Olwyn Enright (Laois-Offaly, Fine Gael)
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Question 131: To ask the Minister for Health and Children the outcome of the meeting between her Department, the Health Service Executive and the Irish Pharmaceutical Union; and if she will make a statement on the matter. [8113/07]

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.

During discussions with the wholesaler representative body, the Pharmaceutical Distributors' Federation (PDF), as part of the agreed process, 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 legal advice to the Minister and the HSE indicates that:

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 State to engage in negotiations with PDF or the IPU in relation to fees or margins. Accordingly, the HSE wrote to all community pharmacy contractors, setting out the position in relation to these issues in detail.

The negotiating team has been examining how best to address this issue for pharmacy contractor services. To this end, the team engaged with the IPU to clarify the legal position and the situation in relation to contract negotiations. Following discussions, the IPU has agreed to a process to examine ways of carrying out a contract review that would comply fully with competition law. It is expected that this process, subject to completion of the necessary arrangements, will begin shortly.