Dáil Éireann Debate, Tuesday - 19 November 2013
711. Deputy Brendan Griffin asked the Minister for Health if he will provide an update on the issue of the high cost of medication here compared to other countries; the progress that is being made and is expected to be made; and if he will make a statement on the matter. [49496/13]
View answerThe prices of drugs vary between countries for a number of reasons, including different prices set by manufacturers, different wholesale and pharmacy mark-ups, different dispensing fees and different rates of VAT.
The State has introduced a series of reforms in recent years to reduce pharmaceutical prices and expenditure. These have resulted in reductions in the price of thousands of medicines. Price reductions of the order of 30% per item reimbursed have been achieved between 2009 and 2013; the average cost per items reimbursed is now running at 2001/2002 levels.
A major new deal on the cost of drugs in the State was concluded with the Irish Pharmaceutical Healthcare Association (IPHA) in October 2012. It will deliver a number of important benefits, including significant reductions for patients in the cost of drugs, a lowering of the drugs bill to the State, timely access for patients to new cutting-edge drugs for certain conditions, and reducing the cost base of the health system into the future.
The IPHA agreement provides that prices are referenced to the currency adjusted average price to wholesaler in the nine EU member states. The prices of a range of medicines were reduced on 1 January 2013 in accordance with the agreement. The gross savings arising from this deal will be in excess of €400 million over 3 years. €210 million from the gross savings will be available to fund new drugs.
A new agreement was also reached with the Association of Pharmaceutical Manufacturers in Ireland (APMI), which represents the generic drugs industry. Since 1 November 2012, the HSE only reimburses generic products which are priced at 50% or less of the initial price of an originator medicine. This represents a significant structural change in generic drug pricing and should lead to an increase in the generic prescribing rate. It is estimated that the combined gross savings from the IPHA and APMI deals will be in excess of €120 million in 2013 with an additional €28 million saved in 2014.
The Health (Pricing and Supply of Medical Goods) Act 2013, which came into operation on the 24th of June, introduces a system of generic substitution and reference pricing. This legislation will promote price competition among suppliers and ensure that lower prices are paid for these medicines resulting in further savings for both taxpayers and patients. It is estimated that this system will yield €50 million in savings in 2014.
Under the Act, the Irish Medicines Board (IMB) is responsible for the assessment for interchangeability of medicines. Generic substitution will be introduced incrementally with the IMB prioritising those medicines which will achieve the greatest savings for patients and the State. The Board is in the process of reviewing an initial 20 active substances, which equates to approximately 1,500 individual medicines. They include statins, proton pump inhibitors, angiotensin-converting-enzyme (ACE) inhibitors and angiotensin II receptor blockers.
The first List of Interchangeable Medicines, containing groups of atorvastatin products, was published by the IMB on the 7th August. The IMB is updating the List of Interchangeable Medicines on an ongoing basis and it expects to complete the assessment of the top 20 priority medicines by mid- 2014. The process will then continue until all relevant medicinal products on the reimbursable list have been assessed.
Once a List of Interchangeable Medicines is published by the IMB a two stage price reduction process gets underway. First, under the terms of the 2012 APMI Agreement, the price of all relevant products fall by 20%, e.g. atorvastatin prices were reduced from 1st September. Secondly, the legislation provides that the HSE may set a reference price for groups of interchangeable products published on the List of Interchangeable Products with a view to introducing further significant price cuts. Taking both price reductions into account, atorvastatin prices are down 70% since the introduction of generic substitution.
Reference pricing involves the setting of a common reimbursement price, or reference price, for a group of interchangeable medicines. It means that one reference price is set for each group or list of interchangeable medicines, and this is the price that the HSE will reimburse to pharmacies for all medicines in the group, regardless of the individual medicine’s prices. The first reference price for atorvastatin products was implemented on 1 November 2013. Reference prices will ensure that generic prices in Ireland will fall towards European norms.
