Terence Flanagan (Dublin North East, Fine Gael)
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Question 227: To ask the Minister for Health and Children the reason in relation to the pharmacy dispute, she is ignoring the Indecon report which states that there is little value comparing different wholesale markets; her views on whether the proposed changes in the sector need to be managed carefully to assess impact and avoid disruption to pharmacy services; and if she will make a statement on the matter. [32082/07]

Mary Harney (Dublin Mid West, Progressive Democrats)
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As the Deputy is aware the new reimbursement pricing arrangements for drugs and medicines under the GMS and community drugs schemes were announced by the HSE on 17th September 2007.

I have previously outlined in detail to the Oireachtas the legal provisions under competition law which prevent the Health Service Executive (HSE) from negotiating with the Irish Pharmaceutical Union (IPU) on fees, prices or margins for their members. When it became clear that the HSE could not negotiate with pharmacists or wholesalers on fees or margins, a detailed, fair and transparent consultation process, including independent economic analysis and public consultation, was carried out to inform the final determination of the new reimbursement pricing arrangements for drugs and medicines under the GMS and community drugs schemes. 161 submissions were received by the HSE, of which 143 were from community pharmacy contractors.

The new price arrangements for community supply were planned to take effect from 1st January for wholesalers and, due to the structure of the reimbursement system, would have come into effect from 1st December 2007 for community pharmacists. The independent economic analysis was carried out by Indecon Economic Consultants and was published by the HSE on 13 November 2007. All aspects of the Indecon analysis were considered by the HSE in making its determination. Full consideration was also taken of public submissions received.

All the evidence available to the HSE-led team dealing with this issue indicated that the State was paying a premium for this service and that the new arrangements will save the HSE about €100m in 2008. The evidence available also indicates that the impact on individual pharmacies will not be detrimental, having regard to the totality of fees and mark-ups under the GMS and community drugs schemes. That evidence, when considered in conjunction with the detailed analysis in the Indecon independent economic report, all points to the poor value for money being obtained by the State under the existing arrangements.

In regard to the reimbursement prices for drugs and medicines under the GMS and community drugs schemes, the main wholesaler companies have confirmed to the HSE that they will comply with the new arrangements by charging pharmacists the new reimbursement price that the HSE will pay pharmacists. I would also point out that arrangements between wholesalers and community pharmacists are a private matter. As the HSE will be paying the market value for distribution services, the Executive feels that there is no justification for wholesalers to reduce service levels to pharmacists, nor for patients not to continue to obtain the same level of service from their community pharmacist as before. The HSE has received no formal notification from any community pharmacist regarding cessation of services under the GMS and community drugs schemes. Any such cessation of services would require three months notice.

In order to address concerns by community pharmacists regarding the implications of the legal advice on competition law, a process of dialogue was established under Mr Bill Shipsey, S.C., to examine available options for advancing pharmacy contractual negotiations in compliance with Irish and EU competition law. The HSE and the IPU recently met under the auspices of Mr Shipsey. I am also exploring, in consultation with the Attorney General, relevant Government Departments and the Health Service Executive, the best way of progressing the development of a new contract with pharmacists. In view of the ongoing positive engagement between the HSE and the IPU, under the auspices of Mr Shipsey, the HSE has decided to defer the implementation of the new reimbursement rates, planned to take effect for community pharmacists on 1st December 2007, to a later date.