The health service and individual patients are set to make significant savings in drug costs under a new price deal with manufacturers, a leading expert on pharmoeconomics has said.
Dr Michael Barry, clinical director of the National Centre for Pharmoeconomics at St James's Hospital and a senior lecturer and consultant clinical pharmacologist at Trinity College Dublin, said that one of the most important components of the new agreement is that the State will no longer pay a price premium for drugs that have come off patent.
"The agreement ensures that the Health Service Executive [ HSE] will no longer pay a price premium for many off-patent products compensating for the fact that the generic prescribing rate in the Republic is very low compared with other EU states," he said.
Under the new four-year agreement between the Irish Pharmaceutical Healthcare Association (IPHA) and the HSE, which comes into effect next month, the price to wholesalers for patent expired medicines will be reduced by 20 per cent.
This will be followed by a further 15 per cent reduction 22 months later.
Dr Barry confirmed that the 35 per cent reduction would apply to patients paying for their own medicines as well as those with medical cards and patients in the drug refund scheme whose drug costs are reimbursed by the State.
The price of newly developed drugs is also expected to drop substantially under a separate element of the agreement.
By extending the pricing mechanism (price basket) for new drugs to include cheaper reference countries, the price average used to fix the cost of new drugs in the Republic will be reduced.
"The inclusion of countries such as Belgium, Spain, Finland and Austria would be expected to reduce the price of medicines in Ireland which are among the highest in Europe at this point in time," Dr Barry told The Irish Times.
The Department of Health said the estimated full-year savings when the agreement is fully implemented will be in the region of €100 million.
The State's annual drug bill is currently €1.8 billion, representing some 15 per cent of public healthcare spending.
Meanwhile, a separate element of the agreement means that the HSE will have the right to carry out a value-for-money assessment on expensive drugs and medical devices.
It could, following a health technology assessment, decide not to reimburse the cost of a drug, meaning that medical card patients could have to pay for the treatment.
Estimating that some four to eight products would be assessed for cost-effectiveness each year, Dr Barry said "this is a major change to the existing agreement and for the first time allows the HSE to request evidence of the cost effectiveness of a new medicine".
"It is consistent with the approach in many EU states where there is an increasing emphasis on value for money from the drugs bill," according to Dr Barry.
The new agreement has been welcomed by Minister for HealthMary Harney and the IPHA.
"It will ensure that patients continue to have access to the most up-to-date and highest quality medicines when they need them," the association said.