€7 million shortfall as mark-up on non-drug items escapes cutbacks

THE DEPARTMENT of Health rowed back at the last minute on plans to cut the wholesale mark-up on non-drug items such as dressings and incontinence products provided by pharmacists under the GMS and community schemes.

The decision in late March to drop the proposal meant that initial plans to generate savings on fees and allowances for community pharmacists by €43 million had to be scaled back to €36 million. At the beginning of April, Minister for Health James Reilly announced that under financial emergency legislation he was putting in place:

* A reduction from 10 to 8 per cent in the wholesale mark-up payable in respect of drugs dispensed under the GMS and community drugs schemes.

* A reduction from 50 to 20 per cent in the retail mark-up payable under the Drugs Payment Scheme and the Long Term Illness Scheme in respect of non-drug items, controlled drugs and fridge items.

* A 50 per cent reduction in the patient care fee under the High Tech Medicines Scheme for months when medicine is not dispensed (fee to be reduced from €60.52 to €30.26) .

However, new Department of Health files, seen by The Irish Times, show that up until a few days earlier, officials had also been working on plans for a reduction from 17.6 per cent mark-up to 8 per cent on non-drugs and other items which include dressings, incontinence products, ostomy products and diagnostic tools.

Senior officials in the Department of Health had originally included the cuts to reduce the wholesale mark-up on non-drug items as part of an overall four-point proposal given to Dr Reilly on March 15th.

However, on March 30th, senior officials told Dr Reilly that a difficulty had come to light regarding the proposals to reduce the wholesale mark-up on the non-drug items.

“The HSE has advised us that it has no evidence of a fixed wholesale element in respect on (sic) non-drug products. Furthermore, the HSE advises that there is ‘very little documentary evidence of bonusing and discounting in the non-drug arena’,” a senior Department of Health official told the Minister.

“The HSE says that due to the absence of transparency in relation to the wholesale mark-up on non-drug items, there is a risk that the proposed reduction could result in the disruption of supply, eg if the regulations set a price below the price paid by the pharmacist.

“In the light of this new information, I am now recommending that we should not make any reduction in respect of the wholesale mark-up for non-drug items. This will result in a shortfall in the savings that we had projected. The exact amount is difficult to quantify pending further analysis but we estimate it at €7 million.”