Dr. Ambrose McLoughlin:

Due to the nature of the business, the health system faces additional unavoidable pressures each year. They have to be funded by way of savings. These unavoidable pressures include demographic pressures, an increasing birth rate, an aging population, increased incidence of disabilities, demand-led schemes such as medical cards and drugs schemes, pay costs, superannuation and increments, acute hospital deficits carried forward from 2012, and full year cost of developments commenced in 2012.

The other measures required to improve efficiency in the system include improving financial systems, the development of shared services, better procurement and more efficient prescribing. These will require a degree of up-front investment in terms of cash and staffing and will also have to be funded from services.

Measures to improve or develop services, including commitments in the programme for Government, are not provided for within the expenditure limits and can only proceed if a commensurate saving is achievable in another area of the health service. Programme for Government commitments include: measures to improve access to hospital services and emergency department and elective waiting times; the development of transition care programmes; the extension of free GP care; investment in primary care, mental health and services for older people; and addressing the cost of the health care reform programme in general - for example, moving towards universal health insurance.

One should bear in mind that there are some very significant issues for the health system to address and that progress can only be made if we increase the efficiency and cost-effectiveness of the health service. In this regard, I would like to put on record some very important developments. The strategies that the Department and HSE are applying are working in a significant way. For example, there has been a 20.6% year-on-year reduction in the number of patients waiting on trolleys, or over 13,000 fewer people, and a reduction from an all-time high of 569 patients on trolleys on 5 January 2011 to 139 on 7 September 2012, representing a 75% reduction. We want to see a continuation of the reduction. Overall surgical waiting lists have decreased in the past year by 7% while every time band has seen a substantial reduction, with the figure for those waiting over 12 months reducing by 85%, that for those waiting for nine months reducing by 63% and that for those waiting over three months reducing by 18%. Therefore, significant progress is being made.

I want to challenge some of the points made by some of the Deputies with a view to offering clarification on the issues and enhancing their understanding. It is not true that we are not delivering on the cost of medicines. We have very intensive discussions under way. These were always going to be complex and difficult. I worked in the pharmaceutical sector for a decade or more and can assure the members that there is no easy solution. The negotiations will be difficult and drawn out, and they will cover the coming three years, but I am very confident they will bring in the revenue suggested in various Government papers.

I assure the committee that we will achieve the €125 million target pertaining to insurance. We are working in partnership with the HSE to deliver in this regard. Work has been ongoing with the HSE for many months, namely, from the beginning of the year, to achieve the best outcome. With regard to insurance and income collection, this matter is simply about the health system claiming what it is entitled to from the insurance system. Wisely, the Department and its Minister decided to enter into negotiations with the insurance companies. My colleague, Mr. Fergal Lynch, will explain in further detail that we have an active task force engaged in recovering the funds.

With regard to the cost of medicines, we are working with the Irish College of General Practitioners, the Royal College of Physicians of Ireland and the clinicians to ensure we achieve the most cost-effective solution. We are anxious to ensure that new medicines, when they become available and are clinically approved, will be available to the patients of Ireland. We are making progress on these issues.

In my Department, absenteeism has reduced from over 4% to 2.8%. In one instance, over the August bank holiday weekend, I discovered an absenteeism rate of 11%. Such levels are not sustainable. With the HSE and my colleague Mr. Tony O'Brien, we have published the details in accordance with the wishes of the Minister. This is so the public can see for itself what hospitals and services are performing to a very high level of cost-effectiveness. The way to see the health system through the next three years is to be cost-effective and really deliver value for patients, both public and private.

With regard to governance, the legal position is very clear. Mr. Tony O'Brien is the accounting officer for the HSE. He is ultimately answerable to the Committee of Public Accounts. I have an oversight role as Secretary General of the Department of Health and work with my colleague in the Department of Public Expenditure and Reform.

Let me make a number of points on service planning. Service planning is not a perfect science. I have been in the health system for many decades and can assure members that there will always be a challenge at service planning time. What we must do is learn. Two independent experts have examined the matter and we now need to improve our financial management and control systems to ensure we obtain value for money.

I assure the members that the Minister and Ministers of State, Deputies Reilly, Shortall and Lynch, respectively, are fully supportive of the initiatives the Department and HSE are working through on their behalf, thus ensuring that we have the most efficient, effective and cost-effective health system possible. It is a matter of ensuring that we have appropriate, relevant and timely information so we can know precisely the position on the health system at a given time.

I want to clarify the matter of reference pricing legislation. I assure the committee that there are clear working plans in place. We are working with industry, the Irish Medicines Board and other parties to ensure that when the Houses pass the reference pricing legislation, we will be in a position to achieve a very significant reduction, not only in the cost of medicines to the State but also, I hope, in the cost of medicines for private patients by way of a spin-off.