HSE not approving new drugs that generate additional costs

Donohoe told Harris in August he wanted ban on new medicines for remainder of year

The Health Service Executive is not at present approving any new drugs that generate additional costs, due to financial pressures.

The HSE said on Tuesday that it was authorising new drugs which were budget neutral or which resulted in savings being made.

The Irish Times has learned that in August Minster for Public Expenditure Paschal Donohoe wrote to Minister for Health Simon Harris indicating he wanted an embargo on the introduction of all new drugs until the end of the year due to financial difficulties in the health service.

Mr Donohoe also urged that the Department of Health retain €130 million it had held centrally in reserve for new developments in the health service which were scheduled to be put in place this year.


“The focus of your department needs to be on addressing the significant financial challenge facing the health budget rather than new initiatives”, Mr Donohoe told Mr Harris.

Mr Donohoe said he wanted to reiterate that this money along with other funding in possession of the HSE for developments should be held back pending further engagement with the Department of Public Expenditure.

“In the absence of credible plans by your department and real traction on cost-reducing measures, we will need to review these funds in order to contain expenditure to more acceptable levels.

“Therefore there is an imperative to ensure that these funds are not disbursed until this review has been completed. Furthermore I would again request that no new drugs are introduced for the remainder of 2019 as I understand that the full allocation for new drugs has been exhausted and you are projecting major overruns in the wider primary care reimbursement scheme.”

HSE reaction

Department of Health figures said the proposed ban on introducing new drugs or spending on planned developments did not go ahead in the end and the letter from Mr Donohoe formed part of the negotiations which led to the Government eventually agreeing to providing additional funding.

However the HSE said: “New applications that are either cost neutral or cost saving continue to be dealt with, however new applications requiring additional resource are being considered within the context of the funding available for 2020.”

The HSE said it had approved 29 new medicines to date in 2019 at an additional cost of €10 million in the current year and more than €200 million in cost over a five-year period.

The HSE said it had not received direction from the Department of Health on the issue of approving new drugs “other than to indicate that positive decisions to reimburse new medicines must be met from within the HSE’s annual budget allocation”.

As early as last February it was reported that the HSE was running out of money for the introduction of new drugs this year.

The Irish Pharmaceutical Healthcare Association, which represents the international research-based pharmaceutical industry in Ireland, said: "Budget 2020 provided a tax break for bookies but nothing for new medicines. That can't be the right priority. We need a new agreement that reliably delivers new medicines funded both by industry savings and exchequer funds. Without this, patients in Ireland will continue to be among the last in western Europe to benefit from new medicines."

Budget tensions

Mr Donohoe this week highlighted the budgetary control in the health service – experienced this year as the additional money which had to be provided by the exchequer – at about €300million, was half the level that needed to be allocated in 2018.

However, the background correspondence exchanged as part of the estimates process leading up to the budget reveal the tensions between the parties.

Mr Donohoe complained that in the light of a potential significant financial overrun, officials in the health service “have no cost mitigation list drawn up, have no intention to prepare one and, indeed, are of the view that they have no mandate to do so”.

Mr Donohoe said: “To be very clear, this is not an acceptable position.”

Martin Wall

Martin Wall

Martin Wall is Washington Correspondent of The Irish Times. He was previously industry correspondent