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Medicinal Products Prices

Dáil Éireann Debate, Tuesday - 21 January 2014

Tuesday, 21 January 2014

Questions (630, 663)

Derek Nolan

Question:

630. Deputy Derek Nolan asked the Minister for Health his plans to include a maximum pricing scheme for essential drugs in the Pricing of Medical Goods Act 2013; his plans to implement a maximum pricing scheme separate from this Act; and if he will make a statement on the matter. [2645/14]

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Seán Kyne

Question:

663. Deputy Seán Kyne asked the Minister for Health the progress made regarding reducing the cost of medicines both at a State level and at consumer level; the negotiations that have been held between the Health Service Executive and the pharmaceutical companies; and if consideration will be given to partnering with other EU member states in purchasing medications which would enable health services to acquire essential medications at a lower cost [2936/14]

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Written answers

I propose to take Questions Nos. 630 and 663 together.

Most drugs and medicines which are paid for by the HSE are supplied to patients through their local pharmacies who, in turn, purchase them from wholesalers or, to a lesser extent, directly from drug manufacturers. There are no plans to alter these arrangements.

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 originator 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 and these are the maximum prices paid by the HSE for originator drugs supplied through the community drug schemes. 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 maximum price at which the HSE reimburses generic products is 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 €148 million in 2014.

The Health (Pricing and Supply of Medical Goods) Act 2013 provides that from June 2013 the maximum price of all new medicinal products reimbursed under the community drug schemes will be set in accordance with the criteria set out in the Act. The Act also provides that the HSE must review all items currently reimbursable under the GMS and other community drug schemes (including prices) within three years to determine if they should remain on the reimbursement list and, if so, what price should apply. In addition, the Act 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 reference pricing 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 Medicinal Products, containing groups of atorvastatin products, was published by the IMB on the 7th August 2013. The List has been updated since then by the addition of 10 more groups of medicines. The IMB is updating the List of Interchangeable Medicinal Products on an ongoing basis and it expects to complete the assessment of the top 20 priority medicines by end Quarter 1 2014. A second list of 20 priority products will then be identified and it is expected the IMB will have completed assessment of these products in Quarter 4 2014. The process will then continue until all relevant medicinal products on the reimbursable list have been assessed.

Once a List of Interchangeable Medicinal Products 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 1 September 2013. Secondly, the legislation provides that the HSE may set a reference price for groups of interchangeable products published on the List of Interchangeable Medicinal 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 maximum 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 and the second reference price for esomeprazole 20mg products was implemented on 1 January 2014. The HSE also expect to implement reference prices for esomeprazole 40mg and rosuvastatin products with effect from 1st February 2014.

In addition, the consultation process is also underway in relation to three more groups of medicines which have been designated as interchangeable by the IMB – Omeprazole, Lansoprazole, and Pravastatin. It is expected that reference prices will be implemented for these groups of medicines with effect from 1 March 2014. The HSE will continue the process of setting reference prices for the remaining groups of interchangeable medicinal products published by the IMB in accordance with the processes and timelines set down in the legislation. It is expected that 80% by value of the off-patent market for prescribed medicines will be subject to reference pricing by end 2014. Reference prices will ensure that generic prices in Ireland will fall towards European norms.

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