Health and care services

Balancing the costs of prescription drugs

eolas reviews the recently published report on the cost of prescription drugs in Ireland by the Joint Oireachtas Committee on Health and Children.

In 2015, the Joint Oireachtas Committee on Health and Children identified the cost of prescription drugs as a major issue. An increase in demand for prescription drugs and new treatments means there is an ongoing need to deliver meaningful value for money in the drug treatment budget. In 2014, €1.8 billion out of a total health budget of €12.4 billion was spent on drug treatment.

The Health Service Executive (HSE) operates a reimbursement model with the pharmaceutical industry and patients can also incur additional charges for prescription drugs. The Committee accepts that the collaboration between the HSE and the pharmaceutical industry has resulted in a €400 million reduction in the price of prescription medicines. However, it believes there is scope for progress in this area, though does acknowledge the importance of balancing the reduction in costs against the security of supply.

Pricing and availability

Ireland benchmarks its prices against a basket of nine countries: Austria, Belgium, Denmark, Finland, Germany, the Netherlands, Spain and the UK. Historically, the prices of both patented and generic pharmaceuticals have been higher in Ireland than in its European counterparts. Price outcomes can vary significantly depending on whether a median or mean average model is used and Ireland’s basket of nine countries is not the common option used by other countries when calculating reimbursement prices.

Moving forward, the report recommends that the average price methodology be reconsidered. The committee wants to see the number of countries used to calculate the average increase to 15 ensuring lower cost countries are included.

Since 2013 maintaining a constant supply of medicine has been a statutory obligation. To do this the report recommends that the Government commission a future-focused assessment of the challenges posed by pricing, supply and demand for pharmaceuticals in Ireland.

The committee also considered the potential for community pharmacists to play a more proactive role in reviewing prescription use and highlights the UK’s New Medicines Service model as an example of best practice in this area. Such reviews have the potential to result in more effective use of prescription drugs and as such, the committee recommends the establishment of an Irish Medicines Service.

Competition

The committee also considered the issue of price transparency and the potential for enhancing competition in the pharmacy sector. In 2012 the Economic and Social Research Institute (ESRI) recommended that a standard template be used in pharmacies to display the dispensing fee and the level of mark-up.

After careful consideration, the committee recommends that in the interest of high-level public transparency and to enhance consumer choice, the display by community pharmacists of a standard template detailing fees merits consideration.

Although agreements between representatives of the pharmaceutical companies and the health service have achieved savings of €400 million to date, in the context of a total annual spend of €1.8 billion, the saving is small. The committee is hopeful that the HSE and the Department of Health will use the report’s recommendations to secure greater savings and a further reduction in the price of pharmaceutical drugs in the next drug pricing agreement with the IPHA.

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