HSE targets €110m cut in drugs’ bill - Drug cost savings

The announcement that the HSE is to try to shave €110m from its drugs’ bill this year by renegotiating prices with drug companies is very welcome, even if the proposal has an all-too-familiar ring to it — and even if such very welcome savings would fall well short of 10% of the estimated €1.7bn spent by the Government on drugs last year.

A second announcement, that the HSE is almost €60m over budget for the first two months of the year, and that that overspending may hit €350m for the full year, adds urgency to negotiations around drug prices. The overrun of €58.4m was driven by overspending of €48.8m in hospitals and €8.8m in social care. An overspend of €350m seems to show a savings target of €110m in a poor enough light, even if realising it remains a considerable challenge.

It is expected that the HSE may invoke legislation because savings offered during negotiations between the Department of Health, the Department of Public Expenditure and Reform and the pharmaceutical industry, which began in March, have been deemed inadequate.

These negotiations come at a moment when it is recognised that Irish patients pay significantly more for some medications than their peers in many other European countries, including Spain, Belgium, Finland, and France. This disparity imposes an unfair burden on our already-strained public health service and begs a question — why don’t the HSE buy drugs in the EU country where they get the very best deal? Why not make globalisation work for our health service? After all, the principle of buying treatment unavailable here is well established and of great benefit to those who use it.

The welcome for the proposal must be tempered too by the thinly veiled threat made by the pharmaceutical sector when such an idea was floated previously — cut our prices and we’ll cut investment in Ireland, they warned, albeit in couched terms. Despite that, pharma exports continue to grow at an impressive pace and profit levels recorded in the sector are pace-setting and impressive. It does not look like an industry that would totter towards collapse if the HSE managed to win a less than 10% reduction in prices paid for drugs.

This prospect is not the only significant proposal around how drugs are bought and sold in Ireland.

The National Association of GPs is to consider how its members might begin to prescribe and sell commonly-used medicines to patients. This one-stop-shop idea may have benefits for consumers and help protect strained incomes at doctors’ surgeries but, naturally, pharmacists are concerned.

Something around €2.7bn is spent on medicines in pharmacies each year and, as well as being a lucrative business, many also provide essential services to local communities. If those services were threatened by doctors cherry-picking common drugs for direct sale to patients and thereby cutting the profit incentive that allows pharmacists stock the widest range of drugs, it is not certain the consumer would benefit.

However, any such proposal must be viewed with the objective of improving services to consumers rather than moving the profit opportunity from one sector to another.