THE HEALTH Service Executive faces a potential bill of €50 million as a result of a High Court ruling yesterday that it was in breach of contract over a reduction in payments made to pharmacists for dispensing drugs under various State schemes.
The HSE said yesterday that it "may" have to pay back that sum which has been generated so far as a result of the reductions in payments to pharmacists.
The HSE had reduced the margin paid to pharmaceutical wholesalers from 17 per cent to 8 per cent in a bid to save €100 million. However, as it had no direct relationship with wholesalers, to achieve this aim it reduced the reimbursement it paid to pharmacists for dispensing drugs and medicines. The HSE argued that the 17 per cent margin was shared between wholesalers and pharmacists in the form of discounts.
The president of the Irish Pharmacy Union, Liz Hoctor, said yesterday it now expected the HSE to immediately reverse its decision to cut payments to pharmacists, which was imposed on March 1st, and to repay the money deducted.
The union, the representative body for over 1,800 pharmacists, welcomed the judgment of Ms Justice Mary Finlay Geoghegan in the case, which was taken by Hickey's Pharmacies.
The judge ruled that the HSE and Department of Health were in breach of contract and could not unilaterally alter the reimbursement price of medicines under the terms of existing agreements and contracts.
The HSE budget for this year had been drawn up on the basis that it would generate €100 million in savings under the pharmacy price reductions. HSE chief Prof Brendan Drumm warned in March that if the pharmacy scheme did not go ahead, the money would have to be taken from frontline health services.
The HSE said last night that it welcomed the Commercial Court's clarification that the prices paid to pharmacies for medicines, under the existing pharmacy contract, can be changed following appropriate consultation with pharmacy representatives.
"The HSE welcomes this clarity in relation to the ability to lower the prices of medicines, which has been a substantive issue for the past year", it stated.
l In a separate development, the HSE is expected to tell trade union leaders today that under current proposals it could face a financial shortfall in funding of more than €1 billion next year.
It is understood that senior officials will say that the HSE has been asked to reduce spending by two per cent next year. The HSE believes that it needs an increase in funding of about 8 per cent to maintain existing service levels.
It is understood the HSE will tell the union leaders that if the proposals were introduced, it would mean having to operate with €1 billion less in funding that it believes it needs to maintain levels of service.