I am pleased to have the opportunity to address the House on Second Stage of the Health (Amendment) (No. 2) Bill 2010. The Bill provides for charging modest fees in respect of prescribed items dispensed by community pharmacy contractors to persons who have medical cards. It provides for a charge of 50 cent per item prescribed by a registered medical practitioner, dentist or nurse and dispensed by a community pharmacy contractor. The maximum amount payable will be €10 per family per month. The charges are being introduced on foot of a budget decision last year to address the rising costs in the general medical services, GMS, scheme. The scheme also seeks to influence demand and prescribing patterns in the GMS in a modest way. We do not set out in the Bill to make the level of savings of the order of €200 million and more which we are already achieving with regard to the prices of drugs and the cost of distributing and dispensing drugs. Nor is it on the scale of the savings we expect to achieve in coming years by introducing reference pricing and generic drug substitution. However, every saving and every contribution counts. This charge should raise approximately €2 million per month. Every saving achieved by and for the HSE Vote will reduce, though not eliminate, the pressure on funding for front line services including hospitals, home help, home care packages, mental health and services for people with disabilities and their families. Given our current financial situation, it is important that we take every step possible to provide public services efficiently, to limit costs to the greatest extent possible and to involve users of resources in better understanding of the value of those resources and their appropriate use. We are doing this in a pragmatic way in the context of Ireland today, with regard to not only the national finances, but to our patterns of prescribing and use of drugs and the costs we face.
Almost 1.55 million people, or 35% of the population, have medical cards. Payments to pharmacies under the GMS scheme increased from €748 million in 2004 to €1,279 million in 2009, despite a reduction in the fees paid to pharmacists from July 2009 and ongoing reductions in the prices of off-patent medicines. The cost of the GMS scheme, including payments to pharmacists and general practitioners, in 2010 is projected to be more than €2 billion. The rate of increase, on average 12.5% during each of the past six years, in the cost of supplying drugs and medicines is not sustainable. The number of prescriptions issued under the GMS scheme has increased by 4 million between 2004 and 2009 to more than 16 million. The number of items dispensed during this period increased by more than 15 million to in excess of 50 million. The average number of items per script has also increased from 2.74 in 2004 to 3.11 in 2009.
I refer to the main provisions of the Bill. Section 1 provides for the amendment of section 59(1) of the Health Act 1970 which currently requires the HSE, Health Service Executive, to supply drugs, medicines and medical and surgical appliances to persons with full eligibility without charge. This is being amended by section 1(a) to provide that where prescription items are supplied by a community pharmacy contractor, they shall be subject to the charges as provided for in subsections (1A) and (1B)(a) subject to the exemptions provided for in subsection 1(C). Subsection (1A) provides that a person who is supplied by a community pharmacycontractor with a drug, medicine or medical or surgical appliance on the prescription of a registered medical practitioner, dentist or nurse who is entitled to prescribe shall be charged 50 cent per item. It also provides that any variation in this amount may be determined by regulations subject to conditions set out in the amended subsection 59(4) of the Act, which I will outline.
Subsection (1B) provides that the maximum amount payable by any person or his or her dependants in any month will be €10. In addition, provision is made for the HSE to refund, credit or otherwise relieve any amount paid in excess of the maximum aggregate amount. Any variation in the maximum aggregate amount is to be determined by regulations subject to certain conditions set out in the amended subsection 59(4) of the Act, which I will outline.
Subsection (1C) provides that two classes of persons will be exempt from the charges, namely, children who are in the care of the HSE under the Child Care Acts 1991 to 2007 and persons who are supplied with specific controlled drugs such as methadone. The section also provides for the making of regulations to exempt other classes of persons from charges, subject to certain conditions as set out in the amended subsection 59(4) of the Act, which I will outline. Prescription charges will not be payable by holders of long-term illness cards. In addition, charges will not apply to persons who are covered by the Health (Amendment) Act 1996, that is, persons who contracted hepatitis C through the use of certain blood products.
Subsection (1D) provides that, notwithstanding the contract between community pharmacists and the HSE, the amount paid to a community pharmacy contractor by the HSE will be reduced by an amount equal to the amounts collectable by that contractor in charges. The amount collected in charges will be retained by the community pharmacy contractor. Subsection (1E) provides for a definition of "community pharmacy contractor" and a definition of "dependant" for the purposes of section 59(1). Section (1E)(b) inserts a technical amendment relating to the existing section 59(2).
I refer to the conditions for making regulations. Paragraph (c) replaces the existing section 59(4) and provides in the new 59(4)(a)(i) and (4)(b) that, in deciding whether to make regulations to vary either the amount of the charge per item or the aggregate monthly amount, the Minister will have regard to such of the following as is considered appropriate: information on the consumer price index, information on expenditure and the number of items prescribed to medical card holders, the medical needs and financial burden on persons who avail of the services and the necessity to control health service expenditure.
Paragraph (c) also provides in the new sections 59(4)(a)(ii) and 59(4)(c) that, in deciding whether to make regulations specifying classes of persons to be exempt from the charges, the Minister will have regard to such of the following as considered appropriate: the particular medical condition, disability or medical needs of persons in that class, the number of the prescription items required in respect of those medical needs, information on expenditure and the number of items prescribed to medical card holders generally or in respect of the specific class, the necessity to control health services expenditure and whether the overall financial situation of the proposed class is worse than that of other persons who are charged for items supplied on prescription. Paragraph (c) also provides that the Minister may make regulations on refund, credit or other relief arrangements where he or she considers it necessary to do so. Paragraph (c) provides that any regulations made under section 59 shall be made with the consent of the Minister for Finance.
Section 2 provides for Short Title, construction and collective citation with the Health Acts and commencement. The Bill is part of a set of actions the Government has taken or is taking to address rising costs in the GMS. These actions include the introduction of off-patent price cuts, reductions in wholesale and retail mark-ups and the introduction of generic substitution and reference pricing.
Significant progress has been made in recent years to improve value for money in the area of pharmaceutical expenditure.
Off-patent price cuts have been implemented and wholesale and retail mark-ups have been reduced. As a result of off-patent drug price reductions in February, the cost of prescribed medicines measured by the Central Statistics Office as part of the consumer price index reduced by more than 12% in that month. Discussions are under way with manufacturers of generic medicines and lower prices for generics are expected to be introduced in September this year.
Despite these reforms, pharmaceutical expenditure continues to pose a challenge because of our aging population and increased use of medicines. Further changes are required to secure a sustainable system of pharmaceutical expenditure while, at the same time, ensuring patients can continue to access necessary and innovative medicines. On 17 June last, I published a report on the proposed model for the substitution of generic medicines and reference pricing. Generic substitution and reference pricing represent significant structural change to the system of pricing and reimbursement of medicines in Ireland. As more medicines come off patent, the introduction of generic substitution and reference pricing will ensure that taxpayers and patients will benefit from increased competition in the pharmaceutical market. Giving patients more choice and promoting price competition between suppliers will help reduce the overall drugs bill without compromising the efficacy or safety of the treatment 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 depend 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. The system will be introduced on a phased basis and, therefore, savings will be achieved on a phased basis. An expert group will provide guidance on which medicines can be safely substituted. Exemptions will be required in some instances for individual patients for clinical reasons, for example, if a patient has difficulties swallowing.
Under the legislation, the maximum monthly amount payable is €10 per family. Payment of the maximum amount will only arise where a family receives 20 items or more in a month. In 2008, just over 2% of medical card families had 20 or more items per month prescribed to them. More than 35% of families had no items prescribed to them. Almost 18% had one or two items prescribed. It is expected, therefore, that only a small minority of medical card families will have to pay the €10 per month maximum charge. Based on trends in previous years, it is expected the prescription charges will yield €24 million in a full year. I commend the Bill to the House and look forward to hearing the views of Senators.