Counting the cost of generic drugs

New legislation aims to allow pharmacists to substitute generic drugs for branded, but how will this translate into savings for the State, asks FIONA REDDAN

THE GOVERNMENT says the generic equivalents of brand name drugs are too expensive in Ireland; international evidence suggests they are over-priced; and consumers are voting with their wallets by stretching out prescriptions rather than getting them filled on time.

Now new legislation is making its way through the Oireachtas and is due to be enacted before the end of the year. But will this effort to resolve the situation actually work? And what of the Department of Health’s talks with the pharmaceutical industry?

At present, pharmacists are precluded from substituting prescribed branded drugs with a suitable generic. So, if your subscription says Plavix for example, then this is the drug you must get, even if there is a cheaper alternative.

While this is an unwelcome expense for private patients, for the State, which is paying out on behalf of medical card patients, it means that its drugs bill is significant.

Indeed, Ireland has one of the highest spend on pharmaceuticals, with OECD data for 2009 showing that Ireland was fourth highest among OECD countries after the United States, Canada and Greece.

Under the proposed Health (Pricing and Supply of Medical Goods) Bill 2012, pharmacists will soon be able to substitute drugs themselves, while the introduction of reference pricing – which is already common in other countries – will mean that if medical card patients want to receive a familiar brand that costs more than the reference price, then they will have to pay the additional cost.

It has been suggested that this could lead to savings of up to €100 million a year.

So far so good you might say, although there is likely to be some opposition to the legislation.

According to a spokesman for the Irish Pharmaceutical Healthcare Association (IPHA), which represents the makers of branded drugs, pharmaceutical companies would like to see more clarification on the Bill and are hoping to get some amendments as it goes through the process of being enacted.

Some in the industry argue that allowing pharmacists to substitute prescriptions takes away the clinical decision-making authority of doctors.

More problematic however, is the fact that even if branded drugs are replaced with their generic equivalent, it won’t necessarily lead to any great savings.

This is because the current agreement between the Health Service Executive (HSE) and the Association of Pharmaceutical Manufacturers in Ireland (APMI) provides that generic medicines can be priced at up to 98 per cent of the originator product.

So in some cases, even if the generic alternative is offered, the Government can expect to make savings of just 2 per cent.

Indeed a recent report suggested that the HSE pays about 12 times more than the NHS in Britain for generic drugs.

The APMI argues that prices are higher in Ireland because of the lower level of demand combined with the need to package products differently.