Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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280. To ask the Minister for Health if he will provide an update on the Health (Pricing and Supply of Medical Goods) Bill 2012; if the bill has been enacted; the impact it has had or is expected to have on prescribing practices; the cost savings expected from same; and if he will make a statement on the matter. [31429/13]

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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288. To ask the Minister for Health if there are plans to introduce competitive tendering for high volume off-patent drugs; the savings such a move would deliver; and if he will make a statement on the matter. [31437/13]

Alex White (Dublin South, Labour)
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I propose to take Questions Nos. 280 and 288 together.

The Health (Pricing and Supply of Medical Goods) Act 2013 was commenced on Monday, 24 June 2013. This Act provides for the introduction of a system of generic substitution and reference pricing. It also sets out statutory procedures governing the supply, reimbursement and pricing of medicines and other items to patients under the GMS and community drug schemes.

The commencement of this Act provides the Irish Medicines Board (IMB) and the HSE with a robust statutory framework for the introduction of generic substitution and reference pricing on a phased basis, with priority given to those medicines which will achieve the greatest savings for patients and the State.

Previously, when a specific brand of medicine was prescribed for a patient, a pharmacist could only supply that particular brand, even when less expensive generic versions of the same medicine were available. The Act now permits pharmacists to substitute medicines prescribed, provided that they have been designated as safely interchangeable by the IMB.

The IMB will review an initial 20 active substances, which equates to approximately 1,500 individual medicines. It is expected that the first List of Interchangeable Medicines, containing groups of atorvastatin products, will be published in mid-August. The IMB will publish subsequent lists for other groups of medicines on an ongoing basis. From the end of the year onwards, hundreds of thousands of prescriptions will be subject to generic substitution, which will offer choice and reduced prices to patients.

The legislation provides that the HSE may set a reference price for each group of interchangeable products published on the List of Interchangeable Products. Reference pricing involves the setting of a common reimbursement price, or reference price, for a group of interchangeable medicines. It means that one reference price is set for each group or list of interchangeable medicines, and this is the price that the HSE will reimburse to pharmacies for all medicines in the group, regardless of the individual medicine's prices. The first reference price is expected to be implemented by November.

Under the latest agreement negotiated with the Association of Pharmaceutical Manufacturers of Ireland which came into effect on 1st November 2012, the price of generic medicines published on the List of Interchangeable Medicines by the IMB will be immediately reduced from not more than 50% to not more than 40% of the pre-patent expiry prices of the equivalent branded original medicines, i.e. a reduction of 20% on the current price of generic products. This price reduction will take effect in advance of the setting of a reference price.

Eligible patients using State drug schemes like the Medical Card or Drugs Payment Scheme will not face any additional costs for products priced at or below the reference price. If a patient would like to receive a particular brand that costs more than the reference price then the patient will have to pay the additional cost of that product. In cases where substitution is prohibited for clinical reasons, patients will not face any additional costs if the prescribed product costs more than the reference price.

The Act also provides that the HSE may use a competitive process to determine the relevant price of medicines reimbursed under the community drugs schemes. While there are no plans at present to introduce competitive tendering, in the case of high volume, off-patent medicines, it is expected that the HSE will set reference prices where appropriate. Reference prices will be set in accordance with the criteria set out in the legislation, in particular, securing value for money for the taxpayer.

This legislation will promote price competition, a greater use of generics and deliver lower medicine prices for the taxpayer and for patients. It is not possible, at this juncture, to provide accurate figures regarding potential savings resulting from the introduction of generic substitution and reference pricing, as these depend on various factors including prevailing prices, number of competitors, availability of substitute products, and market dynamics.