Simon Coveney (Cork South Central, Fine Gael)
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Question 11: To ask the Minister for Health and Children her plans to introduce reference pricing; when this will be introduced; the estimated savings from same; and if she will make a statement on the matter. [6885/10]

Mary Harney (Dublin Mid West, Independent)
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The Government has approved my proposal to introduce a system of reference pricing combined with generic substitution under the GMS and community drugs schemes. Reference pricing involves setting a common reimbursement price for groups of substitutable drugs. This will promote price competition in the Irish market and deliver ongoing savings for both the State and for patients. A working group, comprising of officials from my Department and the HSE, and chaired by Mr Mark Moran, is setting out proposed steps for implementing this initiative. 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 from the start of 2011.

Reference pricing will deliver direct savings by limiting reimbursement to the level of the lowest priced product within a reference group. Indirect savings will also occur as a result of increased price competition. The level of savings will depend upon a range of factors. These include the number and type of products included in reference groups, the relative and absolute prices of products within reference groups and the market response for each reference group. The working group is considering all of these factors and will recommend a model that will deliver value for money and ensure continuity of supply of medicines. It is anticipated that reference pricing will be initially targeted at high volume products that have the potential to achieve significant savings. It is also of strategic importance that this model is in place as a significant number of drugs are due to come off patent in the coming years.