Price cuts on medicines will reduce State bill by €400m

THE COST of hundreds of commonly used medicines will drop by an average of 10 per cent as a result of the agreement reached by the Department of Health and the manufacturers of branded pharmaceuticals.

The deal will knock €400 million off the State’s drugs bill over the next three years, according to both Minister for Health James Reilly and the Irish Pharmaceutical Healthcare Association, which represents the makers of branded medicines.

It will also result in lower prices for consumers buying their medicines over the counter, so long as savings in wholesale prices are passed on by pharmacists.

The projected overall reduction equates to about 7 per cent of the State’s €1.9 billion annual spend on drugs, but sources close to the talks said the average price drop would be somewhat higher than this.

No details of the price reductions that will apply to individual drugs were available yesterday, but the HSE is expected to publish details of the reduced prices that will apply from next month on its website by the end of the week.

In return for making price concessions, the pharmaceutical companies won acceptance of the principle that new medicines will be approved under the HSE’s drug schemes once they have been proven to be cost effective.

This could result in substantial future costs for the health service, as some of the sophisticated new treatments being developed by drug companies are hugely expensive.

The HSE is spending an additional €30 million this year on providing just six new cancer, hepatitis C and anti-coagulant drugs.

The agreement will not affect the price of most generic drugs, but this is being tackled through talks with the manufacturers of these drugs and proposed new legislation.

Under the legislation which comes before the Dáil today, a pharmacist will be able to dispense a generic version of a medicine even when a specific brand has been prescribed.

If a patient wants a more expensive branded drug, they will have to pay the difference in price.

The agreement with the drug companies is welcome relief for Dr Reilly, who has been embroiled in controversy for the past month over the siting of primary care centres in his constituency.

A clearly pleased Minister described the new deal yesterday as a “good news story” for all patients and not just those suffering from serious illnesses.

“It’s a good news story for patients because patients who have to buy their medicines across the counter will find it more affordable now, it will be cheaper. And for those who have medical cards, it means that the money that had been going into producing the drugs they require will now be available for other services within the GMS,” he said.

Speaking during a visit to Limerick yesterday he admitted it had been difficult to bring about the deal, which he said “took a long time”.

Proposals to cut the cost of medicines were the subject of intensive lobbying of the Government by the pharmaceutical multinationals, which account for half of Irish exports and employ 25,000 people.

However, the Government was also coming under increasing pressure from the troika over the escalating deficit in the health service.

Under the agreement, the biggest price falls of up to 50 per cent will apply to drugs that are already off patent or are going off patent.

However, this represents a minority of these companies’ business as the IPHA represents research-based companies that derive most of their profits from new drugs still on patent. Some 400 of these patent protected drugs will be the subject of a price review, according to the terms of the agreement.

Average reductions of up to 16 per cent are promised from this process.

A taskforce on prescribing and dispensing is also to be set up with the aim of delivering further cost saving by encouraging “more cost conscious prescribing”.

The cost of medicines to the Irish consumers is among the highest in the world. One recent survey found that the Irish prices for patented drugs were 45 per cent higher than in Sweden.

Meanwhile, the makers of generic drugs can charge up to 95 per cent of the cost of the branded equivalent.