Press Release

Minister Harney Publishes Report on Proposed Model for the Substitution of Interchangeable (Generic) Medicines and Reference Pricing

The Minister for Health and Children, Mary Harney TD, today published the report of the joint Department of Health and Children/Health Service Executive working group on reference pricing and generic substitution. The report sets out a proposed model for the operation of a system of interchangeable medicines and reference pricing. It also identifies the legislative and administrative changes required.

The Report of the joint working group chaired by Mr. Mark Moran, follows on the Minister’s decision to introduce a system of reference pricing and generic substitution. This will result in a more sustainable system of pharmaceutical pricing and reimbursement and will help to ensure that patients continue to access innovative and affordable medicines.

The Minister said, “Due to our ageing population and increased usage of medicines, we can expect upward pressure on our drugs bill for our health services. It is essential, therefore, that we maximise value for money in this area of expenditure and use all methods to ensure that the right drugs are used, at the right time for the right conditions, and that the cost of drugs is kept as low as possible.

The new arrangements set out in detail today are part of a set of key actions we are taking to achieve greater value for money in pharmaceutical expenditure:

Off-patent price cuts have been introduced, wholesale and retail mark-ups have been reduced and further price cuts were achieved in February this year. These actions alone can be expected to save nearly a quarter of a billion euro for the taxpayer this year, from what would otherwise have been the cost.

“The new system of generic substitution and reference pricing will promote price competition and deliver greater value for money. Over the next five years a number of high volume medicines are expected to come off patent. These reforms will ensure that lower prices are paid for these medicines resulting in significant savings for taxpayers and patients.

“I want to thank Mark Moran particularly for this work he has led with a team of officials from the HSE and the Department of Health and Children. The implementation report is a succinct and detailed guide for the new system that will be put in place – like an instruction manual for the new arrangements that all can see and use. It will provide a cost effective, and sustainable, way that taxpayers’ money is used to pay for interchangeable drugs in our public health services.”

Currently, when a specific brand of medicine is prescribed for a patient, a pharmacist can only supply that particular brand, even when less expensive versions of the same medicine are available.

Under the proposed model set out in today’s report, pharmacists would be permitted to substitute medicines which have been designated as interchangeable. Decisions about the interchangeability of medicines would be evidence-based and take into account best practice elsewhere. It is envisaged that an expert group would provide guidance on this matter.

With reference pricing, a common reimbursement price, or reference price, is set for a group of interchangeable medicines. Eligible patients do not face any additional costs for products priced at or below the reference price. If a patient would like to receive a particular brand that costs more than the reference price then the patient can pay the additional cost of that product. Provision is generally made for prescribers to prohibit substitution for clinical reasons. In these instances patients do not face any additional costs if the prescribed product costs more than the reference price.

Next Steps

Government approval has been received for the drafting of Heads of a Bill to provide for the introduction of reference pricing and to permit generic substitution by pharmacists. The General Scheme and Heads of a Bill are being drafted and a Regulatory Impact Analysis, which will include consultation with all relevant stakeholders, is also being undertaken.

Read the Report