Dáil Éireann díospóireacht -
Thursday, 28 Feb 2008

Vol. 648 No. 4

Pharmaceutical Pricing: Statements.

Minister for Health and Children (Deputy Mary Harney)

I welcome the opportunity to update the House on the pharmacy reform programme, which one cannot isolate from the overall health transformation programme that has been under way for the past number of years. The purpose of the latter is to deliver better services to patients and clients of the health service to ensure that we place a higher emphasis on quality of care and that people have access to health services at primary care level or in the acute system when necessary. Since the establishment of the HSE at the start of 2005, the increase in the organisation's expenditure of more than €4 billion is greater than the total sum used to support the health service in, for example, 1996. I want to put this fact in context. That notwithstanding, we hear frequent references to cutbacks and so on.

One of the greatest increases in health budgets, in Ireland as in other places, is the rising cost of drugs. We want to ensure that, as new therapies and innovations appear on the market, they are accessible to patients. There are three main groups in the pharmacy chain, namely, the producers of medicine, the distributors to the retail sector and the pharmacists, the dispensers of medicine to patients. Reform and better value for money have been recommended by many reports. The most recent, the Brennan commission, was highly critical of our system of reimbursements under the drugs payment scheme, which I shall address.

In terms of seeking better value for patients who purchase drugs and for taxpayers who pay more than 70% of the State's drugs bill, the HSE and the Department of Health and Children began to negotiate with the various components of the supply chain. They began with the producers of medicine and achieved a successful outcome. Heretofore, Ireland was in a basket of five countries, generally the most expensive in Europe, and paid the average price of the five. We are now in a basket of nine countries, including Spain, and will pay the basket's average price to the producers of drugs, leading to a 10% reduction in our payment for new drugs.

Drugs go off patent. When drugs are on patent, companies that innovate are entitled to a return on their investments, which are significant in the area of pharmaceutical development. Many investments never come to fruition. When drugs go off patent, we will get a reduction of at least 35%. Over four years, this represents a saving of €260 million. Some have stated that it would have been better to move to generic prescribing. According to the National Centre for Pharmacoeconomics at Trinity College, we have done better as a result of the reduction of at least 35% than we would have had we moved to generics. Our negotiated agreement with the producers of medicine is a good one and will benefit taxpayers and patients.

In good faith, the HSE and the Department entered into negotiations with the wholesalers. Our constant opinion, which I hold strongly, has been to seek to negotiate where possible. However, in the course of the negotiations, the wholesalers produced legal advice suggesting that negotiating prices with any group was against competition policy in Ireland and at European level. This was the first time the issue was raised. When the HSE sought legal advice and I asked the Attorney General's office to reflect on the matter, it was confirmed that we are not free under Irish and European law to set down and effectively fix prices with any group. This being the case, the negotiations on the price for the wholesale margin came to an end. In Ireland, the wholesale margin was just under 18%, twice the rate in Europe. To put this in context, in Ireland just over €1 billion was spent on community drugs in 2007 and it cost €600 million to take those drugs to patients. It is incredible that it should cost an extra 60% to take products to patients and such a situation exists nowhere else in the world. The wholesale margin of 17.8%, double the European Union average, was regarded as excessive. Indecon was asked, as an independent consultancy firm, to evaluate this area on behalf of the Health Service Executive, HSE, and following its evaluation it was accepted that from 1 December 2007 the margin should be reduced from 17.8%, to 8% and then to 7% next year. This reduction was delayed for three months to facilitate a Shipsey process that, unfortunately, went nowhere.

The wholesale margin will, effectively, be halved, which will save about €100 million in a full calendar year, or about €9 million per month. The wholesalers accept that an 8% margin can allow for a quality service and give them a reasonable profit. Recently when the HSE went to tender for the distribution of a particular product——

Deputy James Reilly

On a point of order, I think this is an important issue that may lead to people experiencing problems in the supply of their medication this weekend. The least we can expect is a quorum in the House so I am calling for one.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Deputy Mary Harney

We are paying a wholesale margin that is roughly double the level of other European countries but it is now to be halved to 8% from 1 March 2008 and it will be 7% from 1 January 2009. Independent analysis has confirmed that this is a fair return for a quality, frequent service that comes to many pharmacies twice daily that can deliver a reasonable profit to wholesalers.

There is a virtual market here because the three main wholesalers have a huge interest in pharmacies; one has invested €300 million in pharmacies, another owns over 400 pharmacies and a third owns over 70. There is a conflict of interest in this regard.

The State has a contract with pharmacists and for general medical service, GMS, patients, those who hold a medical card, pays a dispensing fee per item of roughly €3.26. The drug payment scheme sees the State paying a dispensing fee of €2.68 with a mark-up of 50%; there is a discount back of 8% from wholesalers. This comes to a gross margin in the region of 60% to 70% and I know of no companies, other than those with very innovative products, that have margins like this.

The Brennan commission was highly critical of the anomalies in how we pay for medical card prescriptions and how we pay through the drug payment scheme, DPS. We must move away from cost escalators like mark-ups, which lead to spiralling drug costs. It is not sustainable that more expensive drugs see a 50% mark-up and a dispensing fee. For some years many pharmacies representatives have said there should be a flat fee for all services, whether obtained through the DPS or through medical card services, and I strongly support this.

We must separate the price of the commodity from the price of the professional service provided by pharmacists. Pharmacists are among the best educated and most highly skilled professionals in the country. They are an important part of our health service and I want to see their role developed more fully than in the past, particularly regarding the management of chronic illnesses, preventative health measures and the like. We want to negotiate a new contract with pharmacists through a process like the Shipsey process that is fairly priced by an independent group. At the moment we are at a staging post to a new dynamic and new contract, to which I am committed.

There will be no changes on 1 March in how pharmacists are paid nor in the contract between the State and pharmacists. I am satisfied that nothing will happen next Saturday that will preclude pharmacists from paying staff and meeting business overheads.

In 2002 we sought to change pharmacies in Ireland when the then Minister for Health and Children, Deputy Micheál Martin, lifted regulations that restricted where pharmacies could open. The Irish Pharmacy Union, IPU, felt this would be the death knell for rural pharmacies but there has since been an increase of 26% in the number of pharmacies in the country. When I published the Pharmacy Bill in 2005, which sought to liberalise the pharmacy sector, I was again told it would lead to the closure of pharmacies but there has been an increase of 10% since then.

There are roughly 1,600 pharmacies in the country and, on average, each received approximately €234,000 last year. Many caveats apply to different jurisdictions but, on average, that is €100,000 more than pharmacists in Northern Ireland received. In Northern Ireland there is a wholesale margin of 12.5% up to the first £180,000 and after that the level is 4%.

This matter is not about reducing the price of drugs; it is rising all the time. More people are entitled to medication, the population is aging and there is greater innovation. If we want better value for money for taxpayers and patients we cannot justify paying €100 million more to distribute products than other European countries would. Many Deputies have suggested to me that up to 200 pharmacies may close but I do not accept that. Even if we were to support as many as 200 pharmacies, we are surely not suggesting it costs €5 million per annum per pharmacy to keep those 200 pharmacies in business.

Regarding contingency arrangements, I am anxious to ensure no patient is put at risk of not receiving medication. If this happens it will be because of the game between the two sides — there is no other reason for it to happen. Pharmacies must give three months' notice to withdraw from their contracts. I understand two pharmacies in the entire country have said they will not dispense to the medical card patients on Saturday. The HSE has a freephone line which it has advertised widely and will continue. It has had 200 calls from patients. In regard to every patient, it has been able to reassure them. It has reassured me that if there is any patient on Saturday, Sunday, Monday or Tuesday who cannot get access to their medication the HSE will ensure they get that medication.

We are being told that pharmacists will be charged more than they will get from the HSE. That is not the case. The manufacturers and the wholesalers have made that clear.

Deputy James Reilly

That is not true.

Deputy Mary Harney

I do not expect anyone to do business with somebody who will charge them more than they will get. Any pharmacist who is charged more at the end of the month should contact the HSE and the manufacturers and that will be sorted out. Of that I am certain.

What we are talking about is getting a fairer deal for taxpayers and a fairer deal for patients and, hopefully, we can move very quickly into negotiating under Mr. Shipsey, or a process like that, a new contract that develops the role of pharmacist in our health care system. That is something I and the Government want to see happen. When that happens it will be priced independently. In the meantime, as a temporary measure, €5 is being offered as a base fee for dispensing which is an increase of 70% over the current fee of €3.26. The Sean Dorgan process has been put in place. It includes Sean Dorgan, a well respected former Secretary General of two Departments and a director general of the IDA; Mark Moran, former chief executive of the Mater Private Hospital, who worked in the pharmaceutical industry; and Mary O'Dea, the director of consumer affairs with IFSRA, three highly respected independent people. We have put no limit on what they can recommend. We have further said, subject to Government approval, that whatever they recommend will be backdated to 1 March. That process was put in place after a meeting I held with the IPU this day two weeks ago, because it considered there was a necessity to have an independent process look at the dispensing fee. We have that process in place. It has had its first meeting and will be advertising for submissions and will be meeting the various groups. It is a matter for those groups to put, as forcefully as they can, to those independent persons their views on how pharmacists are to be paid a decent return for the service they provide.

Deputy James Reilly

The Minister has just contradicted herself. She wants a new contract negotiated and no changes to occur in the current contract. Is changing remuneration not a basic and major change in any contract? She would, of course, say she does not accept that, but she will find herself in a minority. The survey carried out by the HSE was answered by something like 18 pharmacists, out of 1,600. However, that is not the substance of what I want to speak about.

I wish to put on record what the Chairman of the Joint Committee on Health and Children circulated:

That no change be made to contracts between the HSE and community pharmacists in advance of the setting up, and reporting, of an independent body whose remit will be to make recommendations on the reimbursement to pharmacists for drugs supplied under the State's Community Drug Schemes, in consultation with the interests concerned;

recognises the vital role the community pharmacists play in the delivery of the health service;

further recognises that proposed changes to the contracts between the HSE and the pharmacists should be designed to allow for financial sustainability.

I had an addendum, which is not relevant here, but the first part of that is very relevant. Why did that disappear from the floor of the Joint Committee on Health and Children? What happened?

Deputy John Moloney

On a point of order. Deputy Reilly who has read out a statement knows full well I have clarified that issue a long time ago.

Deputy James Reilly

The Deputy did not clarify it.

Deputy John Moloney

May I clarify the record, please? As Chairman of that committee——

An Leas-Cheann Comhairle

What is the point of order?

Deputy John Moloney

Thank you. It is quite simple. The Deputy knows full well the truth of that motion within the——

An Leas-Cheann Comhairle

That is not a point of order.

Deputy John Moloney

May I clarify the record?

An Leas-Cheann Comhairle

The Deputy will have a chance to speak later in the debate. Every Member must be allowed to speak.

Deputy James Reilly

I will be interested to hear the version of the truth that comes from the Deputy.

Deputy John Moloney

I hope the Deputy waits for it——

Deputy James Reilly

I certainly will.

Deputy John Moloney

——and does not go to the media.

Deputy James Reilly

This morning's statements, apart from highlighting the situation, appear to be somewhat meaningless and we have had a vote on the Order of Business already. What should be before the House is a motion calling on the IPU and the HSE to stand back from any precipitative action that would endanger continuity of supply of medicines to the most vulnerable in our society, that is, the elderly, the chronically ill and those with disabilities.

I have already commended, on a number of occasions, the HSE on its quest for cheaper medicines for our people. We all want value for the taxpayer. We all want to see that but the manner as to how we achieve it is at issue here. The HSE has sought through unilateral action to bully pharmacists into accepting new pay and conditions that are interfering with their current contract. On the floor of this House before Christmas, we asked that the IPU and the HSE stand back and that neither would take precipitative action but would allow for an independent individual, Mr. Bill Shipsey, to facilitate a resolution. My information is that following presentations by each side the HSE felt there was no further negotiation possible. This, even members of the Government found incredible. The nature of negotiations is that they are ongoing. Many backbenchers in Fianna Fáil have expressed dismay at the manner in which the HSE is conducting its business. Yet the HSE was able to tell us at the committee that it was acting directly under the Minister's instruction. So, it is the Minister who shall have to take responsibility for the consequences of this unilateral change in the contract for pharmacists. Let us not confuse the situation. A new contract was offered over the heads of the IPU during negotiations in January with a rather intimidatory accompanying letter which suggested they would do well to sign the new contract or they could find themselves much worse off after the 1 March deadline. That showed extremely bad faith.

This is no way to conduct negotiations. Furthermore the very "coincidental" involvement of the Competition Authority since this dispute began has bothered and worried many people in what is supposed to be a democracy. The reality is that the Minister rightly sought to create savings and she has to be congratulated on managing to save €55 million from the manufacturers but she now seeks to take €100 million off the retailers whose gross income is €300 million, a drop of 33%.

The Minister mentioned her own Indecon report. In that report, which I have read, it is stated that no sudden changes should take place. Nobody who would consider going from 17% to 8%, a 50% drop, as not sudden — the Minister may not accept that but she will find herself in a minority. The report also stated that it was unwise to compare the Irish market with other markets in Europe, yet the HSE continued to insist on comparing it to Norway, where I understand the market is controlled by two chains of retail pharmacists.

The Minister mentioned earlier moneys spent by one group, €300 million, on pharmacies and another group who owns 400 pharmacies and another group who owns 75 pharmacies. There are 1,600 pharmacies in this country and there is a huge mix. It has been pointed out that there are single operators, group operators, small chains, large chains and multiples. Surely that is a great mix to have in a market. The Indecon report also asked for an independent arbitrator to be put in place before any final conclusions were drawn, instead of which the Minister has made the decision to unilaterally implement the changes and then have a report. What faith can people have in such a process? The Minister is putting the cart before the horse and prejudging the outcome. Even if she were not prejudging the outcome, when there is an outcome, after one, two or three months, how many pharmacists will have gone out of business? What action will have been taken? I certainly do not think it is in the best interests of the consumer or the market.

Deputy Mary Harney

How many does the Deputy think will have gone out of business?

Deputy James Reilly

I imagine quite a number of rural pharmacists will go down.

Deputy Seymour Crawford

That will not matter because it is only the small people.

Deputy James Reilly

Deputy Seymour Crawford is right because that seems to be the modus operandi of this Government, whether it is minorities, such as people with cystic fibrosis, children with autism waiting for assessment, the homeless, or people with mental health, who have co-located hospitals built on the site of their psychiatric unit while continuing to be treated in an open ward with 23 people where there is three feet between each bed. There are 23 women, acutely disturbed, many menstruating with one toilet, one shower and one bathroom. It is an absolute disgrace.

Deputy Mary Harney

That is why we need savings.

Deputy James Reilly

It is a disgrace and the Minister has disgraced herself by allowing private business to supersede the needs of the most vulnerable in our society.

Deputy Mary Harney

Rubbish.

Deputy James Reilly

The reality is that what has been attempted does not address the real issue the Minister has raised, which is the margin that wholesalers have, because as she already pointed out the HSE cannot negotiate with wholesalers nor the wholesalers with the HSE, because of the wonderful competition law. The HSE misled the Joint Committee on Health and Children by telling it that it had a letter from the wholesalers assuring it that pharmacists would not be charged more than the reimbursed cost of drugs by the HSE. No such letter existed. What existed was a letter to an individual pharmacist from one of the wholesalers saying that it would "endeavour to ensure", which is a far cry from a guarantee, that drugs would be provided at the reimbursable cost. No guarantee was given and this letter was certainly not addressed to the HSE.

Furthermore, the Joint Committee on Health and Children received a letter from the same wholesalers making it clear they would not be able to supply drugs to some of their community pharmacists, especially the smaller rural ones, under the new arrangements at the costs suggested by the HSE, completely contradicting what the HSE had been saying. An issue raised by the HSE during the course of the joint committee debate and by the Minister today was that there would be no change to contract structures — what beautiful use of the English language — but that of course does not mean there would be no change to contractual quantums. It is double speak, if ever there was double speak.

I want to lay on the record of this House yet again that my primary concern is for the continuity of care for patients and continuity of medical supply to the most vulnerable citizens in our community, who are the elderly, the chronically ill and the disabled. Serious illness is a grievous enough burden to carry without having to worry whether one will be able to access medication.

The net effect of this current action at the least will be the closure of many rural pharmacies as they find themselves sandwiched between the HSE and the wholesalers. Those most vulnerable are the younger pharmacists who have purchased pharmacies in recent years and have serious overheads and loans to repay. They will go out of business, thus further denuding rural Ireland of essential services. We have already lost the banks, the post offices and now the pharmacies may go. Rural GPs will be next, no doubt. The Minister will complete her agenda, namely, to have corporatised pharmacies in the large urban areas without any regard to the needs of the hundreds of thousands of people who populate our rural areas.

It is interesting that the concerns I have just raised with the Minister are raised in a letter from her ex-colleague and former Minister of State with responsibility for mental health, Mr. Tim O'Malley.

Deputy Mary Harney

Where did the Deputy see the letter?

Deputy James Reilly

It was sent to me this morning. It had been sent to the newspapers but not published.

Deputy Mary Harney

It has not been published. He is a pharmacist, which the Deputy should remember.

Deputy James Reilly

That is correct.

Deputy Mary Harney

I have seen the letter. He is a pharmacist.

Deputy James Reilly

Does that detract from the truth of what he is saying and what he feels?

Deputy Mary Harney

He said the same in 2002, by the way.

Deputy James Reilly

Like me, he would agree that value for money is at the core of this issue. It is how one does one's business.

I want to return to the HSE and its well demonstrated bully-boy tactics. I would like to know how the Minister views the HSE's intention to boycott Newstalk Radio because it has pursued it on issues of public interest. It becomes clearer and clearer that the HSE is out of control, which is what we all feel with regard to this monster the Minister has created. However, when we reflect on what the HSE said at the joint committee, we might wonder if it is actually out of control. Perhaps it is operating directly as the Minister wishes, under her instruction, and perhaps this is her view of how industrial relations should be conducted and her view of how a democracy should operate, through censorship of national radio by threat by proxy.

Deputy Mary Harney

Rubbish. The Deputy knows the reason for that. It is the intimidation of staff.

Deputy James Reilly

The Minister can put any interpretation she wants on it. The facts remain the facts.

Deputy Mary Harney

We will see what the Broadcasting Commission of Ireland says about it.

Deputy James Reilly

Notwithstanding all the above and despite severe provocation by the HSE, I call on the IPU to ensure there is no diminution of service to patients. I ask for the forbearance of pharmacists, despite all their frustrations, and hope the Minister will yield to pressure from her backbenchers, who are clearly very ill at ease with her modus operandi.

In recent weeks, this issue and the issues of cystic fibrosis and autism have been discussed on the floor of the Dáil. We have heard Government backbenchers, including some senior, experienced Deputies, decry the Government position, yet they vote with the Government. I find this extraordinary and I find the explanation offered, namely, that this is the way politics works, unacceptable. It is not the future of politics I see for this country. It is not what people elect their representatives for. They expect their representatives to have the courage of their convictions, and the courage of one's convictions is not just to stand up and speak it as it is, but also to use one's vote to ensure that it happens. Whether it be children with autism, young adults with cystic fibrosis, people suffering with chronic illness or others with disabilities who require continuous medication, we need Deputies who will vote to ensure that these services are delivered and maintained.

The pharmacists have a three-month notice clause in their contract and, as a result, the Minister claims patients have nothing to fear. However, the reality is that methadone dispensing was withdrawn without any such notice being given. This is scant reassurance to the many people who are worried about their medication. My colleague, Deputy P. J. Sheehan from Goleen, County Cork, was visited in his clinic last week by an elderly lady in tears because she was so distressed at the prospect of not being able to get her medication. Deputy Seymour Crawford knows of a lady with a disabled child who similarly wonders how she will manage to get her medication.

I again implore the Minister to stand back from this action and allow the excellent Mr. Dorgan, whose credentials she has outlined, to come to his conclusions. She will then be more likely to have the support of the House for her action. To proceed before this happens will be to possibly put at risk the well-being of many of our most vulnerable citizens.

Deputy Jan O’Sullivan

I wish to share time with Deputy Michael D. Higgins.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Jan O’Sullivan

I urge the Minister to rethink this issue. We are fast approaching 1 March, which is only two days away. The Minister should listen to the voices of the majority of members of the Government parties and to the voice of reason, and not listen to her own political ideology and the bullying tactics of the HSE in this regard.

Although the Minister said that nothing will change on 1 March, everything will change. On 1 March, the amount of money given to pharmacists from the HSE with regard to community drugs schemes will be cut by €100 million. It is disingenuous of the Minister to suggest, first, that to have this amount of money taken from the income of any sector of society would not make a huge difference and, second, that, somehow, it is being taken from the wholesalers. It is not being taken from the wholesalers; it is being taken from pharmacists.

The Minister told us that the wholesalers refused to negotiate and invoked competition law. At the same time, she told us the wholesalers are taking a cut with regard to their 8% margin. How can the Minister tell us this when the wholesalers did not negotiate and she and the HSE have no power to in any way interfere with how or what wholesalers provide to pharmacists? This money is coming from pharmacists.

Just a couple of years ago, as the Minster stated, the market was liberalised and opened up under her Progressive Democrats philosophy. I understand approximately 300 new pharmacies were opened, largely by young pharmacists, but the Minister is literally cutting the ground from under them through a unilateral €100 million withdrawal from that sector. Anybody with any sense of reason would have to accept this will have a serious effect and will cause job losses and closures. I cannot see it happening any other way.

We all want to see costs controlled for the good of the public purse. The Minister referred to the providers — the wholesalers — but the cut is being taken directly from the pharmacists. While we will have an opportunity to question the Minister later, I cannot see that the cut will be made in any other way and it is certain it will have an effect, particularly for patients. For their sake, I strongly argue that the Minister should withdraw the 1 March deadline.

We have all met seriously concerned elderly and sick people who visited us. I am thinking of one woman in particular who came to see me in an extremely distressed state because she will lose the services of her local community pharmacist and there is no other pharmacist nearby. She is greatly dependent on her personal relationship with this individual pharmacist, who has a very large mortgage. That person also has a large number of medical card patients. That is the real issue that the backbenchers sitting behind the Minister are concerned about, which they brought to the health committee and on which we had a long series of discussions. There was agreement on all sides of the House.

I accept there is disagreement on the exact wording of the motion that came from the Government side of the House but at the end of the committee process there was an agreed motion that called on all the bodies concerned to take action to find a settlement in advance of 1 March. Even the Government backbenchers will agree that that was the general content of the motion that was finally agreed. The motion that we proposed was voted down. This would have ensured that the message from the health committee was that no action should be taken in advance of the report of the independent body.

I wish to voice my serious concern that all we have been provided with today is time for statements and questions. We do not have an opportunity to vote on this important issue which is getting closer and closer to its deadline.

My colleague, Deputy Michael D. Higgins, will address the issue of rights under competition legislation. He tabled a motion on behalf of the Labour Party to change the Competition Act, if that is the obstacle. I again dispute the Minister's statement that European competition law is an element in this issue. We can change our competition legislation if we want to and we offer that opportunity to the House.

The Labour Party strongly believes in the right of any group of people to have fair process and to representation by their union. That is being denied pharmacists. I see in one of the medical journals today that the assistant national director of the primary care reimbursement service has said that will also very quickly be applied to negotiations involving GPs. It will presumably also be applied to dentists and vets, and it has already been applied to actors under the Government's interpretation of the Competition Act. This cannot be allowed to continue. We on this side of the House, especially in the Labour Party, strongly believe in the principle of the right of fair process and representation. If that is taken away from pharmacists next Saturday, 1 March, we can expect it to be taken away from other sectors of society.

Even the Indecon report commissioned by the Government stated that this decision should be taken slowly and that there should be consultation and agreement before any change is enacted. What we have instead is a unilateral, bullying intention to take €100 million out of the incomes of pharmacists without an opportunity for negotiation and in advance of the report of the independent body, which I commend the Minister on setting up. The Shipsey process was intended to offer that opportunity but, essentially, when the pharmacists got involved in it in good faith and without any preconditions, the process broke down because preconditions were put in place by the Health Service Executive. The pharmacists said they would accept the outcome, whatever it was.

In effect, the HSE approach was that the decision on the outcome would be made before the process even started. That is not acceptable in any democracy and it is particularly not acceptable to us in the Labour Party. I urge the Minster to take the opportunity to draw back from this dispute and to inform us when she answers questions later that she will instruct the HSE not to go ahead with the proposed changes on 1 March, but will wait for the outcome of the independent body's process.

From talking to pharmacists I know they understand there is a need to address cost issues. They understand that there is an issue for smaller pharmacists in particular. I fear that if this decision is implemented the big chains will end up running the pharmacy business. We will end up with a cartel of a very small number of large multinational pharmacy chains running the pharmacy business in Ireland. The ordinary person who has relied in the past on the advice of his or her community pharmacist will no longer have a community pharmacist in any real sense of that term. Instead, large chains will take over small pharmacies. Pharmacists with large mortgages and wage bills have shown me their books and if this change is introduced they will not be able to pay either their mortgages or their staff.

I do not want Ireland to go in that direction. It has happened in other parts of our economy that small businesses have been forced out of business and we should not stand over this happening in the pharmacy sector. One of the aspects of the health service that works is the relationship between community pharmacists and their patients. There is enough wrong with the health service and Deputy Reilly referred to several aspects of it. Every day of the week issues arise regarding the health service. This morning Deputy Gilmore, our party leader, raised the withdrawal of new services for the homeless. That is an absolute scandal. Every day of the week issues like this arise about the delivery of health services and how this affects the most vulnerable patients.

We should not try to fix what is not broken. We should not interfere with the relationship between community pharmacists and their patients. Above all, we should not have this kind of unilateral process without negotiation which will go ahead next March unless the Minister intervenes. There is general agreement among people on all sides of the House in terms of wanting this matter to be dealt with by the independent body through negotiation and by agreement. That can be done and it need not take a long time. It can be done in a month or two. There is a need for goodwill on the side of the Government and on the side of the Health Service Executive, and I appeal to the Minister to exercise that goodwill.

Deputy Michael D. Higgins

I strongly support the Labour Party spokesperson on health and others who have asked that people stand back and allow the independent body to have a clean slate to make a contribution that will endure and that will protect, in particular, the social role of pharmacists. In the few minutes remaining I can only list a few issues that I think are important.

The social role of pharmacists is important and it is affected by the diversity of supply. When deregulation was first mooted the case that was made was based on the importance of allowing young pharmacists into a profession for which they were highly qualified. Young pharmacists who came in at that time, however — this was revealed in the 26% increase figure referred to by the Minister — had to borrow heavily from banks and lending agencies to go into business. One of its internal contradictions is that deregulation in itself is defeated when it leads to concentration of ownership. If one drives on deregulation to a point of concentration of ownership at the cost of diversity of producers and suppliers, in effect, one is sweeping the ground from under the social role of pharmacists and endangering the professional capacity of young pharmacists who came into the business.

It is not correct to say that the Competition Authority has the rights to which the Minister referred. There were two possible interpretations of the Competition Authority's role, which stands like an eminence grise on this issue. The first relates to section 4 of the Competition Act, especially in the light of the Fennelly judgment in the Supreme Court decision on the case appealed by the Irish League of Credit Unions. That decision explicitly recognised the right of the Irish League of Credit Unions to represent its members on general policy. No restriction arises except in the case of decisions on price in such a way as would lead to a potential abuse of a dominant position.

The Health Service Executive is entirely wrong in arguing against the right of collective representation. The most recent case in European law is the Laval case which, while it held in favour in regard to the economic side, was not welcomed by many. It established the right of collective representation as a fundamental right. The Health Service Executive is going down a dangerous cul-de-sac in trying to suggest that in section 4 it has some right to strike at collective representation. This will arise in the case of the contract with dentists and with vets vis-à-vis the Department of Agriculture, Fisheries and Food and it is simply wrong.

The former Attorney General, Mr. Byrne, later Commissioner Byrne, also made another fundamental point in a lecture to the UCD law society some years ago when he suggested that any body, such as the Health Service Executive, to which powers had been transferred, needed an envelope of clear policy directions on the part of the Minister. He stated that the Minister could not divest himself or herself of existing powers and responsibilities. I suggest the Health Service Executive has two issues. The first relates to whether it has the right to use budgeting in such a way as interferes with the statutory floor to which citizens are entitled in the Health Acts. It does not. The second interpretation I suggested was that regarding section 4 of the Competition Act. I provided an opportunity for clarification on this when I produced a Private Members' Bill. The Government is reviewing the operation of the Competition Authority. If it had wanted to bring forward proposals it could have, but it did not. Neither has it fulfilled the Taoiseach's commitment that this issue would be solved in the early stages of the talks between the social partners. The tragedy of this shambles is that on a bogus reasoning that stopped it concluding negotiations with the wholesalers, the HSE is trying to drive back through the pharmacists something it failed to address with the wholesalers. I strongly support what my colleague, Deputy Jan O'Sullivan, and others have suggested, that we give the independent body the best chance it has by asking it to do what Indecon suggested. I state this factually. If one interprets its report, Indecon suggested the Government deal with the entire situation together, but that is not done by laying down a condition and saying anything can be discussed once the pharmacists have conceded on the fundamental principle. It is time we examined all these issues in terms of the role of the Parliament, the Minister, citizens and the guarantees from them. In taking up the reports of outside bodies such as Indecon, let us be true to Indecon and give the independent body the best chance. Above all let us try to do this because of the anxiety those who need medicines are being put through.

Deputy James Reilly

May I make a correction or a clarification?

An Leas-Cheann Comhairle

No, there is no such thing.

Deputy James Reilly

I may have said 15 when I meant 18.

An Leas-Cheann Comhairle

I am sure that makes sense.

Deputy James Reilly

It was the number of respondents to the HSE survey.

Deputy Caoimhghín Ó Caoláin

The primary reason this issue is being dealt with in this format — statements — is that the overwhelming majority of Government Deputies would not want a division on it today. That is regrettable because from working with many of them and speaking to several of them privately I know they hold the same views as voices that will be heard from the Opposition benches in the course of this opportunity. Since the resumption of the Dáil after the summer recess last year we have demanded that the Minister for Health and Children, Deputy Harney, seriously address the escalating and critical situation threatening community pharmacies. We have called for this matter to be addressed in the Dáil in plenary session, yet it is only now, as the 1 March deadline looms, that these statements and questions to follow have been scheduled.

The Joint Committee on Health and Children has dealt with this matter in detail, meeting over three days recently and hearing detailed submissions followed by a question and answer session with both the HSE and the Irish Pharmaceutical Union, IPU. The committee requested that the Minister attend in advance of those hearings but she did not comply. The committee requested that the Minister attend in advance of the 1 March deadline, but again she did not comply. I see this as shirking her responsibility and accountability to the Oireachtas for a serious situation.

The escalating pharmacy dispute has been a cause of worry and uncertainty to tens of thousands of patients, especially elderly medical card patients. It has created concern for all users of our health system, whether medical card patients or those dependent on the drugs payment scheme. I have seldom seen an issue which has led to such extensive and prolonged lobbying of Deputies yet which, in contrast, has featured relatively little in the news media. Perhaps it is because the details of the dispute are complex. Nonetheless it is unfortunate that it has not received the attention it deserves. A more general airing of the issues might have contributed to a solution before now.

The single most aggravating factor in the dispute has been the adherence of the Government and the HSE to the line that they cannot negotiate financial issues with the IPU, allegedly because of the Competition Act. This, more than anything else, has led to the current impasse. The Minister and her colleagues in Government must bear full responsibility for this. They have made no effort to address the legal difficulty by means of their own legislation. Although it is within the Minister's gift to address this, she has opposed the Competition (Amendment) Bill put forward by Deputy Higgins.

I previously raised other very negative consequences of this interpretation of the Competition Act. They include the blocking of negotiations with dentists on publicly funded dental schemes. Many dentists have withdrawn from the scheme as a result and patients have been left without dental services. This has received even less public notice than the pharmacy dispute but it is no less serious. Age Action Ireland, in commenting on the pharmacy dispute, has pointed out that the dispute with dentists has been ongoing for over a year with many older people forced to go without a service, change dentists if they can find one still in the scheme or attend already over-stretched and under-resourced HSE dental clinics.

If the imposition of new scales of payment for pharmacies goes ahead on 1 March and the IPU withdraws from the medical card and drugs payment schemes, tens of thousands of patients will be adversely affected. The HSE tells us it believes relatively few pharmacists will withdraw. That remains to be seen. There was no need for the Minister and the HSE to escalate the dispute in this way. The IPU welcomed the announcement by the Minister that an independent body would be established to review the contract issues between the HSE and the pharmacists. In welcoming the announcement the IPU had asked the Minister and the HSE to avoid making unilateral changes to existing payment arrangements pending the outcome of an agreed independent review. The Minister and the HSE carried on regardless.

In all of this there is no dispute about the fact that we require better value for money for drug purchases in the health service. Prices are far too high but the question must be asked why it took so long for the Government to address this matter and why it has been done in such a ham-fisted manner.

On today's Order of Business I referred to the fact that on the eve of the 14 February meeting of the Joint Committee on Health and Children the Cathaoirleach, Deputy Moloney, who is with us in the Chamber, circulated a motion which was set to receive all-party support at the meeting the next day. Deputy Reilly also alluded to it in the course of these statements. I wish to read the motion and hear the Minister's response. The Cathaoirleach of the committee presented four specific points as follows:

That no changes be made to contracts between the HSE and community pharmacists in advance of the setting up, and reporting, of an independent body whose remit will be to make recommendations on the reimbursement to pharmacists for drugs supplied under the State's community drugs schemes, in consultation with the interests concerned;

that the committee

recognises the vital role that community-based pharmacies play in the delivery of the health service;

further recognises that the proposed changes to the contracts between the HSE and the pharmacies should be designed to allow financial sustainability;

and that no changes in the current contract or remuneration will take place until such a body reports and likewise pharmacists will refrain from any reduction in services.

I believed then, and said so at committee, and I still believe that encompassed in that motion for which I commended the Cathaoirleach of the committee, was the basis of a solution. However, at the meeting on 14 February the Cathaoirleach withdrew this motion and the Fianna Fáil committee members proposed a bland motion simply calling on the HSE and the IPU to resolve the dispute. They divided the committee in order to pass this motion, and the Government spurned another opportunity to help resolve the dispute. The committee had previously been of one voice on this issue. It defies credulity that the committee would find itself divided at that critical point. That raises many questions, which are not for the Cathaoirleach to answer in the first instance, although I have no doubt that he will address the matter. Why was the sensibly constructed motion not put before the committee members and the opportunity given for unanimous endorsement on 14 February?

Looking on at all of this are patients who fear that their access to vital medication will be disrupted from 1 March. The IPU claims that ultimately the changes to be brought in by the HSE on 1 March could result in the closure of more than 300 pharmacies, with smaller and more rural-based pharmacies worst affected. Age Action Ireland has pointed to the rising concern among older people about how they will get their medication. The group has urged all sides to come together to assure older people that there is a contingency plan and, no matter how this dispute develops, they will continue to receive their medication. Age Action Ireland has stated it is particularly concerned that any such contingency plan would be sufficient to meet the needs of older people living in rural areas, where there are already fewer pharmacies. Such a contingency plan will not work if it involves older people in rural areas having to travel long distances to fill their prescriptions.

The IPU has welcomed the call from Age Action Ireland for both sides to come together to deal with the situation. The IPU states it believes there is still time to resolve the issue and representatives have made themselves available for talks with the HSE. I urge the Minister and the HSE to avail of that opportunity without delay. The IPU has called for a comprehensive review of current payments to pharmacists by an independent body and that no cuts in payment be made until that body has made a recommendation on this issue. The IPU has agreed to work with the HSE to agree contingency arrangements to deal with circumstances which may arise after this weekend, if the HSE proceeds to force through its plans from Saturday. Everything must be done to ensure that there will be no necessity to put such contingency plans into operation.

These issues need to be resolved by agreement and with the aims of ensuring continuity of service to patients, as well as better value for money in the purchase of medicines by the health services. These expectations are not mutually exclusive, as we can address them both. The financial aspects of this are quite complex, but it has been the absence of direct dialogue and negotiation on the generality and the detail of the issue that has led to this impasse. For that, the Government must bear a large share of responsibility.

Pharmacies play a vital role in the primary care system, but the current system is fundamentally flawed because the so-called public and private mix so lauded by this and previous Administrations is inequitable and inefficient. In theory, it involves individual HSE contracts with hundreds of pharmacists around the State. These vary in size from small independent outlets to multinational chains. As with GP services and the medical card scheme, I firmly believe that the current system should be replaced by a fully public primary care system, with free care to all at the point of delivery, based on need alone. The complex public and private system leads to difficulties such as those now convulsing the pharmacy sector, albeit difficulties unnecessarily exacerbated by this Government.

Deputy Mary Harney

Does the Deputy want to take over the pharmacies?

Deputy Caoimhghín Ó Caoláin

However, this is not the only part of our primary care sector in severe difficulty. I already referred to the virtual collapse of the free dental scheme, while much more serious is the rapidly emerging shortage of GPs. We have an aging general population and an aging GP population, with older doctors retiring and not enough younger doctors coming on stream to replace them. There are major problems with the medical card scheme as older doctors retire and their complement of medical card patients, many of them elderly, are placed temporarily on another doctor's panel, and they then must find a new doctor to take them on.

These are all crises either occurring at the moment or looming on the horizon. They are wider issues which will become increasingly important, but they are all relevant to the pharmacy dispute. They are part of the pattern of totally inadequate and often diminishing services for patients as a direct result of bad policy pursuit and bad management.

I have made many appeals to the Minister in this House over the past 11 years and I have concluded that it is a futile pursuit. She clearly has a closed mind and a cold heart where health equality is concerned. Therefore, I must instead appeal to the Fianna Fáil backbenchers and to whomever they trust in Cabinet. I also urge the Green Party Members and Independent Deputies, such as Deputy McGrath and others, who support the Government to act in unison——

Deputy Beverley Flynn

The Deputy did not name me.

Deputy Kieran O’Donnell

Only for the moment.

Deputy Caoimhghín Ó Caoláin

We will include Deputy Flynn as well.

Deputy Mary Harney

The Deputy should try to warm up my heart.

Deputy Caoimhghín Ó Caoláin

I urge them to act in unison and to demand facilitation of a negotiated settlement, before tens of thousands of patients, many of them elderly and infirm, are subject to further worry and distress.

Deputy Finian McGrath

I thank the Leas-Cheann Comhairle for the opportunity to allow me to speak on this important issue. All Deputies in the House support and appreciate the work of our local pharmacists and staff. We commend and value their efforts. Pharmacies deliver on a very important part of our health service that works, but now pharmacists feel they are being shafted by HSE senior management. The members of the IPU feel that the HSE is undermining the ability of pharmacists to provide us all with medicines under the Government schemes. We in this House and the HSE have a responsibility to deal with this high cost issue, especially for patients. However, I will not take any guff from the senior management of the HSE about efficiency and cost savings. I stress that I am talking about the senior management, not the staff who are doing an excellent job, often against the odds. The senior management of the HSE has squandered taxpayers' money.

I always look for value for money for taxpayers and for the protection of our citizens, but I will also fight for a quality pharmacy service that members of the IPU provide. I challenge those who try to damage the good name and integrity of the IPU. Its members provide a quality service and they deserve our support, which they will get in this debate.

Like many of my colleagues, I have been lobbied by patients and local pharmacies. Mr. Michael Pyne MPSI, from Costello's pharmacy in Marino wrote to me and stated:

It is with deep concern that I write to you at this time. The HSE is refusing to engage with an agreed independent process to facilitate the drawing up of a new contract between the HSE and local independent pharmacies. The HSE has issued to this pharmacy a proposal that will have a devastating impact on the service levels, staffing levels and opening hours we provide to this community at present. This is why I am appealing to you all at this time to help me protect Costello's Pharmacy from the HSE.

Cathal, Kate, Margaret, Denisa and I work hard to keep this pharmacy open 65 hours a week and provide the highest levels of general advice and pharmacy care to each and every person who comes through the door. The proposed action which the HSE is due to introduce on March 1st 2008 will in my opinion seriously undermine these services and the jobs of the people that are employed there. This is our community resource. Please help me to keep it open.

Many Deputies will have received hundreds of similar letters. Our local pharmacy provides vital services for our community, dispensing medicine, personal care, reinsurance and expert medical advice. The pharmacist knows the people in our community and takes care of them. This service, which cannot be replaced once it has been lost, is vital for the health care system.

I urge the parties involved to show common sense, have open minds and engage in independent arbitration. Above all, I urge support for the excellent service provided by pharmacies and for the patients in our health service.

Deputy John Moloney

I am glad to have a few minutes to speak on this issue. While I had hoped to speak on the proposals, I propose to give a brief outline of the position of the Joint Committee on Health and Children on the issue. The joint committee spent considerable time discussing pharmacy regulation and I invited the Health Service Executive and the Irish Pharmaceutical Union to make presentations. A meeting with delegations from both bodies lasted for four hours.

I was surprised to hear praise heaped on me by Deputy Ó Caoláin. I ascribed his comments to confusion. Deputy Reilly then tried to create an impression that something sinister had taken place in the joint committee or among its Fianna Fáil members. The Deputy prefers to give his own version of events and does not like the truth to interfere in a discussion.

Deputy James Reilly

The document was issued by Deputy Moloney's office.

Deputy John Moloney

Wherever there is an open microphone or camera, the Deputy comes to his own height on all these issues. I will give a little background to demonstrate his lack of sincerity on most issues he addresses in the House. My explanation of events will again underline that the approach of the Fine Gael Party's spokesman on health is to try to find fault on every issue. In his rush to criticise all aspects of health policy, he forgets what he agreed.

Following its meeting with representatives of the IPU and HSE, the joint committee decided, as it had done for years before Deputy Reilly was elected to the House, to try to formulate a motion which would find cross-party agreement. I commend the Labour Party spokesperson on health, Deputy Jan O'Sullivan, for her excellence in that role. She has again shown complete sincerity on the issue, as she did in the joint committee.

Deputy Alan Shatter

She is being damned by faint praise.

Deputy Jan O’Sullivan

I am getting worried.

Deputy John Moloney

Deputy Shatter will have an opportunity to speak. I have only four minutes' speaking time, whereas he will have 20 minutes.

Deputy Alan Shatter

A new form of seduction of the Labour Party is spreading through the Fianna Fáil ranks.

An Leas-Cheann Comhairle

The Deputy's time is limited. Please allow him to continue without interruption.

Deputy John Moloney

I will place the facts before the House. The Fianna Fáil members of the Joint Committee on Health and Children decided to work with Fine Gael, the Labour Party and Sinn Féin to try to agree a motion. Deputy Reilly forgot to read out three separate proposals that we, as a responsible group in the joint committee, tried to work towards. For instance, he failed to mention the motion stating that we recognised that the proposed changes in the contract between the HSE and pharmacies should be designed to allow financial sustainability. Deputy Reilly had a copy of that text.

The Deputy telephoned me on the relevant evening to find out whether the motion which had been issued in my name was the Fianna Fáil Party motion. I made clear to him that this was not the case and, as he will be aware, I told him the next morning as we entered the committee room that I would clarify the issue at the start of the meeting. I informed the members of the joint committee that the motion had been issued in error and the secretariat had mistakenly understood that the text was to be issued. It was one of three possible motions and the Deputy accepted my explanation. Today, however, he has tried to detract from the issue.

Deputy James Reilly

I read out the text cited by Deputy Moloney. It is on record if he wishes to check it.

Deputy John Moloney

I was at the meeting and created that particular record.

I commend the Minister for her contribution. As a previous speaker noted, backbench Fianna Fáil Deputies are concerned. We are concerned on the basis of two rumours making the rounds. The position regarding the first, that pharmacists will be forced to sell below cost and at a loss, has been clarified by the Minister. The worst rumour is that the HSE may drop some pharmacists from the contract, in other words, it will not renew their contracts. The Minister has also clarified the position in this regard.

I commend the Minister for listening to those who have a genuine interest in sorting out this problem. She has accepted the case that an independent group should examine both sides of the argument. I have full confidence in the work of the independent body. My concern is that Deputy Reilly and his party fear this process will result in the matter being resolved.

Deputy Beverley Flynn

I represent a rural constituency, which has many rural pharmacists and a distribution network for United Drug employing 100 people. This is, therefore, a major issue for my constituents. I commend and support the Minister in her efforts to try to reduce the price of drugs. My difficulty, however, is the manner in which the matter has been dealt with, particularly by the Health Service Executive. Its approach to negotiating with pharmacists has been disappointing. I accept the Minister's point on the restrictions arising from the Competition Act. She has established an independent body which will report to her and has indicated she will make its proposals retrospective to 1 March. In that case, why does she not defer the decision regarding the 1 March date until such time as the independent body issues its report?

Deputy James Reilly

Hear, hear.

Deputy Beverley Flynn

The end result will be the same in any event given that the decision will be retrospective.

The Minister indicated she believed these issues should be resolved through negotiation and I know she is genuine in this matter. That is the only angle I am taking in this debate. I do not want to discuss in detail the remuneration of pharmacists, an issue that should be resolved through negotiations among the various parties led by the independent body.

Deputy Kieran O’Donnell

The Fine Gael Party supports that position.

Deputy Beverley Flynn

I have a difficulty with the statement made by the HSE in the joint committee and repeated by the Minister today that the contract does not change if pharmacists do not avail of the interim contract on 1 March. Regardless of whether that is technically true, this statement gives the wrong impression because remuneration to pharmacists will be reduced by 8%, which is the reduction in the wholesale discount. Fridge items, which constitute 10% of medicines dispensed, are not subject to a wholesale discount. Does the Minister realise that many pharmacists are able to avail of the discount as a result of efficiencies they have introduced in their practices, such as paying their bills before being remunerated by the HSE? Has she considered the savings that could be achieved under the high-tech scheme? I believe as much as €15 million could be saved from the scheme's overall cost of €260 million. While I acknowledge that the Minister is seeking savings of €100 million, must all these savings be made through a renegotiation of the pharmacy contract?

Deputy Alan Shatter

I propose to share time with Deputy Crawford.

I find myself in the unusual position, although it has happened in the past, of agreeing with most of Deputy Flynn's contribution. I even find myself in the astonishing position of agreeing with the departing Deputy Finian McGrath. I can well understand the reason the Deputy expressed such enthusiasm for his local pharmacist. It is because he knows he does not have to vote. He is in the unique position on this issue in that, having failed to take the opportunity to vote with this side of the House to allow a meaningful motion to be passed, he has delivered a speech which has one objective, namely, that it will be copied and furnished to the pharmacist whose letter he cited. I do not take seriously any of his contribution, whereas I take seriously Deputy Flynn's contribution.

Deputies O'Sullivan, Reilly and Flynn came to the nub of the issue, which is one of industrial relations. It is to do with addressing problems which require resolutions in a matter that does not maximise conflict but leads to a successful outcome in the public interest. It is in the public interest to reduce the wholesale price of drugs. It is an outrage that almost 18% is added to the manufacturing price by wholesalers. I agree with everything the Minister stated about the cost of getting the product to the patient. The problem is that pharmacists are caught in a difficulty the Minister has with the wholesalers.

If an award were given for the capacity to conduct industrial relations in the most ham-fisted, asinine way it would go jointly to the Minister for Health and Children and the HSE. They both have their hands on the chaos we have seen on this issue during the past six months. Last Sunday the Oscars were awarded to those in the film industry and what are known as the "razzers" were awarded the previous night, the raspberry awards for the worst movies of the year. If an award were to be conferred on the Minister or the HSE, they would be at the top of the "razzer" list.

Consider the dance that is being conducted on this issue. There is a need to reduce the wholesale price of drugs. The wholesalers convinced the Minister and the HSE that they cannot engage in discussions with them, with competition law cited as the major obstacle. No attempt was made to get around that obstacle and to put in place a formula that would directly result in discussions involving the wholesalers to resolve this issue in a manner in which the retailers as pharmacists are caught in the middle.

The intention of the Shipsey process was to find a solution, but I am informed the HSE never came to the table or treated the Shipsey process seriously. We then had discussions in this House involving an independent body, based on an understanding that normal industrial relations are conducted in dealing with conflict resolution. This means a body would be appointed to engage with all sides and, in the public interest, would seek a solution which would then be implemented. The exact antitheses of conducting good public relations and conflict resolution in the industrial area or any other area is that an independent body is appointed but a solution is imposed before the work of the independent body gets under way and it comes to a considered judgment on what is the solution. That is why we are in the position in which we find ourselves today.

It is of vital importance that those who require medicines continue to have access to them. It is of vital importance that local pharmacists, who are held in high esteem by the local communities in which they operate continue to provide that service. It is grossly unfair to them that they have been put in a position in which they feel they have been trapped, as Deputies Flynn and Reilly expressed well. They are caught in the row between the Minister and the wholesalers. That suits some groups of wholesalers because they control a certain number of pharmacies. It is the independent pharmacies which are placed in the greatest of difficulty.

It is not only rural pharmacies that are affected. There are some urban, single pharmacies operating in communities which have a genuine concern about the economic position they will find themselves in with their staff if the Minister and the HSE impose an 8% reduction on reimbursement for medicines provided. It would be difficult to make a greater hames of an important issue.

I regret that the Government did not have the courage of its convictions to allow this issue to be addressed by way of a motion in the House. It would provide for Members on the Government side who might wish to eloquently criticise the HSE, such as Deputy Finian McGrath, an opportunity to show the courage of their convictions, which I very much doubt he has any capacity to do.

I listened with amusement to Deputy John Moloney, Chairman of the Joint Committee on Health and Children. In front of me I have a motion in his name which was tabled at that committee. The first paragraph of the motion urges: "That no changes be made to contracts between the HSE and community pharmacists in advance of the setting up and reporting of an independent body, whose remit will be to make recommendations on the reimbursement to pharmacists for drugs supplied under the State's community drugs schemes, in consultation with the interests concerned." That is an eminently sensible proposal and I can only assume that somewhere behind the scenes, Deputy Moloney had his bottom severely slapped politically and told to take that motion off the agenda for fear of causing embarrassment and focusing on the total incompetence of the manner in which the Government and the HSE have dealt with this issue.

Deputy John Moloney

On a point of information——

An Leas-Cheann Comhairle

There is no such thing as a point of information.

Deputy John Moloney

I request help from the Chair.

An Leas-Cheann Comhairle

Perhaps the Deputy wishes to raise a point of order.

Deputy John Moloney

I request help from the Chair. On a point of order, will Deputy Shatter seek the motion from the secretariat of the Joint Committee on Health and Children? The motion he quoted was never put and never passed.

An Leas-Cheann Comhairle

That is not a point of order.

Deputy John Moloney

If Deputy Reilly was any way generous or honest he would tell the story. It never went out. It was a preparatory document and no more.

Deputy Alan Shatter

Obviously in the preparation stage you were speaking constructively and after that you were sabotaged. You should have the courage to admit it.

An Leas-Cheann Comhairle

Deputy Shatter should please address the Chair and not shout across the Chamber.

Deputy Jan O’Sullivan

On a point of order, perhaps I can clarify this. That motion was worded by Senator Phil Prendergast as an amalgamation of the Labour motion and a previous Fianna Fáil motion which was distributed with Deputy John Moloney's name on it because his name would have been on it if it was agreed. It is not the case that Fianna Fáil withdrew that motion but it is a shame on its Members that they never agreed to it.

An Leas-Cheann Comhairle

The Deputy is not making a point of order, however valuable and helpful her interjection is.

Deputy Jan O’Sullivan

I am trying to clarify a situation about which I know a great deal.

Deputy John Moloney

I thank the Deputy and I appreciate her honesty.

An Leas-Cheann Comhairle

We have a limited time for this debate.

Deputy Jan O’Sullivan

It is distracting from this very strong issue.

An Leas-Cheann Comhairle

I call on Deputy Crawford to address the House and he has a mere two minutes.

Deputy Seymour Crawford

Today once again I watched, as I did at the Joint Committee on Health and Children total and absolute hypocrisy.

Deputy Bobby Aylward

The hypocrisy is coming from Deputy Crawford's side.

An Leas-Cheann Comhairle

The Deputy has barely two minutes.

Deputy Seymour Crawford

I began public life through farming organisations which sought the right to speak and I understood that we were the last organisation from the 1960s which had the right to negotiate. The Minister has refused to allow normal negotiations to take place and has used all types of camouflage to prevent it. In the limited time available to me I wish to state that tens of thousands of elderly people and people with disabilities are desperately wondering from where they will get their medication in future.

The Minister is satisfied that there will be sufficient pharmacies to deal with the major issues, but I am thinking of places such as Emyvale in north Monaghan. I am aware of the Minister's attitude to north Monaghan as far as the hospital is concerned and we do not want to lose any more. We must consider the ordinary people. For God's sake, at this late point will the Minister allow the arbitrator to decide what is right and how it should be done? No group was ever asked to take a 50% cut because it is not possible to survive in those circumstances. The Minister still has a couple of days. The Taoiseach, the Minister and the HSE are all to blame for this. They all stood idly by for three months and did nothing to solve the issue. Now they are trying to impose something that is unworkable and unjust and will cause great hardship to those who do not deserve it.

An Leas-Cheann Comhairle

I call on Deputy Calleary who is sharing time with Deputy Charlie O'Connor.

Deputy Dara Calleary

I wish to focus on specific issues and I would appreciate it if the Minister would examine them. The most commonly used medication products are those for diabetes, morphine and ostomy products. I understand that the wholesale price of the insulin Lantus OptiSets — Deputy Reilly will probably correct my pronunciation — is €64.04 and the projected reimbursement of that is €58.92. If 30 of those are sold in a month, which is standard in a small pharmacy, the new arrangements would mean a loss of €150. The wholesale rate for ostomy bags — the reference no. is 28335 — is €127.59 while the reimbursement rate under the new scheme would be €117.38, some €20 in the difference. A 30 milligram injection of morphine at wholesale rate is €15.99; the reimbursement rate under the new scheme, €14.71. These are just three examples. The more high-tech the drug, the larger the loss to the pharmacist.

Will the Minister ask the Dorgan group to examine the wholesale issue? There is a lack of understanding as to the impact this will have at HSE level. If we could expand the terms of reference for the Dorgan group to examine the wholesale issue and separate it from the fee-per-item, we will have done some service. The projected fee of €5 per item is far too low. I hope the Dorgan group will have the capacity to deal with that.

I have every confidence in Seán Dorgan. When chief executive officer of IDA Ireland, he attended a meeting of the Joint Committee on Enterprise, Trade and Employment; I found him to be frank and fair and not supinely supporting the Government line. He will do a good job.

The issue his group requires to give most analysis to is the number of young pharmacists who in recent years bought into pharmacies on the back of the 2002 reforms. At that time, people were told there would be closures but it has been the opposite. People who bought in on those reforms are in a difficult situation because of the overnight reform of this sector. Specific attention must be given by Seán Dorgan to those who bought into pharmacies in the intervening period and the impact the proposed changes will have.

It is regrettable that the work done at the health committee is being degraded in the Chamber. I have seen how Deputy Moloney chairs meetings, many in difficult circumstances. Long-serving Members have never seen any committee with such high attendance and participation. Deputy Moloney chaired the meeting on the dispute and dealt with all issues, the IPU and the HSE fairly which was accepted by everyone involved. It is unfortunate to see his efforts, done in the best interests of the House, being degraded in the interests of cheap political point-scoring.

Deputy Charlie O’Connor

I will try to be very calm as I have no real political points to make.

An Leas-Cheann Comhairle

I am gratified to hear that.

Deputy Charlie O’Connor

This is a significant and important debate. I am glad the Minister for Health and Children is in the Chamber listening to our contributions and is aware of our concerns. Some cynicism has been expressed about Fianna Fáil backbenchers' views on this issue. Sometimes it would be handy moaning and crying about everything like the Opposition. I have been in the House for five years and I have settled into my work as a Fianna Fáil backbencher. We care about and are affected by all these issues.

Some colleagues referred to rural communities and pharmacies. From my accent, Deputies will know I cannot claim to have a rural background. I am from an urban background, an inner city child who now lives in Tallaght, the third largest population centre in the country.

Deputy Mary Harney

I never knew Deputy O'Connor lived in Tallaght.

(Interruptions).

Deputy Charlie O’Connor

I will have to tell the Minister again.

Tallaght, so I declare my interest, is the home of significant pharmaceutical wholesalers, concerned about jobs and job security.

I am also concerned about local pharmacies. It is important we support them and understand their difficulties. People are concerned about the services they are providing. In Springfield, Tallaght, where I live, the three local pharmacists are under pressure on this issue.

This House has assisted in overcoming many difficulties by telling people they need to talk and negotiate. It is important such a message emerges from this debate. The pharmacies dispute needs to be negotiated to the end.

I am not going to get involved in the argument of the Joint Committee on Health and Children of which I am a proud member. Under Deputy Moloney's chairmanship, we tried to deal with the issue in a non-political way. Unlike other colleagues, I accept some politics has to go on and Members must make reputations for themselves. I hope they continue with this and do not end up in the Seanad, which sometimes happens to party spokespersons on health.

It is important the work of the committee is acknowledged. I am chairman of the Fianna Fáil policy group. I can look Deputy Reilly in the eye and admit most of my party colleagues have concerns about this issue. The Minister for Health and Children knows that and is not unhappy if I express that. I am not getting involved in HSE-bashing because it has a job to do. It is important, however, for it to outline its views and give assurances in this dispute. Constituents in Tallaght have told me they are concerned about the future of their local pharmacies. They want access to not only the medicines they require but to the care and attention given to them by their pharmacists. That is why I do not want to go Tesco to buy the few tablets I need. I want to go to my local pharmacist.

Not to be parochial about my constituency, but there are communities in Tallaght in which pharmacists need help to survive. I have had many discussions with the Minister for Health and Children on ensuring all communities have a pharmacist. Fettercairn in Tallaght, a local authority estate of more than 6,000 people, has no pharmacy facilities. There are communities — I do not want to single them out as disadvantaged — where pharmacists find it more difficult to survive than the larger stores. All Members from urban and rural communities are finding the same challenges in this matter.

I am not getting into the argument of whether there needed to be a division on this matter rather than just statements. I am sure all Members on this side would walk behind the Minister through the lobby. To say otherwise is just nonsense. The Minister cares about this issue. However, it is important she understands we cannot abandon patients, communities and people depending on us to continue to make the point. Whether it was a right decision to choose 1 March as the date for the changes, that is another day's work. If another date had been chosen, we would probably have had the same challenges.

This is a live issue which people are talking about. I do not yet know if Joe Duffy is going to talk about it but it is important, even at this late stage, to try to find a solution.

Deputy Kieran O’Donnell

The Minister referred to €100 million being a large amount of money. That is much less than what has been wasted on PPARS or the €420 million on e-Government. Government is about choices. The Minister spoke about a fair deal for patients. This new scheme for pharmacies is not a fair deal for patients.

In 1970, under the Health Act, pharmacists took over the dispensing of community drugs from dispensary doctors. The €100 million spent on the community pharmacy sector is good value for money. Why has the Minister not examined generic products to reduce the cost instead of a rough blunt instrument? The wholesalers will take no reduction and will be paid the exact same price. This new scheme for the owner-managed pharmacies, which comprise the majority, will make it impossible for them. The Minister cannot expect the pharmacists to take up the interim contract because they will lose the mark-up on DPS items.

Deputy Calleary made the point that Sean Dorgan is setting up an independent body. He is a great man. However, his terms of reference are confining. He cannot consider the effect on community pharmacies. He is confined to considering the dispensing fee. His hands are tied. Therefore, patients are suffering. The Minister for Health and Children and her accomplices in the HSE have put PR and spin ahead of patient care. It is nothing more and nothing less. They can go around it any way they want but that is what they have done. We are getting circulars daily from the HSE.

Acting Chairman (Deputy Seamus Kirk)

We have to move on to questions.

Deputy Kieran O’Donnell

I would like to see the backbenchers supporting us on this. If they feel so committed on the issue they should do so. Unfortunately, we have no vote today, but I feel strongly about this issue and I would like to hear the Minister's comments. Will she put in place an independent body that has no preconditions and will consider what is best for the welfare of patients? That is our primary concern.

Acting Chairman

We will now have a period of questions to the Minister for Health and Children.

Deputy James Reilly

My first question is to the Chairman of the Joint Committee on Health and Children, Deputy John Moloney. How can he suggest that the situation with wholesalers has been clarified by the Minister when the man who sat behind him only a few moments ago, Deputy Calleary, produced a letter from the wholesalers clearly pointing out that far from guaranteeing they would not have to charge more, they would do so, and in addition, they would not be able to supply drugs to some of their community pharmacists, especially the smaller rural ones, under the new arrangements at the cost suggested by the HSE? It is a complete contradiction. There was no clarification.

I have no intention of having any more rows with Deputy Moloney — that can take place at the health committee — but I will say the following. We spent four or five hours at a very good meeting chaired excellently by Deputy Moloney. I would be the first to put my hand up and say that. We left the meeting with a clear understanding that we would meet the next morning to discuss a composite motion in private session. A motion then appeared at my office. I asked the Chairman if Fianna Fáil had agreed to it. The Chairman said he did not have a problem with it but it had not been voted on by Fianna Fáil and he would have to see what happened at the committee. That was fine. Three minutes into that meeting we went from private session to public session and one Deputy said there should be no motion. We spent another two hours in further discussion. These are the facts of the matter. It shows where we were coming from and how we moved so far away from the central issue. The big question mark remains.

The ruse by Deputy Finian McGrath to blame it all on the bad bold HSE, neglecting to mention that it is answerable to the Minister, whom he supports——

Acting Chairman

I remind Deputy Reilly that we are in questions, not Second Stage speeches.

Deputy James Reilly

Tá ceist agam. Why will the Minister not put the horse before the cart rather than the other way around? Why will she not allow Mr. Dorgan to report first? Why is she ignoring the recommendations of the Indecon report commissioned by the HSE, which stated clearly that there should be no precipitate action, that the Irish market could not be compared with other markets in Europe and that an independent arbitration body should be set up, pending whose report no action should be taken?

Deputy John Moloney

I will not waste time. Deputy O'Sullivan has already pointed out that we are moving away from the central issue. I prefer to leave it to Deputy O'Sullivan, who has clarified the issue regarding that motion.

With regard to going into private session, is it so peculiar to say this?

Acting Chairman

Deputy Moloney, I know you are the Chairman of the committee and I do not want to cut you short, but we are in questions to the Minister.

Deputy John Moloney

I am trying to clarify something. Allegations have been made.

Acting Chairman

Other people wish to ask questions.

Deputy John Moloney

I apologise. I will get my chance to speak at the meeting of the committee.

Deputy Mary Harney

I would have wished an opportunity to respond to the debate but I will respond to the question. As a preliminary response I point out that in a developed country such as ours there is no group in society that does better than professionals. I remember making this point four years ago during discussion of the legislation to establish the Personal Injuries Assessment Board. The same criticisms were given, except that we were not dealing with patients but with clients. I was being told that thousands of solicitors would go out of business, particularly in rural areas. However, we know what happened. Equally, the consequences being predicted here, which were predicted in 2002 when the former Minister, Deputy Martin, changed the regulations, and in 2005 when we published the legislation, will not come to pass. Professionals will do well in a country such as ours where we are spending so much money.

Deputy Kieran O’Donnell

That is a totally different set of circumstances.

Deputy Mary Harney

I have here correspondence from the companies that were mentioned. Deputy Calleary mentioned diabetes and insulin. One of the companies is Janssen and the other is Sanofi.

Deputy James Reilly

With respect, these are not the questions I asked.

Acting Chairman

The Minister has the floor.

Deputy Mary Harney

The Deputy said the companies were going to charge more than they would be reimbursed.

Deputy James Reilly

I did not. I said they could not guarantee they would not.

Deputy Mary Harney

The letter from Janssen states: "The cost of product supplied to wholesalers and therefore retailers will be equalised". From John McLaughlin, Sanofi: "The arrangements will continue as normal in relation to pricing". Many of the manufacturers, including GlaxoSmithKline, AstraZeneca, and Wyeth, have got reassurances from the wholesalers. The drugs business is big business.

Deputy Seymour Crawford

We agree.

Deputy Mary Harney

There is no question, in my opinion, of anybody staying in business if customers are to be charged more than they are being reimbursed. One does not need to be a rocket scientist or an economist or have a qualification in international studies to know that. If, at the end of the month when the invoices are issued by the wholesalers, there is any pharmacist that is being charged more than he or she is being paid, he or she can go the HSE or the manufacturer. I am confident that will be resolved.

Deputy James Reilly

Can I point out——

Acting Chairman

Please, Deputy. The Minister has the floor.

Deputy James Reilly

Those letters were from manufacturers, not wholesalers.

Deputy Mary Harney

They are letters from the people who make arrangements with wholesalers to get their products to the patients.

Deputy James Reilly

They are manufacturers, not wholesalers.

Deputy Mary Harney

We want to negotiate a new contract and we want a flat fee for dispensing. The expertise of pharmacists is dispensing medication. It is crazy that we give pharmacists, through the DPS, a mark-up of 50% and a dispensing fee of €2.68, while they also get an 8% discount from the wholesalers which is not part of the contract between the State and the pharmacists. That, as pointed out by the Brennan Commission, is crazy, and one does not need any studies to know it is not sustainable. We want to pay pharmacists a flat fee for dispensing. We want to pay them the same fee whether they are dispensing for the medical card scheme or the DPS. That is fair. Obviously there will be different arrangements for the high-tech schemes, which will be considered in the context of the new contract.

What is happening now is a staging post on the way to a new contract. A new contract with the pharmacists is what we really need. We want to sit down and negotiate that contract as quickly as possible and then have it independently priced. We are not allowed to do otherwise under competition law, notwithstanding what the Deputies have said. Competition is good for markets, good for consumers and, in this case, good for patients. We cannot have innovation if we do not have competition. We have to adhere to competition law. We can resolve our difficulties in the context of a new contract, which will, it is to be hoped, involve a more developmental role for pharmacists in the health care system.

Deputy James Reilly

The Minister has not answered my question.

Acting Chairman

Deputy Reilly had his opportunity.

Deputy Seymour Crawford

He is entitled to an answer to his question.

Deputy Jan O’Sullivan

I wish to clarify the issue of the motion circulated to the Joint Committee on Health and Children. It is a composite motion, the first section of which is taken word-for-word from the Labour Party motion. Another part of it is a section of the Fianna Fáil motion, word-for-word. It was circulated but not agreed and an alternative, milk-and-water motion was eventually put forward by Fianna Fáil.

Deputy James Reilly

Nobody said it was agreed.

Deputy Jan O’Sullivan

It is shameful that the Fianna Fáil members of the committee were not able to agree on the first part of that motion, which was originally a Labour Party motion. If that had been agreed, we would have a much stronger hand with the Minister today and she would have had to listen to the combined voice of the Oireachtas. Unfortunately that is not what happened. Nevertheless, I do not want the record to be incorrect.

Is it true that €100 million is being taken from the money that is paid directly to pharmacists? How will the Minister ensure that the money does not remain absent and is somehow or other transferred to wholesalers?

I also have a copy of the letter sent by my Limerick colleague, although not my party colleague, former Minister of State Deputy Tim O'Malley. Mr. O'Malley states: "If the changes go ahead as scheduled on March 1, it is my opinion that the implications for our national delivery of pharmaceutical services will be nothing less than catastrophic". Does the Minister agree with that? How will she ensure that small community pharmacists who have taken out large loans can stay in business if this goes through on 1 March?

Deputy Mary Harney

Mr. Tim O'Malley's letter was sent to me last night but has not appeared in the newspapers today. He must have sent it to the Deputies opposite. I do not agree with the letter — he is a pharmacist. Mr. O'Malley and I have never agreed on this issue. When the former Minister for Health and Children, Deputy Martin, removed the restriction in 2002 Mr. O'Malley used similar language to me. He also did so when the 2005 legislation was published. When one is involved as a professional one cannot be as objective as others. My responsibility is to ensure better value for money for patients and taxpayers and that we have a viable and vibrant pharmacy business.

Pharmacists are paid for the entire process. Their fees were €367 million last year and this will not change. It is €100,000 higher in terms of fees than in Northern Ireland, with the caveats I included earlier about different jurisdictions.

There is no change in the fees. Our contract with pharmacists concerns their fees. The Dorgan group will consider a flat fee for service. Of course pharmacists can argue and articulate the impact that changes will have on them. They can make their case to a group of fair-minded citizens who have available to them the expertise they need. We want to move away from a situation where the more expensive drugs are, the more it costs to dispense them. The mark-up and the discounts are not sustainable or fair and no fair-minded person could argue against that.

I cannot tell the Deputies that every pharmacist in the country will remain open. A pharmacy on Grafton Street, perhaps the busiest street in the country, closed last year. I cannot guarantee anyone's business, nor could any government. Pharmacists know how to run their businesses, I do not know how to run a pharmacy. I am very confident that, notwithstanding these changes, we will have a vibrant pharmacy sector. The major beneficiaries will be pharmacies heavily dependent on GMS, where there will be a fee of at least €5, increased from €3.26 at present. The other beneficiaries will be pharmacies in rural areas with small volumes. There is no doubt these pharmacies will gain, something that is important to me. I am confident that pharmacists on which medical card patients, sicker people, poorer people and older people are dependent will do better with a flat fee.

There will be losers. One cannot remove €100 million and not have losers — I am not a fool.

Deputy Jan O’Sullivan

How can the Minister say that small pharmacists will not be the losers? From where will the €100 million be taken?

Deputy Mary Harney

It will not be taken from the fees of pharmacists. Presumably, it will be taken from discounts.

Deputy Seymour Crawford

"Presumably" — the Minister does not even know.

Deputy James Reilly

Presumption is the mother of all catastrophe.

Deputy Mary Harney

The margin is 17%. If any Deputy can tell me of a market in the world where it costs €600 million in order to get €1 billion of product to the patient, I would be very surprised. It is not credible that getting our drugs, which cost €1 billion on the community side, to our patients should cost €600 million. Some €100 million will be removed from the €600 million. That will facilitate a 7% margin of 5% for their business with 2% profit, which is highly lucrative. In Northern Ireland, after £180,000 the wholesale margin is 4%. In a contract recently awarded by the HSE for the supply of vaccines, I understand the winning company tendered at a margin of 4%. These are margins on which people can make profits but it is not acceptable that taxpayers and patients must pay a hugely inflated price for medicine as a result of the way we remunerate pharmacies.

Deputy Jan O’Sullivan

The Minister is doing nothing to the wholesaler.

Deputy Caoimhghín Ó Caoláin

Who will be the losers? Where does the Minister believe they are located? Will they only be pharmacists? How many medical card holders and drug payment scheme dependants will be on this list of losers forecast by the Minister? Is there an analysis of the numbers of people who will have their current arrangements significantly displaced? What contingency arrangements have been considered, as requested by Age Action Ireland, representing older people, so that older people can access monthly or weekly prescriptions where pharmacies are forced to close or withdraw from the medical card and drug payment scheme? What consideration has the Minister and her colleagues in Cabinet given to the core issue for many Deputies? We have registered agreement on the need for a restructuring of the payment for medicines, which we all recognise as far too high. What address has the Minister given to the potential to legislatively overcome the block created by the Competition Act and the manner in which it affects engagement between the HSE and the IPU and the HSE and the Irish Dental Association, IDA? Is it within the gift of the Government to overcome the obstacle to ensure proper representative negotiation between the respective union associations, the representative bodies named?

Before Deputy Moloney leaves the Chamber I wish to refer to the motion read to members at the meeting of the Joint Committee on Health and Children on 13 February. Much has been made of it by different speakers. Nobody is attacking anyone but we are trying to establish why that motion did not become the substantive motion on 14 February as, in the view of this and other Deputies, it had the potential to move the situation forward. Is the Minister aware why the motion did not present itself on 14 February? Within its text it had the potential to unlock the difficulties.

Acting Chairman

The Deputy is going off on a tangent.

Deputy Caoimhghín Ó Caoláin

I am not, by a long shot. I recognise that other Members wish to contribute. Has the Minister any difficulty with the point repeated in the motion that no changes in the current contract or remuneration will take place until the independent body will report and, likewise, that the pharmacists will refrain from any reduction in services?

Deputy Mary Harney

The Deputy asked many questions, including who will be the losers. I first wish to identify the winners because that is important. The winners will be patients, who will receive the medicine cheaper, and taxpayers. The other winners will be pharmacists heavily dependent on medical card patients and pharmacists located in areas where the volume of business is lower. I cannot identify individually who will be losers but clearly those who have high volumes of business and receive large discounts will lose. So too will the wholesalers. I do not know the business arrangements between wholesalers and pharmacists in respect of who pays what. What I am concerned about is the contract the State has with the retail pharmacy sector and the community pharmacists to supply medication to patients. I am satisfied that what is happening this weekend will not impact on the State's capacity to provide a service to patients throughout the country. With regard to contingency, the HSE has a free telephone number on which it has taken between 200 and 220 calls from patients and been able to reassure them. In the event that somebody cannot get their medication, the HSE has assured me that medication will be brought to them.

Deputy Kathleen Lynch

Out of hours? That will be a first.

Deputy Mary Harney

The IPU to its credit, and Deputy James Reilly mentioned this earlier, has called for no disruption in services. I welcome that. Pharmacists take their ethical duties seriously. Unlike in the case of methadone, where one is not required to give three months notice to break a contract, under the contract the State has with pharmacists a three month notice period is required. There will be no cash crisis on Saturday and no issues with the payment of staff. We cannot justify postponing the high margin paid to the wholesaler until the Dorgan group reports. There are two separate issues here.

Deputy James Reilly

Why punish the pharmacists? The Minister is punishing the pharmacists instead of the wholesalers.

Deputy Mary Harney

We want to pay a flat fee. The representatives of the IPU in their meeting with me two weeks ago said that the €5 flat fee, and the HSE has said not less than €5, is not sufficient and that it was not devised, in their view, through an independent process. It was to address that issue that I decided to establish the group chaired by Mr. Sean Dorgan to examine it in the context of these changes. It will be a matter for the IPU and others to make their case to that group regarding the fee. The group will make its report. There are no limitations on the group and we have given a commitment, subject to Government approval, that any advice or recommendations will be backdated to 1 March.

Deputy Caoimhghín Ó Caoláin

What about the Competition Act?

Deputy Mary Harney

I am a strong fan of competition. I am old enough to remember when there was no competition in certain markets. Protectionism protects nobody and certainly not consumers. Society does better when there is fair competition. Furthermore, these markets are regulated. There are regulatory bodies and the recent legislation provides, for the first time, for the regulation of the corporate entities in addition to the pharmacists. That has been broadly welcomed by pharmacists. We have legislated to tackle the conflict of interest between prescribing and dispensing which was, again, an issue of huge concern to pharmacists. To be fair, the Government has done a great deal to develop the pharmacy profession, in particular to allow our pharmacists to open pharmacies in this country, which previously they could not do if they had not graduated here.

Deputy Bernard J. Durkan

If the Minister reduces the number of pharmacists, what will that do for competition?

Deputy Mary Harney

We are not going to reduce the number of pharmacists.

Acting Chairman

Ten Members are seeking to speak and I am anxious to accommodate as many as possible. The debate is due to conclude at 1.40 p.m. I propose that we group the questions from Members. Is that agreed? Agreed. I ask Deputies to confine their remarks to questions.

Deputy Paul Connaughton

I have three questions. Why does the Minister treat the pharmacists in a different way from how she treated the medical consultants? Why did she spend many hours over almost four years going through the arbitration system to ensure that they were happy with what was to be implemented? With the pharmacists, the Minister chose the jackboot and only used an arbitrator, Mr. Dorgan, after the event. They cannot understand it.

The HSE told the last meeting of the Oireachtas Committee on Health and Children that the wholesalers had bought into this scheme. However, I received a letter, through Deputy Calleary, from United Drug which clearly demonstrates that is not the case. They never gave such a commitment. How can medical card holders and pharmacists trust anything the HSE does after this? I share the view that we must get better value for money. The Minister spoke about the losers but we all know the losers will be the people at the bottom — the small pharmacies throughout the country and the people who will have to beg to get what they are due with their medical cards. Of course, given the Progressive Democrats' philosophy, the Minister will not be too worried about that.

Acting Chairman

I call Deputy Mulcahy, after whom I will call Deputy Moloney.

Deputy Kathleen Lynch

The Government side has had the Minister on her feet for the last hour answering questions and making statements. It is deeply unfair that the Government side should get speaking slots as well.

Acting Chairman

After that, I will call you, Deputy. Time is against us.

Deputy Michael Mulcahy

A large number of meetings took place with public representatives in various constituencies at which pharmacists vented their feelings. Was the Minister impressed by some of the people who made representations? Many Members are in politics long enough to know when people are genuine, and there is a genuine fear on the part of some small pharmacies that they will go out of business with the introduction of this new scheme. As other Members have said, and I commend the Minister and the HSE in this regard, we must make savings but there is a fear, and we cannot ignore it, that we could create a situation that will result in large pharmacy chains and the end of small pharmacies. Were any studies undertaken by the Department to assess the impact on pharmacies of the introduction of the proposed new scheme? If there were such studies, what did they show to be the results of that impact?

Deputy John Moloney

In the hope of creating confidence in the independent Dorgan group, how was it selected?

Deputy Kathleen Lynch

The age profile of the pharmacists at the meetings we attended was surprising. They are not elderly pharmacists working into their 80s but a second generation of young pharmacists who have taken on massive mortgages to finance their entry into this business. Have any studies been conducted on the age profile of pharmacists? These people have been given loans on the basis of projected income from their pharmacy businesses. What is to become of them?

It is not just about the General Medical Services scheme and medical cards, but about providing a service in the community. The number of people with medical cards is being cut back each year. Where are people to get their medication if pharmacies close down? The Minister is correct that she is not a fool but we are not fools either. If €100 million is taken out of the service, somebody will suffer. Who are they and what is their age profile?

Deputy Beverley Flynn

The Minister spoke about the drugs payment scheme and mentioned that the pharmacists get the dispensing fee, plus 50%, plus 8%. Her last comment was that the 8% had nothing to do with their contract. If the 8% discount from the wholesaler is not related to the pharmacists contract, why is the HSE involved in any negotiation about that aspect? Are we trying to force the IPU, on behalf of the pharmacists, to negotiate through an independent body with the wholesalers? Is that our objective with this?

Deputy Seán Barrett

The wholesalers are the problem.

Deputy Beverley Flynn

The HSE cannot negotiate with the wholesalers. Is it the case that the Minister believes the pharmacists, on their own behalf, should negotiate with the wholesalers? Is it fair that the HSE should cut the pharmacists' 8% until that happens? I am trying to understand the position.

Second, the Minister mentioned that because of a deal made with the manufacturers she believes we are now in a better situation than if pharmacists were actually prescribing generic drugs. The Minister probably does not have it to hand but has she independent evidence of this that does not originate from the Irish Pharmaceutical Healthcare Association? If so, she should circulate it. It is an important point.

With regard to the discount, it is acknowledged that some pharmacists get a 2% discount, while others get a 14% discount. The Minister has said that no pharmacists will be worse off and they will not get any less than the cost of the drugs to them. In practical terms, how is this going to work? If I am getting a 2% discount and the price is being cut by 8%, the Minister will have to make up that differential of 6%. However, if I am getting a 4% discount, the differential is only 4%. Is it the case that pharmacists all over the country will be on a different price? How will that be administered? Is it fair that the HSE should benefit from discounts pharmacists get from wholesalers because they pay their bills promptly but do not get reimbursed by the HSE for 90 days? If pharmacists pay their bill after 60 or 30 days or immediately, they get a discount of 1% for each of those days. Is it fair that the HSE should recoup the benefit of that, when a young pharmacist may be paying the bill out of a bank overdraft facility? Pharmacists have built efficiencies into their business by ordering in bulk and improving their software and computer systems. Is it right that the benefits of such investment by individual pharmacists in their businesses should be taken away by the HSE?

Deputy Mary Harney

The Deputies have asked many questions. Deputy Connaughton asked how this differs from the situation with the consultants. First, the consultants are our own employees. Therefore, competition law does not interface when an employer negotiates with an employee.

Deputy Paul Connaughton

The consultants have more power.

Deputy Mary Harney

That is the reality. An employer can negotiate with his or her own employees. The issue under competition law ——

Deputy Michael D. Higgins

Does the Minister accept the right to collective representation?

Deputy Mary Harney

Of course I do. I made the point earlier that we want to negotiate a new contract with the IPU, with pharmacists, but the pricing of that contract ——

Deputy James Reilly

The Minister wants them on their knees first.

Deputy Mary Harney

The pricing of that contract ——

Deputy Paul Connaughton

The consultants have the Minister by the tail.

Deputy Mary Harney

We must negotiate the contract. Hopefully ——

Deputy Paul Connaughton

She wants to run a steamroller over them. That is what she wants.

Acting Chairman

I ask the Deputy to allow the Minister to speak without interruption.

Deputy Mary Harney

Hopefully we will reach agreement on a new contract and then we are required, under competition law, to have that independently priced. Unless we get agreement on the new contract, there is no point in establishing a pricing mechanism.

Deputy Paul Connaughton

The HSE knew it had the Minister behind it.

Deputy Mary Harney

The people who will be the chief beneficiaries from an increased dispensing fee — and what is on offer at the moment is a 70% increase for the GMS — are those pharmacies that are very heavily dependent on GMS and those pharmacies in rural communities ——

Deputy Paul Connaughton

They are scattered around the mountains and valleys.

Deputy Mary Harney

—— that have very low volumes of turnover. That is a fact. They will ——

Deputy Paul Connaughton

The Minister said she was no fool. Well, I am no fool either.

Acting Chairman

Deputy Connaughton, please. We cannot hear the Minister.

Deputy Mary Harney

Deputy Mulcahy asked if I have been impressed with the presentations made. I have, for many years, felt very uneasy when young pharmacists approached me to tell me that because they could not get into pharmacy school in Ireland and had to go abroad to qualify, they could not open a pharmacy here. I spent many years campaigning to change that situation. That has changed now.

Deputy Kathleen Lynch

I bet they are sorry they approached the Minister now.

Deputy Mary Harney

I am usually accused in this House of being too pro-enterprise. These are entrepreneurs and business people. They have established businesses and have entered into their arrangements ——

Deputy Kieran O’Donnell

Now the Minister wants to put them out of business.

Deputy Mary Harney

My concern, as Minister for Health and Children, is the contract that the HSE has with pharmacists for the professional service they provide. That contract, paid by way of dispensing fees in 2007, cost €367 million and no money is being taken off that. On the contrary, we are offering a 70% increase for GMS dispensing. Pharmacists have varying discount arrangements with wholesalers. I understand they vary from 1% to 2% where there is very low volume, up to discounts of 12% or 13%. I am not a party to that, as Minister for Health and Children.

Deputy Paul Connaughton

It is the small ones that will suffer.

Deputy Mary Harney

The HSE is not a party to that either. The HSE set out in good faith with the Department to negotiate with the manufacturers, the producers of medicine and to then negotiate with wholesalers, even though we do not have a contract with them. Clearly, we are concerned about the cost of delivering the product.

There is nowhere in the world where it costs €600 million to get medicine to patients ——

Deputy Paul Connaughton

The wholesalers are not talking to the Minister or the HSE.

Acting Chairman

Please, Deputy Connaughton, we are way over time.

Deputy Mary Harney

Nobody could justify, and the Brennan commission was very critical of the 50% mark up ——

Deputy James Reilly

The Minister should deal with the wholesalers, not bully the pharmacists.

Deputy Kieran O’Donnell

Deal with the wholesalers.

Acting Chairman

Deputies, please desist.

Deputy Mary Harney

Nobody could justify that it costs €600 million to provide €1 billion worth of medicines to patients.

Deputy Paul Connaughton

Put the boot into them. That is what we want.

Deputy Mary Harney

The patients are not getting ——

Deputy Paul Connaughton

United Drugs told the Minister to take a run for herself.

Deputy Mary Harney

—— a good deal out of that and neither is the taxpayer. That is my concern.

Deputy Moloney asked how the three members were selected. They were selected by me following a conversation I had with the Secretary General of the Department and one of my advisers. They are people I know professionally and for whom I have a high regard. They know what it takes to make business function and have a consumer perspective. Ms Mary O'Dea has been highly rated as director of consumer affairs at IFSRA by many consumer organisations.

Deputy Michael D. Higgins

Will they be able to examine everything that Indecon examined?

Deputy Mary Harney

There is no doubt that Mr. Seán Dorgan and Mr. Mark Moran are well aware of what it takes to keep a business functioning. What I and the Government want to see is a vibrant ——

Deputy Kieran O’Donnell

The Minister has restricted their terms of reference.

Deputy Mary Harney

—— community pharmacy sector.

I do not have any data on the age profile. I met a young woman in Dublin recently, who was probably in her early 30s, who told me she had 14 pharmacies. A young, Irish woman who is a pharmacist, working in this city ——

Deputy Paul Connaughton

She will go far.

Deputy Bernard J. Durkan

It is the youngest pharmacists who will be most badly affected.

Deputy Michael D. Higgins

Her social role is obviously extensive.

Deputy Mary Harney

I am simply telling Deputies.

Deputy Paul Connaughton

She will do well.

Deputy Mary Harney

I am just telling Deputies. She is one of the young people to whom they referred.

Deputy Paul Connaughton

She will not support the people. She just cares about her business units.

(Interruptions).

Deputy Mary Harney

We have more medical cards in the country now than ever before.

Deputy Jan O’Sullivan

Only marginally more.

Deputy James Reilly

Not relative to the size of the population.

Deputy Bernard J. Durkan

That is nonsense. That is the most ridiculous thing I have ever heard. What about the fact that the population size is going up and up?

Acting Chairman

Deputy Durkan, please. We are way over time.

Deputy Bernard J. Durkan

That is the most stupid thing I ever heard. On a point of order, that is the most daft statement I have ever heard ——

Acting Chairman

Deputy Durkan, please resume your seat and allow the Minister to finish.

Deputy James Reilly

That is just disingenuity on the part of the Minister.

Deputy Bernard J. Durkan

The number of medical cards is going down. The size of the population is going up.

Deputy Mary Harney

I wish to point out to Deputy Durkan that incomes have gone up threefold and medical cards are at their highest level. More than 30%——

Deputy James Reilly

Costs have gone up too.

Deputy Mary Harney

I accept that but the fact is that, notwithstanding our new prosperity, there are more people in Ireland with medical cards than ever before.

Deputy James Reilly

That is the same prosperity that does not allow a nurse or a garda to buy a house.

Deputy Bernard J. Durkan

The Minister is losing it.

(Interruptions).

Deputy Mary Harney

There is no justification for paying twice the rate that is paid across the European Union, no matter how much countries change, to deliver medicine, much of which is made in Ireland. We have one of the most successful pharmaceutical sectors in the world. There is no justification for paying twice as much as is paid in Northern Ireland or anywhere else, to deliver medicine to patients. There is no justification for postponing the delivery ——

Deputy James Reilly

Neither is there justification for bullying the pharmacists when it is the wholesalers the Minister should be targeting.

Deputy Mary Harney

Deputy Reilly made the case earlier about money for cystic fibrosis, among other concerns. The purpose here is to divert the money that would otherwise go to pay for the distribution of medicine ——

Deputy James Reilly

How much of it will go to paying the managers in the HSE?

Deputy Mary Harney

——to other worthy causes in the health services and everybody should support that.

Acting Chairman

That concludes statements on pharmaceutical pricing.

Deputy Beverley Flynn

I wish to ask ——

Acting Chairman

I am sorry, Deputy, but I am way over time. I am not respecting the Order of Business agreed this morning.

Deputy Beverley Flynn

I simply wish to request that, regarding questions that were not answered, the HSE would revert to individual Deputies with answers. I would appreciate that.

Deputy Michael D. Higgins

I would like a copy of those answers. I support Deputy Flynn in her call, even though she did not support me.

Deputy Beverley Flynn

Would that be in order?

Acting Chairman

That request has been noted.