Dara Calleary (Mayo, Fianna Fail)
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Every Member of this House has had representations on this issue since we returned in October. It is time that the dispute between the HSE and the IPU is resolved once and for all. We were given assurances before Christmas that an independent process would be initiated to properly adjudicate the varying claims made by both sides. Everybody agrees reform is needed to the general medical scheme and the drug payment system and that prices should be reduced, but the manner in which the issue is being approached is akin to hammering the community pharmacy sector.

Two specific issues arise, the pharmacy discount scheme and the contract which affects the fee per item. The current proposal from the HSE, known as the interim contract, provides that pharmacists will be paid 8.2% less for medicines supplied by community drugs schemes, including the medical card scheme and the drug payment scheme. That any organisation would make such a crazy suggestion reveals a lack of willingness to engage in meaningful discussions. Any discount or rebate scheme received by pharmacists is used to subsidise the current community drugs schemes. The proposal that the discount scheme be attacked means pharmacies will be required to operate schemes on behalf of the Government at a loss. No sector can be expected to manage such a scenario, regardless of how successful it is perceived to be.

Each pharmacy has different discount arrangements with its wholesaler depending on its level of business. The discount identified by the HSE is not necessarily the amount given to most pharmacies. A small rural pharmacy, for example, would have a smaller discount than one in a large town. The proposal for using one discount rate for the entire operation is a false one and it is leading to serious concerns about the future viability of community-based and rural pharmacies. In recent weeks, I have met pharmacists in my county to examine their audited accounts, which they willingly presented. The current interim contract proposal, which proposes a minimum fee of €5 per transaction, could result in the loss of three jobs in every rural pharmacy in the county. The pharmacists are willing to make their figures available for inspection. Nationally, approximately 3,500 jobs could go in the pharmacy sector, with an annual wage loss of €15 million.

The town from which I come, Ballina, has a proud history of wholesaling. United Drug was established in the town 60 years ago by local GPs who wanted a different way of supplying drugs. The company is now one of the biggest drugs wholesalers in Ireland and Britain and employs 120 people. It is important to note that United Drug does not own any individual pharmacies. Its ethos is to support local pharmacies. I am concerned that the HSE's current attitude will have an impact on the company's 120 employees who provide annual wages to our town of €3.5 million.

Since I was elected last June, the one issue that regularly arises in this Chamber is that the HSE is not working. However, the one part that works very well is the local pharmacy. As I travelled here today, I listened to an advertising campaign by the HSE encouraging people to attend their local pharmacies or GPs before presenting to accident and emergency units, yet, at the same time, the executive proposes to undermine the sector. On 11 January, the HSE issued a letter to Oireachtas Members indicating its intention to enter into discussions with the IPU and other parties. However, before doing so, it is proposing to undermine the sector by forcing people into this interim contract. I am aware that all sides of the House are anxious for a resolution. The Fianna Fáil Parliamentary Party held a vigorous meeting on the issue earlier this evening and asked the Minister for Health and Children to meet us. The Joint Committee on Health and Children will also discuss the issue next week. Given the 1 March deadline for acceptance of the interim contract, it is important this House is seen to act.

Máire Hoctor (Tipperary North, Fianna Fail)
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I will respond to this Adjournment matter on behalf of my colleague, the Minister for Health and Children, Deputy Harney.

Following the completion of new IPHA and APMI agreements with drugs manufacturers in 2006, the HSE announced new arrangements for the wholesale margins on 17 September 2007 which affect the price basis for the supply of drugs and medicines to the State. This is distinct from the dispensing fees paid to community pharmacists under the GMS and the drugs payments scheme. The new pricing arrangements for community supply were planned to take effect from 1 January 2008 for wholesalers and due to the structure of the reimbursement system would have come into effect from 1 December 2007 for community pharmacists.

The Minister has previously outlined in detail to the House the legal issues arising under competition law in regard to the collective negotiation of fees, prices or margins by undertakings or associations of undertakings. A process of dialogue was established under Mr. Bill Shipsey, SC, to address concerns expressed by the IPU about the implications of legal advice on competition law on the right of the IPU to negotiate fees or margins with the HSE on behalf of community pharmacists. In view of the engagement under Mr. Shipsey at the time, the HSE decided to defer the implementation of the new reimbursement rates which were planned to take effect for community pharmacists on 1 December 2007. The HSE continues to keep community pharmacists informed of its intentions regarding implementation of the new arrangements, which is now planned for 1 March 2008.

In consultation with the Attorney General, other relevant Departments and the HSE, the Minister has been exploring the best way of progressing the development of a new contract with pharmacists. To this end, a process was proposed to the IPU at a meeting on 5 December 2007 by the HSE under Mr. Shipsey's aegis to address pharmacists' immediate concerns regarding the alleged impact of the proposed revised wholesaler arrangements on GMS dependent pharmacies and provide a basis upon which discussions on a new substantive contract could commence. The IPU was not prepared to accept this proposal from the HSE and, accordingly, no further discussions have taken place under Mr. Shipsey.

Notwithstanding the failure to reach agreement, the HSE has offered a draft interim contract to pharmacists to address their main concerns regarding the alleged impact of the proposed revised wholesaler arrangements on the GMS dependent pharmacies. The details of the draft interim contract, and the HSE's other intentions in this regard, were set out in a letter to individual community pharmacists on 2 January 2008. The HSE intends to implement the deferred revised wholesaler arrangements from 1 March 2008. The executive also recently held preliminary discussions with the IPU on the development of a new substantive pharmacy contract.

The Minister has asked me to assure the House that the Department is working to develop appropriate arrangements for the negotiation of contracts and setting out the fees payable in respect of contracts with private sector undertakings for the provision of health services on behalf on the HSE. These arrangements may include the establishment of an independent body which would consider the nature of the services to be provided and all other relevant factors in each case and make recommendations in regard to the fees it considers appropriate. The composition of such a body, its terms of reference and the timescale for its work are among the matters to be considered. In line with the legal advice received, the HSE may enter into discussions with community pharmacists on the non-fee aspects of their contract with a view to developing a new substantive pharmacy contract.

The Minister wishes to find a way of adapting the traditional process to arrive at revised pricing arrangements for pharmacy contract, consistent with the legal advice she has received.