By Ben Hirschler
LONDON (Reuters) - The Greek government, battling a shortage of many medicines, has suspended all drug exports in the wake of a fresh round of price cuts, according to a notice from the country's drugs regulator.
The head of the National Organisation for Medicines (EOF), part of the health ministry, has also written to governments around Europe urging them not to refer to the latest reduced prices in Greece when setting their own medicine prices.
The move brings to a head a crisis that has been brewing for more than two years, following a series of Greek price cuts aimed at reining in healthcare costs. The cuts have made Greece a prime location for wholesalers to buy cheap products for re-export.
This so-called "parallel trade" in drugs is allowed under European Union rules protecting the free movement of goods.
With a quarter or more of all medicines shipped to Greece now being re-exported to higher priced markets like Germany, according to Europe's pharma trade body Efpia, the strains have reached breaking point.
EOF President Ionannis Tountas said in a letter to industry leaders on Tuesday - a copy of which was seen by Reuters - that he had recommended the temporary export suspension to keep supplies in Greece and avoid market shortages following a fresh round of price cuts.
News of the export moratorium was also posted on the EOF's website (www.eof.gr).
The new price cuts are designed to save some 300 million euros ($390 million) on off-patent drugs but the EOF said its list contained "errors" and should not be relied on by other countries as a point of reference in setting their own prices.
Tountas said the "exceptional measure" to end exports of all pharmaceuticals was being implemented with immediate effect. EOF will monitor compliance with the order and is ready to take further legal steps to enforce an export ban, he added.
Parallel trade and reference pricing are a growing headache for drugmakers as Greece and other indebted EU states slash drug prices to try and meet austerity budgets, triggering a knock-on effect on prices paid for medicines in other countries.
One way companies and governments are trying to deal with the current pricing pressure in Europe is by devising inventive money-off and pay-for-performance schemes that preserve list prices but still offer a better deal to healthcare systems.
Greece previously agreed with foreign lenders to cut spending on off-patent medicines, which make up around half the market, by 300 million euros. But it has only now published details for each product, triggering a wave of complaints from companies who claim the list contains numerous errors.
($1 = 0.7714 euros)
(Reporting by Ben Hirschler; Editing by Mark Potter)