A questionable trade-off
When many of the major multinational drug companies lobbied the Taoiseach to reverse a decision taken by the Health Service Executive (HSE) not to approve for payment new drugs and medicines, their resolve was clear.
A failure to do so, they suggested, created a risk of adverse “unintended consequences”. This was a warning to the Government, if not a threat, of less future investment in the Irish pharmaceutical sector, where 25,000 people are employed. Ireland depends on export-led growth for economic recovery. Nine of the 10 largest pharmaceutical companies in the world are located here, and drug exports remain central to economic growth.
The Government bowed to the lobbying pressure and reversed course. A key concern has been the high cost of medicines, which the Government has sought to reduce. This involved the HSE refusing to approve for payment some expensive new drugs and medicines, which the pharmaceutical industry felt breached its agreement with the Irish health authorities. A second and much less convincing argument was that lower prices in Ireland would have a knock-on effect in other European countries, depressing the profits of the pharmaceutical sector.
The settlement reached two months ago saw the HSE ban on new drugs and medicines lifted, once these were shown to be cost-effective. In return the pharmaceutical industry agreed to cut the cost of many commonly used medicines by an average of 10 per cent, to produce savings of €400 million for the State over three years. However, the very high cost of new drugs will reduce those savings by some €200 million. And even with these reductions, drug prices will still be higher in Ireland than most other countries. In the past the trade-off with the pharmaceutical industry seems to have involved an acceptance of high drug payments in return for the high employment and export benefits the industry has provided. That trade-off needs to be reassessed.