Health (Pricing and Supply of Medical Goods) Bill 2012 [Seanad]: Second Stage

I move: "That the Bill be now read a Second Time."

I welcome the opportunity to address the House on Second Stage of this Bill, which will introduce a system of generic substitution and reference pricing for prescribed drugs and medicines. These reforms will promote price competition among suppliers and ensure that lower prices are paid for medicines, resulting in savings for taxpayers and patients.

The Bill sets out the Government's proposals to allow the substitution of medicines by pharmacists at a patient's request and to improve and update the statutory basis for the supply of medicines and other prescribed items under the General Medical Services, GMS, and community drugs schemes. It sets out a clear legislative basis for the supply and reimbursement of items to patients under both schemes. It also sets out criteria that the HSE must take into account when making reimbursement decisions.

The Bill will allow the HSE to attach conditions to the supply of certain items, provided that any restriction is evidence based and in the interests of patients and value for money. However, it is important to note that the Bill does not change the existing arrangements for the supply of items through community pharmacies.

The Bill is patient focused and will allow patients to continue to be able to access prescribed medicines in line with their clinical requirements. In addition, if a particular brand of medicine is required by a patient for clinical reasons, he or she will face no additional charge for it. In the current economic climate, it is important that we take every step possible to provide public services efficiently, limit costs to the greatest extent possible and involve the users of resources in better understanding the value of those resources and their appropriate use.

Public expenditure on drugs provided to patients under the GMS and other community drugs schemes has increased significantly in the past decade, with the year-on-year increase in spending on medicines among the highest in Europe. In 1998, we spent just under €400 million in this regard. By 2009, expenditure had increased to just over €2 billion. However, due to action taken by my Department and the HSE, expenditure reduced in 2010 and 2011, with expenditure of approximately €1.9 billion in the latter.

Several factors drive increases in expenditure on drugs. The number of items prescribed has increased in the past decade from approximately 30 million to approximately 70 million in 2010, general practitioners, GPs, are prescribing newer, more expensive products, and greater numbers of people are eligible for medical cards.

My Department and the HSE have taken a number of actions to control expenditure on drugs. Savings are being achieved through ongoing off-patent price cuts agreed with pharmaceutical manufacturers, the pricing mechanism for new products has been changed and we now have a review mechanism that takes account of price reductions in other countries. Since 2010, these actions have achieved savings in the region of €250 million. In 2009 and 2011, regulations were made under the Financial Emergency Measures in the Public Interest Act 2009 to address margins and mark-ups in the pharmaceutical supply chain. The combined full year savings from these measures amount to €154 million.

My Department and the HSE have had ongoing negotiations with the Irish Pharmaceutical Healthcare Association, IPHA, throughout 2012 with the intention of securing a new pricing and supply agreement to replace the recent agreement, which expired on 1 March. The terms of the previous agreement and savings secured under it continued to apply for the duration of the negotiations.

In June, an interim agreement with the IPHA to reduce the price of certain off-patent medicines was reached and is expected to deliver €10 million in savings in 2012 or €20 million in a full year. These price reductions were implemented in advance of further discussions on a new agreement that was expected to deliver more significant savings.

As the House will be aware, the Minister for Health, Deputy Reilly, announced on Monday that intensive negotiations involving the IPHA, the HSE and the Department of Health had reached a successful conclusion with a major deal on the cost of drugs in the State. The deal is an important step in reducing the cost base of the health system. With a value in excess of €400 million over the next three years, the deal will entail significant reductions for patients in the cost of drugs; a lowering of the drugs bill for the State; greater access to new cutting edge drugs for certain conditions; and an easing of future financial pressures on the health services. In broad terms, approximately half of the financial value of the deal relates to reductions in the cost of patent and off-patent drugs while the other half is related to the State securing the provision of new and innovative drugs for the duration of the agreement in an exceptionally difficult economic climate.

The new deal, when combined with the IPHA deal reached earlier this year, means that €16 million in drug savings will be made this year, with much greater savings to be achieved during the next three years. It is estimated that the deal will generate savings of up to €116 million gross in 2013.

I warmly welcome this agreement. The current cost of drugs in our health system at over €2 billion per year represents a major challenge to the State. However, the value of life saving and life enhancing drugs to patients is incalculable. The importance of the new deal to the State and patients alike will be felt into the future. In addition to the IPHA deal, the Department and the HSE will shortly finalise discussions with the Association of Pharmaceutical Manufacturers in Ireland, APMI, which represents the generic industry, to deliver further savings in the cost of generic drugs.

A national task force on prescribing and dispensing has been established to deal with prescribing and dispensing existing medicines. It will address these issues from the perspective of quality and patient safety primarily. However, it can be anticipated that the work of the task force will also deliver significant cost savings in terms of achieving more cost conscious prescribing. Therefore, the task force provides a platform to secure a sustainable means of improving value for money from the significant expenditure of the State on prescribed medicines.

The task force comprises a number of key leaders in the health care system. Its terms of reference require it to oversee and direct analysis of the extensive information that is held on prescribing patterns through the Primary Care Reimbursement Service, PCRS. The task force's work will be wide ranging and include providing advice, guidance and support to prescribers and dispensers to help them improve prescribing practices. Its work will also include assessing the suitability of maintaining the supply of certain items with limited efficacy where more appropriate items are available.

Despite the progress I have outlined, pharmaceutical expenditure continues to pose a challenge, particularly in light of our ageing population and increased usage of medicines. Further changes in the form of generic substitution and reference pricing are required to secure a sustainable system of pharmaceutical expenditure while ensuring that patients can continue to have access to necessary and innovative medicines.

Generic substitution allows pharmacists to substitute a cheaper generic equivalent at the patient's request when a more expensive product has been prescribed. Generic medicines are equally as safe and efficacious as proprietary products and are subject to the same requirements for quality, safety and efficacy. The Irish Medicines Board, IMB, will have responsibility for the designation of interchangeable medicines.

Reference pricing involves setting a common reimbursement amount for selected groups of medicines. Only the reference price is reimbursed by the State. Eligible patients can avoid out-of-pocket payments by opting for a generic medicine at or below the reference price. Coupled with generic substitution, reference pricing provides patients with an incentive to opt for the cheapest available product, but does not impose any unavoidable additional cost on them.

These two measures represent a significant structural change to the system of pricing and reimbursement of medicines. As more medicines come off patent, the introduction of generic substitution and reference pricing will ensure that both taxpayers and patients will benefit from increased competition in the pharmaceutical market. Giving patients more choice and promoting price competition between suppliers will help to reduce the overall drugs bill without compromising the efficacy or safety of the treatment that patients receive.

Savings will be achieved by limiting reimbursement to the reference price, allowing patients to opt for less expensive versions of the prescribed medicine and promoting price competition between the manufacturers of interchangeable medicines. The level of savings will be dependent on a range of factors, including the number of medicines included in the reference price system, prescribing practices and the behaviour of manufacturers of interchangeable medicines. As the system will be introduced on a phased basis, savings will also be achieved on a phased basis.

I turn now to the main provisions of the Bill. Part 1 provides for the definition of certain terms used in the Bill and the laying of regulations. Part 2 provides for the establishment and maintenance of a list of interchangeable medicinal products, setting out the duties of pharmacists regarding prescriptions for interchangeable medicinal products under their branded names and including a number of scenarios. It also sets out the duties of pharmacists regarding prescriptions for interchangeable medicinal products under their common names. Part 2 also contains some miscellaneous provisions. These include the provision that no action or other proceeding shall be instituted against a pharmacist or prescriber when a pharmacist substitutes a medicinal product for a branded interchangeable medicinal product in accordance with the legislation. Also included is the provision that a prescriber may indicate on a prescription if a branded interchangeable medicinal product should not be substituted for clinical reasons.

Part 3 provides for the dispensing of medicinal products under their common names where they are not interchangeable medicinal products. Part 4 provides for the establishment and maintenance of the reimbursement list. It also provides for the conditional supply of listed items by the HSE and the setting of prices for items and listed items. This part of the Bill provides the HSE with discretion to supply non-listed items to certain patients.

Part 5 provides for the setting of a reference price for groups of interchangeable medicinal products. Part 6 provides for appeals to the High Court against relevant decisions of the Irish Medicines Board, IMB, or HSE; power to specify form of documents; fees to be paid to the IMB or the HSE; and amendments to relevant Acts. Schedules 1 and 2 pertain to procedural provisions relating to decisions by the IMB or the HSE. Schedule 3 sets out criteria for the purposes of decision making by the HSE under section 18.

Two issues were to the fore when the Bill was being drafted. The first was the sustainability of the supply of medicines and the other was the safety of generic medicines. Shortages of essential medicines are currently a cause of concern not just in Ireland but throughout Europe and the rest of the world. It is a global problem affecting health systems in all countries and affecting patients worldwide. Medicines shortages can be caused by a combination of factors throughout the pharmaceutical supply chain, such as manufacturing difficulties, industry consolidation and commercial decisions by manufacturers to withdraw unprofitable lines.

Irish medicines regulations place an obligation on both manufacturers and pharmaceutical wholesalers within the limits of their respective responsibilities to ensure the adequate availability and supply of medicines on the Irish market in order to meet patient needs. My Department has been engaging with the Irish Medicines Board, the Health Service Executive and the Pharmaceutical Society of Ireland to identify ways in which the Irish system can manage medicines shortages as effectively as possible in order to minimise the impact on patients. International efforts to effectively manage medicines shortages are also being considered.

Pharmaceutical production is carried out by private enterprises and the State or my Department can only intervene to a limited extent to prevent medicines shortages occurring. The IMB and HSE continue to work closely to operationally manage medicines shortages when they arise. In addition, the Pharmaceutical Society of Ireland works with the pharmacy profession and has recently published guidance to registered pharmacists on managing medicines shortages. Manufacturers, wholesalers and pharmacies all have responsibility to work together to identify shortages quickly and implement alternative arrangements to meet the needs of patients. In this context, Section 24(3)(a) of the Bill provides that when the HSE sets a reference price or reviews a reference price for a group of interchangeable medicinal products, it must take into account the ability of suppliers to meet patient demand. In other words, reference prices will be set at levels which will facilitate rather than jeopardise supply.

The safety of generic medicines underpins this Bill but it is important to point out that generic medicines must meet exactly the same standards of quality and safety and have the same effect as the original medicine. All of the generic medicines on the Irish market are required to be properly licensed and meet the requirements of the Irish Medicines Board. To further enhance the safety aspect of generic substitution, section 13 gives a prescriber the option of indicating on a prescription that a branded interchangeable medicinal product should not be substituted, if there are clinical reasons not to do so.

The programme for Government includes the commitment that "reference pricing and greater use of generics will be introduced to reduce the State's large drug bill and the cost to individuals of their medicines". This legislation will introduce a system of reference pricing and generic substitution for prescribed drugs and medicines which will ultimately lead to savings for taxpayers and patients. It is envisaged that this Bill will contribute to an increase in the rate of generic prescribing in Ireland, which currently stands at approximately 18%. I will, of course, keep the implementation of reference pricing and generic substitution under constant review and will report back to both Houses, as appropriate. I commend the Bill to the House and look forward to hearing the views of Deputies during the course of the debate.

The Minister of State is hitting the ground running in the Department. He has been there a few short days but there has been a €400 million agreement with the Irish Pharmaceutical Healthcare Association and other key pieces of funding have been discovered in the latter days of this year to address the budget deficit. I compliment the Minister of State, although I am not saying it is creative accounting. It is interesting that the announcements have come when representatives of the troika are in the Department looking at the figures to see where the deficit can be addressed and how it arose in the first place.

This is important legislation and we welcome it. It has been a long and drawn-out process, although I accept there were complexities in the drafting of the legislation. Broad consultation was required with the industry and everybody else to ensure the legislation would be effective and meet the needs not only of the taxpayer but the industry and, most importantly, the patients. The balance has been struck in general, although we have concerns that we will address through amendments on Committee Stage. I am hopeful we will get a fair hearing as we want to be constructive, particularly with the issue of supply and shortages. Pharmacists, for example, are concerned about a three month interpretation as opposed to a six month interpretation, and such price referencing changes could cause pharmacists and wholesalers to reduce the stock carried. It is a technical issue to be dealt with on another day.

I will speak to the broader issues of the Bill. The amount of money spent by this State on medicines is alarming. There is no doubt that there are issues with cost and the amount prescribed. The Government, health policy makers, prescribers and dispensers must address the issue in the short to medium term, as it is stifling the ability of the State to fund health services. It is not good to be overly dependent on certain medicines in the prescription process.

Recently we had representatives of the Irish Medicines Board before an Oireachtas health committee. Their take on the issue was interesting, and perhaps we should have a broader discussion in this regard, taking in not just this Bill but the use of interchangeables, prescription-only drugs and over the counter sales. We should also consider the role of pharmacists in the area. If a person with or without a medical card goes to a doctor, the prescription given would be dispensed by a pharmacists. Many companies do not want a drug to be taken off the reimbursement scheme so they would not even make an application in this respect. There is no form of reimbursement if it is taken from the list. If it remains on the list it must be prescribed by a doctor.

There are pharmacists who have spent seven years in college, are eminently qualified and professional and yet they can have no hand, act or part in the prescription process. I would not expect pharmacists to be able to prescribe every particular medicine and drug but there should be a key role for competent professionals who are in every community in the country. They should have a more active role in prescriptions.

There is a commitment in the programme for Government for primary care to be universally available, and although there is a delay in the roll-out, I understand the reasons. Those with a long-term illness will be in receipt of free GP care in the not too distant future, according to the programme for Government. The idea that all the medicines a person requires must be supplied through a prescription or there is no reimbursement is a falsehood because everyone is obliged to go to their GP. If I have a sick child, it will cost me €60 before I can get any form of medicine. I have to pay €60 every time I head to my GP to get a medicine which in other countries may possibly be prescribed and dispensed at pharmacy level. We must have a broader discussion on that. The medical profession will say it is the only one which should prescribe and that the pharmacist should dispense, but I think there is a middle ground in that pharmacists should be able to prescribe and dispense certain types drugs and medicines. I am thinking of skin ointments and other low level products that would not necessarily require a full medical check by a doctor which would cost a person without a medical card €60. It will cost the State if the person has a medical card, so either way it is costing people, either through general taxation or a direct payment to a doctor. That is an issue on which we will just have to bite the bullet. We must have a very genuine discussion on it.

We talk about the pharmaceutical industry, products coming out of patent and that it may save €400 million over the next three years, which is all very welcome. However, I question whether the agreement reached the other day with the Irish Pharmaceutical Healthcare Association will save that amount, but that is another day's work and it is not relevant to this Bill in legislative terms, although it has a knock-on effect. How much of that €1.9 billion cost could be avoided if a proper regime was in place which discouraged prescribing and dispensing in the first place? The amount of medicines sloshing about our systems is at the higher end in comparison with other European countries. That is a key issue and I refer not only to the cost but to the actual quantity of medicines. Those are two areas on which we should have a discussion.

The Irish Medicines Board was quite clear on another issue at which we, the policymakers in the Department and the HSE, should look. There should be a review of the medicines being given to patients. For example, many patients could be on many different medications if they are very ill or require long-term treatments. The doctor prescribes and the pharmacist dispenses. There is a role here for the pharmacist who is the most eminently qualified person in terms of assessing whether medicines are overlapping. There should be a regular review of the medicines prescribed to people. We all know of cupboards full of medicines which are being prescribed and dispensed but not used. People may ask if I am sure about that. I am absolutely definite about that, as would most public representatives who would see it at the coalface. While we welcome the fact there will be reference pricing and generic substitution, we should be trying to reduce the amount of medicines and drugs we use. For all those reasons, a continuum of policy is required to get to a situation where we have a drugs Bill which is reflective of good health policy in terms of reducing the amount of medicines supplied.

Many organisations and advocacy groups continually raise the issue that perhaps there is an over-reliance on drugs. The Department of Health and others have advertisements and campaigns from time to time in regard to over-reliance on antibiotics. That is just one area. There are many other areas of equal concern, including mental health, where we genuinely believe there is an overly prescriptive hand.

This Bill will reduce the price to the patient and the taxpayer but there is no detail in terms of price referencing. Will it be done by statutory instrument, by regulation or by logarithm in the Department of Health? How will it come about? It is very important we have detail on this. What basket will be used by whichever person or entity we allow to strike the reference price?

Perhaps it was the use of language as opposed to the interpretation of the legislation but I was concerned when the Minister of State used the words, "at the patient's request". I assume the pharmacist will recommend and that if the patient refuses, he or she should be entitled to the original medicine or drug prescribed and that there will be a role for the pharmacist to be proactive in promoting generic substitution as opposed to the patient saying he or she will take the cheapest. That is a key area which must be explored a little further, probably on Committee Stage. It would be of concern if more weight was given to the prescriber as opposed to the dispenser. That could create difficulties.

We all know that pharmaceutical companies advertise their products. The Irish Medical Organisation and others have a code of conduct on how and what general practitioners prescribe and whether there are any conflicts. I am not saying every GP in the country has a conflict of interest in terms of prescribing but, at times, companies try to induce GPs to prescribe their particular drug or medicine over another. That is an area we may need to tease out on Committee Stage.

The organisation, Brainwave, contacted me in regard to its concerns about generic substitutions for people with epilepsy, and I am sure it has contacted the Department and the Minister of State. I do not have any medical competency in this area but when organisations such as that express grave concerns about generic substitutions for people with epilepsy, we might look to see whether they merit further examination. There is grave concern among the community which represents people with epilepsy that this might not be suitable for their treatment and requirements. That issue might be visited at some stage in the near future because Brainwave contacted me and I received many e-mails from individuals who are concerned because they did suffer, or are suffering, from epilepsy.

The Irish Medicines Board is responsible for the oversight of medicines. It seems to be very slow to delist medicines, and I raised this with Mr. O'Mahony, the chief executive of the board, at committee, as did other Deputies. Many companies will not request delisting for reimbursement reasons, but the Irish Medicines Board should be proactive in recommending the delisting of medicines and drugs from prescription to over the counter. Other countries, including the UK, seem to be more proactive in delisting medicines and drugs which prove to be safe and can be dispensed by a pharmacist without prescription. We are very slow to do that.

The pharmacist should have more involvement in the amount of medicine an individual can be given. Given the software available to industry now, there should be a simplified and centralised system for pharmacists in order that they can say a person has received his or her allocation of a certain medicine. We have to be imaginative and brave and, at times, take on vested interests and those who up to now looked on prescribing as solely within their remit.

The legislation is a step in the right direction in the context of reference pricing and generic substitution. We must wait to find out how the Minister will reference prices and what criteria he will use. The key issue is the need for a centralised policy to reduce our drugs bill. I refer, for example, to the obesity issue. Deputy Ó Caoláin, myself and others highlight this regularly at the Joint Committee on Health and Children as we chip away at the issue while organisations appear before us to make presentations. I do not point fingers at any Government but we have not made an effort to deal with this issue and every policy maker knows we are sitting on a time bomb, although the consultant, Dr. Donal O'Shea said we are not sitting on the time bomb because it has gone off. We are facing an obesity epidemic and, unfortunately, if it is not addressed in the early years in the context of diet, quality of life, health and education, the State will be forced to pick up the tab down the road to treat diabetes, cardiac and coronary problems and all that flows from them. This will place a significant burden on the State as it will have to pick up the tab but, more important, on individuals whose quality of life will be badly affected.

I am concerned that if the price of medicines is reduced, they could continue to be prescribed at the same rate. There must be a concerted policy to ensure that if prices are reduced, usage does not increase and that there is a response to the needs of our citizens and our society. Obesity will be one of the biggest killers in this country if we follow the trend in the United States and north western Europe. It is happening before our eyes and the statistics are alarming. One in four of our school children is well overweight and borderline obese, which is a disturbing statistic, given obesity does not improve with age. Statistics also highlight that more children are having cardiac and coronary issues because they are overweight and we must be conscious of this. It is fine to reduce the drugs bill but usage could increase because the issues creating the need for them in the first place are not being addressed. I urge the Minister of State to ensure a centralised policy is adopted.

We have made strides to addressing the smoking problem but, at the same time, a large cohort of young people are taking up cigarettes, particularly young girls who start to smoke at an early age, which is a disturbing development. We need tough policy responses to address these issues. Subtle messages in advertising by tobacco companies has encouraged people to take up smoking. While I acknowledge there is a ban on tobacco advertising, we must be conscious that these companies avail of the Internet, magazines and so on to advertise and use high profile models who are seen as influential among cohorts of young women. They are used in a subtle way to encourage young people to take up smoking as a diet suppressant to look like Kate Moss, for example. We must get serious about this to make sure we address the issue at an early stage. Many people share the view that we should not reduce the price of medicines without addressing usage.

Another key issue is the fact that the pharmaceutical industry is a critical component of the economy. The State attracts the best multinationals but I would be concerned if the reason they located here was that we pay over and beyond what we should for on patent products because I assumed they were here because of the attractive foreign direct investment package we offer. We have a capable, well educated, flexible and committed workforce and the necessary infrastructure with close co-operation between third level institutes and universities and the industry to develop products and so on and the State should not pay excessive amounts for medicines. I hope that is not the case because the last thing we need is for the agreement announced yesterday to jeopardise the pharmaceutical industry. It is inexplicable that this would do so. I hope and believe they locate here for all the other reasons as opposed to the State paying well in excess of what other countries pay for patented drugs.

When the legislation is passed and the Minister has put in place the resources to address the issue of price referencing, the Irish Medicines Board will decide the interchangeable drugs. Will the board have sufficient resources? It is key that the staff of the IMB are given all the resources they need in order that they can move swiftly on this issue to make sure the interchangeables are listed. People also need to be educated that generic drugs are not a lesser type of medicine. There are anecdotal stories of people when having drugs prescribed by their doctor saying that because their friend says that the blue tablets are better than the pink tablets, they want them. An advertising campaign needs to be run to tell people to trust the IMB. The board will make the decisions about the interchangeables and it needs to publicise the fact that generics are as good as branded or proprietary drugs.

I refer again to reimbursement. The only way a person can remain on the reimbursement list is if a prescription required, which can only be written by a GP. Many people have to pay a GP for this or the State pays him or her indirectly. That is tying up the system. There is a significant opportunity for us to discuss with the IMO, the representative organisations of other medical professionals and policy makers to create a system whereby all the professionals, including doctors and pharmacists work in cohesion. I acknowledge there must be clear lines of demarcation for some drugs but others should be moved from the prescription only list to the over the counter list. It is a slow process and while the IMB has a role, a broader discussion is needed about the role of pharmacists in dispensing low level prescription drugs. The Minister has referred to discussions on an in-between prescription that could be dispensed by pharmacists but it will be difficult to deliver on the issue. This brings us to primary care, which is about delivering care at the lowest level possible in communities. The pharmacist has a role in this regard.

The legislation is critical and it is welcome for many reasons. If it is too successful, it could discourage a proactive culture of health promotion and I am concerned about this.

Debate adjourned.