Deirdre Clune (Cork South Central, Fine Gael)
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Question 342: To ask the Minister for Health and Children the steps she has taken to reduce the cost of prescription drugs; and if she will make a statement on the matter. [5176/10]

Deirdre Clune (Cork South Central, Fine Gael)
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Question 343: To ask the Minister for Health and Children the options open to her to control the price of prescription drugs from the production line to the consumer; and if she will make a statement on the matter. [5177/10]

Mary Harney (Dublin Mid West, Independent)
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I propose to take Questions Nos. 342 and 343 together.

My Department and the HSE have implemented a number of reforms to reduce the cost of medicines for both the State and patients.

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 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.

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. In 2009 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.

Following recent discussions with pharmaceutical manufacturers, I am pleased to advise that agreement has been reached with the Irish Pharmaceutical Healthcare Association (IPHA) on price cuts of 40% for a large number of drugs and medicines with effect from 1 February. In addition, the rebate paid by IPHA member companies to the Health Service Executive in respect of drugs supplied under the GMS scheme has been extended to include all community drugs schemes and increased from 3.53% to 4%. The combination of these measures plus consequent savings in wholesale and retail mark-ups are expected to result in savings of approximately €94m in a full year.

I am disappointed to say that APMI member companies have declined at this stage to offer any reductions in the price of the generic drugs and medicines that they supply at this time. The current agreement with APMI expires in September 2010 and it is my firm intention to obtain savings from APMI of at least an equivalent level to those secured from IPHA.

It is also my intention to introduce a system of reference pricing combined with generic substitution under the GMS and community drugs schemes. A working group, comprising of officials from my Department and the HSE, is progressing this initiative, which will encourage greater use of cheaper generic alternatives and lead to further savings in the State's drugs bill. I expect to see significant progress on this in 2010, including the identification and implementation of legislative and administrative changes required to give it effect. My Department and the HSE continue to examine all options for containing pharmaceutical expenditure.