Proposed drug cost savings fall €50m short


THERE HAS been a shortfall of more than €50 million in expected savings from a cut-price scheme designed to reduce the State’s expenditure on prescription drugs, research to be published this week will show.

While €300 million savings had been predicted when the agreement between the Health Service Executive and the Irish Pharmaceutical Healthcare Association (IPHA) was signed in 2006, it has emerged that the actual savings over the lifetime of the scheme will be €248.5 million.

The findings mean the Minister for Health, Mary Harney, and the HSE now face additional and unexpected budgetary pressures at a time when drug savings proposals agreed as part of the over-70s deal with the Irish Medical Organisation have yet to be implemented.

An analysis carried out by the National Centre for Pharmacoeconomics at St James’s Hospital has found actual savings of €73 million were achieved between the start of the scheme in March 2007 and December 2008. Researchers, led by Dr Lesley Tilson, have calculated that a further €175 million savings will accrue between January 2009 and August 2010.

The agreement between the HSE and the pharmaceutical industry was aimed at reducing the price of medicines once their patent has expired.

The prices were cut in two phases: the first cut of 20 per cent was introduced in March 2007 and the second of 15 per cent began in January 2009.

In the Republic drugs, are classified under four categories: unbranded generic, branded generic, proprietary drugs with a generic equivalent and proprietary drugs that are still under patent and have no generic equivalent.

The national drugs bill has increased dramatically in recent years and the agreement was an effort to curb this increase.

The analysis found that some 25 per cent of prescription items were dispensed as a proprietary drug even though a generic version was available. For the medical card scheme alone this amounted to €163 million, while generic drug use was even lower in the long-term illness (LTI) and drug refund schemes.

A total of 81 different medicines comprising 267 different branded drugs and 574 equivalent generic preparations were reduced in price under the HSE/IPHA agreement. A further 19 medicines will have a 20 per cent price reduction as they come off patent between February 2009 and August 2010.

The researchers estimated that 86 per cent of the savings achieved came from price reductions on original brands with just 14 per cent of savings due to a reduction in the price of generic drugs. Over three-quarters of the State’s expenditure on community drug schemes is on patented medicines, reflecting a disappointing return in savings on generic drugs.

Dr Michael Barry, director of the National Centre for Pharmacoeconomics and consultant clinical pharmacologist at St James’s, said much greater savings could be achieved if the price of generic drugs was reduced by 20-30 per cent. “The majority of the savings have resulted from a price reduction in proprietary drugs,” he said.

Negotiations on a new agreement between the IPHA and the HSE are due to get under way later this year.