Written answers

Tuesday, 26 June 2007

Department of Health and Children

Community Pharmacy Services

10:00 pm

Photo of Denis NaughtenDenis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 228: To ask the Minister for Health and Children further to Parliamentary Question No. 326 of 3 April 2007 if she will outline the progress to date; and if she will make a statement on the matter. [16675/07]

Photo of Mary HarneyMary Harney (Dublin Mid West, Progressive Democrats)
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My Department and the HSE have been reviewing the pharmaceutical supply chain, with a view to seeking value for money in the State's drugs bill in order to better fund existing and innovative therapies without compromising continuity of supply or patient safety. The review of the Irish Pharmaceutical Healthcare Association (IPHA) and the Association of Pharmaceutical Manufacturers of Ireland (APMI) Agreements, with the proprietary and generic supplier representative bodies, was completed in mid-2006 and the new agreements are in place.

Following completion of the manufacturer agreements and in line with the process agreed by the Cabinet Committee on Health, the State entered talks with the wholesaler representative body, the Pharmaceutical Distributor's Federation (PDF). As wholesale margins are not addressed in the new IPHA and APMI Agreements, the State intended to negotiate direct formal arrangements with the wholesale sector, to address the cost of wholesale supply to hospital and community through fair, transparent and accountable cost structures. In particular, the State wished to examine the high margin, relative to the EU, for wholesale supply to community pharmacy and the wholesalers' claim that they supply hospitals at a loss.

Early in discussions, PDF refused to negotiate a new margin for community supply, based on its own legal advice. Subsequent advice to the HSE, confirmed by the Attorney General's office and Senior Counsel engaged by the Attorney General, indicated that, under section 4 of the Competition Act 2002, PDF as an association of undertakings may not collectively negotiate fees, prices or margins on behalf of its members. Given this position, and the fact that the Irish Pharmaceutical Union is also an association of undertakings, it is not possible for the State to negotiate with PDF or the IPU on fees or margins and such negotiations place these bodies at risk of prosecution.

The State had intended to address the review of community pharmacy, and in particular how to improve value for money and transparency and fairness in relation to service provision, through negotiation with the IPU, as it had in the past, but this is no longer possible. Accordingly, the negotiating team re-considered, in light of the legal position arising from the wholesaler legal advice, how best to address the review of pharmacy contractor services. Following consultation with the IPU, a procedure was agreed to examine available options for advancing contractual negotiations in compliance with Irish and EU competition law. This process, chaired by Mr Bill Shipsey, SC, has commenced.

The State continues to recognise the IPU as the representative body for its members, but negotiations with the Union must comply with the law. The legal issues that emerged during the wholesale sector review were raised by the wholesaler representatives. Once the State became aware of these issues, it was no longer possible to continue as intended. There is, and will continue to be, ongoing dialogue with the IPU as the representative body for pharmacists, within the constraints of the competition legislation and the negotiating team will consider, in the context of competition law and in particular the relevant Competition Authority guidelines, all available options for advancing the process agreed by the Cabinet Committee on Health. I am satisfied that the Cabinet Committee process for review of the supply of drugs to the State is progressing effectively, within the constraints of relevant legislation.

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