Ms Kathy Maher:

I am a community pharmacist in Duleek, County Meath and president of the Irish Pharmacy Union, IPU. I am joined by my colleague, Mr. Darragh O'Loughlin, who is general secretary of the IPU. The IPU which has more than 2,200 members is the professional representative and leadership body for community pharmacists in Ireland. Our members are committed to delivering a quality, an accessible, a personal and professional pharmacy service, putting patients first and which has as its primary goal the optimisation of the health and well-being of society.

I thank the Chairman and committee members for inviting us. The joint committee, justifiably, wishes to understand the key drivers of the State's medicines bill and also wants be assured that the health service is achieving value for the money it spends on medicines.

I must point out that pharmacists do not have a role in the setting of the reimbursement price for medicines. The formula for this price-setting process involves the Department of Health and the Health Service Executive, HSE, on the one hand, and the manufacturers of the medicines, on the other. However, I want to clarify the dynamics of medicines pricing and supply in the State. In economic terms, pharmacists are price-takers, not price-makers.

Medicine prices have fallen dramatically in recent years and continue to fall. The ESRI report entitled, Pharmaceutical Prices, Prescribing Practices and Usage of Generics, published in June 2013, observed that price reductions in the order of 30% per item had been achieved between 2009 and 2013. The average GMS price per item reimbursed by the HSE in 2013 was around the level seen in 2001 and 2002. The introduction of generic substitution and reference pricing have since further substantially reduced medicine prices, with the price of some medicines falling by 85% in the past 12 months. The chief pharmacist of the HSE went on record last summer to say Ireland was no longer paying above the European Union average for medicines. The reference pricing process has seen a much more significant drop since that statement was made. It is worth noting that not only is the State benefiting from these price reductions but that in very challenging economic times pharmacists are passing on the reductions to their customers and patients who are seeing the effect at the pharmacy counter in that the cost of filling their prescriptions has fallen and is continuing to fall.

Our research suggests that, on average, 80% or four out of every five medicines are dispensed under the State's drugs schemes, including the GMS or medical card scheme, the drugs payment scheme, DPS, and the long-term illness scheme, LTI, all of which are funded by the HSE at rates set by the Minister for Health. The fees paid to pharmacists have been cut repeatedly in the past few years.

I will briefly outline the payment system for pharmacists. For all State-funded medicines supplied to patients, or 80% of medicines dispensed, pharmacists are paid the ingredient cost, without a mark-up, plus a regressive flat fee. Regulations made in July 2009 under the Financial Emergency Measures in the Public Interest, FEMPI, Act saw the reimbursement price of medicines reduced from 100% to 91.8% of invoice price. At the same time, under the FEMPI Act, the mark-up was cut from 50% under the drugs payment and the long-term illness schemes to 20%. In July 2013 further regulations made under the same Act saw the mark-up eliminated, leaving pharmacists entirely reliant on the dispensing fee. For the record, the GMS scheme has never attracted a mark-up.

The reimbursement model is dependent on the ability of pharmacists to negotiate terms with their suppliers to subsidise payments from the Government. However, in many cases, this is not always possible and, in some cases, pharmacists are finding themselves dispensing at a loss. This phenomenon is becoming increasingly frequent. To ensure patients have timely access to vital medicines, pharmacists are regularly paying wholesalers more than what the HSE will reimburse. As a result of a recent policy price change by one of the two remaining wholesalers, they now charge pharmacists 9% above the reimbursement price on the first €2,000 of their monthly orders. Effectively, this means that each pharmacy is subsidising the HSE to the tune of approximately €2,000 per year. It is estimated that since 2009 there has been a minimum of €314 million in savings to the State in pharmacy fees. In that period a further €1.42 billion in savings has been realised by the State in reduced payments for medicines. This has affected all stakeholders across the medicine supply chain - pharmacists, wholesalers and manufacturers.

As pharmacists’ fees are unrelated to the cost of medicines, we have no interest in seeing high prices maintained. However, a cautious approach needs to be taken. There is evidence to suggest that, as medicine prices reduce, medicine shortages increase. This is a basic economic fact. This is a small market in a global context and if it is more advantageous for certain suppliers to export out of Ireland to other EU markets where prices are higher, they will do so. We have seen Irish patients bear the brunt of this. IPU research conducted in August 2014 confirmed that there was a significant level of medicine shortages, with 99% of pharmacists confirming they had seen medicine shortages in the previous 12 months. More than half of those pharmacists believed their patients' health or lives had been put at risk by medicine shortages. As such, we believe a mechanism for price modulation needs to be found to balance the legitimate desire of the HSE to achieve lower prices against the need to ensure continuity of supply for Irish patients.

The objective of any review of expenditure on medicines must be to maximise value for money and ensure the best possible health outcomes for patients. While price is part of the equation, it is essential that patients receive their medicines at the right time and take them correctly. We know that the most expensive medicines are not taken at all or taken incorrectly. Pharmacists have an important role to play in this process and there is considerable scope to develop the services delivered by community pharmacists through a more comprehensive, organised and funded service.

Switching more medicines from prescription-only to non-prescription status empowers patients to take better care of their health, with the advice and support of their pharmacist. This allows them speedier access to appropriate treatment, saving the time and cost of a GP visit. It also saves the State the cost of the medicine and frees up valuable GP time to deal with more complex cases. In addition, strong evidence from the United Kingdom demonstrates that introducing a new medicines service allows patients with chronic conditions to obtain greater benefit from their medicines by identifying problems early and improving adherence to medicines taking through an initial consultation with the pharmacy on dispensing the medicine but with a structured follow-up consultation with their pharmacist. Patients who had presented for new medicines service consultations were shown to be more likely to be still taking their medicine or have sought help from their prescriber compared to patients who had not received the service. Economic modelling showed that this service could increase a patient’s length and quality of life, while costing the health service less, when compared to patients who did not receive the service.

The cost of most medicines is falling and will continue to fall in the next few years. As a result, the public, patients and the Exchequer will continue to see considerable savings on their medicines bills. It is appropriate that the committee should seek to ensure prudent use of resources and secure maximum value for the heath budget. It must be recognised, however, that, even as medicine prices continue to fall, there will always be upward pressure on the State as a result of the increase in the number of eligible patients and greater use of exceptionally high cost innovative and biological medicines. In addition, pharmacists are justifiably concerned that constantly falling prices can, in some cases, worsen existing medicine shortages, with a consequential negative impact on their patients’ treatment.

Optimising resources and patient care is fundamental to an efficient and effective health care system. Years of short-sighted cuts in pharmacy payments have undermined the profession’s capacity to deliver the badly needed pharmacy-based services which have been shown around the globe to improve patient health outcomes while reducing spending on health care. It is time for the Government to engage with us on a positive agenda for change, to deliver convenient, accessible and cost-effective health care through a currently under-resourced and under-utilised pharmacy profession. I thank the Chairman and members of the committee for their attention. We welcome any questions from members.