel, but increasingly of medicine, too.

This confirms reports from throughout the country about shortages of pain medication and drugs for fighting cancer, asthma and seizures.

I recall reading about German firms buying medicine in Greece that ultimately ends up in German drugstores. A television report from German station WDR stated:  “The amount of pharmaceuticals these companies have imported from Greece to Germany has increased fourfold from the beginning of the crisis in 2009 until 2014.”

This seems almost unbelievable. Are we taking the Greeks' medicine away from them? Are German patients benefiting from their suffering? How is it possible that a drug destined for Greece ends up in Germany? What's going on – shouldn't these kinds of economic mechanisms be prohibited?

Medicine crisscrosses Europe, sometimes from Country A to Country B and back again, using a technique called reimporting.

I traced the path of a drug from production through shipment to Greece all the way to its arrival at a German drugstore in an effort to understand how this trade works, who earns money from it and whom it harms.

I start where the drug's journey ends in the Engel Apotheke of Sven Villnow, not far from the Main Train Station in Hamburg. It looks like many other drugstores. Near the entrance is a shelf with Band-Aids, cough drops in front of the counter and a rack with magazines featuring health tips. Behind the counter is Sven Villnow, 51, his gray hair combed to the side, though a few unruly strands stick out.

Mr. Villnow is a druggist who knows his customers by name and accepts package deliveries for neighbors. He never wanted a second store. Sometimes, he wonders why his drugstore is frequented by people close to 80 years old, who believe they still should feel like 35-year-olds.

“As a druggist, it's good to think broadly about things,” he said.

What does Mr. Villnow think about drugs from Greece? On his desk are three small, white boxes. Printed on them is the name Avodart, which urologists prescribe for an enlarged prostate.

The package appears quite normal at first glance, but closer inspection reveals it’s been covered with a German label. On the upper right corner of the package, however, its clear for what country the medicine was intended. Written in Greek is a warning: “Caution: Suitable only for men.”

Mr. Villnow switches on the computer and types “Avodart” into a search window. A list of companies offering the drug appears with manufacturer GlaxoSmithKline at the top with a price of €123.64 ($138.79) for 90 tablets.

But listed below are a host of other companies offering Avodart at significantly lower prices. The package on Mr. Villnow's desk came from the German firm Kohlpharma and cost only €97.47, which is €26.17 lower than the GlaxoSmithKline price.

There are many similar companies with names such as CC Pharma, Beragena Arzneimittel, EMRAmed and Pharma Gerke. Their business models are built on the inconsistency of prices in European Union nations, allowing them to purchase drugs where they cost the least and sell them where prices are high.

 

Quelle: dpa
drugs kohlpharma example of relabeling source dpa
(Source: dpa)

 

Medicine crisscrosses Europe, sometimes from Country A to Country B and back again, using a technique called reimporting. More frequently, drugs travel from Country A to Country B to Country C, known as a parallel import.

Mr. Villnow’s ordering system doesn’t tell him where a reimport or parallel import originates, whether from France, Italy or Greece, but he is under constant pressure to fill a quota since drugstores are required to derive at least 5 percent of prescription drug sales from reimports and parallel imports.

Health insurance companies use it to save money.

If Mr. Villnow doesn't meet the quota, he must pay a penalty to the health funds.

Mr. Villnow seldom questions the system of reimports and parallel imports. He’s grown used to it. But now he gazes pensively at the Avodart on his desk.

“This passing back and forth throughout the world seems pretty stupid,” he said. Yet it saves German health insurers money with estimates varying from €91 million to €222 million per year. He acknowledges it’s a positive benefit.

One thing is clear. There is strong political support for reimports and parallel imports because medicine prices vary greatly in Europe. In Greece, for example, 90 doses of Avodart from original manufacturer GlaxoSmithKline don't cost €123.64, but €68.13, or €55.51 less.

These striking variations in price are the result of different health systems and the marketing strategies of manufacturers.

The reimports and parallel imports are designed to make price differences between countries less, so they actually serve a good purpose. But what happens when a politically sanctioned system collides with a crisis as in Greece? Can things continue as before?

A July press release from the Association of Research-Based Pharmaceutical Companies stated the firms would “continue to guarantee the delivery of medicine to Greece in spite of all lack of clarity and unmet payments in the past.”

The association called on the political establishment to assure the drugs would “actually reach Greek patients. We need a ban on exports of pharmaceutical products from Greece.”

A few days later, the Greek government passed such a prohibition, but only for 25 drugs.

Is the pharmaceutical industry sacrificing itself for the Greeks? Does it fall to politicians to prevent unscrupulous reimporters from thwarting those efforts?

I follow the path taken by the Avodart to Mr. Villnow’s drugstore, but in the opposite direction. Near the border to Luxembourg, between Saarbrücken and Trier, lies the tiny town of Merzig, where a compound of white, low-rise buildings is the shipping and logistics center of Kohlpharma, the company that delivered the Avodart to the drugstore in Hamburg.

The company can be seen as a gigantic relabeling machine. In the morning, trucks arrive with drugs, delivering 35,000 packages every day.

With 800 employees, the firm has annual sales of €700 million and is the largest importer of medication in Europe, though in comparison to major producers such as Bayer or GlaxoSmithKline with their revenues in the double-digit billions, Kohlpharma is a dwarf.

The company can be seen as a gigantic relabeling machine. In the morning, trucks arrive with drugs, delivering 35,000 packages every day. The packages travel along conveyor belts stretching for six kilometers (3.8 miles) in blue containers that look like shopping baskets.

If you take out a package, you can see from which country it was imported. Viskaldix, used for lowering high blood pressure, comes from France, while Elocon, which is similar to cortisone, comes from Greece.

Eventually, all the drugs end up in one of the production halls, where a crew made up almost exclusively of women put the blue boxes on white tables.

Stacked at workplace E04, for example, are 163 of the 90-pill packages of Avodart from Greece. An employee places a package on a narrow conveyor belt that leads to a silver machine, where a German label is glued onto the Greek package.

A second worker on the other side of the machine receives the package and inserts directions for use and other information written in German. The Greek drug has been transformed into a product that can be sold in Germany.

Jörg Geller, Kohlpharma’s managing director, is well aware reimporters are often held in low esteem and seeks to counter the perception. Kohlpharma has reimported 3,500 packages of Avodart so far this year from a total of six countries.

Of the six nations, Greece sits in the middle, price-wise. The company would prefer to purchase Avodart in nations where it is less expensive, such as Italy or Estonia.

Since 2009, Mr. Geller said, imports by his firm from Greece have declined by about 50 percent. On average, he added, drugs have not become cheaper, but more expensive. “Scarcity in Greece is mirrored in the prices,” he said.

After leaving Kohlpharma, I recall the WDR television news report. Wasn't it said that since the crisis, imports of medicine from Greece quadrupled?

Data from the Federal Statistics Office shows that, calculated in tons, that’s true, but what do the figures mean?

There are drugs that cost €50,000 or even €100,000 for just a few grams while others can be bought by the liter for only a few euros.

The value of imported medicines paints a different picture, declining continuously from €322 million in 2009 to €222 million in 2014.

The market research company IMS Health, which regularly determines where the reimports and parallel imports come from for 1,000 German drug stores, concludes the share from Greece fell from 19 percent in 2012 to 15 percent in 2014.

Compared to the entire European Union, the value of drugs exported from Greece has remained more or less constant since 2009.

The scarcity has another explanation. Over the same period, the value of Greece's imports of medicine from the E.U. fell from €2.5 billion to €1.8 billion. Generally, pharmaceutical firms are responsible for deliveries.

I spoke by telephone with a woman who works for the Greek wholesaler that bought the Avodart from GlaxoSmithKline and resold it to Kohlpharma. She insisted her name and the name of her company not appear in the newspaper.

Let's call her Melina.

Melina sought anonymity because she doesn't want to alienate the manufacturer her company depends on for deliveries. What she said doesn't fit the publicly polished image of generous, accommodating pharmaceutical companies proclaimed by the Association of Research-Based Pharmaceutical Companies.

The stopping point in this investigative journey was supposed to be Posnan, a town in Poland and the location of the factory that makes Avodart, but GlaxoSmithKline said it was not possible to visit the factory.

Before the crisis, Melina said, her company was given two or three weeks to pay invoices from manufacturers. Now, most will only deliver after prepayment.

It’s a difficult situation for Melina's company. On one hand, it must pay manufacturers immediately, but on the other hand, its own customers, primarily Greek drugstores, often pay their bills weeks or months later because the Greek state is virtually broke.

“We wholesalers are being squeezed by both sides because of the crisis,” Melina said.

A relatively clear picture of the situation emerges through the conversation with Melina. Since the Greek government lacks money to pay drugstores and hospitals, they cannot meet their obligations to the wholesalers.

Wholesalers, in turn, don't have the necessary funds to place orders with pharmaceutical companies after paying in advance. As a result, pharmaceutical firms send less medicine to Greece.

It’s difficult to condemn these actions. Pharmaceutical companies, after all, are not charities. But they can be criticized for presenting themselves through their professional association as selfless saviors.

And they shouldn't use the Greek crisis to prevent the reimports and parallel imports that have long been a thorn in their side, but actually have little to do with the problems of the Greek health system.

Melina said it is not the case that because of the crisis her company makes fewer shipments to Greek drugstores and more to foreign buyers.

The share of exports has remained constant at approximately 20 percent.

“If we no longer delivered to a domestic drugstore simply in order to get a better price abroad, the druggist would need only to pick up the telephone and complain to the manufacturer or to the Greek health authority,” she said. “Then, we would have a massive problem. We would no longer receive supplies and might even lose our license.”

What must be done to improve the situation in Greece? Perhaps we should start with the prices. Although many medications are less expensive in Greece than in Germany and imports make sense, in relative terms, Greece pays far more for drugs than Germany.

In 2013, the unitary Greek health insurance fund EOPYY used 44 percent of its entire budget for pharmaceutical products. For German statutory health insurers, purchases of drugs made up only 16.5 percent of the budget.

This is due primarily to the large share of expensive original medication.

Lower cost generics have a market share of 76 percent in Germany, but only 5 percent in Greece. Karl Lauterbach, a member of the Social Democratic Party of Germany politician with health expertise, blames the lobbying of manufacturers, a corrupt health system and false inducements for druggists for the situation.

“This is the main problem,” he said. “And here is where steps must be taken.” He sees little impact from reimports and parallel imports.

The stopping point in this investigative journey was supposed to be Posnan, a town in Poland and the location of the factory that makes Avodart, but GlaxoSmithKline said it was not possible to visit the factory.

Requests for a meeting at the company's German headquarters in Munich were also turned down. I submitted written questions seeking to learn what terms of credit the company gives its Greek customers and what outstanding debts it has with them.

Instead of answering the questions, the pharmaceutical firm offered a general statement: “For GSK, guaranteeing the adequate provision of medicine to patients has the highest priority. We continue to deliver our pharmaceuticals to Greece and have no knowledge of an undersupply of GSK therapeutic products in that market induced by the financial crisis. This includes delivery of and treatment with the product Avodart, about which you made a specific inquiry.”

What is strange is that GlaxoSmithKline products are on the list of medicines whose export are forbidden by the Greek government, though admittedly not Avodart, but instead vaccines and inhalation sprays.

But if there were no supply problems with these products, as GlaxoSmithKline said, why has their export been forbidden?

And so the picture becomes clear. Yes, there are medicines that are scarce in Greece, which is underscored by reports from doctors and patients. No, reimporters are not responsible for the situation.

Instead, those who blame them should be carefully scrutinized.

Pharmaceutical companies have enjoyed high earnings in Greece for years and now partly deliver their products only after advance payment. And there’s the Greek government, which pretends to be doing something with a ban on exports instead of taking concrete action.

 

This article originally appeared in Die Zeit. To contact the author: [email protected]