Roche says drug pricing agreement is hurting profits at its Irish unit

Swiss pharmaceutical giant Roche has warned that a revised pricing agreement on drug prices agreed between the Government and the body representing big pharma firms in Ireland will hit profits at its Irish subsidiary.

In newly filed accounts for Roche Products (Ireland) Ltd, the company said the Framework Agreement on the Supply and Pricing of Medicines, which was introduced in July 2016, would “have a serious negative impact on profit margins”.

The agreement between the Department of Health and the Irish Pharmaceutical Healthcare Association (IPHA) promised the Government more than 750 million in savings over the four years of the deal. However, there has been criticism of the accord, with the Healthcare Enterprise Alliance claiming that it fails to deliver the best value.

In the company accounts, which cover the 12 months to the end of 2016, Roche Products said the deal would hurt products in both that year and into 2017, when the full impact of the agreement would be felt.

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“These measures have a serious negative impact on profit margins as these losses to the top line flow straight to the bottom line,” the pharma giant said.

Roche said that it and other drug firms were “continuing to experience significant delays in the reimbursement of products,” adding that this had caused the launch of new products to be delayed with a knock-on effect for both the company and patients.

New medicines

“Despite this, the directors remain confident that the company has a positive future given the strength of the product pipeline with new medicines due in areas such as lung cancer, multiple sclerosis and haemophilia,” it said.

According to the accounts, Roche paid a €5 million dividend to its parent in 2016, unchanged from the previous year. This is despite pretax profits falling to €5.4 million from €5.88 million on revenue that rose to €109 million from €101 million.

The IPHA, which represents more than 30 pharma companies locally, claimed last year that Ireland is falling behind in access to new medicines despite the pricing agreement.

In a report published in September, it said recent medicine spend in the Republic has seen little to no growth while the number of patients being treated had jumped.

Roche’s other main Irish subsidiary, Roche Ireland Limited, reported a €78.5 million pre-tax loss last year after booking a €130 million writedown on its Clarecastle manufacturing plant in Co Clare in 2015.

The company recently confirmed it had yet to find a buyer for the facility and intends to proceed with plans to close the plant by 2019 with the loss of 240 jobs.