Finian McGrath (Dublin North Central, Independent) | Oireachtas source

I thank you, a Leas-Cheann Comhairle, for the opportunity to speak on the Health (Pricing and Supply of Medical Goods) Bill 2012. This is an important Bill and it is also important to develop the debate on drugs, their cost and the efficient running of our health services. Because of the downturn in the economy the cost of drugs is now a huge issue, but efficiency and the cost of drugs to our health service should always have been an issue.

In dealing with the issue of pricing, we also need to ensure the safety of drugs. Safety must never be at issue in the supply of drugs, particularly by multinational companies.

This debate also gives us an opportunity to look closely at multinational drugs companies and their role in Irish society. They are an important aspect of the broader debate and of the debate on the Bill.

The pricing of drugs has emerged as a huge issue, but we must maintain a balance and consider the broader view of community life and the safety of patients. Recently, I was asked by a drugs company in the United Kingdom to lobby the Government regarding a new drug that will have a major impact on cystic fibrosis patients. I have gone to the Minister, made the details known to him and recommended the drug, which might have a major impact on 160 cystic fibrosis patients. The company claims this is a radical new drug that could save lives, and the Minister and the HSE appear to be open to this idea.

Sadly, the drug has a very high cost, but what is the cost of a human life? To supply the drug to a cystic fibrosis patient could cost between €200,000 and €400,000 per year, but it has huge potential to save the lives of these people. I have given the information and the name of the company to the Minister and to the HSE. I ask the Minister of State to look at the proposals regarding this new drug that has just been invented. It could have huge potential. We can deal with its cost at a later date. If it can save human lives we should get on with it. This issue also has important implications for the Bill.

The main objectives of the Bill are to promote competition between suppliers of interchangeable medicines and ensure value for money in the supply of medicines or other prescribed items to patients under section 59 of the Health Act 1970. The Bill will enable patients to opt for lower cost interchangeable generic medicines, establish a list of prescribed items that may be supplied or reimbursed by the HSE to patients under the GMS scheme and community drugs schemes, and establish mechanisms for setting the prices of these items where they are so supplied. No cost to the Exchequer will arise from the Bill and the introduction of generic substitution and reference pricing has the potential to deliver significant savings for the State over the medium to long term.

Cost saving is positive and sensible and we need to look seriously at it. We must also be careful to get the balance right. The pharmaceutical sector is a major employer in Ireland. A number of my colleagues referred to corporation tax. Yesterday in The Sunday Business Post I read an interview with David Gallagher, managing director of Pfizer Ireland.

That company employs 4,000 people in this sector, a massive economic contribution to the State. I consider myself to be on the left but I agree with colleagues that the 12.5% corporation is the sensible approach. The Government, however, must be sure to get all of the 12.5% because there are all sorts of legal loopholes emerging and we must maximise the amount we get from these companies.

Mr. Gallagher, the managing director of Pfizer Ireland, said that the company is not a charity and that it invests where it believes it will get a return; it is as simple as that and there is no point pretending otherwise. That is straight talk from a man who has invested in Ireland to make money, and that is the bottom line. He has a good quality, highly trained and educated workforce with many graduates from Irish universities. When he says the company is not a charity, he is representing his vested interest. Our job as politicians, however, is broader; we must represent the broad, communal view. Our view must be different and must put patients and taxpayers first.

There is a conflict of interest but there is no reason we cannot deal with this issue. When Mr. Gallagher says Pfizer Ireland is not a charity, that is fair enough but we have a different philosophy. Mr. Gallagher was president of the Irish Pharmaceutical Healthcare Association until recently and he was strongly in favour of the pharmaceutical companies' lobbying of the Taoiseach earlier this year over a HSE decision not approve the new drug payment scheme. Many people were concerned the big companies had more access to Ministers and the Taoiseach than the weaker and smaller groups in Irish society.

These groups must be around the table, I accept that, they provide jobs to Irish people and pay corporation tax, but I worry we might be losing the balance in the debate about the respite care grant. We all jumped up and down about the grant in the past week but the €26 million cut was made to the respite grant anyway. The Minister and many people on the backbenches are privately very unhappy about this but they must face the reality. Are the carers less effective than multinational companies? They did not get a fair crack of the whip, which was the Labour Party's role in Government. That is not a rant, it is a reality. Even at this stage, in the next 24 hours, I ask the Government to revisit the respite care grant. If we are talking about equality, people with disabilities and carers, and building a new, inclusive republic, we should have the courage to say we got the respite care grant issue wrong and should change it. It is never too late and there is nothing about which to be ashamed. I want to represent those with a disability and the carers, and I will keep pushing that issue.

The figures for expenditure on medicines and no-drug items are huge. In 2011, the HSE expenditure on medicines and non-drug items such as dressings supplied to patients in the community was approximately €1.9 billion, including mark-ups and dispensing fees paid to pharmacists and wholesalers. In addition, hospital expenditure was €300 million. The HSE expenditure on medicines and non-drug items supplied to patients in the community has decreased in recent years from €2.01 billion in 2009 to €1.91 billion in 2010. In 2011, the figure had fallen to €1.9 billion. This is in contrast to an increase of 185% between 2000 and 2010. The number of items paid for by the HSE under community schemes increased by approximately €30 million in 2000 to €70 million in 2010. Those are the figures about which we are talking.

Savings have been achieved through the ongoing off-patent price cuts agreed with the pharmaceutical manufacturers and we welcome that. The Department and the HSE continue to engage with the Irish Pharmaceutical Health Care Association and the Association of Pharmaceutical Manufacturers in Ireland to secure reductions in the price of drugs. In July 2012, an agreement was reached with the IPHA on the interim drug price reductions, which will deliver further savings of €20 million in the price of off-patent medicines. These price cuts were accepted by the Minister for Health in advance of further discussions with the IPHA, which are expected to deliver more significant savings. Negotiations are ongoing between officials of the Department and the HSE and the IPHA since in the interim agreement was reached. I expect these discussions to conclude shortly. I welcome that €20 million reduction because it is close to the €26 million that is being cut from the respite care grant. There have been savings and reductions but we must also ensure the reductions and savings are sensible.

In July 2009, the wholesale mark-up paid on medicines was reduced from 17.66% to 10%, a sliding dispensing fee was introduced and the retail mark-up paid under the drug payment scheme. The long-term illness scheme was reduced from 50% to 20%. These changes result in annual savings of €120 million. That is sensible and we can up our game here when it comes to efficiency.

In June 2011, regulations were made to reduce certain payments by the HSE to the community pharmacy contractors, which included a reduction from 10% to 8% in the wholesale price mark-up of drugs items. There was a reduction from 17.66% to 8% in the wholesale mark-up of controlled drugs and a reduction from 17.66% to 12% in the wholesale mark-up on items. Also, there was a reduction from €62.03 to €31.02 in the high tech non-dispensing fee which led to savings in the region of €34 million. I use those figures because when the negotiations took place with the IPHA, there were reductions of €30 million and €34 million in two sections. Once again, I remind the House the respite care grant cut was €26 million. There are options on the table.

The reaction of the IMO to this legislation is important. It has stated it welcomes the proposals for reference pricing but would not include the maximum potential saving on its own. It stated it does not believe pharmaceutical substitution is the most effective mechanism to support reference pricing and generic consumption. Policies are required to encourage all parties, including patients, doctors and carers, and not just pharmacists to promote the use of generics. There is a potential risk to patients because receiving different medication each time they are given a prescription by pharmacists could lead to non-compliance.

In addition the Irish Medical Organisation, IMO, has suggested that current policies for setting generic prices are not optimal and it has argued for the promotion of more competition as a means of achieving price reduction. It is important when an important stakeholder such as the IMO is on the pitch to listen to its contribution and recommendations and I urge the Government to consider them. The organisation has good recommendations for a generic policy, including, for example, reducing the cost of generic medicines by ending pricing agreements for off-patent and generic pharmaceuticals and promoting managed competition.

The organisation has called for the Irish Medicines Board to ensure regulation does not unduly discourage the entry of safe generic medicines to the market. This is something I referred to earlier with regard to safety. I always tend towards the Irish Medicines Board because it is important. Safety should be an issue as well. IMO initiatives to encourage the manufacture of generics in Ireland should be explored. It has recommended a system of pharmaceutical reference pricing for off-patent generic medicines.

The IMO also proposes transparency in the distribution chain and has called for the regulation of margins. It has highlighted several important and relevant aspects of the legislation and the need to introduce a public awareness campaign to inform the public of the advantages of generic medicines and to alleviate any concerns. That is important. When it comes to the broader issue in the debate, one of the IMO recommendations is to carry out a cost benefit analysis to compare newer and what are frequently more costly options. Basically, these are the views of the IMO and because it is a major stakeholder, it is important to consider them.

The Irish Pharmacy Union, IPU, is the representative organisation for community pharmacists in Ireland. It has broadly welcomed the plans to enable pharmacists to dispense cheaper generic drugs and it has broadly welcomed the legislation. As with other stakeholders, the IPU has not commented on the specific provisions in the Bill to date. It has stated that generic substitution is standard practice in many other countries and it would mean lower medicine prices for patients as well as considerable savings for the State. It believes generic substitution should be introduced without delay. The IPU is on board in this regard. However, in the case of the introduction of reference pricing, the IPU has advocated a cautious approach. It has recommended that reference pricing is a highly complicated mechanism and does not represent a quick fix. It believes careful consideration and engagement with key stakeholders is required to ensure there is no disruption of supply. It believes the impact of reference pricing on patients and pharmacists rather depends on the model of reference pricing introduced. In some countries reference pricing has led to a shortage of certain medicines. It is important when there is a group such as the IPU on the pitch to ensure we listen to its views.

The final group which we must consider is made up of patients groups and patient advocate groups. Their concerns have centred on the question of whether medicines are genuinely interchangeable for particular conditions. Several advocacy groups have requested that certain medicines be exempted from substitution. For example, the Irish Osteoporosis Society presentation to the Joint Committee on Health and Children recommended that certain medicines be exempt from substitution. My colleague referred to the Irish Epilepsy Association. It has argued that the substitution of branded epilepsy medicines with generic equivalents or switching from one generic to another generic version of the same drug can lead to a recurrence of seizures in some people whose epilepsy is otherwise under control. As part of the debate on cost saving we should take a broader view and I acknowledge the Government is doing so. One should listen to different vested interest groups. However, as someone who will promote patient issues, I am strongly supportive of the Irish Epilepsy Association and its arguments.

I welcome the broader debate. We all seek efficiency and cost savings on drugs in the State because it is a significant issue. I noted earlier in my introduction that it was important to get the balance right. There is a major contribution from multinational pharmaceuticals companies in the country. We want to hold on to them because they employ Irish graduates, staff and workers. They make a considerable contribution, but one cannot come to the table with too much clout. If one believes in equality, one must believe in fair play, and I am concerned about some of the industry's excessive clout at times, especially at the expense of more vulnerable groups in Irish society. I welcome the debate and I thank the Leas-Cheann Comhairle for this opportunity.

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