James Reilly (Dublin North, Fine Gael)
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I thank the Minister, Deputy Mary Harney, for coming to the House to respond to this Adjournment debate. Fine Gael recognises the need to achieve value for money on behalf of taxpayers and consumers. We want to support the Minister to this end. However, we are concerned that a recent decision made by the Minister could have a negative impact on patients and jobs. The reputed sharp 34% decrease in payments to pharmacists from the HSE could well result in the loss of jobs and the closure of many community pharmacies, thereby reducing choice and service to patients. This might be avoided if other options were considered. Perhaps the Minister could engage with the pharmacists to agree a phased approach, loaded upfront if necessary, that would achieve the same savings over a number of years. The Dorgan report, which was commissioned by the Minister or the HSE, recommended that change should be phased in. I agree with the Minister that it is not acceptable that it costs €600 million to deliver pharmaceuticals worth €1.2 billion to our people.

As I said at the outset, I support the Minister for Health and Children's intention in this respect. However, I am concerned that patients will suffer as a consequence of the sharp reduction in payments to pharmacists. Perhaps the Minister will consider engaging with the Irish Pharmacy Union in a more phased manner. Now that she has made the order, the Minister has the upper hand and may find the union much easier to deal with. Now that many pharmacists have issued notice of their intention to withdraw services, I ask the Minister to set out her contingency plans to ensure continuity of supply to patients, which must be our primary concern.

Given that older people use pharmacy services to a greater extent than any other age group, I suggest that the Minister should instruct the Minister of State with responsibility for older people, Deputy Áine Brady, to take personal responsibility for supervising the contingency plans. Such a course of action should be not construed as removing responsibility for continuity of supply from the Minister herself. We cannot allow the circumstances that prevailed during the methadone dispensing crisis, for example, to be repeated. The Minister has 30 days to take action. I am sure it is within her remit to open negotiations on another front to see if a crisis can be avoided in this instance. She needs to be well prepared if she is to ensure that patients do not suffer as a consequence of the actions of pharmacists.

Jan O'Sullivan (Limerick East, Labour)
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I am glad that the Minister, Deputy Harney, has come to the Chamber to participate in this debate. The Minister's approach is based on section 9 of the Financial Emergency Measures in the Public Interest Act 2009. When that legislation was being considered in this House, it was understood that health professionals would have to take a hit of approximately 8%. I understand that is the percentage for GPs and other health professions. Why are pharmacists being asked to take such a large hit in comparison to others? They have told us it is 34%. I remind the Minister that when the Progressive Democrat Party, which I believe is now no more-----

Mary Harney (Dublin Mid West, Progressive Democrats)
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It still exists. It is harder to close down than it was to start it.

Jan O'Sullivan (Limerick East, Labour)
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-----opened up the market - she was certainly a PD at that time - it allowed many young pharmacists to come into the pharmacy business. They came in on the basis of the type of mark-ups and reimbursements that have been there, at least up to now, and were there at the time. Many young pharmacists took out bank loans and now have very high overheads as a consequence of the opening up of the market. They are now effectively being cut off at the knees by this measure. I ask the Minister to understand where they are coming from. I am not concerned about the large multiple pharmacies, but I am concerned about the community pharmacists who are trying to make ends meet and are genuinely worried about having to lay off staff.

I am also very much concerned about the patients who will be impacted by this move. I ask the Minister to meet them on a fair basis to try to find a solution to this issue. Ms Liz Hoctor, president of the Irish Pharmaceutical Union, said: "Our position is a responsible one. We know we have to play our part in reducing costs and we are ready and willing to do so. Indeed, we already offered to take an 8% cut in our fees."

They appear to me to be as willing as any other health professional group to take their fair share of cuts. They have also told me that they have suggested a further €30 million could be saved on generic prescribing, if they were allowed as pharmacists to substitute generic products responsibly for patented products. Will the Minister explain why it is necessary to be so confrontational with pharmacists? We had the battles last year and now we have this battle again. When it came to the consultants, for example, the Minister was able to take years to reach an agreement with them whereas the pharmacists are being dealt with at arms length in this type of confrontational manner, which can and will lead, if something is not done, to severe difficulties for medical card patients in particular.

I urge the Minister to adopt some type of an approach that will meet the pharmacists half way to try to find the savings necessary without everybody having to suffer the pain that appears to be facing us.

Mary Harney (Dublin Mid West, Progressive Democrats)
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I am happy to be here to respond to the Adjournment motions tabled by the Deputies. I hold pharmacists in very high regard. I have played my part in opening up the market opportunities for young pharmacists here, particularly those who were educated abroad and did not have an opportunity to open their own businesses.

The fact is that we will spend €16 billion on public health services this year. We all know that this is an incredible amount of money, some 40% of the tax we will raise during 2009. Since 2002, the cost to the State of pharmacy services has doubled. No other professional group in Ireland has had its fees from the State double, or anything near it, and that is why pharmacists are different from others to whom the 8% applies. As has been acknowledged, we spend €640 million to get €1 billion worth of product from the factory to the patients in the community. By any standards, that is excessive. In 2008, we gave €440 million by way of mark-up and fees and almost €200 million as the wholesale margin. The article in The Irish Times today referred to by the Deputy, where Ms Hoctor said they were prepared to give up 8%, or €21 million, would mean that fees were only €260 million, equivalent to 2002 to 2003 levels. Their fees are actually €550 million, so unless we are going to start dealing with the facts we will not be able to have an informed debate.

The fact is that we have major pressures in our public health service. Since 2001, the Brennan commission has recommended change in this area. In the meantime, since 2002, pharmacy fees have doubled and that is not sustainable. I recognise and accept that some pharmacists have excessive debt, but it is not the duty of the State to overpay by way of fees in order to deal with those in that situation and neither could the State ever be expected to do so. It would be highly inappropriate of the State, because an individual or individuals may have excessive bank debts and perhaps borrowed money to pay to doctors and others to get into the pharmacy business, to continue to pay excessive fees to sustain that situation.

Regarding income, pharmacists said in 2007 that they had a turnover of €3 billion. This year, we will take €55 million and next year it will be €133 million. They also said in the PricewaterhouseCoopers report that 49% of their income comes from the State. That means we are taking 25% of the 49%, or effectively 12.5%. We are taking €133 million away from what pharmacists said in 2007 was a turnover of €3 billion. I have not seen where the 34% comes from but it does not make any sense to me.

I left a meeting with Professor Drumm and others from the HSE and the Secretary General of my Department, who were discussing contingency arrangements, to come to the House for this debate. I have a number of things to say to patients. I certainly hope that commercial disputes between the State and the pharmacists will not interfere with patient care, and we are determined that no medical card patient will have to pay for his or her medication. Plans will be put in place and they will be well advertised over the coming days in that regard. We have to assess the tenor of the letter that has been received. Some pharmacies have indicated an intention to withdraw, while a small number have indicated that they are withdrawing. We have to seek clarification of that but, clearly, there are ethical responsibilities on pharmacists to supply sick people with their medication. That is a matter for the Pharmaceutical Society of Ireland as the regulator. It is not a matter for me, nor is it one in which I intend to engage.

I have been asked why we did not introduce the Dorgan report. The Dorgan body was established in the context of pharmacists having the wholesale margin reduced from 17.6% to 8%. As the House knows, the High Court found that although the principle was fine, the process was wrong and, therefore, we could not proceed with it. The recommendations made arose out of that context. If that had gone ahead - it was in place last year for a number of months - and we had applied the 8% on top of this, it actually would have been a greater sum. Dorgan said we should not completely eliminate the 50% mark-up. My intention originally was to have no mark-up, just a dispensing fee. We have not eliminated the mark-up, but reduced it from 50% to 20%. We have reduced the wholesale margin from 17.6% to 10%, instead of 8%, and we have abolished the €33 million which was paid for the over-70s because we have eliminated the automatic right to the over-70s medical card.

This is not the end of the story. We are going to move to reference pricing for off-patent products and the HSE is looking at the issues surrounding hi-tech drugs. We need to do much more to continue to reduce the cost of delivering medication to patients, and I accept this is not the total picture reference. Pricing is important and legislation must be provided in that regard. I am in discussions with Professor Drumm and others on that matter and there are also issues to be addressed around the high-tech scheme. It comes to this: when faced with very difficult choices the €55 million we will get this year is half the money we spend on home care packages and a quarter of what we spend on home helps. It is factored into the HSE's budget for this year.

Based on legal advice, we used the provisions in the emergency legislation to deal with this issue, and I believe it is appropriate in all the circumstances. As I said, the High Court found the HSE was not entitled to reduce the wholesale margin, but the Minister had the authority to do so. Based on legal advice, we have used the opportunity presented in the legislation to reduce the cost of delivering pharmaceutical products to patients. We have taken the fees we have paid to pharmacists back this year to what they were in 2007. Next year, the €133 million reduction will bring them back to what they were in 2006. I do not believe anyone could argue that the fees paid in 2006 to 2007 did not provide for sustainable pharmacy businesses in Ireland.

I am delighted to have had the opportunity to respond to this debate. I am sorry that the time is very limited, but I assure the Deputies opposite that I am working with Professor Drumm, the Secretary General of my Department and others to ensure that appropriate contingency arrangements are in place so that patients can get their medication and to ensure that medical card holders in particular, the poorest in our society, do not become the victims of a commercial dispute between the Government and pharmacists.