The fallout from the High Court ruling could prove very costly for the health service, writes Martin Wall
THE DISPUTE between pharmacists and the Health Service Executive (HSE), which culminated in yesterday's court judgment, stemmed directly from the Government's plans to reduce its expenditure on drugs and medicines.
The Government maintained that it paid out €1.745 billion last year on drugs and medicines for patients under various community schemes. Minister for Health Mary Harney contended that the State paid €600 million to wholesalers and pharmacists to bring drugs and medicines from the factory gate to the patient. She also maintained that the wholesale margin in Ireland was double the European average.
Under this process of reducing costs, the HSE sought to reduce the margin paid to pharmaceutical wholesalers from 17 per cent to 8 per cent in a bid to save €100 million this year.
It argued that the 17 per cent margin was shared between wholesalers and pharmacists in the form of discounts.
However, pharmacists claimed that the discounts had become an integral part of the viability of the sector and that the unilateral decision by the HSE would see their income reduced by about 30 per cent. They said that this could result in the closure of up to 300 outlets, up to 5,000 job losses and a diminution of services for patients.
Pharmacists launched a very strong campaign of political lobbying against the HSE price cutbacks. Separately a number of pharmacists initiated legal action against the HSE and it was on foot of one of these cases that yesterday's judgment was delivered.
For the HSE the ruling will add to its serious financial difficulties.
The HSE budget for this year had been drawn up on the basis that it would generate €100 million in savings from the pharmacy cost-reduction plan. It said yesterday that the reduction in the payments to pharmacists had so far produced €50 million in savings.
The IPU is seeking the HSE to immediately reverse its decision to cut the payments and to repay the money deducted.
Senior HSE sources said that it would not give up on its plans to reduce expenditure on drugs following the High Court ruling, although it is likely to seek to achieve this in a different way.
Informed sources said that one possible option open to the HSE would be to look at the price it pays for generic or non-brand name drugs. However, it remains to be seen how the HSE will deal with the potential loss of up to €100 million. Last March, HSE chief Prof Brendan Drumm said that if the €100 million cost- saving plan for the pharmacy sector did not go ahead, the money would have to be taken from frontline health services.