Thirty years ago, the shift to a globalisation model for medicines that had lost patent protection prioritised cost-efficiency and large-scale production capabilities. It marked a turning point in the industry.
Local and EU production reduced. Reliance on Asia accelerated, with China and India emerging as the dominant players. The cost advantages of generics, offering the same medical efficacy, became a game-changer.
Year-on-year demand levels surged, driven by an ageing population, the increasing prevalence of chronic illnesses and growing pressure on health budgets.
Most recent figures indicate that 120 million prescription medicines are dispensed annually to Irish patients. While we continue to lag behind the European average, generics account for 60 per cent of these.
While the critical role of medicines in our lives is clearer than ever, so too is the need to balance demand, affordability and, essentially, accessibility. The sourcing and funding of medicines face growing strain.
Cracks in the globalised model are now fissures. Supply-chain fragilities, initially apparent in 2019 and intensified by Covid, have worsened.
The cost advantages of Eastern manufacturing are fading, prompting manufacturers to reconsider the sustainability of supplying mainstay medicines at bargain basement prices. The withdrawal of many medicines from the Irish market reflects this. Countries like Ireland, heavily reliant on a diminishing number of offshore suppliers, have faced worsening medicine shortages.
Since 2020, shortages in key medicines such as hormone replacement therapy (HRT), antibiotics, blood-pressure medications and multiple other mainstay treatments have become routine. More than 400 medicines are now out-of-stock, a figure that has more than doubled in two years. Critically, on average 40 per cent of these have only one supplier, compared to a European average of 25 per cent.
Simultaneously, demand for specialised medicines to treat complex conditions is rising. These advanced treatments require intricate, resource-intensive manufacturing processes, driving up costs. The new Programme for Government is right to commit on access to new medicines. Creating the financial headroom to pay for them, however, is a real test.
Our current annual spend on medicines, including fees, stands at €2.9 billion. This is double what is was a decade ago. In addition, under the Drug Payment Scheme, patients must cover the first €80 of their monthly medication costs.
Economically, Ireland’s pharmaceutical sector is a cornerstone. We have more than 90 companies here employing 45,000 people, producing high-value biologic and patented medicines for global markets. These companies contribute billions of euros in tax revenues and account for half of the Ireland’s export value.
But, vital as this is, an export-focused model is limited in meeting domestic patient needs which, for the most part, rely on imports. Such a contrasting medicines model at a time of supply chain vulnerabilities and geopolitical change is risky.
No going back
Medicine supply chains will not return to the way they were. Governments and manufacturers are recalibrating. Germany and France are diversifying, increasing domestic production to enhance resilience. Scandinavian countries have adopted centralised purchasing systems and contingency plans to ensure rapid access to alternative medicines during disruptions.
Other nations, including Portugal, the UK, Malta and Switzerland, are bolstering stockpiling efforts and adapting regulatory frameworks to meet the evolving challenges.
“America First” and what that may mean has also now to be factored in.
In the manufacturing sector, competition is increasingly internal in nature as buyers compete to secure supplies which invariably gravitate to markets offering higher prices. Ireland’s small-scale disadvantage and heavy-reliance on external supply chains leaves it vulnerable. There are multiple examples of mainstay medicines which once would have been supplied here but are now going elsewhere in Europe.
Opportunity for change
Ireland’s medicines pricing agreement expires in September, presenting an opportunity to rethink our strategy. While the existing agreement improved on previous iterations, it was quickly outpaced by international shifts.
Bolstering our domestic resilience in an affordable, adaptable way demands a response that aligns with new realities. While we cannot control everything, there are many things we can do to help ourselves against supply vulnerabilities.
Remarkably, unlike 137 other countries, Ireland still lacks its own “essential medicines list” to anticipate and address supply challenges. Such a list, iterative and transparent in nature, would leave us better placed to anticipate, mitigate and manage supply challenges, encouraging competition among suppliers in the process.
Implementing a minimal supplier rule would reduce reliance on single sources, enhancing resilience. Enhanced transparency on volumes, spending and ingredient sources is critical given the extremely high levels of unlicensed medicines dispensed here.
Introducing a fast-track model for essential medicine applications would streamline approvals during shortages. We can better deploy existing legislative levers on price. Partnering with other countries can improve trading and access capabilities. Improved reporting would aid decision-making and foster market competition.
Such measures can form the backbone of a more resilient, adaptable medicines strategy that secures the supply of mainstay medicines while creating budgetary headroom for innovation. For the newly appointed Minister for Health, an early win is on offer. The coming eight months will be decisive.
Sandra Gannon is managing director of Azure Pharmaceuticals, a producer of generic medicines
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