Jan O'Sullivan (Limerick East, Labour)
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Question 64: To ask the Minister for Health and Children the discussions she has had and the progress that has been made in reducing the cost of drugs and increasing the use of generic products being prescribed; her plans to introduce reference pricing for prescription drugs; and if she will make a statement on the matter. [45532/09]

Mary Harney (Dublin Mid West, Independent)
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My Department and the HSE have implemented a number of reforms to reduce the cost of medicines.

Under the terms of the current agreements between the HSE and pharmaceutical manufacturers which govern the supply terms, conditions and prices of medicines supplied under the GMS and other community drug schemes, price cuts of 35% are applied to all off-patent proprietary products for which generic alternatives are available on the Irish market. A report published by the National Centre for Pharmacoeconomics in May 2009 estimated that approximately €250 million will be saved due to off-patent price cuts, up to September 2010, when the agreements come up for renewal.

Since September 2006 a larger basket of reference countries has been used for determining the prices of new products accepted for reimbursement under the State drugs schemes. The current agreements also permit price adjustments to reflect price changes in the reference countries.

This year I reduced the wholesale mark-up payable on medicines from 17.66% to 10% and reduced the retail mark-up payable under certain schemes from 50% to 20%. Savings from the measures have been estimated at €55 million for 2009 and €133 million on a full year basis.

My Department and the HSE support the increased use of generics where this is appropriate. All options for containing pharmaceutical expenditure, including generic substitution by pharmacists, the promotion of more cost-effective prescribing by GPs, and the greater use of quality prescribing indicators are under consideration. It is my intention to introduce a system of reference pricing combined with generic substitution. My Department and the HSE are examining options to progress this initiative, which has the best potential to promote the usage of cheaper generic or off-patent medicines and provide further savings from reductions in prices. I expect to see significant progress on this next year, including the identification and implementation of legislative and administrative changes needed to give it effect.