Billy Kelleher (Cork North Central, Fianna Fail)
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To ask the Minister for Health the total amount of savings delivered each year as a result of medicines pricing agreements between the Health Service Executive and IPHA from 2006 to 2012 inclusive; and if he will make a statement on the matter. [39843/12]

Billy Kelleher (Cork North Central, Fianna Fail)
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To ask the Minister for Health the total savings realised from the Health Service Executive agreements with the Irish Pharmaceutical Healthcare Association each year from 2006 to 2012 inclusive on off-patient and on-patient branded medicines; and if he will make a statement on the matter. [39844/12]

James Reilly (Dublin North, Fine Gael)
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I propose to take Questions Nos. 246 and 247 together.

My Department and the HSE have taken a number of actions in recent times to control expenditure on drugs. Savings are being achieved through on-going off-patent price cuts; the pricing mechanism for new products has been changed; and we now have a review mechanism that takes account of price reductions in other countries. Since 2010 these actions have achieved savings in the region of €250 million.

Furthermore, regulations made under the Financial Emergency Measures in the Public Interest Act 2009 have reduced margins and mark-ups in the pharmaceutical supply chain. The combined full-year savings from these measures are €154 million.In addition, I announced on the 18th June 2012 that an interim agreement had been reached with the Irish Pharmaceutical Healthcare Association (IPHA) to reduce the price of certain off patent medicines. This is expected to deliver savings of €10 million in 2012 (€20 million in a full-year). These price cuts were accepted in advance of further discussions which are expected to deliver more significant savings. Negotiations are ongoing between officials of the Department/HSE and the IPHA since the interim agreement was reached. These discussions are expected to reach a conclusion shortly.

The Health (Pricing and Supply of Medical Goods) Bill 2012 was published on the 13th of July 2012. This legislation will introduce a system of reference pricing and generic substitution for prescribed drugs and medicines. These reforms will promote price competition among suppliers and ensure that lower prices are paid for these medicines resulting in savings for taxpayers and patients.

Billy Kelleher (Cork North Central, Fianna Fail)
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To ask the Minister for Health the form and means by which references pricing, as proposed in the Health (Pricing and Supply of Medical Goods) Bill 2012 currently before the Oireachtas, will operate; and if he will make a statement on the matter. [39845/12]

Róisín Shortall (Dublin North West, Labour)
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The Health (Pricing and Supply of Medical Goods) Bill 2012 provides for the introduction of a system of generic substitution and reference pricing. Generic substitution allows pharmacists to substitute a cheaper generic equivalent, at the patient’s request, when a more expensive product has been prescribed. Reference pricing involves setting a common reimbursement amount for selected groups of medicines. Only the reference price is reimbursed by the State. Eligible patients can avoid out-of-pocket payments by opting for a generic medicine at or below the reference price.

Reference pricing coupled with generic substitution provides patients with an incentive to opt for the cheapest available product, but does not impose any unavoidable additional costs on patients. As more medicines come off patent, the introduction of generic substitution and reference pricing will ensure that both taxpayers and patients will benefit from increased competition in the pharmaceutical market. Savings will be achieved by limiting reimbursement to the reference price, allowing patients to opt for less expensive versions of the prescribed medicine, and promoting price competition between the manufacturers of interchangeable medicines.