Mary Harney (Dublin Mid West, Progressive Democrats)

We are paying a wholesale margin that is roughly double the level of other European countries but it is now to be halved to 8% from 1 March 2008 and it will be 7% from 1 January 2009. Independent analysis has confirmed that this is a fair return for a quality, frequent service that comes to many pharmacies twice daily that can deliver a reasonable profit to wholesalers.

There is a virtual market here because the three main wholesalers have a huge interest in pharmacies; one has invested €300 million in pharmacies, another owns over 400 pharmacies and a third owns over 70. There is a conflict of interest in this regard.

The State has a contract with pharmacists and for general medical service, GMS, patients, those who hold a medical card, pays a dispensing fee per item of roughly €3.26. The drug payment scheme sees the State paying a dispensing fee of €2.68 with a mark-up of 50%; there is a discount back of 8% from wholesalers. This comes to a gross margin in the region of 60% to 70% and I know of no companies, other than those with very innovative products, that have margins like this.

The Brennan commission was highly critical of the anomalies in how we pay for medical card prescriptions and how we pay through the drug payment scheme, DPS. We must move away from cost escalators like mark-ups, which lead to spiralling drug costs. It is not sustainable that more expensive drugs see a 50% mark-up and a dispensing fee. For some years many pharmacies representatives have said there should be a flat fee for all services, whether obtained through the DPS or through medical card services, and I strongly support this.

We must separate the price of the commodity from the price of the professional service provided by pharmacists. Pharmacists are among the best educated and most highly skilled professionals in the country. They are an important part of our health service and I want to see their role developed more fully than in the past, particularly regarding the management of chronic illnesses, preventative health measures and the like. We want to negotiate a new contract with pharmacists through a process like the Shipsey process that is fairly priced by an independent group. At the moment we are at a staging post to a new dynamic and new contract, to which I am committed.

There will be no changes on 1 March in how pharmacists are paid nor in the contract between the State and pharmacists. I am satisfied that nothing will happen next Saturday that will preclude pharmacists from paying staff and meeting business overheads.

In 2002 we sought to change pharmacies in Ireland when the then Minister for Health and Children, Deputy Micheál Martin, lifted regulations that restricted where pharmacies could open. The Irish Pharmacy Union, IPU, felt this would be the death knell for rural pharmacies but there has since been an increase of 26% in the number of pharmacies in the country. When I published the Pharmacy Bill in 2005, which sought to liberalise the pharmacy sector, I was again told it would lead to the closure of pharmacies but there has been an increase of 10% since then.

There are roughly 1,600 pharmacies in the country and, on average, each received approximately €234,000 last year. Many caveats apply to different jurisdictions but, on average, that is €100,000 more than pharmacists in Northern Ireland received. In Northern Ireland there is a wholesale margin of 12.5% up to the first £180,000 and after that the level is 4%.

This matter is not about reducing the price of drugs; it is rising all the time. More people are entitled to medication, the population is aging and there is greater innovation. If we want better value for money for taxpayers and patients we cannot justify paying €100 million more to distribute products than other European countries would. Many Deputies have suggested to me that up to 200 pharmacies may close but I do not accept that. Even if we were to support as many as 200 pharmacies, we are surely not suggesting it costs €5 million per annum per pharmacy to keep those 200 pharmacies in business.

Regarding contingency arrangements, I am anxious to ensure no patient is put at risk of not receiving medication. If this happens it will be because of the game between the two sides — there is no other reason for it to happen. Pharmacies must give three months' notice to withdraw from their contracts. I understand two pharmacies in the entire country have said they will not dispense to the medical card patients on Saturday. The HSE has a freephone line which it has advertised widely and will continue. It has had 200 calls from patients. In regard to every patient, it has been able to reassure them. It has reassured me that if there is any patient on Saturday, Sunday, Monday or Tuesday who cannot get access to their medication the HSE will ensure they get that medication.

We are being told that pharmacists will be charged more than they will get from the HSE. That is not the case. The manufacturers and the wholesalers have made that clear.

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