Ms Sandra Gannon:

I am the general manager of Teva Pharmaceuticals Ireland. I am joined today by my colleague, Aideen Kenny, head of commercial operations at Teva. We thank the committee for the opportunity to discuss the cost of prescription medicines in Ireland. I will give a brief overview of Teva Pharmaceuticals Ireland. Teva is a global pharmaceutical company operating in both the generic and the innovative specialty side of the market. For the purpose of today's meeting, we will focus on the generic element of our business.

Teva employs more than 500 people in Ireland at two locations, in Waterford, which is the global respiratory hub of Teva Pharmaceuticals, and in Dundalk, where we have based a commercial operation. Since 2014, Teva is the largest supplier of prescription medicines in Ireland, the first time a generic provider has occupied this position. In real terms, this translates into almost 8 million packs of Teva medicines being distributed here each year. Every four seconds a patient somewhere in Ireland takes a Teva medicine.

Our innovative and branded portfolio treats conditions such as respiratory disease, multiple sclerosis, cancer pain and a number of other conditions. We feel we are well placed with both an innovative medicines franchise and a very strong generic medicines franchise to comment on the cost of prescription medicines.

In real terms we have seen considerable change in recent years. The catalyst for this change was the decision of the State, the largest purchaser of medicines, to embrace meaningfully the savings that were to be had from switching to a positive and pro-generic medicines policy. The Health (Pricing and Supply of Medical Goods) Act 2013 facilitated generic substitution at pharmacy level and benchmarked Irish prices of generic medicines against the wider European market in the form of reference pricing.

Teva actively supported these reforms, inputting actively into the legislative process. In parallel, we undertook a national campaign called Understand Generics, which with the help of broadcaster, Gay Byrne, aimed to inform patients on the impact of the legislation as they presented their prescriptions in the pharmacy and also in order that they might better manage and pay for their health care costs. We were one of the few pharmaceutical companies to take this approach. At that time just 10% of the medicine volumes were supplied by generic companies, whereas in the United Kingdom the equivalent was 80% of medicines volumes supplied by generic companies. The position now, a few short years later, is that 34% of the total Irish pharmaceutical market by volume is supplied by generic companies. We have come a long way in a very short time.

We estimate that in 2014, which was first full year in operation of reference pricing and generic substitution, more than €150 million of savings were achieved. This advancement comes against the backdrop of broader developments. Let us consider the work of Dr. Sara Burke, a health policy analyst in TCD, on the resilience project. This project shows that between 2005 and 2013, the number of people covered by public health funded medicine schemes increased considerably, as did the number of medicines dispensed through the public health schemes. At the same time, the cost of drugs under public health schemes has decreased and remains the same, despite the volume increases, as the 2009 level. Total payments by the HSE, including professional fees and drug costs, remain below the 2009 level. Credit is due to many, including many members in this room, for ensuring that Irish taxpayers and patients realised the financial and health benefits which were to be had by switching to a pro-generic policy. Progress has been made.

However, it is my firm view that the reforms of recent years are ill-equipped to deal with the future demand for medicines. We must approach this problem head-on with innovative thinking and collaborative solutions. As recently as last week the ESRI published numbers which show that we are living longer but not healthier lives. Life expectancy now stands at 81 years. However, 50% of the population now have two or more chronic diseases. Some 61% of all adults are overweight or obese. The HSE has stated that within five years the incidence of chronic disease will increase by a further 40%. The numbers with heart disease, the killer of the largest number of Irish people, will grow by another 31%. Some 30,000 new patients will be diagnosed with cancer every year between now and 2020. The Irish longitudinal study on ageing, TILDA, also confirms this fact that a "combination of population growth and ageing will increase demands for treatments by between a quarter and a third by 2026 if current approaches to treatment continue". Patients are paying more out-of-pocket expenses. The combination of the new prescription charge and the increasing threshold for the drugs payment scheme has shifted a greater proportion of the cost of medicines to patients. These realities solidify the challenge that we all face.

We all agree that we need to find a sustainable means of meeting our ever increasing health care demands. This is why the pace of reform and our approach to spending on medicine must change. This year we estimate that Ireland will save €95 million on prescription medicine costs as a result of reference pricing and generic substitution. We in Teva estimate that we could almost double this saving by taking a broader approach. We estimate that some €113 per annum in additional savings can be made in four specific areas. Some €60 million could be saved by opening up generic competition in the low value and volume sector of the medicines market, which currently costs more than €200 million each year. Some €25 million can be saved by instructing those who prescribe in our hospitals to switch from expensive biological medicines to the more affordable, equally effective biosimilar medicines where available. This is what all the benchmark countries we look to have been doing for years. Despite this, some of the country's largest hospitals continue to forgo the savings available in their procurement processes. A further €15 million could be saved by allowing pharmacists to dispense more affordable generic medicines to those patients who are presenting for the first time and whose prescription medicines may be included on the non-interchangeable list. We are not asking that existing patients switch medicines, but we are asking that those who are starting out on medication can start on a cost-effective generic alternative. We estimate a further €18 million in savings can be achieved by incentivising cost-effective prescribing for non-interchangeable medicines such as inhaler devices, which currently cost the State more than €72 million a year.