Italy joins Europe-wide move to cut drug costs

Italy is taking new steps to rein in healthcare spending and reduce the country's drugs bill by imposing a cut in generic drug prices and curbs on reimbursement for more expensive medicines.

Italy joins a growing list of European countries that have acted to cut drug prices as part of austerity measures to tackle runaway budget deficits.

Under a package of measures, set out in a 176-page austerity program published on Tuesday, the price of off-patent generic drugs will be cut by 12.5 percent from June 2010 until the end of this year.

From 2011, reimbursement of generics will be limited to the cheapest version of a medicine within four therapeutic categories, with the lowest price established by a tender system.

The introduction of a tender system for purchases of generics follows similar action by Germany, where tendering has led to reduced prices.

Purchases of goods and services by the state health service above reference prices will have to be justified.

The measures should save the state 600 million euros ($733.8 million), according the austerity package.

($1=.8176 Euro)

(Reporting by Silvia Aloisi and Ben Hirschler; Editing by Hans Peters)