Dr. Leisha Daly:

I was elected president of the Irish Pharmaceutical Healthcare Association for a two-year term beginning last September. I am personally honoured to meet the committee today. I am joined by Oliver O'Connor, our chief executive officer.

Our association represents 47 pharmaceutical companies supplying essential medicines to the Irish people. We have American, Belgian, British, Danish, French, German, Irish, Italian, Japanese and Swiss members. Our products are key for health and our presence is important for the economy. We support health and growth. Nine of the top ten pharmaceutical companies in the world have a significant manufacturing presence in Ireland. The industry here employs about 25,000 people in highly skilled jobs. A further 25,000 people are employed indirectly by our industry.

IPHA companies are research-based. Our companies develop innovative medicines supplied first under patent protection. Other pharmaceutical companies can make medicines when they go off-patent. These are so-called generic medicines. It is a very different business from ours. Their representative association, APMI, will meet the committee later today. Their business does not involve the high risk and massive investment required to develop new medicines.

Pharmaceuticals, like other innovations, are granted a 20-year patent life. However, on average, the research and development phase and supply process can take up to 12 of those 20 years. Reimbursement under patent protection may only be for eight years. The cost of bringing a new medicine to patients is around €1.4 billion euro. It is a complex process. For example, an older molecule like aspirin contains 21 atoms whereas the newer molecules currently available for treating cancer can contain up to 25,000 atoms. It has been compared to the difference between a bicycle and jet. Those jets are being manufactured and used in Ireland.

We seek to get the right medicines to Irish patients as quickly as possible. Last year, we brought at least 29 new medicines to Ireland which have the potential to benefit 700,000 patients. These medicines treat a variety of diseases, including Parkinson’s disease, diabetes, cancer, hepatitis C, asthma, schizophrenia and other conditions. Access to new drugs for all patients is a key part of our agreement with the Department of Health. Our members also support at least 65 different patients’ organisations with important information on how to use these medicines properly.

Our economic impact in Ireland is not just in jobs created, taxes paid, investments made and research funded, year after year. It is not confined to the €1.2 billion in savings we have contributed over the past eight years. It is mostly in the value of helping people getting back to work, enjoying a better quality of life, contributing to communities and living longer, healthier and more productive lives. This is the value of public spending on health and on medicines in particular. We have contributed to significant improvements in Ireland in life expectancy, in cancer survival and in cardiovascular disease. Clot-dissolving drugs have saved many stroke victims from permanent disability or death. New cancer medicines have made many cancers treatable and survivable. HIV-AIDS has been converted from a terminal illness to a manageable condition. Hepatitis C is now curable. Rheumatoid arthritis no longer means lifelong crippling pain. Life has been extended greatly for many people with cystic fibrosis.

The value of medicines for people is beyond an accounting calculation. It is certainly well beyond the €750 million the HSE spends on patent-protected and unique medicines in the community drugs schemes.

Our association negotiates and implements a supply and pricing agreement with the Department of Health and HSE. Having an agreement helps the State and the HSE. It means predictability and consistency in pricing and supply. It involves a detailed test of value for money before any new medicine is paid for. It tackles the risk of medicines meant for Irish people being sold to higher-priced countries. Under the current agreement, which started in November 2012, Irish prices were set at the average of prices in nine other EU members states. These countries reflect income levels similar to Ireland. Most other EU member states use similar mechanisms for pricing medicines. Competition law prevents our association from making individual pricing or other commercial decisions for members. However, the agreement means that when a member company proposes a new medicine to the HSE, it must offer it at a price which is at, or lower than, the average of its price in the nine EU member states.

We have audited this process. Last August, a third-party firm checked how close to the average our prices were on that date. The study showed that prices for patent-protected medicines were within 1.8% of the average of the nine countries. Prices in Ireland are neither the highest nor the lowest in Europe. Our member companies see agreed pricing and supply as an essential part of a stable investment and business environment in Ireland. The results of our agreements are good for taxpayers and the health services. Prices are falling, as the Minister has confirmed on a number of occasions, most recently last week. The average price per item in the HSE community drugs scheme has fallen every year since 2009. The Minister confirmed last week that the average cost per item is now running at 2001-02 levels. At the same time, the number of items prescribed for Irish patients has risen by 73%. These price cuts have made some room available to fund new medicines. However, I must caution that we cannot rely on savings alone from off-patent medicines or price cuts to fund the promising new medicines for patients in the coming years.

It is now time to turn to a successor agreement. The current agreement ends this October. We are prepared for detailed discussions on all aspects of a new agreement. Working by agreement between the State and industry is the best way to ensure patients get access to new and existing medicines as quickly as possible. Prices are falling and significant savings have been made Medicines deliver enormous benefits to people, which is a key part of the value of public spending on health and medicines. The challenge we share in Ireland and globally is to bring health science and promising new medicines to people effectively and efficiently. We need to share the benefits throughout our society, ensuring access to medicines and health care for all Irish patients.