Price deals on generic drugs save State €1.5bn since 2006

Price deals with the pharmaceutical industry have saved the State more than €1.5bn since 2006, the Oireachtas Joint committee on Health and Children has been told.

Feargal Goodman, assistant secretary of the primary care division in the Department of Health, told the committee that generic drugs now account for about 68% of the total off-patent market.

As part of Ireland’s troika commitments, a 70% target for generic penetration was to be achieved by next year.

Mr Goodman said that, by the end of 2014, generics accounted for about 68% of the total off-patent market so the target for the end of this year had already been exceeded.

A new pricing system means that the HSE will set one price, called the reference price, that it will pay for a group of interchangeable medicines.

Only the reference price is refunded by the State, so the patient is encouraged to opt for a generic medicine at or below the reference price.

John Hennessy, national director of the HSE’s primary division, said the health authority refunded €1.92bn on medicines and appliances last year.

However, expenditure on hi-tech medicines had increased from €315m to €485m in the last five years.

Mr Hennessy said a significant proportion of the €1.5bn in savings had been invested in new medicines.

“In 2012, the State committed to invest up to €210m of savings on new medicines and this is expected to reach €250m by the end of 2015,” he said.

He said companies must now provide “robust evidence” to justify their price. Before 2006, there was no formal economic evaluation of new medicines.

Mr Hennessy said there were exceptional cases where medicines were considered for reimbursement. However, the HSE was increasingly faced with what companies considered to be exceptional medicines.

He said there were increasing expectations that the State would be able to reimburse medicines considered to be exceptional but that in no way approached any conventional understanding of cost-effectiveness.

He said the first reference price had been set in November 2013 and, by the end of this January, the HSE had set reference prices for 110 interchangeable groups across 37 different medicines.

The HSE is reimbursing in the order of 1.5m claimed items every month for reference priced medicines.

Alexion, which produces the expensive blood disorder drug Solaris, said it did not want to attend the committee’s hearings on the cost of prescription drugs because it would place “inappropriate focus” on the detail of individual pricing agreements in Ireland and elsewhere.

Last month, the HSE reluctantly approved the drug at an estimated cost of €430,000 per patient per year.

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