COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 16 Jan 2003

Vol. 1 No. 5

2001 Annual Report of the Comptroller and Auditor General and Appropriation Accounts.

Vote 33 - Health and Children.

Chairman

Witnesses should be aware that they do not enjoy absolute privilege and are apprised as follows. The attention of members and witnesses is drawn to the fact that, as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997 grants certain rights to persons identified in the course of the committee's proceedings. These rights include the right to give evidence, the right to produce or send documents to the committee, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses. For most parties, rights may only be exercised with the consent of the committee. Persons being invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of these rights and provided with a transcript of the relevant parts of the committee's proceedings if the committee considers it appropriate in the interests of justice.

Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members also of the provisions within Standing Orders 156 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the objectives of such policies.

I welcome the delegation and invite Mr. Kelly, Secretary General, Department of Health and Children to introduce his officials.

Mr. Michael Kelly

I am accompanied by Ms Helen Minogue, assistant principal officer, finance unit; Mr. Dermot Smyth, assistant secretary, finance unit; Mr. Tom Mooney, deputy secretary, primary care division, and Mr. Bernard Carey, principal officer, GMS division.

Chairman

I welcome also officials from the Department of Finance.

Mr. Purcell

With your permission we will deal with section 9.1, which draws attention to issues arising from the decision to extend the medical card scheme to all those aged 70 years or over regardless of means. The decision to extend the scheme was announced by the Minister for Finance during his budget speech in December 2000. The new arrangements were implemented with effect from July 2001.

Normally when proposals involving increased public expenditure are being developed, the potential cost is estimated in order to assist the decision making process. This requirement has recently been reiterated in the report of the working group on the accountability of Secretaries General and accounting officers, which was before the committee in correspondence this morning. It states that the responsibilities of accounting officers include "ensuring that all relevant financial considerations are taken into account and, where necessary, brought to the attention of the Minister where they concern the preparation and implementation of policy proposals relating to income or expenditure for which he or she is accounting officer". What happened in this case did not make it up to that standard. In response to my inquiries, the accounting officer of the Department of Health and Children informed me that the Department of Finance only made his Department aware of the decision to extend the scheme a few days before its announcement in the budget. After informal oral contacts between officials of both Departments about the cost implications of this initiative, the Department of Health and Children supplied such data as were readily available to it in the short time involved.

The figure put in the budget was £7 million, nearly €9 million, and that was to cover the second half of 2001. The revised cost estimate, however, for the full year 2002 has been calculated at about €55 million, and that is after taking account of estimated consequential savings of €28 million on the drugs payment scheme. There were two main reasons for the increased costs. First, it was estimated that 39,000 additional persons would be covered by the new scheme while the real figure turned out to be about double that. Second, the rate of capitation at which participating GPs are paid for newly eligible persons aged 70 or over is a multiple of that applying to existing medical card holders. The details are contained in the report because it would vary depending on distance and so on from the doctor's surgery. In addition, a form of compensation had to be negotiated with the pharmacists for the loss of their 50% retail mark-up on the ingredient cost of medicines for persons over 70 who had hitherto been private customers of those pharmacists.

When the numbers availing of the scheme began to mount up, it became clear there was something wrong with the data on which the estimates were based. It was established that there were serious inaccuracies in the health boards and GMS databases arising from duplicates and failure to remove persons who had either died or moved away. An initial exercise was carried out which led to the removal from the system of 15,000 surplus medical cards in the 70 and over category. In light of the findings, the validation of all those on medical card databases is being undertaken. The fact that the numbers on the databases were inflated meant that doctors were being paid capitation fees for non-existent patients. They would have been duplicates or what we might call "ghosts" - people who had died or perhaps moved away.

GMS research indicates that the resultant overpayments to doctors could be in the region of €12 million annually. The quantification of the actual amounts overpaid awaits the completion of the validation exercise on all medical card databases and the matter of recovering the overpayments will have to be addressed at that stage.

In the past I have shared my concern with this committee about proposals being adopted in the absence of reliable information on costs. I want to make it clear that I am not taking issue with the merits of the policy or the policy objectives concerned in this case as I am rightly precluded from doing so. What I can say, however, is that effective management of taxpayers' money demands that spending proposals are properly costed before commitment decisions are made. The speedy implementation of the management information framework in Departments is apposite in this regard.

In so far as the problem of the surplus medical cards is concerned, I would like to notify the committee that I am building on some of my earlier work in this area with a view to including the findings in a general report on matters arising from my audits in the health sector.

Chairman

Would Mr. Kelly like to make a brief opening statement?

Mr. Michael Kelly

The account given in the annual report of the Comptroller and Auditor General for 2001 fully and fairly reflects my detailed response to queries raised by him in relation to this particular matter. I would like to avail of the opportunity today to bring the Committee of Public Accounts up to date on developments since the presentation of the comptroller's report to Dáil Éireann on 13 December 2002.

As the committee is aware, the implementation of the Government initiative extending automatic medical card eligibility to persons aged over 70 years brought to light inaccuracies in the GMS lists of medical card holders in that age category maintained by health boards. In response to these inaccuracies, the Department instructed all health boards to carry out a review of their over 70s medical card lists. This initial exercise resulted in excess of 15,200 duplicate entries and entries for deceased persons being removed from those lists.

Given this outcome in relation to the over-70s population, the Department subsequently requested the chief executive officers in the health boards to carry out a full review of the entire GMS list for their functional areas. The health boards executive is co-ordinating this comprehensive review and a dedicated project team has been assigned lead responsibility for overseeing the exercise which is expected to be completed early next month. Since the inaccuracies in the GMS databases came to light, in the region of 25,300 medical cards, including some 22,700 cards relating to persons aged 70 and over, have so far been removed from the system.

The following matters are also being addressed as part of the HBE medical card project: ongoing management and control of the GMS register; administrative procedures for medical card processing and review; information systems integration and development; modernisation of application and review forms; customer satisfaction measurement; and development of a training strategy and staff training courses.

This review, which was initiated by the Department, has uncovered a number of serious weaknesses in the processes employed by health boards to monitor and update databases related to the medical card population. The Department is now working with the health boards to ensure that the necessary systems are put in place so that GMS lists are properly managed into the future and that more rigorous arrangements for reviewing the eligibility of medical card holders and tracing mobility between health boards or between GMS lists are put in place.

As indicated in the report of the Comptroller and Auditor General, the GMS (Payments) Board estimates that the overpayment of capitation payments made to doctors arising from inaccuracies in the databases is in the region of €12 million in 2002. However, the full extent of the overpayments in respect of all age categories will not be determined until the full review of the entire GMS list has been completed next month. When the final position is known, arrangements will then be made to seek recovery of overpayments from the doctors concerned. A national approach will be adopted to this and prior discussions are planned with the Irish Medical Organisation with a view to agreeing a methodology for the recovery of the overpayments.

Steps have also been taken to review the governance and overall level of accountability operating in the general medical schemes. Deloitte and Touche has been contacted by the Department to undertake this review, identify any weaknesses in the present governance and accountability arrangements and make proposals to address any inadequacies identified. The terms of reference include an examination of the roles and responsibilities of the Department of Health and Children, the health boards and the GMS (Payments) Board. The report of the review is currently being finalised by Deloitte & Touche and the Department is committed to taking whatever corrective action is necessary to improve governance and accountability in the GMS schemes. In addition, the position of the GMS (Payments) Board within the health system forms part of the overall audit of structures and functions currently being undertaken by Prospectus consultants. That project is also nearing completion and its findings and recommendations, subject to Government approval, will most likely have implications for all organisations within the health system, including the GMS (Payments) Board.

Deputy Rabbitte

Is there a hard copy of Mr. Kelly's statement in our papers?

Chairman

Yes.

Deputy McCormack

I find it extraordinary that there was no liaison between the Department of Finance - I am dealing with the medical card section; I will leave the refund of drugs scheme to the other members - and the Department of Health and Children about a major initiative such as this one. No warning was given and it appears somebody thought this up as an election gimmick or something that would look well in terms of the election due to be held shortly afterwards. Clearly it was not planned. It was a last minute decision. Should there not have been liaison between the Department of Finance and the Department of Health and Children in terms of such a major announcement?

I want to deal with some aspects of this decision. It was announced in the 2002 budget. The health boards were formally advised of the budget measures in January 2001 so they were aware of it from December. They were formally made aware of it in 2001 yet they were not able to get any indication about what this measure would cost. They first based it on a cost of €19 million with 39,000 persons becoming eligible and then, on further investigation, the figure was 70,000 costing €51 million. That is extraordinary and there is no logical explanation for it in any of the reports before us. They state that more recent papers on the file suggested that the database on which the original estimate of 39,000 potential applicants was based was inaccurate and not up to date. When did those more recent papers become available on the file? In other words, what new information was available that changed the figure from 39,000 to 70,000 people?

I want to ask some further questions. There was a miscalculation of about 30,000 persons——

Chairman

Perhaps Mr. Kelly would like to reply to those questions first.

Mr. Kelly

I do not mind.

Chairman

If we log up too many questions it will be difficult to get replies.

Mr. Kelly

Deputy McCormack raised a number of points and I will do my best to reply to them. On the first one about the short timescale, while I agree that as a matter of good practice in public management an ideal position would be that there would be plenty of time in advance to prepare costings and so on, the reality of the position faced by the people working on this in the Department of Health and Children at the time was that within a matter of days, as I understand it, whatever data was available had to be assembled and supplied to the Department of Finance in relation to this particular initiative. I am not taking away from the argument that in an ideal world that is not how significant policy developments would be advanced and implemented but that is the reality of the position the Department found itself in at the time.

In relation to the emerging problem and the timing in terms of detection and so on, as the scheme was implemented in the second half of 2001 and watching the data being put together by the GMS (Payments) Board in relation to, first, costs overall in the GMS schemes and, second, the number of people aged over 70 registering on the GMS (Payments) Board's database, it became obvious that the trend we were seeing was not in line with the assumption of 39,000 that had been made in advance. The reason that assumption was made was that at that time there was confidence in the Department in the databases held by the health boards on the numbers of people already registered for a medical card in the relevant age groups. Having watched what happened, the realisation began to dawn later in 2001, and certainly in the early parts of 2002, that there was a serious problem emerging and we acted in raising our concerns about this with the health boards as soon as it became evident and I subsequently wrote a letter to each chief executive officer telling them that we would have to seriously review the databases because there was a serious misalignment between what was emerging in terms of claims on the GMS (Payments) Board and what their databases were showing.

In relation to the opportunity the health boards had to prepare for this, in fairness to them, there was one aspect of this estimation of costs over which they could have had no control and that was the outcome of the negotiations to take place with the Irish Medical Organisation and the Irish Pharmaceutical Union on the terms on which GPs and pharmacists were prepared to get involved in this extension of eligibility to people aged over 70. At the time, and having done some initial checks over a period of months, the boards had confidence in the databases and it was not until a full root and branch examination of the databases was carried out in each health board that the true figures as they are emerging now actually came to light.

Chairman

Will Mr. Errity comment on his position in terms of the level of notice given by the Department and the accrued cost which is now apparent?

Mr. Michael Errity

As I was not in the section at the time of this decision, I can only indicate my understanding of what happened. As the Secretary General has already said, the timeframe for this decision was very short. We were advised that the Government had taken the decision to take this policy initiative very late in the day. We immediately contacted the Department of Health and Children for costings of the proposal and on the basis of the data it had available then, it came back to us as quickly as it could within the timeframe available in the finalisation of the 2001 budget and that figure was included in the budget speech costing £7 million which was intended to be the half-year cost of the initiative because it was due to be introduced from the following July. The decision was taken in a very tight timeframe but it was the timeframe within which both Departments had to operate.

Chairman

It is now apparent that it is totally inaccurate.

Mr. Errity

In hindsight that is clearly the case but with the best will in the world both Departments operated on the data they had then in terms of the numbers that might benefit from this decision and also the financial consequences in relation to the IMO and the pharmaceutical union.

Chairman

Will the Department take a firmer position in future cases in terms of not giving an opinion if they do not have adequate time to get all the facts?

Mr. Errity

I agree with the Comptroller and Auditor General's opening comments that in an ideal world all the facts should be available before a decision is made regarding the financial and other implications. However, we do not operate in an ideal world and decisions must be made based on what is available at the time. We are anxious that any proposals should be brought forward sufficiently in time to allow them to be thoroughly evaluated and costed before being implemented.

Deputy McCormack

It states that the initial exercise resulted in excess of 15,200 duplicate entries and entries for deceased persons being removed from the list. It also states that 25,300 medical cards, including 22,700 relating to persons aged 70 and over, have been removed from the system. Approximately €12 million is overpaid annually to doctors who operate the medical card system. It states that arrangements will be made to seek recovery from the doctors concerned, but that has not yet worked out, which is extraordinary. The Comptroller and Auditor General referred to the ghost holders of cards. Deceased people or ghosts do not attend doctors for services. How did the figure of €12 million arise? As regards overpayments in social welfare, if someone's means increases and it is not discovered for a couple of years, it will be immediately deducted from future payments of social welfare. I am puzzled as to why the €12 million cannot be deducted from doctors in the general medical card service.

I am also puzzled that an accountancy firm must be appointed to carry out a review. Mr. Kelly said that health boards were asked to carry out a review of their databases. There are approximately ten or 11 health boards in the country. If one person was appointed in each health board to work one day a week or a month to check the registered deaths for the previous week or month, it would be easy to take the people who are deceased out of the medical card system. Anyone in an office could do that and I am puzzled as to why that cannot be done. It would not be necessary to look up the deaths in the local newspaper as it would be possible to get a list of the registered deaths for the previous month. The medical card of anyone who is deceased could then be cancelled.

Deputy Rabbitte

It is probably on the Deputy's database.

Deputy McCormack

That is probably true. This is a serious issue. The Minister for Finance has been negligent in this regard. He introduced this in the budget at the last minute, but he only told the relevant Department a day or two beforehand, which is extraordinary. How will the annual figure of €12 million be recouped from the doctors concerned? Will any penalty be imposed on or action taken against the practitioners who were paid for ghost patients, as referred to by the Comptroller and Auditor General?

Mr. Kelly

As regards the GPs, the obligation is on the health board to keep the list right. Capitation payments are made on the basis of a particular GP's list. The error in this case was made by the health boards. GPs could be more active in notifying the health boards about patients who die or move to a different doctor. There are two reasons the list might be inaccurate, particularly in relation to people aged over 70. The first is the one the Deputy mentioned, namely, that a person dies. The second reason is that a person may move out of their community to live somewhere else or to move to a nursing home and the list is not corrected at that stage.

The figure of €12 million is based on an estimate that the total number of excess registrations will be 70,000. We are anticipating a total of 35,000 in the over 70 age group and 35,000 in the under-70 age group. The calculation is based on a capitation applied to those two figures.

We are taking this in a number of stages. The first stage is to identify all the cards which are improperly registered on the system and to withdraw them because a payment is being made for each card. The immediate issue is to identify all those and to stop the payments. The second part is to identify how long these excess registrations have been operable. That gives the period of time over which the excess payment has been made. A calculation then needs to be made in relation to individual GPs. Having gone through that process, we will then know the overall scale of the problem, whether it is €12 million or a multiple or a fraction of €12 million. We know that at a point in time there were a certain number of excess cards in the system. We need to put a scale on that and then we need to take action to seek recovery.

Deputy McCormack

How will the recovery be made?

Mr. Kelly

I have not turned my mind to that in advance of today, but we will try to think that through with the GMS (Payments) Board. We will then talk to the Irish Medical Organisation about it and move on to take action.

Deputy McCormack

Will any action be taken against offenders who were overpaid or claimed money without earning it?

Mr. Kelly

The word "offenders" in relation to general practitioners who have been mistakenly overpaid by a health board is not the correct terminology to use.

Deputy McCormack

Mr. Kelly should tell me the right terminology.

Mr. Kelly

People have been overpaid based on an error made at health board level.

Deputy McCormack

I do not follow that logic. I do not know how anyone could get paid without claiming for it.

Deputy Curran

I want to revisit the original estimate which was supposed to be €19 million for a full year, but which transpired to be €50 million. It has been stated on numerous occasions that part of the problem was the short period of time. An estimate is only that and there were primarily two components to the cost. One component was what was going to be paid to the doctors and the pharmacies and the second was the number of people on the scheme. The figure for the first component was always going to be an estimate because a deal had not been done with the relevant parties. Whether the Department had a week, a month or a year, its database was not right and it was not in a position to get an accurate figure. The problem was not the short period of time. If the Department had been given a longer period it would still not have got the right answer because its database was inaccurate. It was only when the scheme was implemented that the database's inaccuracies became apparent.

That brings me to the current position. A review is being undertaken and 25,000 medical cards have been withdrawn, primarily, I presume, from people who are deceased or who have moved elsewhere. One of the interesting comments in chapter 9, page 101, states:

The Department maintains no independent records in this area. Under the Health Act, 1970 a chief executive of a health board is authorised to issue the medical card. The Minister for Health and Children has no authority or responsibility in the issuing of a medical card.

That is fine but I would have thought it would be prudent for the Department to maintain and co-ordinate records, particularly in this age of computerised systems. When one examines the inaccuracies one can look at them in two ways: first, in relation to people who are deceased and, second, people who have moved from one health board area to another. It seems that had the medical card system been monitored nationally we would probably have had more accurate information starting off. I wonder if the Department of Health and Children has a view on this, rather than turning it around by saying to each health board that they should issue medical cards. I am not disputing their right to do that but from a national point of view, does the Department of Health and Children have a specific role in monitoring this? In other words, if variations are to take place in the scheme in future, the cost analysis might be more accurate.

Chairman

What steps have been taken to prevent cancelled medical cards from being used by clients in pharmacies? Last week, I saw a medical card with an expiry date of 2015, which had been cancelled yet the person was still using it to avail of services. What is the average cost of each medical card issued in the new over 70 age category? How does it compare to the existing average cost of an over 70s medical card before the scheme was extended?

I am mystified as to the rationale for increasing the capitation fee to €438 and €635 for those in nursing homes. Why is there such a huge variation in the introduction of that scheme?

Mr. Kelly

I take Deputy Curran's point that the Department has an overall responsibility to ensure that systems are in place to give accurate information. The development of modern information systems in the health service has been part of the Department's agenda for some time. The necessary capital investment to put that in place has not been available in the necessary amounts and it is something with which we are making slow progress.

Deputy Curran

Is that a significant figure?

Mr. Kelly

Is the Deputy referring to the capital investment? We have just prepared a strategy on health information systems which puts a scale on that. We reckon it should be about 2% of non-capital spend per annum, which would put it at around €170 million per annum, as against a spend in the order of €30 million at the moment. So, to get this right we will need to invest. As part of the e-government agenda in relation to health, the ultimate solution to this is a unique patient identifier which would be based on the PPSN number. In terms of our future thinking on this, we would see some sort of smart card containing patient identification data so that each time this unique identifier hits the system it would register centrally. Until we get to that point - I have to say that looks to me like it is some way off, based on how quickly we can invest in the necessary IT systems and so on - we will be relying on health boards, on the basis that they are responsible for deciding who gets a medical card, to register accurately who gets them and to maintain that register. The only information we can draw on centrally, whether it is in relation to medical cards or other issues, is based on the basic management information that we can glean from health board records that are supplied to us. In this case, the GMS payments board at national level would obviously have a read on the overall numbers but they would also depend to a great extent on the basic records maintained by health boards.

In relation to the existing cost versus the new cost, in 2001 the average doctor cost in the GMS scheme for all medical card holders was €177. The more interesting figure is the capitation rate for the over 70s medical card holders, which is €462 as against the average for all medical card holders of €177. There is, therefore, a significant cost in the deal done for the over-70s medical cards.

You asked about the reasoning behind that gap, Chairman. The doctors' argument is that a person aged over 70 is a lot more demanding on the GMS in terms of health care, and international statistics bear that out. Typically, there is a higher load placed on individual GPs by virtue of treating persons aged over 70, than treating someone in their 30s or 40s. Having said that, it is also fair to say that in the course of the negotiations on the introduction of medical card eligibility, the IMO was successful in exploiting a situation where there was an imperative to introduce the scheme during 2001. It was not something that the IMO particularly favoured; if there was to be an extension of the GMS population they would prefer to have seen it extended in some other manner, rather than this way. The IMO certainly had some opposition to the decision made by the Government and that came through in the negotiations. It was a particularly difficult set of negotiations and this was the end result in order to get the scheme introduced in the timescale indicated.

Chairman

There is a considerable cost differential for the over 70s compared to the situation prior to the introduction of this scheme.

Mr. Kelly

There is, Chairman, yes.

Deputy Curran

I have one final question on this section. The review that is going on at the moment started, I presume, with the over-70s and a total of 25,000 medical cards have now been recovered from the scheme. When the review is complete, one assumes the scheme will be accurate. What procedures are in place to maintain that accuracy going forward?

Mr. Kelly

That brings us back to the medical card project to which I referred in my statement. The health boards are going through the review of the lists and the databases but they have also agreed that a range of improvements need to be made to the arrangements in place in relation to maintaining the medical card database going forward. The kind of issues being looked at include the improvements necessary for the ongoing management and control of the GMS register and the administrative procedures for medical card processing and review.

Looking at the systems issues around how people are first registered on the medical card database and how they get their card brings us to systems and people issues. One of the points the chief executive officers of the health boards made when this problem came to light was that this would have been an area of business in the health boards which they would have assumed over a long number of years had reached routine business level and that other more pressing issues were getting senior management time, such as the development of health services of various kinds. This was something which was assumed to be working quite smoothly. Having discovered that it is not, they are taking a root and branch approach to see what needs to be done to improve both the systems and the people aspects of it in terms of training people, who may often be quite junior, who are involved in the processing of the applications and so on.

Deputy Curran

Prior to this review, when somebody died, how did the health boards know to take them off the list?

Mr. Kelly

To be quite honest, I do not know what the detailed procedure is but obviously the information could come to the health boards in a number of different forms. The person may have been a patient of the health board in another setting, for example, they may have died in a hospital, so the information would transfer back that way. On occasion, general practitioners notify——

Deputy Curran

Was it haphazard or was there an organised procedure in place? Was it hit or miss? Is that why the figure is inaccurate?

Mr. Kelly

I think I would have to conclude that whatever procedure was in place was fairly leaky. I would not describe it has hit-or-miss but it certainly was not hitting the target.

Deputy Curran

In the absence of a national medical card computerised system, I presume more manual type systems will be tightened up going forward.

Mr. Kelly

Again, that is the point of the exercise taking place at health board level. That is obviously an exercise in which the Department will take a keen interest in terms of the actions which follow from it and in keeping an eye on this particular aspect of the system going forward.

Chairman

As regards cards which have been cancelled being used in pharmacies and in GP practices, is there anything in place to prevent that abuse?

Mr. Kelly

The way the system would catch that at the moment is that if a card is cancelled, that information is relayed to the GMS (Payments) Board which makes payments to doctors and pharmacists. The payment simply would not be made if the card was cancelled.

Chairman

A patient with a card which has been cancelled on the register may go to the GP and the pharmacy. How does the pharmacist or the GP know it has been cancelled?

Mr. Kelly

If the GP or the pharmacist gets a message that the payment will not be made, I think we could take it they would act at their end to ensure the patient did not get benefit from the card from them.

Chairman

They could get benefit on one or two occasions.

Mr. Kelly

They might if the GP is careless. The GP might see the patient but the taxpayer would not end up paying because the GMS payments board will not make a payment once the card is cancelled.

Chairman

It beggars belief that a card may have a validation date of 2015 but may be cancelled. I saw such a case last week. It does not generate confidence in a system.

Deputy Rabbitte

Mr. Kelly, to describe this, or to pass it over, as an error - €19 million to €51 million - is not to treat it with the respect it merits. Is that not a fair comment?

Mr. Kelly

I did not just describe it as a simple error. I have described, in the best way I can, the sequence of events which gave rise to——

Deputy Rabbitte

It is a pretty horrific cock-up. Can we be certain that prior to this change in the scheme, the databases were out of date and that GPs have been paid for matters for which they were not entitled to be paid?

Mr. Kelly

The last major validation exercise in relation to medical cards took place in 1998 - I do not have the exact date - with the introduction of the new form of card. Discussions with the chief executives of the health boards would suggest that the clean out of the database at that stage gave a hard result. We are talking about the period between then and 2001.

Deputy Rabbitte

The only way we have to validate it is when something like this happens, that is, when a change is made and then the chickens come home to roost when the figures come in. We do not know in retrospect whether the clean out in 1998 was correct.

Mr. Kelly

What I can deal with at this stage is to discover, as far as I can, the true depths of the problem. In the first instance, we are doing a comb back through the over 70s population. That has been extended to the entire GMS database. The priority is to identify cards which are invalid so that we stop payments. That is being done as cards come to notice.

Deputy Rabbitte

Are those 25,300, to use the comptroller's words, ghosts or deceased people or do they include people considered to be ineligible members of the scheme? Is it just dead people or does it include a number of different categories as a result of the trawl?

Mr. Kelly

On the information I have, it does not include the withdrawal of cards from people based on a review of eligibility. They are cards which are invalidly on the system - in other words, to use the term used earlier, they are ghosts. The cards are either duplicates or belong to people who have died or moved on and it has not been recorded on the system.

Deputy Rabbitte

What do you mean by a duplicate card? Are they dead people or are they categories other than and including dead people?

Mr. Kelly

It does not involve the withdrawal of cards from people. They belong to dead people or to people who have moved on. In terms of duplicate cards, if a person moves to another area, they get a second card, so one removes one card from them.

Deputy Rabbitte

Do you have an idea what proportion of the 25,300 are dead?

Mr. Kelly

No.

Deputy Rabbitte

Should we not try to find out? How many people are employed in the health boards?

Mr. Kelly

Is the Deputy referring to the health system?

Deputy Rabbitte

I am referring to the health boards.

Mr. Kelly

There are 96,000 people employed in the health system.

Deputy Rabbitte

How many?

Mr. Kelly

Some 96,000.

Deputy Rabbitte

How many would be concerned with administrative and bureaucratic information technology work in the health boards? Are there not enough of them for us to be able to expect that they would have accurate information on something as relatively straightforward as this?

Mr. Kelly

Within the health boards, in overall management and administrative staff, there are 10,360 people. Of these, 64% would be involved in direct patient services in one way or another. In relation to this particular exercise, one group that might be relevant is the people working on information technology in the health boards, of which there are 311. There would be a variety of others. To be honest, I do not have data as to the numbers of people who would be working directly on this particular problem.

Deputy Rabbitte

Will Mr. Kelly explain the shortness of the period to the committee? Is he saying that the Minister announced a policy change on 5 or 6 December 2000 to take effect in July 2001? Is he saying that the window between that announcement and the enactment of the legislation in May or the preparation of it in April is what is meant by the shortness of the period?

Mr. Kelly

No, where the shortness of the period referred to in the statement comes from is the initial period around the time of detailed preparation of budget provisions in December. It is the time from which it became known to staff in the Department of Health and Children that certain data were required for this particular aspect of the budget announcement and the time that data had to be received in the Department of Finance.

Deputy Rabbitte

What does Mr. Kelly's paper say about when that request first came to him?

Mr. Kelly

It refers to a very short period of time.

Deputy Rabbitte

No. When did he receive the request?

Mr. Kelly

I do not have the exact dates with me, but it would be very short. It would be a matter of days.

Deputy Rabbitte

Does that mean the notice he received as Secretary General of this policy change was days and the Department was expected to calculate it in days?

Mr. Kelly

It was around the time of the preparation of the budget. This is perhaps more an issue for the people from the Department of Finance to comment on, but as the Government comes to look at a final package of proposals for the budget, there are perhaps a whole constellation of issues——

Deputy Rabbitte

I understand that. I am asking about this decision. Mr. Kelly was only given days in which to consult and obtain information from eight, ten or 11 health boards and to provide the Department of Finance with the required figure.

Mr. Kelly

That was the process. We did not have to go to the health boards. I want to make that clear. The number of people in the relevant age groups on the general medical service register would already have been known. That was one figure. The Central Statistics Office estimate for the population in the over 70s age group was also known. From our point of view, the analysis is fairly simple. We relied on the data from the health board databases at the time which would have been available in the Department, and it was simply a matter of taking one figure from the other, which gave the net figure.

Deputy Rabbitte

Would the origin of that information have been the health boards?

Mr. Kelly

Yes.

Deputy Rabbitte

Did the Department rely on it being accurate?

Mr. Kelly

Yes.

Deputy Rabbitte

Is it correct to say that one figure was subtracted from the cohort provided by the CSO for that age group?

Mr. Kelly

Yes.

Deputy Rabbitte

That is hardly the way to make policy, is it? You do not have to answer that, Mr. Kelly.

How soon can the recouping of money from doctors be expected to be done?

Mr. Kelly

There are a number of stages involved in this and I do not want to go——

Deputy Rabbitte

What period of time does Mr. Kelly estimate?

Mr. Kelly

Is that for the process?

Deputy Rabbitte

Yes. Is it that the Department will not continue to issue doctors with their normal entitlements? Is the figure debited from their payments or does the Department send them an invoice saying they owe it €15,900?

Mr. Kelly

There are different ways of doing it. Our first priority has been to stop payments. The second stage of this is to establish the dimensions of what we are talking about. There is an estimated figure of €12 million for what we have established to date. When we have done the entire trawl for all age groups, and we should have it in February, we should know the total number. We will then have to establish for what period each of those cards was invalidly live on the system. That gives the total liability at that stage. Then we will have to work out in detail the sort of arrangements referred to by the Deputy. I have not as yet turned my mind to that.

Deputy Rabbitte

What does Mr. Kelly say to the statement by Professor Tom O'Dowd last week that the effect of all this has been to seriously skew payments towards doctors in such a way that those in catchment areas of well-off patients earn about four times what doctors in disadvantaged areas earn?

Mr. Kelly

I have not seen that particular statement from Professor O'Dowd, but asking me to comment on it is tantamount to asking me to comment on a policy decision, and I do not propose to do that.

Deputy McGuinness

It is difficult to comment on the time span between the Department of Finance making the policy decision and the Department of Health and Children being informed about it given that Mr. Kelly has not stated the date on which the request for information was made. I will assume it is a short period. For clarification purposes, it is necessary to define this short period using exact dates.

I would have thought that, when the request was made of the Department of Health and Children, regardless of the timeframe involved, all the information relative to each health board would have been at hand in the Department and that it would have had all that it required to do the sums, as it were, on the proposal.

No amount of dressing up this problem can take away from the fact that, in business terms, it is a disaster to have this type of leak of money. It was referred to as a serious weakness, but the first thought that came to my mind when I heard about it was that it was a shambles. Surely that is a more accurate description rather than a serious weakness. A comment was made about being in an ideal world. Perhaps we should connect to the real world because, in business, all the required figures must be available. If a business does not have that information, it cannot make correct decisions. The Department did not make the right decision because the basis for its decision was wrong.

The management systems within the Department of Health and Children and each health board are in question. The assumption made was not just wrong - it was out by a mile. While Mr. Kelly says the Department is reviewing its system from here on, the question arises as to what happened prior to 2001. What is going to happen to the systems that were in place and which gave the wrong information? It is almost an excuse to say e-government will deal with this. Yes, it will but that is in the future. My questions relate to this error of sizeable proportion and what happened previously. What is the cost implication prior to 2001? How long will it take to measure the cost in terms of this system error and change?

A question was raised about GPs notifying the board about change. Surely it is the responsibility of the paying officer or health board to have traceability in terms of the system and to have the systems monitored continuously. Therefore, is it not the management skills of the chief executive officer in each case, be it eight, ten or 11, that is in question here, because they gave the wrong information? How many health boards gave the wrong information or is each health board at fault? Is it a fact that each health board does not have information on the services it is administering? The Chairman gave an example of another area. I was appalled when I heard the story but I related it to a question I asked in the Dáil about suppliers to health boards being paid for supplies they have not provided. When one health board was advised, it was difficult to have the cheque returned, which is a product of this kind of system. Is it the case that this system must be examined and it must be spread across the systems within the board itself?

A question was asked about the number of employees. I though the Department of Health and Children would have had a running list of employees engaged under each separate heading. Will each health board be in a position to provide a list of the number of employees in each health board area, dealing with each specific area of health board administration, so that we can define how many are in this area dealing with the systems that have provided the wrong information and what exercise is required to decide how many more people are needed, what IT systems are required or how many will be using those IT systems? That decision cannot be made until the number of employees is made available.

On recouping money and making a comparison with the Department of Social and Family Affairs, where a person on the margins is deducted 50 cent, €1 or €2 a week immediately an over-payment is discovered, is the committee being told that sometime in the future when there is time to define the over-payments and allocate each over-payment to each GP, some sort of agreement will be reached with their representative body to recoup them? That is the opposite to how it works for people who cannot defend themselves that easily and who are made to pay on the day. What will happen in that area?

Chairman

What is the total amount the Department believes is being wasted in regard to the so-called surplus ghost medical cards across the whole GMS? Given that such an anomaly was found in the over 70s, has a calculation been done of that figure across the whole system?

Mr. Kelly

The €12 million figure relates to the whole system. It refers to the cards that have been identified at this stage in relation to the over 70s, but it is also an estimate in relation to the remainder of the GMS population. The €12 million figure is an estimated figure for the entire GMS population.

I have already tried to explain to members of the committee that an estimate is being prepared at this stage, based on what we know. We will not know whether the full extent of liability here is a multiple or some fraction of the €12 million until we have done the full exercise I have described. First, the exercise to identify the remainder of the invalid cards on the system must be completed. Second, we must identify for how long each of these cards was invalidly live on the system so that payments will be made. When we get the answer to that question, which should not be too far ahead, we will be able to put an overall cost on this.

To answer Deputy McGuinness's question on what do we can do in this regard, I responded already to Deputy Rabbitte on that issue. I have said that when we get to that stage we will think about going ahead with our immediate priority of stopping payments, which we have done. We must then discover the full scale of the matter, and we will have the answer to that question next month. We must then decide what to do with that information and how we will recover over-payments. I have already indicated to the committee that I have not worked out in detail how that will be done, but it will be the next item on the agenda.

On the question of defining the period and so on, while I do not have the exact dates, on the information I have, it was a period of three days. If the Deputy wishes, we can certainly supply him with the dates on which the request was received and the information was provided. It is an interval of approximately three days.

I agree with the Deputy in regard to the responsibility of the health boards in maintaining the systems and so on. It is the responsibility of health boards to maintain good systems within the limit of the resources at their disposal and to manage things efficiently and effectively, which is what is expected of them. This particular exercise has brought to light the weaknesses in these systems and the boards and Department are now acting on those weaknesses.

In regard to the information we have on the number of employees in each health board area, we get information from the boards on aggregate employment levels. We get detailed information on the numbers of people in each professional and administrative category at different grades and so on. We do not get routinely from the boards a detailed breakdown of where every member of staff in each board works. I regard it as the responsibility of the chief executive officer of each board to manage this in an efficient way. As Secretary General of the Department, I do not get involved in evaluating where staff are allocated in the boards. I do that in regard to the Department of Health and Children. This is part of the accountability system currently in the health system where a chief executive officer is the person with the statutory responsibility for managing and allocating resources in his functional area and in relation to the budget and employment control figure. I am sure if asked, each chief executive officer would be prepared to supply the information required to the Deputy.

Deputy McGuinness

Is each board affected in this regard and what sanctions will be taken against them?

Mr. Kelly

Yes, every board is affected.

Chairman

It is important that the committee be kept informed in regard to progress made by the Department in recovering these funds.

Deputy B. O’Keeffe

Will Mr. Kelly outline, on the basis of his information to date, the exact figures for each of the boards in terms of the number of spurious medical cards which existed and which were being paid for?

Mr. Kelly

I am sorry, Deputy, I do not have that data with me, but I will certainly be happy to supply it later.

Deputy B. O’Keeffe

On what basis were the 12,000 cards removed from the system?

Mr. Kelly

That is an estimated figure. Some 70,000 cards multiplied by the capitation rate gives the €12 million total.

In relation to the over-70s part of that, 35,000 of the 70,000 invalid cards in the estimate are attributed to the over-70 age groups and that is an extrapolation from the position as we know it at the moment, which is based on quite hard information in relation to the over-70 age group. The other 35,000 is based on an estimate which was given to us by the GMS (Payments) Board, which has made a number of assumptions, again based on data coming to light about the overall position in all of the boards and it does not refer to any particular board. It is a global estimate.

Deputy B. O’Keeffe

I must declare an interest here because I am chairman of the Southern Health Board. In the Southern Health Board we have collated our data and I would be very surprised if those data have not been made available to the Department at this stage. Perhaps Mr. Kelly might make available to the committee the actual breakdown. I think everybody in the system knows the information technology system in some health boards is excellent but in others is awful. I would like to understand the extent to which this has affected the actual outcome.

If I walk into my GP with a medical card, have a consultation and get a prescription, what onus is on the GP to sign a form to say I have been to see him and have bought a product from him? Is an invoice made available to the health board or is it taken on trust that I have been to see my GP and no receipt issue or record of the visit is given to the health board? What process of checks and balances is in place to show that people are making legitimate claims?

Mr. Kelly

Because the payment to general practitioners is a capitation payment, once a patient is an eligible person the payment is made. It does not depend on the number of visits or the number of times the patient sees the GP. Once the patient is validly on the system the appropriate capitation payment is made to the GP.

Deputy B. O’Keeffe

So, there is no system to check whether I go to my doctor once, twice or never at all. Is there any feedback to the board on exactly the number of visits or consultations made and is there no onus on a GP to say what contact he has had, good, bad or indifferent, with a particular person? If that is the case does Mr. Kelly not think a control element is sadly lacking? Is the system not open to fraud?

If we have overpaid €12 million the question on everyone's lips is, "How many GPs claim fraudulently?". This issue raises its head straight away. If we have no checks and balances is it not quite easy for someone who wants to buck the system to do just that because of the lack of control of the number of visits and of the necessary reportage?

Mr. Kelly

I go back to the basic make-up of the scheme. As it involves a capitation payment the GP is not paid per visit in any event. He gets a capitation payment because he provides care to a particular person who is in the GMS system. Unless there is impersonation at the individual level, I do not see where the opportunity for fraud arises.

Chairman

On that point, Mr. Kelly, what benefits do you anticipate from the GMS information project?

Mr. Kelly

That is the ultimate answer. The exercise which is being conducted by Deloitte & Touche at the moment in relation to the GMS scheme is also relevant. It is looking at the entire chain of accountability and the governance framework of the operation of the GMS scheme. I expect any exposure of the type referred to by the Deputy would come to the surface in that. I do not believe fraud of the nature suggested by Deputy O'Keeffe is an issue.

Deputy B. O’Keeffe

In terms of accountability the payment of a capitation fee is fine. However, the stark reality is that a large number of people who were dead were being paid for, and that smacks of a lack of control and of reportage. Surely the Department must be concerned about this. While the health boards have responsibility to look after medical cards the Secretary General must be concerned about an overpayment of €12 million on an annual basis, for we know not how many years. The fundamental questions for this committee are whether this can or will happen again and what reporting procedures can be put in place to ensure that no one who is dead can be claimed for and that there will be no duplications in the system.

I mentioned that the level of information technology expertise in some health boards is excellent but it is well known that this is not the case in others. There is a major problem in this regard in some boards. What do we envisage in order to bring those health boards up to speed? This problem has manifestations across the board. One health board employed 360 people more than its allocation but this was not discovered because the data system in place was not appropriate or adequate. Information technology shortcomings have ramifications for the entire system. This must be a major concern to the members of the Committee of Public Accounts.

Deputy J. Higgins

We may have stumbled inadvertently on an answer to the question everyone in the country is asking as to why we have such a huge crisis in our health services. For some considerable time the system has been haunted by more than 25,000 ghosts.

If the hard pressed doctors and nurses in our hospitals and the unfortunate patients in overcrowded corridors were privy to this discussion they would say it is no wonder we are in this mess when such a basic task as compiling and maintaining an accurate database has been bungled so incredibly by the health boards as has been outlined today. More than 25,300 were removed from the register, including many deceased people. We know of the phenomenon of people who have passed away continuing to play an active role in the election process in a jurisdiction not far from here but it is news to us that in this jurisdiction those unfortunate people continued to transfer significant amounts of money to sections of the medical profession.

This is such a basic thing that we have to ask very basic questions. Is it the case that every health board has a central computer on which each medical card is recorded?

Mr. Kelly

The basic management of medical card registration would be done at community care area level in each health board. The programme manager or the assistant chief executive officer on the primary care community care side in each board would take central responsibility in terms of the management team of the board for what happens on that side. Those are the people in the boards who would also be involved as members of the board at board level of the GMS (Payments) Board. There is a focus of responsibility in each health board for this issue.

Deputy J. Higgins

Does each health board have centrally recorded, at one location, a list of all medical cards?

Mr. Kelly

It is my understanding that they would have.

Deputy J. Higgins

Is there a procedure in each health board for when a card holder dies? Is there a process for notification of the health board of the death?

Mr. Kelly

I do not know. I expect there is but I cannot give a definite answer.

Deputy J. Higgins

Would it be incredible if the health board having a central list of medical card holders did not have a system of automatic notification when somebody dies?

Mr. Kelly

The Deputy used the word incredible. I do not know whether it is incredible or not. I have given the Deputy the information as I had it. Deputy Rabbitte already asked me how many of these are deaths. I do not know the answer to that question so cannot be any more helpful in relation to the detail of the make up.

Deputy J. Higgins

Some are unfortunately as a result of people having died.

Mr. Kelly

That is right.

Deputy J. Higgins

Evidently there is not a process in every medical board where there is automatic and official notification for the purposes of the central lists of medical cards.

Mr. Kelly

My own conclusion is, and that is all I can share, that there is certainly not a watertight system at health board level for taking account of events like deaths which have an impact on the medical card register or indeed of other events like people moving from the area or from one GMS list to another.

Deputy J. Higgins

Is that not mind boggling?

Mr. Kelly

Certainly the facts that we discovered on this, as they unfolded over a period of time, were something that surprised and disappointed me.

Deputy J. Higgins

Mr. Kelly is very restrained in his language. Perhaps that comes with the position. People will draw their own conclusions but I imagine that a primary school child au fait with modern technology and IT systems would find this incredible. How many doctors were in the GMS in 2002?

Mr. Kelly

There were 1,863.

Deputy J. Higgins

Could we do a quick sum then, based on the figure of €12 million in 2002, of what the average overpayment per doctor would be?

Mr. Errity

It would be about €6,000.

Deputy J. Higgins

That is an average. Would it be fair to say that some doctors would have been overpaid much more than that and some much less?

Mr. Kelly

Any of us can speculate about the spread. To be honest, against the background of what has happened I would be reluctant to do that until I have hard information. I have already indicated to the committee what I am doing and what health boards are doing to get that information. I would prefer not to engage in speculation about it.

Deputy J. Higgins

If you did not want to speculate on my suggestion that some would have got more and some less, you would have to agree that if that was not the case everybody would have got €6,000.

Mr. Kelly

It is certainly a possibility, yes.

Deputy J. Higgins

It is not just a possibility, it is an inevitability. If we have €12 million divided by 1,863 that is what we get.

Mr. Kelly

If there is an even distribution of the €12 million it would give us €6,000.

Deputy J. Higgins

It would be extraordinary if it was just €6,000 per person, would it not?

Mr. Kelly

It would.

Deputy J. Higgins

So the likelihood is that some doctors in some practices may have been overpaid by €10,000, €15,000 or €20,000 in 2002.

Mr. Kelly

Until I have hard data on it all I can say is that anything is possible.

Deputy J. Higgins

Do you have any single example of a case of overpayment? Do you have a figure for any particular practice as of now?

Mr. Kelly

I do not at this stage.

Deputy J. Higgins

From the point of view of the medical practitioners who would have been in receipt of these funds how can it happen that even an overpayment of €6,000 would not be noticed in the practice?

Mr. Kelly

Because the basis on which the payment to an individual GP would be made is a function of the number of people on his or her GMS list by the capitation payment for each of those people. So the GP would be getting a steady supply of cheques made up on that basis from the GMS payments board. The responsibility in terms of the number of people on a GP's list does not lie with the GP. The responsibility for that and for its accuracy lies with the health board.

Deputy J. Higgins

Has there been an onus on doctors by the health board to notify the health board if a patient on the list dies in their practice?

Mr. Kelly

There is a reference to that in the contract but it is not an absolute binding thing in relation to GPs. There would certainly be a——

Deputy J. Higgins

Is that not extraordinary? Presumably, a GP would have to have a list of medical card holders on his or her practice.

Chairman

Deputy, we will have to move on. We want to deal with the drug payment issue also before we break.

Deputy J. Higgins

Yes. I would like to understand how people can get overpaid by at least €6,000 and not notice it.

Mr. Kelly

That is a fair point.

Deputy Dennehy

There is a danger we will labour the point but there are lessons to be learned. There are a huge number of extra medical cards floating around. If it were not for the over 70s initiative would this error have been discovered or would we have continued to pay willy-nilly? Is there any process for finding out about overpayments?

Mr. Kelly

I think it would have been discovered through the development we spoke about earlier - the development of the unique patient identifier and the application of that to the GMS scheme. It would have come to light then but that is probably some way ahead. There is no doubt that it was the introduction of the over 70s medical card scheme that brought this particular problem with the databases to the surface.

Deputy Dennehy

We are talking about a huge volume in this, Chairman. It is not as though 500 or 600 people were found or lost or whatever the case may be. I do not want exact figures for the whole lot, but to date, what is the longest period of time that the Department has discovered we have been paying for duplicates?

Mr. Kelly

Again I am sorry I do not have the answer to that because I have said the first thing that we have been concerned with is to identify as many of these as we can and that is what we have been giving priority to, so that the payments of capitation are stopped. The second part of it is to establish for how long were these duplicates or invalid cards live on the system and payments being made to GPs on foot of that. We have not yet got a count on that.

Deputy Dennehy

I take Mr. Kelly's point on the priorities, Chairman, but like Deputy O'Keeffe, I am a member and former chairman of the Southern Health Board and what I am concerned about is that it is only ten years since it was a quill pen effort with staff taking home packets of cards at night to try and do the writing up in longhand. What concerns me is that we had a cleansing in 1998 - not back in 1990 or some time like that - and that would suggest that every one of those cases would have been thrown up. Still there are approximately 30,000 surplus cards. I wonder if the new cleansing will be any more efficient than the last one. Are procedures being put in place to ensure it is? I do not believe for one moment that all the cards emerged since 1998.

Mr. Kelly

I cannot speculate as to whether they did or not. After we have gone through the second part of the exercise that I am talking about we will know how far back the duplicates now uncovered have been running. To the extent that some of them run back, if that is the case, beyond 1998, we would certainly have to ask a fundamental question about the validity of what was done at that stage but we do not know that yet and I prefer not to speculate about it. For now I am putting faith in the exercise that was done in 1998 on the basis that it was around a major change in the medical card system at the time. The issue of the new form——

Deputy Dennehy

How soon, Chairman, can we expect to get a note on this?

Mr. Kelly

We are expecting to have the trawl finished during February. That will identify for us the full number of invalid cards. Having identified them it is a question of how long it takes to chase back on the GMS payments system and I would have thought that is a computer exercise at that stage. It should not take a very long time.

Deputy Dennehy

The GMS board worries me a bit as well. I certainly would not wish to criminalise or criticise any GP too much. I think they must have a minimum of 650 patients to make the panel viable and I would not expect them to go checking up everybody that had died, but I expect the GMS (Payments) Board, a statutory body, to carry out ongoing audits. Does the board simply accept all the figures given by each of the health boards? Does it have a mandate from the Department to carry out an audit?

Mr. Kelly

They certainly have a responsibility to ensure that payments which are made are valid. In doing that one of the basic ingredients from which they would be working would be the lists of eligible people supplied by the health boards. One of the exercises we are undertaking at present, the Deloitte & Touche study in particular, has been put in place because there are a number of different parties around the GMS scheme: the Department in relation to the policy decisions; the GMS payments board but only in relation to the payments that are made to GPs, pharmacists and others; the health boards in relation to entering people onto the system and maintaining the registers and so on. At the moment because of the way those arrangements are set up there is not an adequate accountability chain in all of that, such that one particular organisation or person is directly accountable for the entire chain of events. The Deloitte & Touche exercise is undertaking to have a look at that and to recommend a different set of accountability arrangements. I imagine that will cover the type of processes that the Deputy has suggested.

Deputy Dennehy

One item that has emerged which concerned me quite a lot and which the Comptroller and Auditor General included in his comments was the short amount of time, only three days, that the Department was given. Would not be fair for the members of this committee to presume that, particularly where age profiles in the older population are concerned, that if the Department was only given three hours they should be able to signal an accurate figure? I find it very worrying. In the context of the Southern Health Board there are so many profiles done on the elderly and projections for the next 20 years that we can count up to the very last person. I am extremely concerned if the Department of Health and Children did not have a very accurate age profile, particularly for the older population. Would it be fair for us to believe that you could provide that at literally three hours notice?

Mr. Kelly

Of course.

Deputy Dennehy

I accept now that the CSO is being blamed a bit back here somewhere.

Mr. Kelly

No. I want be very clear on this, Deputy. I have not attributed blame to anybody on this. It is reasonable to expect the Department to have a read on the overall numbers of people in any age group because the CSO regularly supplies all Departments with that data. They had a projection which was easily available and we had it. The second figure that was needed to make the calculation in relation to the number of new people over 70 coming on to the system would have been the number of people already on the GMS system aged over 70 who have medical cards by virtue of their means. The new cohort would have been the residual, the number of people aged over 70 who did not already have a medical card.

The faulty piece of the information was not the CSO projection or the total number of people, it was the total number of people assumed to be already on the GMS system. The number derived from the databases in the health boards overstated the number of people aged over 70 already on the GMS and that is where the problem lay. The Deputy is quite correct. We had the data that was available, we did the calculation and, as Deputy Curran pointed out earlier, whether it was three hours or three days, our answer in relation to that would not have been any different because we would have been relying on the data that had been supplied to us by the boards.

Deputy Dennehy

References were made earlier to the general service, the hospital service and community care and if we are dealing with figures that are totally inaccurate we need to know that. It would concern me if statistics from the CSO were that incorrect.

I came in here disappointed. A task force is now being set up to rectify matters in all the eight or ten health boards and this is a reactive rather than a proactive response. We seem to be playing catch-up. Do all the health boards have an electronic method of recording details of medical card holders?

Mr. Kelly

Yes. That is my understanding of it.

Deputy Dennehy

I have one final question, which was asked earlier——

Chairman

I am hoping to get to the drug scheme.

Deputy Dennehy

It was asked earlier but it was answered in a different way. Perhaps the two can be answered together. The final deal done with GPs - I presume the same is true for pharmacists - was a multiple of the rate for the existing medical card holders. What arguments were put forward to justify that huge increase?

The new capitation rate is €438 for the over 70s - let us call them the ordinary patients. However, it was much higher - €635 - for those in private nursing homes. I thought it would have been the other way around because of the ease with which a GP can go to a nursing home and see a number of patients. What is the reason for the great difference? What primary arguments were put for this huge increase in capitation fees?

Mr. Kelly

The argument in relation to the capitation fees was in the context of considering people aged over 70 as a cohort and comparing their usage of health services generally, but more particularly because these are people who would be living in the community, in their own homes, their initial contacts would be with the general practitioner and they would have a heavy reliance. However, internationally the evidence is that age advances - the graph rises steeply the further along one goes - the usage, the take-up——

Deputy Dennehy

May I interrupt Mr. Kelly for a moment? We had always built that in. All previous agreements had considered distance from the home, age profile and difficulties. That did not change. It was accounted for and tabulated into the previous agreement.

Mr. Kelly

The eventual fee arrived at here was the outcome of a set of negotiations and all I can reflect are the arguments that were put forward. In so far as there is a rationale for the very much higher fee for people aged over 70, it has to do with their proportionately much higher usage of services. Working on a capitation basis, as the GMS scheme now does, capitation for the entire GMS population would assume a certain number of visits on average per year. The capitation, by definition, for a particular cohort like the over 70s would have to assume a much higher——

Deputy Dennehy

I accept that. That argument has been made years ago and is accepted, but now it has suddenly jumped. The point Mr. Kelly seems to be making is they were able to fight a tough case on that one and they beat him. Can Mr. Kelly address the difference between the ordinary visitation and the nursing home?

Mr. Kelly

The nursing home difference arose. Again the rationale there was that the difference between a person living in their home and a person resident in a nursing home was that, by definition, the person in the nursing home was more dependent and therefore required more regular medical attention as well as ongoing nursing care to keep them going.

Deputy Dennehy

I would not accept that, but I have made my point.

Chairman

What progress has been made on developing the unique patient ID number?

Mr. Kelly

Some progress has been made on it. In fairness to the chief executives of the health boards, the development of a unique patient identifier in the GMS context in particular is a project they themselves took on. They developed it to a point where a system was piloted in one of the health boards during 2002. The pilot uncovered many problems with that particular system. It was also the case at that stage that the whole development in relation to the use of the PPSN as the unique identifier for all public services was progressing. In the Department, we took the view that whatever work was being done by the health boards in relation to a unique identifier for GMS should be related to this. In other words, people should not end up with one health service identifier and another identifier for the rest of the public service. We have encouraged them to work within the PPSN context, but the work is ongoing on that. In time it will require a considerable investment to make it happen.

Chairman

What will be the annual cost for the 85,000 people aged over 70?

Mr. Kelly

You are asking about 85,000 people over 70.

Chairman

It is now reported the number of medical cards issued to people aged over 70 will go up to 85,000.

Mr. Kelly

I do not have a figure for it, but we can work out a figure and supply it.

Chairman

Before we conclude and move on to the issue of drugs payments, perhaps Mr. Purcell would like comment on medical cards.

Mr. Purcell

This might be some help to members. We carried out some preliminary work in this area in 2000. Having listened to the discussion about the accuracy of the figures etc., even within the GMS during 2000 and prior to furnishing these figures for budgetary purposes, they would have come with a health warning. When I say that, if they did not come with a health warning, then they should have.

Working from memory on this, the item "duplicates" would have been on the agenda for most of the meetings of the GMS (Payments) Board in 2000. The health boards strongly disputed the basis of GMS concern that there were so many duplicates in the system. On the basis of our preliminary work, which entailed carrying out computer interrogations of the systems that existed at the time, we tended to confirm the GMS concerns, in so far as it could be confirmed on a pilot basis. I regret that due to pressure of other work we were unable to push that through. However, in my opening comments, I indicated that we had returned to this in the meantime and I would expect it would form part of a general report that would come to this committee.

I know you are anxious to go on, Chairman, but in fairness to members and others here, it is fair to say that in delivering this system through the health boards, there were eight different systems in the health boards as they were at the time. Even within health boards, there was no real standard way of approaching this. There were even different systems between community care sections within health boards. None of these systems talked in any direct way to the GMS payments board. If that is not a recipe for disaster, I do not know what is. I would like to give members a flavour of what is behind all that. It is a very complex area that involved much work, which we were unable to put in during 2000, but we are certainly trying to put it in now. We hope not to duplicate the efforts being made by the Department and the different studies that are going on. There is no doubt the systems in place at that time were seriously deficient.

Deputy Curran

I would like to raise a point before we leave discussion of the medical card system. A number of items came up today and before we close the chapter on medical cards——

Chairman

I do not intend to close it.

Deputy Curran

Mr. Kelly specifically said it would take another month to complete the review, which is a fairly short timescale. Is there a procedure whereby we can get fairly prompt feedback on the outcome of the review itself? We also need to be kept informed on the amount of refund due and how Mr. Kelly intends to obtain that from the GP service. Two inaccuracies were identified in the discussion today, namely the actual number of medical cards in existence and, based on that inaccuracy, the original prediction with regard to the over 70s. This casts doubt on other management systems in the health services. Are there other implications or knock-on effects which should now be investigated? I am concerned that, following today's discussion, there should be regular feedback to the committee on further progress with this report.

There was one other issue which was not fully dealt with today. It is, perhaps, a procedural matter. What process is followed when a person dies? This question was posed in different ways by previous speakers, indicating a distinct lack of confidence that the previous system was watertight, whatever about the ongoing system. Having undertaken the review, we need to ensure that there is an accurate system in operation from now on.

Chairman

The system appears to have been appalling. We should return to this matter again as soon as the report is to hand and invite the Department to a further meeting at that stage. I ask Mr. Purcell to introduce the next section of the report.

Mr. Purcell

Section 9.2 of my report deals with the possible financial repercussions of the drugs payment scheme not being put on a statutory footing by the Department until 20 months after its introduction. As the committee will be aware, the scheme replaced two other schemes that were designed to subsidise the cost of prescribed drugs to those not covered by the medical card system. The drugs refund scheme was general in its application, while the drugs cost subsidisation scheme was targeted at those having a long-term condition requiring prescribed drugs. The replacement scheme was introduced administratively in July 1999. However, according to the accounting officer, the enabling regulations under the relevant Health Act were not made at that time because it was expected that the relevant section of the Act would be amended within a short period. In fact, Government approval had already been obtained for that course of action.

However, that is not how the situation developed. Over a year later, there was no sign of the amending legislation and by October 2000 the Department had obtained advice from the Office of the Attorney General that the revised threshold under the new scheme needed a statutory base. The necessary regulation was eventually put in place under the existing section of the Act in March 2001. The effect of the delay in putting the scheme on a proper statutory footing was that, technically, many of those on the drugs cost subsidisation scheme would have been underpaid during the intervening period. Depending on the particular circumstances of each case, those claiming under the drugs refund scheme may have been either overpaid or underpaid during the same period.

As indicated in the report, it is estimated that the resulting potential underpayment was in the region of €18 million and the administrative cost of processing claims for potential refunds added a further €2 million to that figure. In his response, as noted in my report, the accounting officer made it clear that it was not intended to make refunds. He cited an informal Government decision in that regard. He also informed me that no estimate of the total overpayment was sought, on the basis of legal advice that the Department could not recover overpayments made to persons who had benefited financially from the non-statutory scheme. There is at least a possibility - I will leave it at that - that the Department's failure to react in an appropriate and timely manner to the legislative difficulties encountered could yet give rise to a significant contingent liability for the Exchequer.

Chairman

Thank you, Mr. Purcell. I have a few questions. What advice was given to the Minister in respect of the amalgamation of the two drug schemes? It would appear that people with long-term conditions have suffered unfairly from this decision. What efforts are being made to address the problem of underpayments and overpayments in respect of drugs schemes? Approximately 175,000 people were overcharged by an estimated €18 million, subsequently reduced to €17.3 million, as a result of a change in the DPS in July 1999. What was the reason for the original delay in providing a legal base for this scheme? It seems absolutely incredible that a scheme could be introduced with a delay of 20 months in providing the required legal framework.

How can the Department justify, legally and morally, not refunding the overpayment to consumers? The individual amounts involved ranged from €1 to €250. This is a very serious issue. It is my understanding that the Attorney General advised some time ago that refunds should be made. This situation involves issues of accountability and fair play. The Department miscalculated and made substantial errors. Consumers who were overcharged are entitled to a refund.

Mr. Kelly

In relation to the drugs payments scheme, the context is relevant and was regarded as such by the Government in making its decision. That scheme was designed and introduced at the time as a fairer and more user-friendly system than the two schemes which it replaced. It has provided monthly budgeting for medicines for families and has produced significantly greater overall benefit for patients in the aggregate. It also introduced full re-imbursement at point of supply of the cost of approved drugs above the monthly threshold in line with customer service principles. There is no longer any need to pay first and then reclaim expenditure from the relevant health board. Unlike the two previous schemes, everybody is eligible for DPS.

I take the Chairman's point that none of that is directly relevant to the questions that have been raised. However, it is part of the background to the position which was taken on this matter. The fact that 1.2 million people had registered with this scheme by the end of 2001, and the overall benefit in terms of the volume of claims under the new scheme, are indicative of the greater aggregate benefit associated with its introduction. The background to the position taken by the Department is outlined in the Comptroller and Auditor General's report, from which the relevant extracts are available to the committee. I can go through that again if the committee so wishes. As regards the bottom line in this matter, I certainly accept that the way in which the scheme was introduced on an administrative basis in the first instance, with the necessary regulatory framework put in place 20 months later, does not line up with good administrative practice and should not have happened.

In this instance, it was not as a result of any deliberate decision that the circumstances arose. They arose out of a decision made at the time, based on an assumption by the Minister that there would be a short interval between the administrative introduction of the scheme, the processing of the amendment to the Health Act, 1970, in the Oireachtas and the making of the necessary regulations. As a result of difficulties with drafting and obtaining time for debate in the Oireachtas, it took much longer than originally planned.

The aggregate benefit to the community from the new scheme is considerable. By comparison with the two previous schemes, there would have been a number of losers, for want of a better word, among those who were refunded less than they would have been under the original schemes and others who were refunded more. In light of the position in which we found ourselves, we considered a number of issues and took legal advice on the obligations of the Department.

The Chairman has referred to advice from the Attorney General.

Chairman

It was reported in the Irish Independent in November 2002 that the Attorney General advised the Government that it must repay the money.

Mr. Kelly

I do not know what sources the Irish Independent had, but that is certainly not in line with the legal advice which I read again earlier this morning. As I understand it, the Irish Independent retracted that piece the following day.

With regard to the current position taken on this, I acknowledge that, in the context of the aggregate benefit to the community overall, one group has gained more than it would have and one group has lost out on entitlements that existed under pre-existing schemes. Having looked at the various considerations surrounding this matter - including the legal position, but also the overall funding available for health services - the Department is now in the position that in order to allocate €20 million of resources to this area, the money would have to be released from some other part of the system. That was the case in 2002 when the informal decision by Government on this was made.

In so far as that was a consideration in 2002, it is an even more acute consideration in 2003 when overall budgets are that much tighter. Having considered the various aspects, I find that there is an informal Government decision regarding what happens on this and that is that no further action is planned with regard to it.

Chairman

How will the Department treat a claim from individuals for a refund where they were underpaid? Would they not have a justifiable legal case if they were underpaid?

Mr. Kelly

I do not have a particular view on that and I do not know. I am clear that, at present, the Department is not under a legal obligation to make retrospective refunds.

Chairman

We are discussing a budget of €9 billion and I am concerned by the clear anomalies that exist with regard to medical cards and the drugs payment scheme. As Deputy Curran indicated, it does not inspire confidence that it takes 20 months to bring in the legal background to enact a scheme. I am appalled. The Department was well aware of what was needed to enact the scheme.

Mr. Kelly

I have tried to explain the sequence of events that gave rise to that particular delay. I accept that it is not the way to conduct public business.

Deputy Curran

I understand, to a certain extent, the background to this matter and I listened to the answers. I presume, however, that before the announcement was made about the establishment of the drugs payment scheme, there would have been discussions with the Department and the detail of the scheme would have been thrashed out. The Department would have been ready to roll-out the scheme.

The accounting officer said that the regulations fixing the threshold for the new scheme at £53.33 per month could have been made in July 1999 under section 59 of the Health Act, but, as Government approval had been obtained to amend the section, it was decided to defer the regulations until the Act was amended. Mr. Kelly commented earlier that this was expected to be a short interval. What did Mr. Kelly understand a short interval to mean?

Mr. Kelly

I refer to the advice of those directly involved in this at the time - July 1999. I would have expected that to be within a matter of months at the most, perhaps in the Dáil's autumn term.

Deputy Curran

Why was it not seen in the autumn term? What happened next and how long did the Department wait before it was decided that there was an urgent need to act on this matter?

Mr. Kelly

In terms of trying to get the amendment to the Health Act, 1970, processed, there was an ongoing effort on the part of the Department to get the necessary drafting done. There is a lot of pressure on drafting time, it requires co-operation elsewhere and it is about priorities at particular points. We put faith in getting that item of drafting done at an early stage. That continued as a way of processing this.

Deputy Curran

However, after so many months, when the Department realised that this legislation was not going to come through in the manner expected, the first option was still open. At what stage did the Department decide that this short interval was not to be so short and that it would have to go back to plan A?

Mr. Kelly

There would have been some lead-in to the making of the regulations at the time. It would have been some time in advance of that that the decision was made to go that route.

Deputy Curran

At some stage during this process, the Department decided that it had to seek further legal advice from the Attorney General. Why was that not obtained in the first instance, prior to the announcement of the scheme? If the legislation was not going to appear in a short period - as proved to be the case - why did the Department not obtain that advice from the Attorney General in the first instance?

Mr. Kelly

Because that was not seen as the way of processing the particular change at the time. The Attorney General's office, no more than the Department of Health and Children, is busy dealing with many other issues on a day to day basis. We sought advice on issues where it was needed at that point, on the basis that we were going to process the change through an amendment of the Health Act, 1970, and by making the subsequent regulations.

Deputy Curran

Some 15 months after the scheme was announced, the Department obtained the advice from the Attorney General. It then took another six months before the scheme was in place - from October of one year to March of the next. Why did it take such a long time? The Department was aware of what the scheme involved before it was initiated. However, even after the Attorney General's office gave the Department the go-ahead, it still took another six months to put the scheme in place. What was the specific delay in that section?

Mr. Kelly

I do not have the papers relating to that matter in my possession. I assume there must have been some complexity around some of the issues which arose at the time that needed additional thinking through by the Department. However, I accept that I am making a speculative remark because I have not checked the relevant papers.

Deputy Curran

I would be somewhat disappointed if that was the case, as I would have expected those issues to have been teased out prior to the scheme being announced. I agree with Mr. Kelly that it is speculation, but it is somewhat disturbing that the whole process took so long. I take the point that the Department was prepared to wait for the short interval, but that may have been only three or six months. I am more concerned about the following 12 months. Implementation was slow, even after the advice was received from the Attorney General.

I wish to examine the actual figures. In a previous debate on medical cards, it was made clear that members of the committee were keen that refunds would be sought from GPs as a result of overpayment. It is ironic that we are now discussing people who were underpaid in many cases.

The report has an interesting level of accuracy. We know that 175,000 households were involved and that there were 4.75 million transactions. We also know the number of items and the amount of money involved. Mr. Kelly said that there will be no automatic refund, but I would have thought, from a moral point of view, that these people are entitled to the money. Of course, I have not received legal advice on the matter. I suspect that many of the 175,000 people involved do not have a clue; they accepted the new arrangements when the scheme changed. They probably do not realise the implications of the delays and are unlikely to make claims.

It would be interesting to see what would happen if somebody made a claim, as legal advice may differ on the matter. I am disappointed that the Department did not automatically put in place a system to try to rectify the problems, particularly as a substantial amount of money may be available when refunds are received from GPs. Given that some 175,000 people are owed money, it would seem equitable, honest and fair to offset the expenditure involved in refunding it against the moneys that will be received from GPs.

Mr. Kelly

The Deputy has made various points about the liability or otherwise of the Department. As an officer of the Department, I have to be guided by legal advice in relation to such matters. I accept that there are wider considerations and I would love to live in an ideal world where the pressure that is on the health budget does not exist. It would be preferable if there was scope to address these issues within the funding that is available, but, realistically, if 2003 funding was applied, the money would have to be withdrawn from services elsewhere in the health system. I would have to take a certain professional view of such a decision in light of the relative priority that is attached to the different demands on funding.

Deputy Curran

I did not ask that money should be withdrawn from any other service, but I specifically suggested that the funds that will be received from GPs who have been overpaid - we are only beginning to learn about the extent of it - could be used to pay those who are owed money. The money will, in some ways, represent a windfall for the Department of Health and Children because it did not know until recently that it existed. We do not yet know how much money can be recouped from GPs. I am certainly not arguing that services should be cut, but I am saying that tighter management and better control of certain funds is necessary. I have given a specific example of a sum of money that can be regarded as a windfall and that could be used to reimburse the 175,000 households that have lost out. I wonder if a system could be put in place to pay one set of people from the funds to be received from another set of people.

Mr. Kelly

I cannot give a definitive answer to the Deputy's question about the likely yield from any attempt to recover money from GPs until we have gone through the figures.

Deputy Curran

I understand that.

Mr. Kelly

We know that the likely cost of the GMS in 2003, taking account of cards and payments that have been stopped, will place huge pressure on the funds that have been assigned to the scheme in the Estimate. In the event that a clawback yields revenue in 2003, I would have thought that the priority would be to support the ongoing operation of the GMS, but I cannot say anything more until we see how costs pan out over the year. Having said that, however, I take the committee's strong views about the issue seriously.

Notwithstanding the fact that the Government has made an informal decision that binds the action I can take in relation to this matter, I will take the committee's suggestion back to my office for discussion within the Department and at political level. The context in which it will have to be considered includes the tight GMS budget - any clawback will have to be applied to dealing with that. Regardless of the legal advice that there is no formal legal liability, I appreciate Deputy Curran's point about the rights and wrongs of the matter. I will bring the argument back to my Department, but I cannot pretend that it is going to be easy to make progress on the matter.

Chairman

That is very encouraging and we are delighted to hear it. As Deputy Curran has pointed out, it is a big issue because we should do what is right and fair. The fact that we are creating confidence in the system, through medical cards, new accountancy procedures and the operation of the best management system, is to be welcomed, but it is clear that other repayments should be made.

Deputy J. Higgins

I wonder if Mr. Kelly received a copy of the letter that was sent from a citizen to the Minister for Health and Children, Deputy Martin. It drew attention to the fact, discovered under the Freedom of Information Act, 1997, that a memo was sent to the principal officer on the DPS side on 22 February 2000 stressing the urgency of the regulations and outlining concerns about their prospective nature. More than a year passed before the regulations were introduced in March 2001. This underlines the moral case for the repayment of the moneys owed that has been made by other Deputies. Although the Attorney General apparently said that the question of overpayment was not pursued because such moneys could not be recovered, no direction was given as to what should happen in cases of under-payment.

Does Mr. Kelly agree that the decision made by the Ministers for Finance and Health and Children in relation to whether the money should be paid to the people involved was purely a political one? Mr. Kelly referred to tight budgets, but I suggest he should draw the Department of Finance's attention to the fact that the amount of money involved in this case represents a small proportion of the €700 million it will give this year, through the reduction in corporation tax, to people who are much wealthier than the unfortunate people who have not been paid their due.

Deputy Dennehy

Regarding the question of payments, does Mr. Kelly accept that a precedent has already been established with the decision of the Ombudsman on nursing home subventions? Is that binding on any moneys owed to the public or to applicants? Would the findings he made with regard to that apply in this case, meaning that the Department will have no option but to pay?

Mr. Kelly

I can only offer a view on that. While there are certain similarities between the two cases, there are also distinct differences. In this particular case, the new scheme conferred an overall benefit, in the round, on the community. The nursing home subvention scheme involved a certain set of terms which applied across the board to everybody's detriment. In this case, there is an aggregate benefit to the community which is reflected in the increased volume of usage and the fact that so many people have registered with the scheme.

There has been a dramatic increase in the spend on this scheme by comparison with the two earlier schemes. Relative to previous schemes, one group has gained and one group has lost. There are differences between the two matters and each has to be looked at on its merits.

Deputy Dennehy

I presume the Department is creating a plan B and getting everything ready in case it is forced to pay people. Once the first case is taken, it will be found that matters will go against us. It is better that we make a good decision now. I accept that Mr. Kelly will pass on our views and that the right decision will then be made.

Chairman

What percentage of the drugs in the GMS are generic?

Mr. Kelly

At present, 21% of GMS items are generic and 11% are generic under the drugs payment scheme.

Chairman

The same drug, if generic, can be half the cost.

Mr. Kelly

This is an issue we are actively considering in 2003 with the pharmaco-economic unit in St. James' Hospital. When one begins to strip it down and look at the true potential to make savings through the use of generics, one moves from an intuitive feeling that it is an attractive proposition. When looked at in terms of the availability of generic substitutes, the cost difference for the top 30 items in the GMS and the top items prescribed under the DPS are marginal in many cases.

In recent years the significant cost difference that used to prevail between proprietary brands and generics has become marginal. The true potential saving is something to which we are giving active consideration, with a view to taking action in 2003. However, the clinical accountability of certain general practitioners regarding their duty to prescribe what they believe is the best product is also a factor. This matter has a number of different dimensions and it is not easy to deal with. There is some potential for savings, but all of the factors involved mean that is not huge.

Chairman

Has the possibility of using generic drugs been developed with the GP network?

Mr. Kelly

Within the indicative drug budgeting scheme that is part of the GMS already, there are strong incentives for GPs to prescribe cost effectively. That has particular reference to generics and as it is to some extent a feature of the GMS, the potential to push it further comes down to the variables I described.

Chairman

Is Mr. Kelly aware of a different price structure for customers availing of the drugs scheme in pharmacies to that for those who buy drugs directly?

Mr. Kelly

In that a different price is charged by the pharmacist depending on the customer?

Chairman

In that it depends on which method of acquiring the drugs is used.

Mr. Kelly

The pharmacist is paid the retail price for drugs he supplies privately across the counter. In relation to the GMS, the make-up of what he gets is different.

Chairman

Can the same drug be considerably more expensive in the GMS system?

Mr. Kelly

The pricing structure in the GMS for prescribing involves the trade price plus a dispensing fee. There is a difference between that and the drugs payment system where the price includes wholesale cost, a mark-up for the pharmacist and a dispensing fee.

Chairman

From my business experience, it is difficult to explain the difference. It adds considerably to the budget administered by the State and the justification for the price difference should be examined. It does not stand up.

Deputy J. Higgins

The extent of profiteering in the pharmaceutical industry and the level of profit taken by some of the multinational corporations should be investigated. There is a tendency to throw a drug at a person on each and every occasion they present with a medical condition. We should think seriously about a campaign to assert that people could get on quite well without many of the drugs which are being shovelled at them and could resort in some cases to natural remedies. There is even a natural healing process through which some conditions pass in a few days, which is preferable to having a drug for every occasion costing a huge amount of money.

Mr. Kelly

I do not want to deal with, as the Deputy puts it, the subject of profiteering on the part of the pharmaceutical industry. The prices at which we deal with the industry are governed by the agreements we have with it and there are strong features within the agreement with IPHA, which continues to 2005. We are starting the work involved in renegotiating the agreement when it comes up for renewal. It is quite a complex area.

Regarding the Deputy's remarks on pushing drugs on people, it is an interesting comment on the Irish consumption of drugs that we are at the low end of the league table in the context of other European and developed countries. That may be surprising, but it is what the statistics indicate. I agree with the Deputy about the sensible prescribing of drugs. There are mechanisms in place at hospital level, in terms of drugs and therapeutics committees, and at general practitioner level, with ongoing professional education and the general practice development unit designed to improve practice. Medical practitioners are conscious of that.

I also share the Deputy's view that there is more scope for alternative and complementary therapies. We can work with complementary therapists in terms of practitioner regulation, giving greater formality and a greater sense of public safety, which is good for both groups. There are ongoing attempts to regulate the substances alternative therapists use.

Chairman

I thank all the witnesses for their contributions. The two issues discussed today are important and further reports will be necessary. We are not closing the book today. Next week we will we deal with the Department of Finance Vote.

The committee adjourned at 2.25 p.m. until 12 p.m. on Thursday, 23 January 2003.