Deal to save State €750m on pharmaceutical drugs

The Government has signed a four-year deal with the pharmaceuticals sector that promises to deliver savings of €750 million on the State’s drugs bill.

It is expected those savings will provide scope for the HSE to pay for new, innovative treatments not yet on the market.

Savings to the €1.7 billion State drug bill, which will average €190 million a year, will be weighted towards the end of the four-year term.

However, the agreement has left open the possibility of decisions on approval for new drugs being decided as a result of lobbying of Ministers by the families of very ill patients for new but expensive treatments.

Overall, Minister for Health Simon Harris said the new agreement on pricing was "a good day for patients".

Drugs prices here will be compared against prices for the same drug in a basket of other countries that has been expanded to include such low-cost markets as Greece, Portugal and Italy in a move the Minister said should help bring Irish drug prices down towards the European average. “We had seen our drugs bill spiralling somewhat out of control,” said Mr Harris, “and we had seen that lack of headroom create significant problems in providing new drugs for Irish patients.”

Prices will also be subject to annual review, with the provision that the cost to the HSE can only fall, not rise, as a result of the periodic reviews. In previous agreements, price was set at the start of the term and government did not benefit from any subsequent fall in drug prices.

Review process

As part of the review process, drug companies will notify the HSE of new drugs in its pipeline it expects to bring to market within the next few years. Both sides said this should lead to better budgeting for potentially revolutionary new treatments.

The agreement also provides for an immediate 50 per cent cut to off-patent drugs once a generic alternative is available in the Irish market. In relation to new biologic drugs where developing “biosimilars” is a more complex and costly process, the mark-down will be effectively 30 per cent.

‘Better outcome’

The Minister, who had threatened to trigger a mechanism that would have automatically marked drugs down by 30 per cent, said the agreement was a “much better outcome... particularly to have a deal that will save more than we would have saved using automatic reimbursement”.

He said €600 million of the projected savings would come from branded pharmaceuticals and biopharmaceutical drugs. The balance – €150 million – is expected to come from the other drug companies producing generics or biosimilar products as well as pharmacists and elsewhere in the supply chain.

However, Sandra Gannon, Irish country head of the largest generics company, Teva, and president of generics lobby group the Healthcare Enterprise Alliance, said the deal was a missed opportunity.

She said the 30 per cent “artificial pricing clause” in the agreement would make it uneconomic for biosimilars to enter the Irish market.

As these newer biologics were by far the fastest-growing sector of the drugs market, she said as much as €300 million of promised savings under the deal were unlikely to be achieved. “It leaves Ireland alone in Europe and indeed one of the only countries in the world preventing competition in this part of the medicines market.”