Savings of €16m on drugs expected before year end

THE DEAL to cut the State’s drugs bill by up to €400 million over the next three years is expected to yield savings of €16 million before the end of this year.

The deal follows the conclusion of lengthy talks between the Department of Health, the Health Service Executive and the Irish Pharmaceutical Healthcare Association. The agreement will result in significant reductions for patients in the cost of drugs and greater access to new cutting-edge drugs for certain conditions, the department said.

The development will come as a relief to Minister for Health James Reilly, who has been heavily criticised recently over health spending overruns. The deficit in the HSE stood at €374 million at the end of last month.

Dr Reilly’s failure to cut drug costs was criticised by former minister of state Róisín Shortall after she resigned last month because of ongoing disagreements between the two politicians.

The expected saving of €16 million before the end of this year is considerably less than the projected €60 million to €70 million forecast by the Minister. It is estimated that the deal will generate gross savings of up to €116 million next year and considerable savings in both 2014 and 2015. The Irish Pharmacy Union welcomed the announcement but expressed concern at the lead-in time for price reductions, which take effect on November 1st. This would hit pharmacists with existing stocks, it said.

The department said half the financial value of the deal related to reductions in the cost of patent and off-patent drugs. The second half relates to the State securing the provision of new and innovative drugs for the duration of the agreement.

The Government has been heavily lobbied by international drug companies which employ 25,000 staff in Ireland. Their influence was implicitly recognised by Dr Reilly yesterday when he said the health of the broader economy was at stake. He said one company alone made a contribution of €880 million to the exchequer in a year.

Dr Reilly said he believed the Government had shown just how strong a hand it had in the deal that had been achieved. He said he believed it was a “very good deal” for patients and for the taxpayer.

He told RTÉ Radio that 60 per cent of the population paid for medicine over the counter and the deal would make them more affordable and accessible. In addition, where drugs were being accessed by patients on medical cards, the deal would free up funds in the health system for other patient services.

The deal would also guarantee access to new drugs as they became available.

He acknowledged it had been a “difficult” deal to reach in negotiations between the industry, the Department of Health and the HSE. But he said it was worth waiting for because it would benefit patients and the health service “in a major way” without undermining the pharmaceutical industry.

Although today’s deal will save the HSE significant sums of money, its impact for consumers is likely to be limited. This is because the prices of most generic drugs, which can range up to 94 per cent of those of their branded equivalents, are not affected.

The mark-up charged by pharmacists to private patients also remains unaffected. The prices Irish consumers pay for their medicines are among the highest in the world.

Talks between the department and drug companies collapsed last February after the industry walked out over disagreements about the inclusion of approved new drugs on the reimbursement list.

The cost of medicines in the health service was €1.9 billion in 2010 – almost 13 per cent of the total budget of €14.8 billion.