Billy Kelleher (Cork North Central, Fianna Fail)
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8. To ask the Minister for Health the net savings he anticipates in 2014 in the State’s expenditure on drugs; and if he will make a statement on the matter. [48050/13]

Billy Kelleher (Cork North Central, Fianna Fail)
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This question is about the net savings the Minister anticipates in 2014 in the State's expenditure on drugs. The reason I ask the question is that I note there have been agreements with the Irish Pharmaceutical Healthcare Association, IPHA, and the Association of Pharmaceutical Manufacturers in Ireland, APMI. However, in the Estimates last year it was reckoned there would be a saving of €160 million, but a reply to a parliamentary question I submitted last week stated that the anticipated savings would be €120 million. There is a shortfall of €40 million between the Estimates last year and the saving actually achieved this year. This year the Minister has indicated savings in the Estimates for next year. Will he clarify the anticipated savings in 2014?

Alex White (Dublin South, Labour)
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The State has introduced a series of reforms in recent years to reduce pharmaceutical prices and expenditure. These have resulted in reductions in the prices of thousands of medicines. Price reductions of the order of 30% per item reimbursed have been achieved between 2009 and 2013; the average cost per items reimbursed is now running at 2001-02 levels. Additional savings measures are expected to generate net savings of approximately €152 million in 2014, as follows: new agreements were reached with the Irish Pharmaceutical Healthcare Association, IPHA, and the Association of Pharmaceutical Manufacturers in Ireland, APMI, in October 2012. It is estimated that the combined gross savings from the IPHA and APMI deals will be in excess of €120 million in 2013 with an additional €28 million saved in 2014. The Health (Pricing and Supply of Medical Goods) Act 2013, which came into operation on 24 June, introduces a system of generic substitution and reference pricing. This legislation will promote price competition among suppliers and ensure that lower prices are paid for these medicines resulting in further savings for both taxpayers and patients. It is estimated that this system will yield €50 million in savings in 2014.

As announced in budget 2014, it has become necessary to increase the prescription charge due to the very difficult and challenging economic environment which requires the Government to achieve additional savings in health expenditure, with €666 million of savings targeted in 2014. The increase in prescription charges will account for €43 million of this target. The Government is committed to achieving these savings while protecting front-line services to the most vulnerable to the greatest extent possible.

A review was carried out earlier this year under the Financial Emergency Measures in the Public Interest Act 2009, FEMPI, regarding the operation, effectiveness and impact of the amounts and rates payable to certain health professionals under the relevant regulations. The 20% retail mark-up to community pharmacists in respect of items dispensed under the drug payment scheme, the long-term illness scheme, the European Economic Area scheme and the Health (Amendment) Act 1996 scheme was eliminated.

The 2014 saving arising from this measure will be approximately €17 million. In addition, provision was made in budget 2014 for €10 million in savings arising from the removal of products from the reimbursement list. The HSE will now consider products for review in compliance with the provisions of the Health (Pricing and Supply of Medical Goods) Act 2013.

Billy Kelleher (Cork North Central, Fianna Fail)
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I thank the Minister of State for his response.

Alex White (Dublin South, Labour)
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I believe every word of it.

Billy Kelleher (Cork North Central, Fianna Fail)
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He does. Hopefully, those measures will come to fruition. Time and again, the difficulty is that anticipated savings are not being realised. This year, we will have a shortfall of €40 million, placing pressure on other services. At the back end of the year, we now have a certain amount of fire brigade action in our hospital budget and the broader budget to try to rein in costs. It is important that when we set about achieving savings, they are realisable in the first place. Issues arose in terms of delays in the legislation.

This matter relates to the question raised by Deputy Ó Caoláin and me in the context of the €666 million in savings. Clearly, there is a great deal of scepticism - on that side of the House, not this side - about the ability to save €113 million in probity. Will the Minister of State make the commitment that every effort will be made to ensure that the savings identified will be implemented at the start of the year as opposed to half way through it?

Alex White (Dublin South, Labour)
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Most certainly we can give the commitment that everything will be done in order to drive the savings that are required in this context. I welcome the Deputy's support for these changes, as they are important and will yield a benefit for the State, the Exchequer and the health services. We will press on further. We waited many years for this legislation and introduced it this year. Not only have the Houses passed it, but it is also operating and the Irish Medicines Board, IMB, is pressing ahead with its list of interchangeable products.

Change is happening. Given our economic collapse, people are entitled to have low expectations. They view many issues in the economy and the health services generally sceptically. However, we are driving and achieving change and will continue to set and achieve targets.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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If possible, I will make an addendum. I acknowledge that savings and progress have been made, but there are significant differentials. In particular, I am aware of the situation of the generic equivalent of Lipitor, a commonly prescribed cholesterol lowering drug that is four and a half times more expensive to me living on this side of the Border as it is to my neighbour a short distance North of the Border under the NHS system. We have a long way to go. The tragedy is that the arguments used by the pharmaceutical companies - a smaller market and greater transport distances - are ballyhoo, as many of the drugs in question are made on our own doorstep in Ireland and the travel distance is even shorter. We need to be much more bullish with the pharmaceutical sector.

Mick Wallace (Wexford, Independent)
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My question is like Deputy Ó Caoláin's. The use of generic drugs will amount to a saving of approximately 10%. As the Deputy pointed out, Lipitor's equivalent is approximately €48 in the Republic and €10.60 in Newry. Is the Minister of State able to explain why this is so? I do not understand it.

Alex White (Dublin South, Labour)
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I will not be able to dress any particular drug, but I share people's interest in and concern about this matter and am keen to follow up on it. There are differentials. A report prepared by the ESRI this year provided a good analysis of this situation. Sometimes, one does not always compare like with like, although I am not making an excuse for the differentials. There are many factors, for example, pharmaceutical manufacturing, pharmacies' mark-ups and so on, that we need to address.

I assure the House that there is the same level of concern on this side about the issue as there is on that side. We will press onwards. We have made great strides, but there is more to do.