INSIDE THE WORLD OF BUSINESS

Accountancy and accountability

FOR THE 20 or so investors gathered at the tribunal into the conduct of accountant-turned-property investor Alan Hynes, yesterday was supposed to deliver accountability and culpability. Instead the main outcome of the public hearing was to cast a light on the closely-connected circles of Irish professional life and the difficulties of self-regulation.

The case was adjourned after two of the three members of the tribunal voluntarily stepped down after the question of possible conflicts of interest was raised.

That Michael Tyrrell and Aidan Connaughton, both experienced professionals, decided to step down from the process is to be commended. For once there was no attempt to magic away conflicts of interest behind “Chinese walls”. Finding replacements who have no connections to Hynes should not prove impossible.

The case also raises a broader question about the role and efficacy of CARB, the board that regulates the members of the Institute of Chartered Accountants.

While CARB has achieved some results – for example, the publication of its two-year investigation into Ernst Young’s role as auditors to Anglo Irish Bank last September – it has also been frustrated in its attempts to implement its own investigative procedures. Most notably, it was forced to postpone its investigation into four senior Anglo executives, including Seán FitzPatrick and David Drumm, last year at the behest of the DPP, amid concerns that it would prejudice criminal proceedings.

CARB is important to Chartered Accountants Ireland. In the wake of the banking scandals, the accountancy profession needs to demonstrate, to an increasingly dubious public, its commitment to the highest professional and ethical standards.

But whether a quasi-legal, self-regulatory model has sufficient authority to deal with the massive level of ineptitude and abuse of power that took place in relation to the banking system is questionable.

With the legal profession facing strong intervention from Minister for Justice Alan Shatter about its own regulatory body, lawyers would be forgiven for feeling affronted that the same demands are not being expected from the accountancy profession.

Harsh medicine for pharmaceutical sector

THE ESRI set the stage yesterday for what looks like some hard bargaining between the Health Service Executive and the pharmaceuticals sector in coming months in a report subtitled: “Getting a Bigger Bang for your Buck”.

The report, commissioned by the HSE, addresses three key areas – the high “factory gate” price of drugs in the Irish market, both “in patent” and generics; the need for more information from and competition among pharmacists; and the thorny issue of changing doctors’ prescribing practices.

With the current industry agreement on factory gate prices for prescription drugs up for renewal this year, the ESRI argues that moving from an “average” price among a basket of currencies to the more common “lowest basket price” model more prevalent in Europe would save tens of millions of euro.

Tendering for prices of the most widely used drugs and their generic rivals once off patent would also yield savings of at least 10 per cent, it argues, and possibly much more.

The least contentious element of its report would see pharmacists forced to display a breakdown of charges, something with which even the Pharmaceutical Society of Ireland has no issue.

The idea of fostering competition between pharmacies, while reflective of core ESRI policy, would require a change in the law. So, too, the idea of requiring doctors to default to generics unless they explain in writing why a branded alternative is necessary.

The proposed changes are likely to prove challenging for the pharma sector but are only the latest in a global squeeze on drug costs – which, in Ireland, account for 17 per cent, or €1.9 billion, of the healthcare budget.

Generic prices in Ireland remain well ahead of other jurisdictions, the ESRI says.

And with figures showing that, despite the recession, there has been a net gain of more than 100 in the number of pharmacies operating in the State, the sector will struggle to play the poor mouth just yet.