Reilly and drugs sector need to be seen to be cutting costs


BACKGROUND:It will be interesting to see if this deal will cool Ireland’s love affair with international drug firms, writes PAUL CULLEN,Health Correspondent

THE LAST time Minister for Health James Reilly announced a deal to great fanfare – with hospital consultants last month – the claimed agreement unravelled before the ink was dry.

The outcome from the Minister’s latest negotiations, an agreement to cut the State’s drugs bill by up to €400 million, is at least a done deal, but like the talks with the consultants caution is advised in assessing its merits.

The headline figures sound attractive but the details released yesterday were sketchy, and there was no breakdown to show how it is proposed to save €400 million over three years. The announcement was made by press release rather than press conference, leaving little opportunity for either the Minister or the drugs companies to answer questions.

It’s worth bearing in mind that the pharmaceutical industry claims to have made price reductions amounting to €600 million since 2006, and yet the cost of buying many medicines in Ireland remains extremely high.

Whatever about the content of the deal, both the Minister and the pharma industry urgently need to be seen to be cutting costs. Reilly is in desperate need of good news after a month of political controversy over the siting of primary care centres in his constituency; he also needs to tackle the yawning financial deficit in the health services.

The industry is feeling the pressure of public opinion over the cost of drugs, which surveys show are, in general, far higher than other countries in Europe.

This much-delayed agreement will make little inroad into the HSE’s deficit this year – an estimated €16 million in savings instead of the anticipated €60 to €70 million – but Dr Reilly can at least tell the troika it’s a start.

Talk of cuts of up to 50 per cent in the price of drugs is misleading, as this level of reduction applies only to older drugs whose patent has expired. Just as you wouldn’t expect to pay the full whack for last year’s car model or last season’s fashion, you wouldn’t expect to do so for older drugs that can be copied.

So what is happening to the price of the cutting-edge, patent-protected medicines the pharmaceutical firms make most of their money from? We’re told only that a once-off “price realignment” of unspecified size will apply. There’s a long way for prices to go down, given that a recent survey found Ireland had the highest prices in northern Europe.

What makes the drug firms so keen on this deal is that it opens the way for new treatments and medicines to be included for reimbursement under the medical card schemes. For the HSE, though, this can be something of a Trojan horse, delivering life-saving benefit for small numbers of patients at enormous cost. The effect could be to wipe out much of the promised savings achieved through cost reductions for older medicines. Two hepatitis C drugs, approved this year, will cost €30 million next year, for example. Earlier this year, the HSE estimated the total cost of approving known new drugs could be €300 million over five years.

The pharmaceutical industry is a huge earner for the economy, accounting for half of all exports. High drug prices are in part a payback for the 25,000 jobs in the industry so it will be interesting to see if this deal will lessen the love affair between Ireland and international drug companies.

The deal will have little impact on the price of common or garden generic medicines, which are often multiples of the price in Britain or Spain. The prices that non-medical cardholders pay will continue to depend on the pharmacist’s mark-up. To be fair, though, talks with the drugs makers are getting under way and legislation before the Dáil should see prices come down generally.