The issue of affordability and access to medicines is a major challenge for the Irish health service and for systems internationally. It is important that we take steps to ensure a sustainable supply of medicines. This Government is committed to reducing the cost of medicines for Irish patients and a number of actions are currently reducing medicine costs.
In relation to new medicines, the Health (Pricing and Supply of Medical Goods) Act 2013 sets out the conditions under which new medicines can be reimbursed in the community drugs schemes. Before approving reimbursement of a new medicine, the HSE is required to consider a number of criteria, including the potential or actual impact of a medicine, its cost-effectiveness, the health needs of the public and the resources available to the HSE. The HSE therefore undertakes a robust analysis of the pricing points of new medicines and this is factored into negotiations with manufacturers. In the negotiation process, the HSE will often seek significant price reductions so that medicines reimbursed are both cost-effective and affordable.
The pricing arrangement agreed with IPHA last year is providing ongoing and increasing savings, both for the taxpayer and for patients in pharmacies. Under the 2016 Framework Agreement, medicines are now subject to an annual downward only price realignment. In addition, the price will ensure that the State achieves better value for money on the cost of medicines as prices in the reference countries are adjusted downwards over time. It also ensures that the prices paid by Ireland remain in line with other member states. The agreement, which also includes a rebate of 5.25% is estimated to reduce expenditure on medicines by up to €750 million over 4 years.
Reference pricing for generics is also an important pricing mechanism. Medicines which are off patent are subject to generic substitution and reference pricing. The list of medicines approved for substitution, which allows pharmacies to dispense the most cost effective version of a drug to patients continues to expand.
The introduction of biosimilars, the equivalent of generics for very expensive and complex biologic products, will free up significant resources to allow more people to be treated across the health system. The estimated expenditure in Ireland on six biologic medicines that are due to lose exclusivity over the next 3 years was approximately €170 million in 2015. My department is developing a biosimilars policy in order to maximise the benefit of these products throughout clinical decision making and supply. Recognising the importance of biosimilar medicines, the 2016 framework agreement included a 30% reduction on the price of a biologic medicine when a biosimilar is launched in Ireland.
International cooperation on pricing and reimbursement of new medicines is also an opportunity to secure better value for individual medicines. In June 2016, the Employment, Social Policy, Health and Consumer Affairs Council adopted conclusions on strengthening the balance in the pharmaceutical systems in the EU and its member states. Those conclusions invited member states to explore opportunities for cooperation on pricing and reimbursement of medicines and to identify areas for cooperation which could contribute to affordability and better access to medicines. I have indicated my support for these measures and I welcome the opportunity for member states to cooperate by sharing information, so that we can achieve affordable and sustainable access to medicines.
In addition, I used the opportunity at the second Round Table meeting for European Health Ministers and heads of Europe-based pharmaceutical companies in Portugal last December, and the recent OECD meeting in January, to engage with Ministers from other countries on how to address the challenge of securing access to new medicines for citizens at an affordable price.
The commitment to reduce the cost of medicines includes reducing prescription charges for medical card holders. I have begun this process by reducing the prescription charge and monthly cap for medical card holders over 70, and their dependants, on an administrative basis, pending the enactment of the required legislation.
My department continues to examine new ways to achieve efficiencies in the cost of medicines. The HSE keeps the price of medicines under ongoing review, and works continuously to achieve greater efficiencies in the areas of drug pricing, supply and distribution. The Executive has a number of initiatives already underway or in development, particularly under the National Drug Cost Management Programme and the Medicines Management Programme, which provides national leadership relating to issues such as the quality of the medicines management process, access to medicines and overall expenditure on medicines.
