Bernard Durkan (Kildare North, Fine Gael)
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Question 242: To ask the Minister for Health and Children the group, bodies, agencies or representatives for whom she, her Department or the Health Service Executive sought or received advice in the past six months in relation to the costs of medicines, dispensing fees and ongoing services to the public in relation to the issues which have caused the dispute between the pharmacists and the HSE; and if she will make a statement on the matter. [9772/08]

Bernard Durkan (Kildare North, Fine Gael)
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Question 243: To ask the Minister for Health and Children the extent to which she, her Department or the Health Service Executive have had discussions with the drug companies, the wholesalers and the pharmacists in regard to the subject matter on the impasse between the Health Service Executive and the pharmacists; the reason the discussions were not held with each body simultaneously; and if she will make a statement on the matter. [9773/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
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I propose to take Questions Nos. 242 and 243 together.

My Department and the Health Service Executive (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 patient safety or continuity of supply. The HSE has operational responsibility for the management and delivery of health and personal social services under the Health Act 2004, including the arrangements for the supply of drugs and medicines for eligible patients under the GMS and community drugs schemes.

In line with the strategy agreed by the Cabinet Committee on Health for reform of the drugs supply chain, it was decided to address each element of the supply chain sequentially. Accordingly, a HSE-led negotiating team, including officials from my Department, first engaged with the Irish Pharmaceutical Healthcare Association (IPHA) and the Association of Pharmaceutical Manufacturers of Ireland (APMI), representing proprietary and generic supplier representative bodies, and completed new agreements with these bodies in mid-2006. These agreements are in place.

At the commencement of planned negotiations with wholesalers' representatives, legal issues around competition law were raised. Subsequent legal advice to the HSE indicated that a consultation process, accompanied by independent economic analysis, was considered the most appropriate means to allow for the determination of new reimbursement pricing arrangements for wholesale supply. The revised pricing arrangements for wholesale delivery were arrived at following this process, involving direct discussion with wholesaler companies and a call for public submissions, published on 20th December 2006, in response to which a total of 161 submissions (including 143 from community pharmacy contractors) were received.

Following the completion of public consultation, and informed by the independent economic analysis carried out by Indecon Economic Consultants, new reimbursement arrangements for wholesale supply were announced by the HSE on 17th September 2007. The report by Indecon was published by the HSE on 13 November 2007. All aspects of the Indecon report were considered by the HSE in making its determination.

The Government is firm in its view that the wholesale mark-up paid on the price of drugs should be reduced to a level that is fair to both taxpayers and wholesalers. The existing mark-up in the range of 15% to 17.6% is neither reasonable nor sustainable. The decision to pay an 8% mark-up from 1 March, and 7% from 1 January 2009, will go ahead.

However, I am concerned, in particular, to support pharmacies which have a high proportion of medical card patients and where a dispensing fee of €3.27 applies for most transactions. Many of these pharmacies are in rural or inner city areas and provide an important social and health service. With my support, the HSE has indicated it is prepared to offer a higher fee, of no less than €5 per item dispensed, to community pharmacists, on the basis of an interim contract which would be essentially the same as the existing contract.

I met with the Irish Pharmaceutical Union recently and heard their point that there should be an independent assessment of the fees offered. In the light of this, I have established an Independent Body to begin work immediately to assess an interim, fair community pharmacy dispensing fee of at least €5 to be paid for the medical card scheme, the Drugs Payment Scheme and other community drug schemes.

This Body is being chaired by Seán Dorgan, former Head of IDA Ireland. It will take submissions from all sides and will carry out its own analysis. It has been asked to make its recommendations by the end of May 2008. Its recommended fee level, subject to Government approval, will be backdated to 1 March 2008. The requested date for submission of the Body's report is 31 May 2008. The Independent Body has met twice, on 25th February 2008 and 3rd March, and has invited submissions. Both the HSE as the contracting body and the IPU as the representative organisation for community pharmacists, along with other stakeholders, will be entitled to make submissions to the Independent Body, on issues of concern to them.

Based on its consideration of submissions received and its own independent evaluation, the body will recommend an appropriate dispensing fee that would, in its view, represent a fair and reasonable price to be paid for the pharmaceutical service currently being provided by community pharmacists to the HSE under the GMS and community drug schemes. If approved by Government, it will be backdated to the date from which any individual community pharmacist may choose to avail of the HSE's offer.

The development of a new substantive pharmacy contract will also get underway as soon as possible. This will be done under the auspices of an agreed facilitator and it too will be priced by the Independent Body. I believe the foregoing provides all concerned with a reasonable way to make the transition to a fair and transparent method of payment for present services and, I hope, greatly developed pharmacy services in the near future.