Driving Down The Cost Of Medicine

Author:Mr Michael Finn and Paul Clifford

Ireland, in common with many other jurisdictions, has experienced a significant level of debate and controversy regarding the prices of drugs supplied under state-sponsored community drugs schemes. Ireland's expenditure on medicines has reportedly been falling since 2009, despite an increasing level of medicine usage. This update discusses some recent initiatives that aim to drive down the state's medicines bill.

New pricing agreements with industry bodies

October 2012 saw the Irish Pharmaceutical Healthcare Association agree a new medicines supply agreement with the Department of Health and Children and the Health Service Executive (HSE). The three-year agreement, which took effect from November 1 2012, is said to provide €400 million in savings. Under the agreement, when a patent on a medicine expires, its price to wholesalers will be reduced to 70% of the original price. After 12 months, the price will be further reduced to 50% of the original price. For existing patent-expired medicines, the price was reduced to 60% of the original price on November 1, to be followed by a further reduction to 50% of the original price in November 2013. These reductions are in addition to a reported €600 million in savings provided by pharmaceutical companies since 2006. Recently, negotiations were also finalised with the Association of Pharmaceutical Manufacturers in Ireland, which represents generic manufacturers, which heralds further significant savings.

National Taskforce on Prescribing and Dispensing

A National Taskforce on Prescribing and Dispensing has been established to deliver additional cost savings by achieving more cost-conscious prescribing. Due to become operational before the end of 2012, it will:

address prescribing and dispensing of medicines from the perspective of quality and patient safety; and assess the suitability of maintaining supply of certain items with limited efficacy, where more appropriate items are available. Health (Pricing and Supply of Medical Goods) Bill 2012

In parallel with these changes, the Health (Pricing and Supply of Medical Goods) Bill 2012, published in July 2012, is making its way through the legislative process. The government envisages that, once enacted, this new legislation will further reduce expenditure by increasing the rate of generic prescribing, which currently stands at approximately 18%. Against this backdrop, the key objectives of the bill are discussed below.

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