Health officials had little sympathy with GPs and pharmacists on new fee cuts
Civil servants told Minister there was scope for additional reductions in payments
Representative bodies and individual healthcare professionals warned of consequences for services if proposed 7.5 per cent fee cuts were implemented by Department of Health. Photograph: Getty Images
Senior Department of Health officials had little sympathy with lobbying by healthcare professionals, including GPs and pharmacists, to hold off on further cuts in fees and their warnings about the consequences of such a move on services.
Instead, officials told Minister for Health James Reilly, following a consultation process earlier this year, that despite several rounds of reductions in payments in recent years, there was still scope for further cuts.
In July the Government invoked financial emergency legislation and announced cuts of about 7.5 per cent in fees for GPs, pharmacists and others, who are not HSE employees but provide services on a contract basis.
During the consultation process, representative bodies and individual doctors and pharmacists made submissions in which they generally warned of the consequences for services if additional cuts were imposed.
The official files in relation to consultation and the imposition of the new cuts, which have been seen by The Irish Times, show Department of Health officials rejected these arguments.
The Irish Pharmacy Union (IPU) told the department that pharmacists collectively had seen their income fall by €525 million (or about €316,000 per pharmacy) under previous cuts imposed by the Government between 2009 and 2012.
However, the department said that of this figure, €258 million related to a reduction in the wholesale mark-up paid to pharmacists. It said this was not a remunerative element of payment to pharmacists and should not be included.
“The department does not view the reduction in the wholesale margin as a reduction in income for pharmacists. It is a payment to cover wholesaler costs and was never intended to form part of pharmacists’ remuneration.”
The department said a similar argument could be made in relation to VAT. It said the HSE paid almost €86 million to pharmacists last year to cover VAT on ingredients and fees.
“Pharmacists paid this money over to the Revenue . . . VAT is not a remunerative element of payment to pharmacists.
“If the Government decided to cut VAT, we would not entertain a claim by pharmacists that that their income had been reduced.
“Excluding the wholesale margin reduction from the analysis, the reduction in direct pharmacy income over the period is €268 million or €94 million in 2012.”
The department told the Minister that while the IPU claimed that the cuts under the financial emergency legislation had resulted in a significant reduction in overall pharmacists’ income between 2009 and 2012, increased prescribing volumes had offset these reductions.
As a result, the 2012 payments to pharmacists were within 5 per cent of the 2009 figure and would exceed it by the end of this year.
Officials also said that there had been no evidence that the cuts imposed over recent years had impacted on the delivery of services.
There were more community pharmacy contracts in place last year than there were in 2008; 1,711 compared with 1,620.
The department said the IPU continued to argue that generic substitution should be introduced in advance of a reference pricing system as it would deliver immediate savings for the public.
However, the department said “the approach proposed by the IPU would enable pharmacists to dispense products which attracted the highest margins/discounts for the pharmacist but which would not guarantee savings for the patient or the State”.