asked the Minister for Health, with regard to a report (details supplied) which indicated that the cost of general medical service drugs are set for an 80 per cent increase in the near future, if he will give details of the negotiations between his Department and the Federation of Irish Chemical Industries; and if any attempt is being made to relate the price of drugs in Ireland to drug prices in Europe rather than to drug prices in Great Britain, which are above average.
Written Answers. - Drug Prices.
101.
In 1983, arising from specific recommendations of the Trident report, the then Minister entered into a pricing agreement with the Federation of Irish Chemical Industries. That agreement set parameters for Irish trade prices of drugs and medicines by reference to directly comparable trade prices in the United Kingdom. Some 85 per cent of drugs and medicines on the Irish market are imported from the UK. The agreement with the FICI was renewed in August 1986. At my request, officials of my Department undertook a renegotiation of the agreement in the summer of 1987. A new agreement took effect from 1 August 1987.
I share the view of my predecessors in office that the general level of manufacturers' prices and wholesalers' trade prices obtaining in the UK, and therefore in Northern Ireland also, offers a reasonable basis for the establishment of trade prices here.
I have no function as regards the retail prices of drugs and medicines paid by private patients in high street retail pharmacies.
Direct comparisons of trade prices in selected continental countries does indicate that drug prices in some countries are much lower than they are in the UK. However, a very broad spectrum of social, economic and market circumstances must be taken into consideration when such comparisons are made. The level of trade prices on the Irish market will, however, be kept under constant review, particularly as regards the situation which will arise from movements towards completion of the internal market within the European Community by the end of 1992.
The current agreement with FICI is scheduled to run until July 1990. This agreement provides that, on average, trade prices of drugs supplied through the GMS scheme shall not exceed the comparable UK trade prices by more than 7 per cent, after allowance for currency differentials. A rebate of 5 per cent of trade price cost of drugs supplied in the GMS is payable by companies, reducing the net differential on GMS sales considerably. The GMS accounts for 55 per cent of all Exchequer expenditure on drugs and medicines, with hospital purchases accounting for most of the remainder.
In the hospital services, a mandatory discount of at least 15 per cent is available on listed trade prices.
The current agreement also provided for a 15 month absolute freeze on Irish trade prices, regardless both of currency movements and of ongoing price increases in the British market. This price freeze ended on 31 October and companies were then entitled to recalibrate their prices in line with the agreement. It is estimated that this recalibration will give rise to an average increase of about 7 per cent in trade prices generally.