Written Answers. - Drug Costs.
Liz McManus
Question:
136
Ms McManus
asked the
Minister for Health
the main features of his recent agreement with the Irish chemical industries on the price of prescribed drugs in the GMS; if he will review the drug budgeting scheme for doctors in the GMS which may offer an incentive to GPs not to prescribe the most appropriate drug but the cheapest one; and if he will make a statement on the matter.
As outlined in my reply of Wednesday, 30 June 1993, the Government has approved a new four-year agreement between my Department and the Federation of Irish Chemical Industries on the price of drugs. The Agreement will come into effect on 1 August 1993.
The main elements of the Agreement include:
—a reduction of over 6 per cent in the cost of GMS drugs. This reduction is achieved through an immediate price decrease of 3 per cent on all drugs and an increase in the rebate payable on drugs supplied under the GMS Scheme from 2 per cent to 5 per cent;
—a price freeze for a period of four years. The price will be subject to review, however, if during this time there is an average movement in cumulative currency adjusted price indices across a basket of European countries in excess of 10 per cent.
In addition, the industry has agreed to make a once-offex-gratia payment of about £2 million to compensate for currency fluctuations over the last year of the current agreement.
The new agreement sets the maximum price for all drugs prescribable and reimbursable in the GMS scheme and all medicines supplied to hospitals and health boards. It provides that a minimum discount of 15 per cent shall be obtainable on supplies to hospitals and explicitly recognises the right of such bodies to negotiate better terms with individual manufacturers, importers or agents.
Under the agreement the price of new products coming on the market will be linked to the lesser of the currency adjusted UK price and the average price of the same product in a basket of European countries. In an innovative clause, the price of new chemical entities will be subject to review after two years to ensure that the cost impact of such products does not distort the market.
This agreement is an integral part of my Department's overall drugs strategy aimed at containing the cost of drugs to the Exchequer. It is estimated that the cumulative effect of the price concessions could yield savings to the Exchequer of up to £15 million per annum.
The decision of the Government to approve the new agreement was taken after careful consideration of all the options available. It is the view of the Government that the terms proposed provide the best available protection of the interests of patients and taxpayers.
The use of indicative drug targets does not interfere with the right and duty of the doctor to prescribe as appropriate for each patient. The arrangements agreed last November with the Irish Medical Organisation, for the provision of general practitioner services under section 58 of the Health Act 1970 to eligible persons, which included the area of prescribing, will be reviewed next year.
