Pricing of medicines needs to be reformed, says IPHA president

Aidan Lyncht HSE should not be expected to pay for drugs that are not innovative

The Government and pharmaceutical companies need to fundamentally reform the approach to setting medicine prices, a spokesman for the major drug companies says.

And he acknowledges that the industry “should not expect the HSE to pay for medicines that are not innovative”.

Aidan Lynch, the vice-president and general manager of GSK (Ireland) Ltd, will tell a conference organised by the National Centre for Pharmacoeconomics (NCPE) today that the pace of innovation meant the pricing and supply agreements of the past would not work for the future.

The industry's existing four-year agreement with the State on pricing and supply of medicines expires next summer. The Irish Pharmaceutical Healthcare Association (IPHA) says it is looking for a mind-shift in how medicines spending is considered – from "a cost to be written off" to an "investment in outcomes".


“The future of medicines pricing and supply will be radically different to what has gone before – and all stakeholders, especially industry and the State, must be ready to embrace change,” according to Mr Lynch, who is also president of IPHA, which represents the major research pharma companies.

New medicines

He says the funding needed to support the introduction of new medicines will be higher than anything that can be saved by the HSE on older medicines.

“Interchangeability and reference pricing will continue to yield savings but on a diminishing basis. The biosimilars policy, once rolled out, will bring about some efficiencies,” he says.

“However, all of these combined will not cover the cost of new medicines. The old will not fully compensate for the new.”

In a major policy statement, the IPHA says it is open to looking at new ways to agree medicine prices, including looking at European models where drugs are reimbursed based on their effectiveness.

“The use of real-world data is increasingly a feature of reimbursement systems,” Mr Lynch tell delegates. “For that to work, there needs to be a willingness on the side of the State and industry to co-create registries and other tools that can be used to demonstrate effectiveness.

“In today’s world, innovation must be affordable. I, as a taxpayer, do not want the State to pay for anything that does not represent value, whether that’s a building or a medicine.”

Demographic pressures

The IPHA notes that the extra budget space this year for new medicines was just €10 million – “less than half of 1 per cent of the medicines budget or one-20th of 1 per cent of the total health budget”. It claims most other western European countries allow for a minimum of between 2 and 3 per cent to allow for demographic pressures and to provide for innovation.

The pharmaceutical association has been at loggerheads with the Government over delays in the introduction of new medicines in recent years.

In many cases, the NCPE, under Prof Michael Barry, which regulates the introduction of new medicines – assessing the clinical effectiveness of the medication, it impact on quality of life in health terms and whether the price proposed is justified in its view – rules that new drugs are simply not value for money at the initial price sought by the pharma company.

But budget constraints are also an issue. As early as February this year, Prof Barry said the new medicines budget for 2019 was already almost fully spent.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times