Press Release

New drug deal worth €400 million over three years says Minister Reilly

The Minister for Health Dr James Reilly has today (15th October, 2012) announced that intensive negotiations involving the Irish Pharmaceutical Healthcare Association (IPHA), the HSE and the Department of Health have reached a successful conclusion with a major new deal on the cost of drugs in the State. The deal is an important step in reducing the cost base of the health system.

The new deal, with a value in excess of €400 million over the next three years, will mean

  • significant reductions for patients in the cost of drugs,
  • a lowering of the drugs bill to the State,
  • greater access to new cutting-edge drugs for certain conditions, and
  • an easing of financial pressure on the health services into the future.

The deal is beneficial in two broad ways,

  • about half the financial value is related to reductions in the cost of patent and off-patent drugs
  • the other half is related to the State securing the provision of new and innovative drugs for the duration of the agreement in an exceptionally difficult economic climate.

Dr Reilly congratulated all parties to the complicated, protracted negotiations for concluding a deal of such benefit to patients and the health services and he said “given the scale of the financial challenges in Health over the next few years, this agreement is vital progress after much hard work” .

The new deal, combined with the IPHA agreement reached earlier this year, means that €16 million in drug savings will be made this year with much greater savings to be achieved in 2013/14/15. It is estimated that the deal will generate savings of up to €116m gross in 2013.

Alex White, Minister of State with responsibility for Primary Care has welcomed the deal. “The current cost of drugs in our health system at over €2bn per year represents a major challenge to the State. However the value of life-saving life-enhancing drugs to patients is incalculable. This importance of this new deal to the State and to patients alike will be felt well into the future”.

This landmark deal comes as legislation aimed at reducing the cost of generic drugs makes its way through the Oireachtas. The Health (Pricing and Supply of Medical Goods) Bill 2012, which will introduce a system of reference pricing and generic substitution, is a priority for the Government. The Minister expects that this Bill will be enacted before the end of the year and will deliver further savings in the costs of medicines for the health service and private patient.

The Department and the HSE will shortly finalise discussions with the Association of Pharmaceutical Manufacturers in Ireland, which represents the generic drugs industry, to deliver further savings in the cost of generic drugs.

Further information for Editors

Amongst the measures that have been agreed include;

  • the price of medicines marketed by IPHA companies which are off-patent prior to 1st of November 2012 will be reduced to 50% of their original price by 1st November 2013;
  • the price of up to 400 patent protected products which have been available on the HSE Community Drug Schemes prior to 2006 will be subject to a price review. Price reductions averaging up to 16 % are expected from this review process.

Previous agreements reached with IPHA on reductions in the price of medicines have accumulated savings in excess of €600 million for the taxpayer since 2006.

In addition, a National Task Force on Prescribing and Dispensing, has been established to deal with prescribing and dispensing of medicines. It will address this issue from the perspective of quality and patient safety primarily, however, it can be anticipated that the work of this Task Force will also deliver significant cost savings in terms of achieving more cost conscious prescribing. The work of the Task Force will be wide ranging and include providing advice and guidance and support to prescribers and dispensers to help them improve prescribing practices and assessing the suitability of maintaining supply of certain items with limited efficacy where more appropriate items are available.