Most drugs and medicines which are paid for by the HSE are supplied to patients through over 1,800 community pharmacies who, in turn, purchase them from wholesalers or, to a lesser extent, directly from drug manufacturers. The current pharmacy based model results in over 70 million items being dispensed annually through local pharmacies across the State, including low population centres in rural areas. It enables pharmacies to receive deliveries each day from multiple wholesalers ensuring that all patients have continued access to essential medicines without delay. Under this model, as the drugs are purchased by individual pharmacies with no direct input by the HSE, there is no scope for the type of central procurement arrangement envisaged by the Deputy.
Establishing an alternative centralised distribution centre capable of distributing 70 million items across the State would be extremely difficult to achieve and would absorb any potential savings available to the HSE from directly purchasing medicines.
Under the Memorandum of Understanding with the Troika, Ireland committed to increasing the share of generic drug usage in the medium-term. In Quarter 4 2013 generic products accounted for 58% of the total off-patent market by volume. My Department has set a target of achieving 70% generic penetration of the off-patent market by volume by 2016.
A number of enabling measures are being implemented to achieve this target, in particular, the introduction of generic substitution and reference pricing under the Health (Pricing and Supply of Medical Goods) Act 2013.
In October 2012 a new agreement on the pricing and supply of generic drugs was reached with the Association of Pharmaceutical Manufacturers in Ireland (APMI), which represents the generic drugs industry. Since 1 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 Medicines Management Programme within the HSE has introduced the preferred drugs initiative which facilitates more cost-effective prescribing particularly in relation to high-cost medicines. It continues to engage with general practitioners to reinforce the message around safe, effective and cost-effective prescribing including generic prescribing.