Jerry Cowley (Mayo, Independent)
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Question 292: To ask the Minister for Health and Children if she will resolve the difficulties which exist between the Irish Pharmaceutical Union and her Department in view of the proposals to establish a group with representatives from both sides to explore whether it would be possible to agree a process which is fair, reasonable and acceptable to all parties; her views on whether a resolution between the two groups has to be reached; and if she will make a statement on the matter. [3453/07]

Mary Harney (Dublin Mid West, Progressive Democrats)
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In 2005, a process was begun to examine all aspects of the drugs supply chain, with a view to achieving greater value for money in the pricing and supply of drugs and medicines to the health services and the GMS and community drugs schemes, consistent with patient safety and continuity of supply. This process was agreed by the Cabinet Committee on Health. A joint HSE/Department of Health and Children negotiating team was put in place to advance this process.

In mid-2006, the negotiating team reached agreement with the Irish Pharmaceutical Healthcare Association (IPHA) and the Association of Pharmaceutical Manufacturers in Ireland (APMI). Discussions then began with the wholesaler representative body, the Pharmaceutical Distributors' Federation (PDF), as part of the agreed process on supply to community pharmacies and the health services. However, PDF advised the State that a legal issue precluded it from negotiating a new margin for distribution to community pharmacies. The negotiating team then obtained legal advice, which subsequent legal advice to the Department confirmed, that this issue also had implications for negotiations with community pharmacists.

The position is as follows. Section 4(1) of the Competition Act, 2002 prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the restriction or distortion of competition, including agreements to fix prices, unless the agreement, decision or concerted practice meets certain conditions. Those conditions are not met in this case.

Wholesalers and pharmacy contractors are undertakings. PDF and the IPU are associations of undertakings under Section 4(1) of the Act. The coming together of wholesalers under PDF or pharmacy contractors under the IPU to negotiate prices would be a breach of Section 4(1). Entering into an agreement, making a decision or being involved in a concerted practice in contravention of Section 4(1) is a criminal offence and would expose those parties, their directors, managers and officers to the risk of criminal prosecution.

In light of the above, it is not possible for the HSE to engage in negotiations with PDF or the IPU in relation to fees or margins. The HSE has written to all community pharmacy contractors, setting out the position in relation to these issues in detail.

The negotiating team is now examining how best to address this issue for pharmacy contractor services. However, negotiations must comply with the law. To this end, the team has engaged with the IPU, has set out the legal position and clarified the situation in relation to contract negotiations. The team is currently considering, in the context of the legal position, proposals from the IPU with a view to agreeing a process for contract review that would comply fully with competition law. It is hoped that this ongoing dialogue will allow this matter to be resolved.

With regard to IPU representation of pharmacists, both my Department and the HSE recognise the IPU as the collective representative body for its members. There is, and will continue to be, ongoing dialogue with the IPU, within the constraints of the legal advice provided. I wish to see that dialogue continuing in a constructive manner.