ESRI backs generic drugs move

The introduction of generic drugs to the Irish market presents the Government with a "good opportunity" to make substantial savings in pharmaceutical expenditure, the ESRI has said.

Budget Perspectives 2012, a paper published today by the institute, suggests high rates of spending on pharmaceuticals in Ireland could be attributable to the low penetration of generic drugs in the Irish market.

According to the report, OECD data shows per capita spending in 2009 on pharmaceuticals in Ireland was fourth highest among OECD countries after the United States, Canada and Greece.

Government spending on pharmaceuticals accounted for 1.7 per cent of GDP that year, substantially higher than the OECD average of 1.2 per cent.

The Irish Pharmaceutical Healthcare Association (IPHA), which represents the pharma sector in Ireland, said these figures predate concessions made by the industry which will save the State in the region of €200 million.

This figure is in addition to €300 million in savings agreed between the IPHA and the Health Service Executive in a 2006 deal on generic or ex-factory drugs.

A generic drug refers to any drug marketed under its chemical name without advertising and is subject to the same stringent regulations as any other approved drug.

While today's ESRI paper says the Government must give high priority to the promotion of generic subscriptions, it points out that merely permitting the subscription of such drugs may not be enough to ensure success in the market.

Incentives aimed at consumers are "particularly effective," the report says, while the role of the prescriber is described as "crucial."

The ESRI says the ideal approach, which the Government is planning to introduce, would be to jointly implement generic drug substitution and reference pricing.

Under such a system, lists will be drawn up by the HSE of all branded and generic drugs that can be used interchangeably. The State will only pay for the cheapest one for a medical card holder, regardless of which one is prescribed.

The IPHA said it “strongly disagrees” with the ESRI’s support for the joint approach.

The association said there is “no compelling argument that savings will be achieved” and added that such an approach would “remove the distinction between prescribing and dispensing which has served doctors, pharmacists and patients well.”

The ESRI report points out for the introduction of generic drugs to be successful, it must generate "at least" the savings outlined in the 2006 IPHA deal.

While it said it supports the need for efficiency and cost effectiveness in the Health Service, the IPHA said any further erosion of prices “is not tenable” and will “seriously damage” the industry which employs some 50,000 people in Ireland.

The association called “at the very least” for a “comprehensive” cost benefit analysis before such an approach is adopted.