Press Release

Minister Harney announces Independent Body to begin work immediately to assess fair community pharmacy dispensing fee

The Minister for Health and Children, Mary Harney, T.D., today (18th February, 2008) announced a new Independent Body to recommend a new, interim community pharmacy dispensing fee.  This fee will be implemented with effect from 1st March this year.

The Minister said,
‘The Government is firm in its view that the wholesale mark-up paid on the price of drugs should be reduced to a level that is fair to both taxpayers and wholesalers.  The existing mark-up of almost 18% is neither reasonable nor sustainable and the HSE’s plan to pay an 8% mark-up from 1 March, and 7% from 1 January 2009, is to go ahead.  

‘We have listened to issues raised by the Irish Pharmaceutical Union about retail pharmacies in this context.  Although it is no part of the community pharmacy contract, wholesalers have passed on part of their mark-up to retail pharmacies by way of discounts, with larger discounts given to larger pharmacies.

‘Wholesaler discounting has been described by pharmacists as a method ‘to prop up’ the fees paid on medical card prescriptions.

‘I believe dispensing fees should stand in their own right, without external, artificial props.

‘We are concerned, in particular, to support pharmacies which have a high proportion of medical card patients and where a dispensing fee of €3.27 applies for most transactions.  Many of these pharmacies are in rural or inner city areas and provide an important social and health service.

‘With my support, the HSE has indicated it is prepared to offer a higher fee, of no less than €5 per item dispensed, to community pharmacists, on the basis of an interim contract which would be essentially the same as the existing contract.

‘I have met the IPU and have heard their point that there should be an independent assessment of any fees offered, and a reasonable process to deal with the non-price terms of contracts.

‘The HSE and I agree this is the method that will be followed to put in place a substantive new pharmacy contract, which will recognise the role that pharmacies can play in community health services.  I am very committed to developing the role of pharmacy and to paying a fair fee for that.’

‘But since that process will take some time, even with the evident commitment on both sides, some immediate steps are necessary.’

‘In conjunction with the HSE, I believe that the following approach is the fairest way forward now:

  • I am establishing an Independent Body to begin work immediately to assess an interim,  fair community pharmacy dispensing fee of at least €5 to be paid for the medical card scheme,  the Drugs Payment Scheme and other community drug schemes. This Body will be chaired by  Seán Dorgan, former Head of IDA Ireland.  It will take submissions from all sides and will  carry out its own analysis. It will be asked to make its recommendations by the end of May.   Its recommended fee level, subject to Government approval, will be backdated to  1 March 2008.
  • The development of the substantive new contract will get underway immediately and will be completed as soon as possible; this will be done under the auspices of an agreed facilitator and it too will be priced by the Independent Body.


Appendix 1

Independent Body for Community Pharmacy Dispensing Fee

Members: Seán Dorgan, former Head of IDA Ireland

Mary O’Dea, Consumer Director, Financial Regulator  

Mark Moran, Chairman EBS, former CEO Mater Private Hospital

Terms of reference:

To advise the Minister for Health and Children on the appropriate level of dispensing fee to be paid to community pharmacists for existing services provided under the GMS and community drug schemes having regard to:

(i) the overall public interest including the issues of patient safety and continuity of supply;
(ii) the fee of €5 per item which has already been offered;
(iii) the reasonable costs incurred by pharmacists in providing services under the schemes and the value of the professional service of dispensing; and
(iv) the statutory obligation on the HSE to use the resources available to it in the most beneficial, effective and efficient manner to improve, promote and protect the health and welfare of the public;
and to submit a report on the matter to the Minister for Health and Children.
The requested date for submission of the report is 31 May 2008.

Mode of operation:

Both the HSE as the contracting body and the IPU as the representative organisation for community pharmacists, along with other stakeholders, will be entitled to make submissions addressing whatever factors and issues are of concern to them.

The body will also be entitled to engage whatever outside expertise it requires to assist it with its task.

Based on its consideration of submissions received and its own independent evaluation, the body will recommend an appropriate dispensing fee to the Minister that would, in its view, represent a fair and reasonable price to be paid for the pharmaceutical service currently being provided by community pharmacists to the HSE under the GMS and community drug schemes.

Each pharmacist will have three options: to avail of the interim contract immediately; to accept the interim contract upon the report of the Independent Body; or to stay with the existing retail fee structure until the agreement of a substantive new contract.

‘I believe this provides all concerned with a reasonable way to make the transition to a fair and transparent method of payment for present services and, I hope, greatly developed pharmacy services in the near future.’

‘Finally, I wish to express my gratitude to Sean Dorgan, and the other two members of the Independent Body – Mary O’Dea and Mark Moran – for agreeing to take on this important task.’

Note: Membership and terms of reference for the Independent Body are at Appendix 1.