Maria Corrigan (Fianna Fail)

I welcome the Minister to the House to discuss this important issue and thank her for regularly making time available to come to the House. I commend her on the determination and commitment she brings to the vital issue of health reform.

It is important to remind the House of the long-standing problem faced by patients regarding the cost of medication. They pay a multiple of the cost in other countries.This has long been a bone of contention for all parties and a constant source of frustration for people when they travel abroad and purchase medication at a fraction of the price paid in Ireland. This is not in the best interests of the consumer and as the taxpayer foots €100 million of this unnecessary cost, it is not in the best interests of the taxpayer or the Irish finances. There is much we could do with €100 million and we can all think of projects on which we would willingly spend it.

The increasing cost of medication in Ireland represents a significant portion of our health budget. The ageing population has increased the demand for a practical and efficient community pharmacy drugs supply program. The HSE and the Department of Health and Children have sought to provide a system giving greater value to patients purchasing medication and to taxpayers who contribute to that budget.

The Brennan Commission highlighted faults with the present system of reimbursements under the drugs payment scheme. As a result, the existing wholesale mark-up paid for drugs is to be reduced to a level fair to both wholesalers and taxpayers. The Government should be commended for this bold step to ensure a sustainable and principled system of drugs payment exists.

It is important to note the context in which the change takes place. The HSE expenditure on medical card and community drugs schemes in 2007 shows that €1.1 billion was spent on purchasing drugs and medicines from manufacturers; €200 million was paid to wholesalers to deliver these products to community pharmacies; €237 million was paid to pharmacists in fees for the medical card, drugs payment scheme and long term illness schemes; and a further €130 million in markups on specific schemes giving a total of €367 million. Adding VAT of €38 million, the total cost of drugs and medicines under the schemes will amount to approximately €1.74 billion in 2007. Therefore, it costs upwards of €600 million to deliver drugs and medicines costing €1.1 billion from the factory to the patient. This is very expensive and the HSE saving of €100 million from the wholesale delivery side should be seen in this context.

The reduction of the wholesale margin from almost 18% to a level eventually reaching 7% will represent a saving of €9 million per month. This will bring the Irish level in line with the European average. It has cost us in excess of €600 million just to deliver €1 billion of drugs to the patient. This situation is untenable and avoidable. The HSE's pharmaceutical reform will provide a stable foundation for the process of pharmaceutical pricing for the years to come.

The new system of pharmaceutical pricing ensures dispensing fees will stand independently and eradicates the practice of external wholesaler discounting. This simplification affords every party of the supply chain — the producers of medicine, the distributors to the retail sector and the pharmacists — with a durable and effective method of interaction and work.

Wholesale companies have given assurances that they will not charge pharmacists more than the amount wholesalers are reimbursed by the HSE for the cost of drugs and medicines supplied. Therefore, contrary to beliefs, pharmacists will not have to sell below cost. The HSE's decision on the wholesale price does not affect the €370 million paid in fees to pharmacists. The flat fee proposal that will be assessed by the independent body will be voluntary.

I welcome the announcement by the Minister for Health and Children of the establishment of an independent body to assess an interim, fair community pharmacy dispensing fee, with at least €5 to be paid for the medical card scheme, the drugs payment scheme and other community drug schemes. This amount is an increase of over €1.70 per item dispensed. This offer to individual community pharmacists is voluntary and the option to remain with their existing contracts allows for a level of flexibility during the transition period. This option facilitates the evolution of the system in a practical and sensitive way. The HSE will not be taking contracts away from any chemist.

Reservations have been expressed by the Irish Pharmaceutical Union about the new pricing system. Questions have been aired about the survival of many pharmacies across the country. These concerns have resulted in an extensive lobbying campaign on behalf of the pharmacists.

While I commend pharmacists for the role they play in our community — I have seen first hand their professionalism and compassion — I have grave reservations regarding some of the actions they have undertaken in this campaign, particularly their early move regarding people who use methadone. I regret the fear that is now being instilled in elderly and vulnerable patients.

I commend the pharmacists' intention to minimise the impact of their actions. I applaud their commitment to developing their role and enhancing the services they provide to the community. I understand their fear of change. I hope that they will find reassurance in the Government's clear dedication to maintaining the role of the pharmacy and to ensuring fair fees for this development.

The role of the pharmacist in Irish society is not to be understated. Pharmacies are an integral part of our health system. It is not envisaged that any pharmacies will suffer as a result of this latest reform. Previous pessimism about the fate of pharmacies after reform was introduced in recent years has proved unfounded. This instance will be no different.

I welcome the HSE's intention to enter discussions with the IPU and other parties on the development of a new substantive contract and I especially welcome the commitment to a proper professional fee for contracted pharmacy services. This is a deserved recognition and acknowledgement of the valuable role played by pharmacists within our community. Pharmacists have made the strong point that theirs is a role that could be developed further for the benefit of the public, for example in the areas of diabetes and health screening.

The professional fee provides a basis for a proper acknowledgement of this role and its further development. However, in the interests of value for money, we should look not only at wholesalers and pharmacists but also at the structure in place to support the various drugs payment schemes. Pharmacists recount a multitude of frustrating experiences in following up on their payments and the associated paperwork. They report being passed from one person to another and the considerable time required in following up claims. If this is the case, it is not a good use of anybody's time. It is not efficient and carries a cost that cannot be considered value for money. I ask the Minister to examine such comments and to investigate what improvements may be required to ensure an efficient, effective system that contributes to value for money.

It is essential to keep in mind that the welfare of the patient is at the crux of the transfer to a new pricing system. We must guarantee that no patient will suffer as a result of this reform programme and that provisions are in place should such an occurrence arise. Ultimately, the change in price will benefit the patient through reductions in drug prices. The target of reducing the wholesale mark-up paid on the price of drugs to 7% by January 2009 represents the target set by the HSE and the Department of Health and Children to achieve fair and sustainable levels for all. This is also on par with European counterparts.

I look forward to the recommendations of the independent body in late May. Rounded and wide-ranging opinions gathered from independent analysis, and from all stakeholders, can only strengthen this reforming process. I strongly urge the pharmacists and the HSE to work with the independent body to ensure that the best possible service for the patient is delivered at a reasonable cost, with appropriate acknowledgement and recognition of the role of the pharmacist.