Tom Sheahan (Kerry South, Fine Gael)
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Question 22: To ask the Minister for Health and Children the position regarding her plans to introduce reference pricing; the amount that will be saved from the introduction of reference pricing; if she believes that some categories of medicines are not suitable for substitution; and if she will make a statement on the matter. [34783/10]

Mary Harney (Dublin Mid West, Independent)
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The Government has decided to introduce a system of reference pricing combined with generic substitution of medicines. This will promote price competition and deliver ongoing savings for both the State and for patients. In June, I launched a report which sets out a proposed model for the operation of generic substitution and reference pricing. I expect to see significant progress on the implementation of this initiative, including the legislative and administrative changes required to give it effect in 2011. There are some medicines that are unsuitable for substitution. Decisions about the interchangeability of medicines will be evidence-based and take into account best practice elsewhere.

Reference pricing will deliver direct savings by limiting reimbursement to a common reference price for groups of interchangeable medicines. 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. I anticipate that reference pricing will initially be targeted at high volume products that have the potential to achieve significant savings. I would also highlight the strategic importance of this initiative as a significant number of drugs are due to come off patent in the coming years.

This is one of a range of measures to increase value for money in this area of expenditure. I am pleased to note that the prices of over 500 generic medicines were reduced with effect from 1 October. Achieving greater value for money in this area of expenditure will ensure that patients can continue to access innovative and affordable medicines.