Press Release

State to make major savings under new drug pricing deal

  • New four-year agreement with Irish Pharmaceutical Healthcare Association (IPHA) will reduce the price the HSE pays for medicines from the 1st of August
  • Improved pricing mechanism will keep prices of medicines in Ireland on a downward trajectory and will save an estimated €600 million in total over four years plus additional savings from non-IPHA companies
  • Savings and new assessment process to support investment by the HSE in new and innovative medicines for Irish patients

The Minister for Health, Simon Harris T.D. has today welcomed the agreement of a four-year Framework Agreement on the Supply and Pricing of Medicines with the Irish Pharmaceutical Healthcare Association (IPHA).

Commenting on the new Agreement the Minister stated:

“I am delighted this deal delivers better value for the State and will provide better access for patients to new and existing drugs. It will also bring the cost of medicines in Ireland more into line with other European countries.

“This new agreement with IPHA and its application to non-IPHA companies, will result in the HSE paying less for medicines from the 1st of August, and will deliver an estimated €600 million in savings over the next four years and additional savings from non-IPHA companies.”

“The Government wants to ensure that Irish patients continue to have access to new and innovative medicines and that Ireland remains at the forefront of its European peers in terms of early access to medicines in an affordable manner and within available resources. As a result of this agreement with IPHA, the HSE will be in a much stronger position to meet the increasing demand for existing medicines and also to invest in new medicines over the next four years.”

“The pricing provisions in this agreement represent a significant improvement on those contained in the previous agreement.  They will see an expansion of the reference basket used to set prices in Ireland from the present nine to 14 countries, including for the first time Greece, Italy and Portugal. The agreement also includes, for the first time, an annual price realignment to ensure that the prices of medicines in Ireland reduce in line with price changes across the reference Countries. A rebate of 5.25% rising to 5.5% will further reduce the overall cost of medicines in the years ahead.”

“This agreement represents the outcome of an intensive and complex process of engagement between State officials and IPHA over recent months and I would like to acknowledge the substantial commitments which IPHA has made on behalf of its member companies,” the Minister added.

Framework Agreement on the Supply and Pricing of Medicines

Ends

Notes to Editors:

Key pricing elements of the new pricing agreement include:

  • Period: The new pricing agreement will run for the period 1st August 2016 to 31st July 2020.
  • Composition of the Reference Basket: The basket of countries that will be used to undertake international reference pricing for the annual price realignments has been extended from nine to 14 with Sweden, Portugal, Luxembourg, Greece, Italy added to Austria, Belgium, Denmark, and Finland, France the Netherlands, Spain, & UK. The inclusion of a number of lower-priced countries will result in lower prices in Ireland.
  • Methodology: The methodology will continue be the currency adjusted average of prices in the reference basket.
  • Frequency of Price Realignments: Price realignments will now take place on a yearly basis (initially on 1st Aug 2016 and then on 1st July in 2017, 2018 & 2019). This will ensure that the State achieves better value for money on the cost of medicines during the lifetime of the Agreement, as prices in other basket countries are reduced over time.
  • PCRS (Community Schemes) Rebate: The rebate to PCRS (currently 4%) will increase to 5.25% from 1 June 2016 and will increase by a further 0.25 % to 5.5% from 1 August 2018 onwards.
  • Hospital Rebate: A new measure in this agreement is that a 5.25% rebate from 1 June 2016, increasing to 5.5% from 1 August 2018, will now apply to hospital products.
  • Price Reductions on small molecules on loss of exclusivity:  The price of existing patent-expired medicines will be reduced to 50% of the original ex-factory price. There will be no phased reduction to 50% as was the case in the 2012 Agreement.
  • Discount of Biologics upon entry of biosimilar into Irish market: The price of biologic medicines will be reduced by 20% and the rebate will be increased to 12.5% upon entry into the market of a biosimilar. Biosimilar medicines have a key role to play in improving the cost effectiveness of the medicines bill in the years ahead and this clause strikes the appropriate balance between reducing the price paid by the HSE and encouraging new biosimilar medicines onto the markets.
  • New Reimbursement Principles: A revised set of principles and processes in line with the Health (Pricing and Supply of Medical Goods) Act 2013 will underpin the assessment process for new medicines with greater transparency and certainty introduced.