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Delivery of Pharmaceuticals in Ireland – Getting a Bigger Bang for the Buck

ESRI's Pharmaceutical Delivery Roadmap will support better value for money for the State and cash paying patient

The ESRI is today (24 January, 2012) publishing Delivery of Pharmaceuticals in Ireland – Getting a Bigger Bang for the Buck, by Paul K. Gorecki, Anne Nolan, Aoife Brick and SeŠn Lyons. The report provides a roadmap for the delivery of healthcare pharmaceuticals that should result in better value for money for both the taxpayer and the cash paying patient, while ensuring continuity of supply.

The report states that Ireland is at an important junction in the delivery of pharmaceuticals. Significant progress has been made in recent years in reducing the cost of delivery of pharmaceuticals, both to the Health Service Executive and the cash paying patient. For example, wholesale margins have been reduced and pharmacy mark-ups have declined, at least for pharmaceuticals paid for by the State. However, more needs to be done.

In tandem with other OECD countries, health budgets in Ireland are under pressure. Pharmaceutical costs expanded rapidly in Ireland in the 2000s, at a time when healthcare costs were rising rapidly. Pharmaceuticals currently account for around 17.5% of public health expenditure, up from 14% in 2000. In 2009 expenditure per head in Ireland on pharmaceuticals was amongst the highest in OECD countries.

The Report makes various recommendations and suggestions on how Ireland can obtain better value for money. These include:

Setting the Ex-Factory Price for New Pharmaceuticals

  • Setting the ex-factory price of new pharmaceuticals based on the lowest, as opposed to the average, price in the nine EU Member States that comprise the current 'basket' (i.e. Belgium, Denmark, France, Germany, Netherlands, Spain, the UK, Finland, and Austria).
  • Updating the ex-factory price of new pharmaceuticals every six months, as compared to between one and three years at present.

Setting the Ex-Factory Price for Pharmaceuticals with Generic Competition

  • The ex-factory price of high volume interchangeable products should be set on the basis of competitive tenders. At present ex-factory prices of such pharmaceuticals are set relative to the originator price.
  • The State pharmaceutical Schemes should pay the lowest price among a group of interchangeable pharmaceutical products. At present the State pays the price of the product dispensed which is decided by the medical practitioner.
  • Pharmacists should be able to dispense a pharmaceutical product which is interchangeable with that prescribed by a medical practitioner. At present the pharmacist has to dispense the brand written on the prescription by the medical practitioner.

Providing More Information to Patients

  • Patients should be informed of a pharmacist's dispensing fees, pharmacy services, and mark-ups through in-store displays using a standard template. At present such information is not displayed by pharmacies.
  • Pharmacists should be able to offer and to advertise that they will pay, in whole or in part, any patient co-payments for State pharmaceutical Schemes. At present this is prohibited.

Changing Prescribing Practices

  • Prescriptions should, subject to some exceptions, be written using international non-propriety names (e.g. atorvastatin not Lipitor). At present no such rule exists.

The implementation of these recommendations and suggestions will lead to better value for money via lower pharmaceutical prices, better informed patients and a more competitive and patient-responsive pharmacy sector.

The report's recommendations and suggestions are evolutionary not revolutionary. They draw on international experience and build upon earlier reports to the HSE and to Government. Hence this should limit the possibility of unintended consequences that may, for example, affect security of supply. The recommendations are timely as the agreements with the pharmaceutical industry expire in 2012, while the legislation on reference pricing and generic substitution is to be introduced in 2012.

For further information please contact:

Paul Gorecki (Research Professor, ESRI), +353 1 8632039, paul.gorecki@esri.ie.

Note to Editors:

1.†Delivery of Pharmaceuticals in Ireland – Getting a Bigger Bang for the Buck, by Paul K. Gorecki, Anne Nolan, Aoife Brick and SeŠn Lyons (ESRI), will be published online on the ESRI website at 00:01 am Tuesday 24th January. The embargo is until 00:01 am Tuesday 24th.

2.†Members of the media are invited to attend a media briefing on Monday 23rd January, at 10.30 am, in the ESRI.

3.†The report was commissioned by the Health Service Executive and is published by the ESRI after peer review.

4.†The terms of reference were to prepare a report that will "set out a roadmap for reforming the delivery of drugs to patients/consumers within a framework that guarantees security of supply and value for money." (The terms of reference are reproduced in Annex B of the report).

5.†Ex-factory price means the price charged by the manufacturer at the factory gate. It excludes the wholesale mark-up and any mark-ups/dispensing fees charged by the pharmacist.

6.†New pharmaceuticals are those recently introduced pharmaceuticals subject to patent protection with no direct competition.

7.†An interchangeable pharmaceutical product is one that contains the same amount of the same active ingredients, possesses comparable pharmacokinetic properties, has the same clinically significant formulation characteristics, and is to be administered in the same way as the pharmaceutical prescribed.

8.†Patients currently co-pay 50c per item on the GMS Scheme (up to a maximum of €10 per month) and up to €132 per month on the Drug Payment Scheme.

9.†International Non-proprietary Names (INN) identify pharmaceutical substances or active pharmaceutical ingredients. Each INN is a unique name that is globally recognised and is public property. A non proprietary name is also known as a generic name.

10.†Cash paying patient refers to those patients that make out-of-pocket payments under the GMS and the Drug Payments Scheme. Details of these co-payments are contained in item #8 above.


The Economic and Social Research Institute, Whitaker Square, Sir John Rogerson's Quay, Dublin 2.
Telephone: +353 1 8632000; Fax +353 1 8632100; email: admin@esri.ie; web site: www.esri.ie. †
The ESRI is an independent research institute governed by a Council. The ESRI does not as an Institute take policy positions and the views expressed in ESRI publications are those of the authors. All ESRI reports are peer-reviewed prior to publication

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