John Brassil (Kerry, Fianna Fail)
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1187. To ask the Minister for Health the reason for the discrepancy in the estimated savings from a framework agreement with an organisation and his Department as reported in a recent report by a person (details supplied); and if he will make a statement on the matter. [38274/17]

Simon Harris (Wicklow, Fine Gael)
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The new four-year Framework Agreement on the Supply and Pricing of Medicines, signed in July 2016, which is available at is an agreement between the State and the Irish Pharmaceutical Healthcare Association (IPHA), and is expected to deliver approximately €600 million in savings over the lifetime of the Agreement from IPHA companies and €150 million in savings from non-IPHA companies. The savings were calculated, with the support of an international consultancy firm, on the basis that the alternative to an agreement was no agreement. The option of continuing with the current agreement, as argued in the paper referenced by the Deputy was not an available or viable option.

The savings are a function of the terms of the new agreement. The new Agreement contains a number of features which represent clear additional value over the terms of the previous 2012 Agreement. The reference basket of countries used to set prices in Ireland has been expanded from 9 to 14 countries and, importantly, includes lower cost countries. For the first time, the Agreement provides for an annual price realignment, which will ensure that the prices of medicines in Ireland reduce in line with price reductions across the reference countries. This will ensure the State achieves better value for money on the cost of medicines as prices in other basket countries are adjusted downwards over time. In addition, the Agreement secured a 30% reduction in the price of biologic medicines when a biosimilar medicine enters the market.

A key focus of this agreement was to achieve lower prices in the face of both demographic pressures on expenditure and the continued development of new medicines, many of which pose affordability challenges to the Irish health service and indeed internationally. The HSE included a savings target of €148m in the National Service Plan 2017 for drug related savings arising from the agreement and the launch of a biosimilar for Embrel in 2016.