Pádraic McCormack (Galway West, Fine Gael)
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Question 221: To ask the Minister for Health and Children how her recent decision to decrease by an average of 34% the payments pharmacists receive from the Health Service Executive was arrived at; her views on the alternatives put forward by a union (details supplied) the which would save a similar amount of money; and if she will make a statement on the matter. [27247/09]

Mary Harney (Dublin Mid West, Progressive Democrats)
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The decisions I have made on the reduction in payments to community pharmacists under the Financial Emergency Measures in the Public Interest Act 2009 will reduce their income from the Health Service Executive (HSE) by €133m in a full year, from a total of approximately €550m. This is a reduction of 24% and not 34% as representatives of the Irish Pharmacy Union (IPU) have claimed. My decisions followed a public consultation process conducted under that Act. All interested stakeholders were invited to make submissions on the matter. The IPU made both a written and an oral submission to my Department. In addition, 104 other written submissions were received largely from community pharmacists. These submissions were analysed and considered before I made my decision to reduce payments.

Reductions are absolutely necessary for two reasons. Firstly, the cost of the community drugs schemes has doubled since 2002 to over €1.6 billion in 2008: and fees and other income earned by pharmacists have doubled accordingly. Secondly, it cost an exorbitant €640 million to get €1 billion of drugs from the factory gate to the patient in the community in 2008. This level of expenditure on delivery and dispensing is no longer sustainable, given the current financial circumstances of the country and the other priorities for spending in the health sector.

Savings from the measures have been estimated at €55 million for the remainder of this year and €133 million on a full year basis. This is almost exactly what would have been saved if I had imposed an across the board 8% reduction in fees and retail mark-ups and re-imposed the reduction in wholesale mark-up to 8%, as attempted by the HSE last year. However, I have decided to achieve broadly the same level of reduction through a revised common fee structure for dispensing, a reduced retail mark-up, removal of the special payment for over-70s dispensing and reduction in the wholesale mark-up to 10%.

In its submissions, the IPU indicated that it was prepared to consider yielding savings in an amount equivalent to 8% of dispensing fees only, which it calculated would save €21m in a full year. This would imply that their earnings from the HSE were just €260m in 2008. However, this is far from the case. In addition to dispensing fees, pharmacists also received a retail mark-up of 50% on items dispensed under the Drug Payments and Long Term Illness Schemes and special payments in respect of dispensing to persons aged 70 years and over. These payments brought their income from the HSE in 2008 to €440m. In addition pharmacists have benefitted from approximately half the €200m value of the wholesale margin. For the reasons outlined earlier, savings of €21m as proposed by the IPU would not have been an adequate response to the financial problems that we face in the pharmacy sector.

The IPU also suggested that savings of €30m could be obtained through generic substitution and €33.7m through a combination of changes in the High Tech Scheme, implementation of the Barry Report and the IPHA agreement. These are matters that are being pursued by my Department and the HSE. Any savings that arise under these headings will be additional to, and not a substitution for, the reductions in payments to pharmacists that I have announced.