Billy Kelleher (Cork North Central, Fianna Fail)
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To ask the Minister for Health the mechanism by which reference pricing for medicines will be delivered; the person who set the reference price; the model that will be used; the date on which it will take effect; and if he will make a statement on the matter. [47684/12]

Alex White (Dublin South, 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, which will be done by the HSE. 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.