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Monday, February 13, 2012

Greece & US Top List of Big Drug Spenders - A Shared Sign of Debt Risk?

"Greece’s continuing high level of spending on medicines is a striking example of the broader problems facing the country as it battles under international pressure to cut public expenditure and rein in the nation’s debt," say the authors of a Financial Times article (see "Athens struggles to rein in medical excess").

If drug expenditure per capita and as a per cent of GDP is a measure of a country's financial instability, then the U.S. is in the same league as troubled Greece (see chart on left).

Interestingly, a Merck executive blamed rampant consumerism!

"There were no controls on spending in the past, the whole system favoured consumption," says the director for Merck, the US pharmaceutical group, in Greece. "It was not only supplier-led, but demand-led by doctors and patients."

The same could be said of the U.S., the gold standard among health systems that "favor" consumption. But if that Merck pharma executive were to say the same about the U.S. system, he probably would be sent off to an "emerging" market such as Russia.

P.S. Actually, we are not comparing apples to apples here. Greece is a one-payer healthcare system, whereas in the U.S. there are several payers -- including consumers. So, in terms of state debt, healthcare expenditures are a bigger factor in Greece than in the U.S. However, in the U.S. personal debt caused by healthcare expenditures can keep the economy sluggish and have an impact on the ability of the U.S. to pay its debts and fund the future.

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