Pharmacy drugs scheme never planned as source of profit - HSE

THE HEALTH Service Executive (HSE) is contending a scheme for paying pharmacies to provide free drugs and services under the General Medical Scheme (GMS) was "never intended to be source of profit" for pharmacies but only to reimburse them the cost of drugs, the High Court was told yesterday.

John Gordon SC, for the HSE, said his client contended the Minister for Health retains a power to alter the payments to pharmacies to reflect what is happening "on the ground".

He said the basic ex-wholesale price (BEWP) paid to pharmacists by the HSE for drugs provided by them under the scheme had from 1971 included a 17.6 per cent mark-up to reflect what wholesalers were invoicing pharmacies. However, that situation had since changed and the Minister was entitled from March last to reduce that mark-up to 8 per cent.

The price was never intended to be "set in stone" and it was his case the BEWP had changed with the decision to reduce the mark-up, he said. It would "make no sense at all" for the HSE to have agreed to the regime contended for by pharmacies, counsel added.

Counsel was, in replies to queries from Ms Justice Mary Finlay Geoghegan, outlining the HSE's defence to a legal challenge by more than 20 pharmacies to "unilateral" decisions by the HSE to reduce the amounts paid to them for free provision of drugs and services under the GMS. The case is being heard in the Commercial Court and is expected to last six days.

In their action, the Hickey group of 24 pharmacies claims the HSE decisions of September 2006 and September 2007 are in breach of their contracts under the Community Pharmacy Contract (CPC) of 1996 and will lead to annual losses of more than €2 million.

The challenge, aimed at overturning the new HSE payments scheme which came into effect last March, is regarded as a test case for hundreds of other pharmacies.

In evidence yesterday, community pharmacist David Hickey, Garville Avenue, Rathgar, Dublin, told his counsel, Gerard Hogan SC, his case was he had a contract under which his pharmacies were entitled to be paid the BEWP as provided for under the 1996 CPC, incorporating the 17.6 per cent mark-up.

He said his pharmacies make claims to the HSE for some 80,000 items provided monthly under the GMS scheme and had been paid the BEWP "without demur" until March last when the new scheme came into operation. Now they were being paid on the basis of an 8 per cent mark-up. He had never been told by the HSE or health boards he was entitled to be paid only the net price which he actually paid to wholesalers.

Mr Hickey agreed most pharmacies secure discounts from wholesalers in relation to drugs purchased, including GMS drugs, and said the discounts negotiated by him were in the region of 10 to 12 per cent. He agreed these were not passed on to the HSE but said the discounts were part of a package agreed with wholesalers for efficiencies achieved by pharmacies.

He also agreed benefits achieved by pharmacies as a result of special offers from drug wholesalers were not passed on to the HSE.