Mr. Shaun Flanagan:

In every reference price decision we make supply is one of the factors about which we are concerned. Why do we not go to the lowest in Europe? The reason is that experience tells us definitively that we will have supply issues. Why do we not go to the United Kingdom in terms of reference pricing? The United Kingdom is at the bottom of the off-patent market. It has been down this road for 30 years and is, by definition, lower than us. We can look good if we go to the United Kingdom, provided we can do the job and get out before the problem starts. In the Health Act there is a statutory requirement on us to worry about continuity of supply. We look at the UK price and every reference price across Europe and try to set a price that is at the average or median figure. I understand it is difficult for people to accept and that it must be very difficult for those who live near the Border. They can cross the Border and get something cheaper, but the United Kingdom is one of the least expensive off-patent markets in the European Union. We must remember that it is a market of 60 million people and that Ireland is a market of 4.5 million. Taking 20,000 packs out of the UK market and exporting them will not be noticed. In Ireland 20,000 packs could be the entire run for the year. As we are very open to losing these supports, we must be careful about it.

Pricing is not the only aspect that drives shortages. There are other reasons, including problems with raw materials, manufacturing difficulties, recalls and quality issues. Manufacturers may also have production difficulties. There can also be industry consolidation and unpredictable shifts in demand, including unexpected increases in demand. Parallel trade and pricing decisions are a minority of the reasons there is a shortage in the market. Most of the shortages pharmacists experience are not down to pricing and parallel trade issues but to other issues that happen in having a quality assured process. On occasion, regulators must intervene and state there is an issue about a factory. This can lead to a problem with the supply of a particular medicine. It is not as simple, therefore, as pricing and parallel trade. I think I have covered the issue of reference pricing and the United Kingdom.

In terms of numbers, the level of generic penetration must considered whether there is an off-patent market and a patent market. It is technically impossible for a generic to enter the patented market. The figure of 68% we quote is the last quarter reimbursement figure. In the off-patent market 68% of claims we receive are for generics. If we compare it to the figure in the United Kingdom, we must remember that the denominators are different. Senator John Crown may be able to confirm this point independently. Cancer drugs such as sutents are not distributed through the community pharmacy chain but through home care systems and hospitals. They are not included in the UK denominator in terms of UK pharmaceutical spending. They are also not included in the UK OECD figures. They are included in Ireland's OECD figures because we have a different model. We provide these high-tech drugs through the community pharmacy contract network. That means that 90% of high-tech drugs are on patent. By definition, our denominator is bigger; therefore, it is technically impossible at whole of market level, based on OECD levels Ireland produces, to get to 70%.

If the committee looks at it where we think it should, which is the proportion of the market where it is possible to compete, 68% of the claims are in generics.

In response to the question about people being uncomfortable about generics, the actual figures no longer bear that out. Increasingly we are seeing, as people become more comfortable with generics and get more used to them, they are becoming more comfortable. Prescribers are a key driver in providing reassurance to patients. As prescribers become more comfortable prescribing them, patients will often take their lead from the prescriber.

In terms of the reference pricing molecules, we are not 90% generic penetration for some. Atorvastatin is 90% plus generic and is the most common statin used. For the one Senator Crown mentioned, we are at 90% generic utilisation. One of the most expensive proton pump inhibitors is omerprazole, which is at 90%. In fact, all the proton pump inhibitors are at or above 85% generic penetration. Reference pricing has made a huge difference and in the generic substitution proportion of that.

Within the 32% portion where there is no substitution, one has to remember the areas concerned. People might be less comfortable about substitution which is something the Oireachtas discussed in detail when passing the Health Act. One must be careful because the further up one goes there are other drugs that one might be less comfortable about substituting.