Pharma lobby warns against new drug price cuts

Ireland’s pharmaceutical industry has fired a warning shot against any attempt by Government to drive further cuts in the price of patented drugs.

The Irish Pharmaceutical Healthcare Association says its members must be able to charge a "fair and reasonable" price for new medicines that allows companies to make a "fair return" on their investment.

The warning is contained in a booklet published by the association, which suggests that drug prices are currently at a fair level, though savings could be made through greater use of generic medicines.

Minister for Health Leo Varadkar has identified cheaper drug prices as one of his priorities while in office. Earlier this month he said €130 million in savings had been identified from drug costs and other areas, but he did not spell out how these were to be achieved.

Ireland has among the highest drug prices in the world, numerous reports in recent years have found, including a number from the troika that oversaw Ireland's debt.

However, the association says a 2012 agreement with the Department of Health has resulted in savings of almost €800 million in the HSE's drugs bill and average price reductions of 30 per cent per item.

Generic costs

Where prices remain high, the branded pharmaceutical industry contends this relates to the cost of generic medicines or mark-ups imposed by wholesalers and pharmacists.

According to the association booklet, the success of the pharmaceutical industry depends on governments adopting “a balanced approach” across the lifecycle of patented medicines.

“Key to this is permitting timely reimbursement of new medicines at a fair and reasonable price, whilst at the same time harvesting efficiency savings through the development of a well-functioning generics market where the savings accrue to the State or individual patients.”

The association says a balance must be struck between the State’s need for value for money and industry’s need to have a fair return on its investment. “The right balance can be achieved through a sound partnership approach with Government.”

It says the 2012 agreement ensured Irish drug prices were set at the average of a basket of nine European countries, were “neither too high nor too low” and served to ensure continuity of supply of products for the consumer.

Briefing notes prepared for Mr Varadkar earlier this year show his officials tried to have the price of drugs in Ireland reduced to the lowest of the basket of nine countries, but agreement with industry could not be reached. The agreement, which expires next year, was supposed to have been reviewed mid-term, but this has not happened.

Last week, the Irish Pharmacy Union said medicine shortages were posing a "significant risk to patient health".

Lower prices were leading to the export of drugs out of Ireland to countries where prices were higher.