Greece crisis: Greek medicine supply could be cut off, banks running out of cash
Published 29/06/2015 | 14:35
Drugmakers said they would continue to ship medicines to Greece in coming weeks, despite mounting unpaid bills, but warned supplies could be in jeopardy if Europe did not take emergency action.
Imports of life-saving medicines, along with energy, top the list of products at risk if Greece defaults on its debt and moves closer to exiting the euro zone.
Greeks woke up to the reality of a 'Grexit' this morning with bank withdrawals capped at €60 and many ATMs running out of cash.
In addition, the euro and stock markets slumped on the news with a debt default possible tomorrow and a Greek referendum on membership of the eurozone possible on Sunday.
Prime Minister Alexis Tsipras, who blindsided creditors by calling a referendum on the austerity cuts in the aid package proposed by the creditors, appeared on television on Sunday night to announce capital controls to prevent banks from collapsing.
Their imposition capped a dramatic weekend for Greece that has pushed the country towards a likely default on
€1.6bn of International Monetary Fund loans on Tuesday and closer to an exit from the euro currency bloc.
And Jean-Claude Juncker, who is head of the European Commission, asked Greeks to vote in favour of staying in the eurozone on Sunday in the planned referendum.
"I ask the Greek people to vote Yes in Sunday’s referendum, says Juncker. Vote Yes to stay in the euro," he said.
He added that the Greek people deserve to know the truth - accusing Athens of not telling the whole story.
"I will never let the Greek people down, ever – and I know that the Greek people don’t want to let the EU down," he pledged today.
Mr Claude Juncker, also said he felt "betrayed" by the "egotism" of Greece in the run-up to the collapsed talks.
Drugmakers warned today that medicine could also run out.
"In the worst-case scenario of 'Grexit', we believe the integrity of the medicines supply chain may be in jeopardy, which would create a risk to public health," the industry's trade association said in a letter to the European Commission.
A copy of the letter to EU Health Commissioner Vytenis Andriukaitis from Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations, was seen by Reuters.
Drug manufacturers face moral pressure not to cut off supplies and an emergency meeting of the Hellenic Association of Pharmaceutical Companies agreed on Monday to ensure supplies continued for the coming month.
But despite the action of individual companies there might still be shortages unless special steps are taken to stop the diversion of supplies to other countries.
Bergstrom said global companies like Roche, Novartis, Pfizer and Sanofi wanted to find a way to keep drugs flowing but needed support from the European Commission.
If Greece leaves the euro zone and reintroduces the drachma, the value of the new currency is likely to depreciate rapidly, creating a significant arbitrage opportunity for traders to re-export medicines to other European countries.
Such so-called parallel trade is allowed under European free trade rules but drugmakers argue temporary curbs should be considered by European authorities to prevent drug shortages in Greece.
Drug supplies could also be at risk from a more general breakdown in trading systems, since the Greek medicines supply chain is complex and involves several hundred wholesalers, who purchase and distribute drugs to pharmacies.
Reuters reported last month that drug companies were owed more than €1.1bn by Greek hospitals and the state-run health insurer EOPYY, after not being paid since December.
Greece represents less than 1 percent of world drugs sales but it could have a bigger knock-on effect on the wider market due to parallel trade and the practice of other countries referring to Greek prices for their own price setting.