Spanish hospitals owe drug firms 7.5 billion

The amount Spain's public hospitals owe drug companies rose 11 percent to 5.12 billion euros ($7.5 billion) in the first quarter of 2011, industry association Farmaindustria said on Wednesday.

Spain's southern and eastern regions - home to an ageing population of expatriates and Spanish nationals - are the most indebted regions and accounted for some of the fastest growth in unpaid drug bills in the first few months of the year.

Spain's central government is putting pressure on its autonomous regions to cut their borrowings, currently at 40 percent of total spending, as part of plans to cut the public spending deficit to 6 percent of GDP this year from 9.2 percent in 2010.

The Socialist government has also been accused by the opposition Popular Party, or PP, of fudging the accounts in regions it lost to them in its recent rout at Spain's local elections. Spain's southern central region of Castille-La Mancha, which new PP leaders say has more debt than previous Socialist leaders admitted to, saw the fourth-largest growth in unpaid drug bills in the first quarter.

Drug debts were also high at hospitals in traditional PP strongholds like Valencia, where the high deficit could be made untenable by an increase in financing costs.

The Spanish government's deficit-cutting plan which was approved in 2010 aimed for a cut in pharmaceutical costs of 1.3 billion euros in 2010 and 2011.

Rating agency Moody's said on Wednesday that indebted European countries like Greece and Spain could push down drug prices by switching to more generic versions.