HSE moves to slash drugs mark-up

PHARMACIES and drugs companies have claimed a decision by the Health Service Executive to slash the mark-up paid for medicines will put many community pharmacists out of business.

Describing the move as “catastrophic”, the Irish Pharmaceutical Union (IPU) and drugs wholesalers, United Drug and UniPhar, said many communities would be left without pharmacies if the plan went ahead.

Under the deal, which is to take effect from next January, the 17.66% mark-up presently paid by the HSE to wholesalers is to drop to 8% with a further reduction to 7% in January 2009. The agreement is expected to save the organisation 100 million in 2008 alone.

At 17.66%, the mark-up is more than twice the European average. The main beneficiaries have been the three wholesalers holding 90% of the Irish market — United Drug, Cahill May Roberts and UniPhar.

HSE chief executive,

Professor Brendan Drumm, said the new arrangement was reached after a consultation process which included drugs manufacturers, importers and distributors, and was essential to stem escalating drugs costs which had almost quadrupled in 10 years from €332m million in 1997 to €1.6bn last year.

However, IPU president, Michael Guckian, described the HSE announcement as a “hammer-blow” to the pharmacy profession. “Under the guise of a reform of the payments system for wholesalers, the HSE has actually set out to slash the price it pays pharmacies for medicines, without any regard to its impact on patients or pharmacy services,” he said.

UniPhar’s chief executive, Jim Canavan, said by threatening the viability of pharmacies, the move would also impact negatively on wholesalers. “The HSE’s change is far too aggressive,” he said.

United Drug called on the Minister for Health to intervene. “A draconian intervention of the nature proposed will impact unnecessarily on services to patients and make many pharmacies unviable, particularly smaller businesses in rural areas,” said its chief executive, Liam FitzGerald.

The new deal follows an agreement reached last year with drugs manufacturers to cut the costs of drugs which were no longer patent protected.

A third cost-cutting move was also signalled yesterday, with the HSE saying it needed to move on discussions with the IPU on the issue of retail drugs prices, but this too is set to run into opposition.

Prof Drumm also warned that all new so-called wonder drugs coming on to the market would have to pass a cost-effectiveness test before being prescribed here. He said the HSE could not keep running to Government for more money every time bills increased.

“The public are going to have to become much more informed about how useful drugs are when they come onto the market. There is a challenge as to how society can afford to pay for that. We are going to have to be much more careful going forward to make sure that these drugs do carry the kind of benefit that justifies their expense,” he said.

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