Monday, September 10, 2012

The Irish Problem?

High-priced drugs

The Irish Times - Monday, September 10, 2012
RIGHT ACROSS Europe, the pharmaceutical sector has been forced to reduce profits as governments went in search of savings on medical bills. Nothing like that rigour was applied here, although prices have fallen since 2009. In the past decade, the cost to the State of drugs and medicines has risen at three times the European average and pharmaceuticals are among the most expensive in the world.

Against that background, reported progress in talks between the Department of Health and drug manufacturers on a deal to cut the State’s annual drug bill by up to €400 million is welcome – though belated. Minister for Health James Reilly promised significant savings from this area in last year’s budget. But the legislation needed to implement the reforms reached the Seanad only before the summer recess.

The intention behind the Health (Pricing and Supply of Medical Goods) Bill is to promote competition between suppliers and ensure value for money. It will allow patients to opt for lower-cost medicines than those prescribed by doctors; establish a system of reference pricing for generic drugs; and allow the Health Service Executive to specify a list of medicines and non-drug items that will be reimbursed.

It is anticipated that the prospective deal with the Irish Pharmaceutical Healthcare Association (IPHA), which represents the major production and research companies, will yield savings of €30 million to €40 million in the remaining months of this year. This is less than the €60 million to €70 million forecast by the Minister. And figures produced by the Central Statistics Office show how effective the sector has been in protecting its interests. Government spending on pharmaceuticals is now twice that of 2003, even though drug margins and dispensing fees were cut in 2009.

As a large employer that accounts for some 50 per cent of all exports, the pharmaceutical industry is of great importance to the economy. Some big-selling drugs are about to come off patent and the companies concerned will have to decide on continued production here, with lower prices, or an exit from the market.

Budget cuts are supposed to be tough but fair. Since 2008, however, State spending on child benefit has fallen by almost one-third, the largest reduction in any of the welfare sectors. This fall has been accompanied by an increasing incidence of child poverty. Lobbying by powerful commercial interests should not succeed in tilting the balance against social equity.

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