Joanna Tuffy (Dublin Mid West, Labour)
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Question 65: To ask the Minister for Health and Children the details of the agreement made with the Irish Pharmaceutical Healthcare Association; if it will, as reported, save €200 million in 2011; her plans to introduce reference pricing and if so, the further savings she expects to make by this means; and if she will make a statement on the matter. [1564/11]

Mary Harney (Dublin Mid West, Independent)
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Following discussion with my Department and the HSE, the Irish Pharmaceutical Healthcare Association have agreed a series of measures to deliver savings on drug expenditure of €200 million in 2011. Savings of €155 million are expected under the GMS and community drug schemes, €35m under the High Tech Scheme and €10m on hospital medicines.

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. 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.

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.

Questions Nos. 66 and 67 answered with Question No. 22.