Collective approach on drugs: United move may help cut health bill

Next Wednesday Martin Shkreli, currently a guest at New York’s Metropolitan Detention Center in Brooklyn, is expected to discover how long he will spend in prison on securities fraud convictions. 

At the upper end of the scale, he could spend 20 years behind bars. 

However, his fate will not provoke widespread distress. 

A multimillionaire — still — the former hedge-fund manager became the poster boy for out-of-control capitalism and greed when, in September 2015, as CEO of Turing Pharmaceuticals, he increased the price of the toxoplasmosis treatment drug Daraprim by over 5,000% — up to $750 a pill from $13.50. 

After public outrage that shakedown price was cut to $375 for some hospitals.

Shkreli may be the alpha example of how drug companies use their take-it-or-leave-it leverage to demand prices that often seem out of kilter and sometimes close enough to extortionate. 

However, in Ireland, pharmaceutical, biopharmaceuticals and chemistry companies’ leverage extended to making a thinly-veiled threat on future investment if the Government demanded lower drug prices. 

The sector directly employs more than 30,000 people — not counting the 350 MSD jobs announced just yesterday. It generates exports worth something in the region of €54bn.

Those are impressive numbers but, in a society where the State pays for 85% of the pharmaceutical spend, it is essential that anything that might reduce that tremendous bill — €2.5bn in 2015— be considered. Figures from 2012 showing that we had the third highest per capita expenditure on drugs in the 25 EU countries for which data was available confirm that. 

All EU countries have endured substantial increases in drug costs since the turn of the century but Ireland’s increase was among the sharpest, nearly tripling from 2000 to 2008.

In that context, the news that the Government believes drug prices will fall in the coming years because of a new collective approach by a number of EU states to dealing with drug manufacturers is very welcome. 

The initiative is a response to the recent dispute over the cost of the cystic fibrosis drug Orkambi and possibly difficulties over Respreeza, a drug shown to slow the progression of genetic emphysema. 

There are other wonderful, badly-needed new drugs too that do not meet unavoidable value-for-money criteria causing heartbreak and no little conflict.

Health Minister Simon Harris told the Cabinet yesterday that Ireland has, in principle, agreed a deal with Belgium, the Netherlands, Luxembourg, and Austria to formally negotiate as a group with pharmaceutical firms. 

This collective approach may not entirely turn the table on the manufacturers but it will strengthen the hand of public-interest negotiators. What was once an uneven playing pitch may, in time, become one.

This idea could work on several levels, It might reduce drug prices and, more importantly at a moment when Brexit looms and the EU can seem remote, it shows that a community-wide approach empowers ordinary citizens. 

That’s the good news but the bad news may be that this collective approach may be a threat to our corporation tax rates.

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