James Reilly (Dublin North, Fine Gael)
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Question 212: To ask the Minister for Health and Children the savings she estimates to make from drugs costs; and if she will make a statement on the matter. [37888/08]

Mary Harney (Dublin Mid West, Progressive Democrats)
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My Department and the Health Service Executive (HSE) have been reviewing the pharmaceutical supply chain, from manufacturers and wholesalers through to community pharmacists, with a view to seeking value for money in the State's drugs bill. New agreements with the propriety and generic manufacturers (Irish Pharmaceutical Healthcare Association/Association of Pharmaceutical Manufacturers in Ireland respectively), in place from September 2006, provide increased value for money for the State and the consumer through a reduction in the price of existing drugs and medicines coming off patent and through the use of a wider basket of countries for pricing new drugs.

Over the period of the agreements, which run to 2010, the HSE expects to achieve savings of the order of €250 million across the General Medical Services and community drugs schemes, and in the cost of drugs to hospitals, through two off-patent price cuts, totalling 35%, for drugs with substitutable alternatives. In addition to the savings quantified, there will be further savings as generic manufacturers respond to the lower price of branded drugs, through the use of a wider basket of 9 countries (previously 5) for pricing new medicines, and through two price reviews for new medicines over the term of the agreements.

The Government remains of the view that the cost of pharmacy services under the GMS and community drugs schemes is not sustainable and must be reduced to a more reasonable level. Expenditure on the medical card, drug payment and other demand-led schemes is approximately €2.6 billion and represents 18% of HSE current expenditure. The average annual increase in expenditure in recent years has been 13%. This rate of increase cannot be sustained. It has been decided to introduce a range of further measures in 2009 to slow the rate of increase in these schemes and generate savings of €175m. These measures include an increase in the threshold for the Drug Payment Scheme from €90 to €100 a month; new guidelines on the prescribing of nutritional supplements; and other measures to reduce drug costs. These savings required by the 2009 budgetary framework will be achieved through the ending of automatic entitlement to a medical card for those with incomes in excess of the new threshold and through economies in drug usage.

In this regard, I have decided to establish a process under the Chairmanship of Dr. Michael Barry, to develop recommendations for good practice which will secure safe and effective prescribing for patients while maximising the potential for economy in the use of public funds. The initial report from Dr. Barry will be prepared by 1st December. I am satisfied that there is significant scope for savings arising from this prescribing initiative. I will shortly be announcing the terms of reference for the group to be chaired by Dr Barry and I am hopeful that this group can achieve the necessary savings in accordance with the budgetary strategy.