Mr. Darragh O'Loughlin:

There is a pharmacy that has attracted a great deal of publicity for the prices it offers on generic medicines. The owner has a particular business model, which is a subscription model. I will not describe it because I know he is coming before the committee later. Many of the other pharmacies that do not have that business model have established costs, so the businesses have been in existence since before the financial crisis in what we thought at the time was a boom. With upward-only rent reviews and high rates, rents and wage costs, it is not possible to reduce the cost base of any business, as the members know from their constituencies, and pharmacies are no different. Pharmacies have to charge a price that covers the costs of delivering the service and operating the business. In a competitive market, pharmacies have maintained a high quality of service and have seen prices drop considerably, so pharmacists are passing on price reductions as they come in to the fullest extent they can.

The Chairman asked about the steps that are being taken to address over-prescribing. Some of the increase in the number of items dispensed on the State schemes is due to the increasing number of people who are eligible for the State schemes. Senator Colm Burke spoke about the jump in expenditure from 2001 to 2009, when there was a very considerable rise. There were many reasons for that. One was a huge increase in the number of medical cards in circulation - from 1.2 million to approximately 1.8 million - because the unemployment rate suddenly shot up. We were dispensing prescriptions for 50% more people. During that time, more therapies were coming on line. If we go back 15 years, more of the products that are generic today and that are becoming cheap today were new, novel and exciting medicines. Examples include the cholesterol and ulcer medicines I spoke about and many of the asthma and respiratory medicines that we are so used to now. Perhaps Dr. Daly will speak about this. There was a wave of new medicines that were then very expensive but that have dropped in price since then.