Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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To ask the Minister for Health the way he will reduce the State's drug bill; if he will detail the savings that will be made over the next three years; the legislation and agreements that will be necessary to deliver these savings; and if he will make a statement on the matter. [7465/13]

Alex White (Dublin South, Labour)
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Following intensive negotiations involving the Irish Pharmaceutical Healthcare Association (IPHA), the HSE and the Department of Health, a major new deal on the cost of drugs in the State was concluded in October last. It will deliver a number of important benefits, including

- significant reductions for patients in the cost of drugs,

- a lowering of the drugs bill to the State,

- timely access for patients to new cutting-edge drugs for certain conditions, and

- reducing the cost base of the health system into the future.

The gross savings arising from this deal will be in excess of €400m over 3 years. €210 million from the gross savings will make available new drugs to patients over 3 years. Thus, the deal will result in a net reduction in the HSE expenditure on drugs of about €190m.

The Department of Health and the HSE have also successfully finalised discussions with the Association of Pharmaceutical Manufacturers in Ireland (APMI), which represents the generic industry, on a new agreement to deliver further savings in the cost of generic drugs. It is estimated that the combined gross savings from the IPHA and APMI deals will be in excess of €120 million in 2013.

The IPHA agreement provides that prices are referenced to the currency adjusted average price to wholesaler in the nominated EU member states in which the medicine is then available. The prices of a range of medicines were reduced on 1 January 2013 in accordance with the agreement.

The Health (Pricing and Supply of Medical Goods) Bill 2012, which is currently before the House, provides for the introduction of a system of generic substitution and reference pricing. The Bill provides that when the HSE is setting a reference price for, or reviewing a reference price set for, a relevant group of interchangeable medicinal products it shall take into account the following criteria:

- the ability of suppliers to meet patient demand for the relevant item;

- the value for money afforded by the relevant item;

- the equivalent prices of the relevant item in all other Member States where the product is marketed;

- the prices of therapeutically similar items; and

- the resources available to the HSE.

It is important to balance achieving best value for money for the taxpayer with assuring continuity of supply for critical medical products, particularly in a small market like Ireland. Consequently, the Bill aims to achieve value for money while avoiding disruption in the availability of medicines on the Irish market.