Dáil Éireann Debate, Tuesday - 3 October 2017
446. Deputy Billy Kelleher asked the Minister for Health the extent to which savings from the State’s agreement with an organisation (details supplied) in 2016 have been applied towards the funding of new medicines; and the processes in place to ensure that in 2018 savings generated under the agreement are applied for the funding of new medicines by the Health Service Executive and transparently reported as such. [41919/17]
Amharc ar fhreagraThe new four-year Framework Agreement on the Supply and Pricing of Medicines, signed in July 2016, which is available at: http://www.ipha.ie/alist/ipha-hse-agreement.aspx, is an agreement between the State and the Irish Pharmaceutical Healthcare Association, IPHA, and is expected to deliver approximately €600 million in savings over the lifetime of the Agreement from IPHA companies and €150 million in savings from non-IPHA companies. These savings have been taken into account in the 2017 HSE National Service Plan.
The savings are a function of the terms of the new agreement. The new Agreement contains a number of features which represent clear additional value over the terms of the previous 2012 Agreement. The reference basket of countries used to set prices in Ireland has been expanded from nine to 14 countries and, importantly, includes lower cost countries. For the first time, the Agreement provides for an annual price realignment, which will ensure that the prices of medicines in Ireland reduce in line with price reductions across the reference countries. This will ensure the State achieves better value for money on the cost of medicines as prices in other basket countries are adjusted downwards over time. In addition, the Agreement secured a 30% reduction in the price of biologic medicines when a biosimilar medicine enters the market.
At the date of signing, the IPHA Agreement was forecast to deliver savings up to €750 million from IPHA and non-IPHA companies.
The figures were calculated on a full year basis as follows:
IPHA Savings*
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
|
€120m |
€160m |
€200m |
€270m |
*Figures are rounded and subject to annual review as part of the annual estimates process based on the most up to date pricing data at that time.
A key focus of this agreement was to achieve lower prices in the face of both demographic pressures on expenditure and the continued development of new medicines, many of which pose affordability challenges to the Irish health service and indeed internationally. The HSE included a savings target of €148 million in the National Service Plan 2017 for the provision of health services in 2017 arising from the agreement, and the launch of a biosimilar for Embrel in 2016.
As the Deputy will be aware, the HSE will spend approximately €2 billion on new and existing medicines across the health service in 2017 when account is taken of ingredient cost, fees and VAT.
In line with statutory obligations, the HSE operates within the resources provided by Dáil Éireann each year. The HSE has statutory responsibility for decisions on pricing and reimbursement of drugs in accordance with the Health (Pricing and Supply of Medical Goods) Act 2013.
The allocation of funding is a matter for the annual budget and the HSE's National Service Plan.
