Estimating the Fiscal Effects of Public Pharmaceutical Expenditure Reduction in Greece

Abstract

The purpose of the present study is to estimate the impact of pharmaceutical spending reduction on public revenue, based on data from the national health accounts as well as on reports of Greece’s organizations. The methodology of the analysis is structured in two basic parts. The first part presents the urgency for rapid cutbacks on public pharmaceutical costs due to the financial crisis and provides a conceptual framework for the contribution of the Greek pharmaceutical branch to the country’s economy. In the second part, we perform a quantitative analysis for the estimation of multiplier effects of public pharmaceutical expenditure reduction on main revenue sources, such as taxes and social contributions. We also fit projection models with multipliers as regressands for the evaluation of the efficiency of the particular fiscal measure in the short run. According to the results, nearly half of the gains from the measure’s application is offset by financially equivalent decreases in the government’s revenue, i.e., losses in tax revenues and social security contributions alone, not considering any other direct or indirect costs. The findings of multipliers’ high value and increasing short-term trend imply the measure’s inefficiency henceforward and signal the risk of vicious circles that will provoke the economy’s deprivation of useful resources.

Impact of the financial crisis on COPD burden: Greece as a case study

“…Healthcare Services Provision) revealed 174 357 patients on COPD treatment, compared to the total number of almost 9.9 million who were reported to be insured in 2011 [13,96,97]. It is worth mentioning that 2 million patients were thereafter excluded from public insurance and, thus, could not access mainstream healthcare services.…”

Pharmaceutical Pricing Policy in Greece: Toward a Different Path

“…Small price reductions though not only are consistent with the budgetary targets of the country but also deter collateral financial damages of restrictive pharmaceutical policies, such as public revenue losses, which is currently a serious fiscal issue in Greece (15). …”

Pharmaceutical expenditure dynamics in the Balkan countries

“…Greece recorded much more intense recession effects in the pharmaceutical sector: in 2007 the pharmaceutical expenditure per capita in Greece was 2.22-times the pharmaceutical expenditure per capita in Serbia, whereas in 2012 it reduced to 1.76-times 17 . The Greek government enacted a number of fiscal policies in order to deal with the dramatic economic fluctuations caused by the global financial crisis, including the lowering of pharmaceutical prices, as well as setting the budget for pharmaceuticals to a fixed share of the gross domestic product 18 . It was projected that these restrictions would result in a considerable share (35-47%) of the outcome of pharmaceutical spending cutback becoming counterbalanced by the yielded loss in public revenues 18 .…”

“…The Greek government enacted a number of fiscal policies in order to deal with the dramatic economic fluctuations caused by the global financial crisis, including the lowering of pharmaceutical prices, as well as setting the budget for pharmaceuticals to a fixed share of the gross domestic product 18 . It was projected that these restrictions would result in a considerable share (35-47%) of the outcome of pharmaceutical spending cutback becoming counterbalanced by the yielded loss in public revenues 18 . An increase of pharmaceutical spending in Serbia coincided with the increasing trend in public debt which doubled during 2004-2012, and shortages of pharmaceuticals occurred more frequently compared to the period before 2008, due to substantial public debt towards pharmaceutical companies supplying the Eastern European market 17,19 .…”