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Ireland to impose reference pricing and increase generic substitution

Department of Health’s proposals will be contained in forthcoming legislation

The Irish government has laid out plans to impose reference pricing and increase the country's use of generic substitution in order to lower its medicine bill.

The proposals will be contained in the forthcoming Health (Pricing and Supply of Medical Goods) Bill, which is due to be published before the next session of the Dáil.

The Bill will give the government powers to “introduce a system of Reference Pricing and Generic Substitution for drugs prescribed under the GMS [General Medical Services scheme] and community drug schemes”.

Minister of State for Health Róisín Shortall told the Dáil: “These reforms will promote price competition among suppliers and ensure that lower prices are paid for these medicines resulting in savings for taxpayers and patients."

She added: “The Government recognises the potential savings, for the taxpayer, which could be made from the use of generic drugs instead of proprietary drugs.”

The Irish pharma industry criticised the lack of consultation over the changes, and the Irish Pharmaceutical Healthcare Association (IPHA) noted the Department of Health already has a process in place for evaluating new medicines and deciding if they should be reimbursed.

IPHA chief executive David Gallagher said: “We support evaluating the safety, efficacy and cost-effectiveness of medicines but we are concerned that, as referenced in the Dáil, the Department of Health is looking at a new process without consulting any industry group and this is likely to result in further delays in providing advanced medicines to patients. 

“We are also concerned that the proposed Health Bill appears to reach far beyond details of generic reference pricing and substitution and seems to extend more generally to the provision of medicines. We believe in- depth consultation with industry is critical to ensure there is no further hindrance to patient access to advanced therapies.”

IPHA says the medicine prices in Ireland are “broadly in-line with priced charged across Europe” and are already set with reference to other European markets.

“There are differences in costs in Ireland to the state and the public,” Gallagher said, “but this is not as a result of the prices set by pharmaceutical companies.”

And he noted that medicines spending fell in 2010 and 2011 “as a direct result of savings delivered by pharmaceutical companies to the state” and is forecast to fall further in 2012.

The planned pricing changes have already caused one specialty pharma company to hurriedly factor them into its financial forecasts.

Alliance Pharma's chairman Michael Gatenby told the firm's annual general meeting last week: "We continue to await developments in Ireland, where there is discussion underway about changes to pricing and where we expect a move towards generic substitution which could impact Nu-Seals sales.”

28th May 2012

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