Pharma firms fight back in Greece – a taste of what is to come in UK public procurement?

We are seeing something in Greece that may foreshadow issues around Europe and perhaps in the UK.

The Greek government has imposed a 25% price cut on pharmaceutical suppliers.  But they are not taking this lying down.

As the BBC reports:

The decision by Leo Pharma to suspend distribution of an anti blood-clotting agent and a remedy for psoriasis takes Greece one step closer towards an all-out boycott by medical suppliers.

Kristian Hart Hansen, a senior director of the company, said the 25% price reduction would encourage similar moves in other countries with large debt problems such as Ireland and Italy.

And here is the firm's side of the argument.

This is classic supply positioning and (as Professor Cox would no doubt say) a demonstration of where power in the supply chain really lies.  I can see some fascinating case studies arising as the UK government starts  its "'immediate negotiations to achieve cost reductions from the 70 major suppliers to government".  (D Laws, May 24th).

The issue raised by the firm here around the precedent it would set is exactly what has been worrying me about the UK's position; how can IBM or Balfour Beatty offer price reductions to the government without having every other customer immediately on the phone looking for the same?

So anyone who thinks the task described by David Laws will be easy should look carefully at the Greek experience, and think again....


First Voice

  1. Paul Snell:

    The Greek government doesn’t have a great record when it comes to buying things to assist the nations health. At the height of the swine flu pandemic the Daily Telegraph reported the health minister had ordered 16 million doses of the vaccine – in a country where the population is only 11 million. Helps to be prepared I guess …

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