The Government has introduced a series of reforms in recent years to reduce the prices of drugs and medicines which are paid for by the HSE. This has 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 01 November 2012, the maximum price the HSE pays for generic products is 50% of the initial price of an originator medicine. Recent negotiations with the APMI have resulted in agreement on additional price reductions and, from 1 May 2014, the maximum price the HSE will pay will be 40% of the initial price of an originator medicine. This will result in the price differential between off-patent drugs and most generic equivalents increasing from 5% currently to approximately 20%.
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. 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.
In the case of drugs and medicines which are paid for by the HSE, prices are set in accordance with the provisions of the Health (Pricing and Supply of Medical Goods) Act 2013 or the terms of the framework agreements between the Department of Health and the HSE and the representative bodies for pharmaceutical manufacturers in Ireland. However, neither the Minister for Health nor the HSE has any power to set the prices of drugs and medicines purchased by private patients. However, I would be disappointed if all pharmacists were not passing on the benefits of lower prices to patients. The HSE advises the public that if they are being charged prices which exceed the reimbursement price listed on the HSE website (http://www.pcrs.ie/), plus a dispensing fee of between €3.50 and €5, then they should discuss the differential with their pharmacist to ensure they get the best possible price for the medicine concerned.
Finally, my Department has asked the Pharmaceutical Society of Ireland (the pharmacy regulator) to consider how to provide greater price transparency in retail pharmacies. This examination is ongoing.