Bernard Durkan (Kildare North, Fine Gael)
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36. To ask the Minister for Health his expectations in regard to reducing the cost of medicines to the public and the health services, with particular reference to the need to ensure that such costs here are in line with best practice throughout the European Union, thereby availing of the benefits of the Single Market, and reducing health costs to the Exchequer; and if he will make a statement on the matter. [7978/15]

Leo Varadkar (Dublin West, Fine Gael)
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The Government has introduced a series of reforms in recent years to reduce the prices of drugs and medicines which are paid for by the HSE. This has resulted in reductions in the price of thousands of medicines. Price reductions of the order of 30% per item reimbursed have been achieved between 2009 and 2013; the average cost per items reimbursed is now running at 2001/2002 levels.

A major deal on the cost of originator drugs in the State was concluded with the Irish Pharmaceutical Healthcare Association (IPHA) in October 2012. It is delivering 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 IPHA agreement provides that prices are referenced to the currency adjusted average price to wholesaler in nine EU member states (Austria, Belgium, Denmark, Finland, France, Germany, Netherlands, Spain, and UK) and these are the maximum prices paid by the HSE for originator drugs supplied through the community drug schemes. The gross savings arising from this deal will be in excess of €400 million over 3 years. Over half of the savings to be delivered - €210m - were to be reinvested by the State into the provision of new and innovative drugs.

As part of the Mid-Term Review of the 2012 Agreement, my Department and the HSE have been engaging with IPHA in seeking to achieve additional savings in expenditure on drugs and medicines to ensure that funding is available to enable patients to have access to new and innovative drugs.

An agreement was also reached with the Association of Pharmaceutical Manufacturers in Ireland (APMI), which represents the generic drugs industry, in 2012. Under this Agreement the maximum price the HSE pays for generic products is now 40% of the initial price of an originator medicine. This has resulted in the price differential between off-patent drugs and most generic equivalents increasing from 5% to approximately 20%.

It is estimated that the gross combined savings from the 2012 IPHA and APMI deals amounted to €125 million in 2013 with €148 million generated in 2014.

The continued implementation of generic substitution and reference pricing as provided for under Health (Pricing and Supply of Medical Goods) Act 2013 is also contributing to reducing the cost of medicines. It is estimated that reference pricing will yield approximately €50 million in savings in 2014 and a further €25 million in 2015. Reference prices will ensure that generic prices in Ireland will fall towards European norms and once set reference prices must be reviewed every 12 months.

Further reductions in the price of medicines in Ireland remains a priority for the Government, however, it is worth noting that neither the Minister for Health nor the HSE has any power to set the prices of drugs and medicines purchased by private patients. It would none the less be disappointing if all pharmacists were not passing on the benefits of lower prices to patients.