Mr. Shaun Flanagan:

Deputy O'Connell has left. She asked about increases in the price of aspirin. This relates to medicines that were previously owned by a major pharmaceutical company and that were sold on to Aspen in 2010 or 2011. In 2011 or 2012, Aspen commenced a process whereby it came to a wide range of European authorities and demanded or sought price increases to maintain supplies of the products in the market. These are not orphan drugs, so I have not prepared for this question. However, from memory, the company approached the HSE in early 2012. We refused the price increase on at least two occasions. Eventually, we arrived at a scenario around December 2012, where, from memory, the paper record was that the company had said it would not be in a position to release any more stock into the Irish market unless a price increase was granted. It pointed to the fact that at least 12 authorities throughout Europe had granted price increases already.

We were left in a position where we either we granted a price increase to maintain access to the medicines or we did not. A judgment had to be made as to whether it was reasonable to expend €200,000 to maintain access. A judgment was made that in the context of what we were faced with. It was not reasonable to pay the sum of €200,000 but we had no other choice. As Deputy O'Connell stated, Aspen's activities across Europe are now the subject of an inquiry by the Directorate General for Competition, or DG Competition. The HSE is assisting the DG Competition in the context of that, as are many other repricing and reimbursement authorities across Europe.

Price increases do not happen that frequently. Over the past decade, there have probably been between 3,000 and 4,000 price reductions. We have had fewer than 50 price increases over that period and some of these were reversals of previous reductions in circumstances where those reductions may have gone too far and where there were concerns about continuity in the market.

Regarding what we have done to prevent it, there has been useful activity by some of the competition authorities across Europe. In particular, the UK fined another pharmaceutical company for similar activities. The findings in that case affected corporate governance and directors, and what the latter have to sign. If someone comes to us for a price increase, we now require two directors to indemnify or sign, confirm that the documentation put forward is accurate and complete, and provide as much of a business case as possible. That has seemed to help a bit because, as a result of the activities of the UK Competition and Markets Authority, directors are reluctant to sign those confirmations.

The Institute for Clinical and Economic Review, ICER, was referred to. I am not an expert in economics, but there is a whole science around what the cost per quality adjusted life year, QALY, might be. In theory, as I understand the matter, it breaks down to two forms; what one's willingness to pay is; or what is the actual cost per QALY of the average health intervention with which one is comparing it. If we take a view that every health intervention comes with a sum of roughly €25,000 or €30,000 per QALY and if we introduce something into the system that is above that level, we reduce our efficiency. If we then introduce something that is below that level, we increase our efficiency and use resources better.

The issue regarding the ICER relates to how inefficient we are willing to be. In other words, how many opportunity costs elsewhere in the system we are willing to accept in the context of the introduction of a new medicine, technology, service or whatever. That is fundamentally an ethical and a policy-level discussion. We operate within the parameters that the Oireachtas has given us, which is the Health (Pricing and Supply of Medical Goods) Act 2013. We operate within the parameters of an ICER of €45,000 per QALY, which some policy-level Departments suggest should be lower. We try to then match the various criteria in the Act, which include the clinical need for the item. We end up with a scenario where Professor Barry is asked by the HSE to make a judgment at €45,000 per QALY and at €20,000 per QALY as to whether something is cost-effective. That does not mean that those are always the decision points that the HSE uses. Clearly, there is no way Orkambi could have been reimbursed on that basis, because it does come not within a yard of that type of ICER score.

The HSE tries to weigh up all of the criteria that the Oireachtas set out in the legislation, which include: effectiveness; efficiency; cost-effectiveness; alternative items; the budget impact; the level of resources available; and the certainty around the information. All these things are clearly laid out in the Act. We have to include all of those. The HSE tries to arrive at a judgment. It is very reluctant to go anywhere north of €100,000 per QALY, though on occasion it has done so. It is very happy to go well under €45,000 per QALY if it can. Professor Barry's process is about is establishing if something is cost-effective at the price submitted.

Deputy Durkan asked if we engage in commercial negotiations. Yes, we do. A member also asked if we engage in confidential commercial negotiations. We do. The reality is this. I went back over the last 50 medicines that we have assessed. Without weighting the value of each individual medicine, the average reduction, arrived at by summing the reduction and dividing by the number of medicines, is 25%. We are doing our best to stretch the resources as far as we can to provide access to as many medicines as possible. If we increase the QALY threshold, we would get more access to more medicines, but we would also have to pay. The State would have to fund us more. That is the reality. Again, those are policy-level decisions. I am agnostic on that. I have a personal view, but it is a personal view. It is not for me to put out my personal views on that. The State could decide to set a QALY threshold of €100,000 per QALY. That would mean that more medicines would be approved. It would mean that the HSE would probably pay more for those medicines - one of the advantages of the threshold we have is that it gives us an opportunity to challenge the prices charged by pharmaceutical companies.

These are really difficult policy-level ethical issues. We do not have the answers on this side of the table. What we do is try to stretch our resources as far as possible in order to provide access to as many medicines as possible. What is the answer that everybody wants? Everybody wants to say yes to everything, even on this side of the table. However, we cannot say yes to everything with the resources available. That is the simple truth. Maybe we can say yes to more resources with softer decision thresholds, provided that does not introduce any perverse incentives in how the industry interacts with the system.