The four-year pricing deal agreed in September 2006 between the drug industry and the Irish government is “well on the way” to saving 300 million euros over four years, but other state negotiations with wholesalers and pharmacists have “utterly failed to produce a single euro of additional savings,” industry leaders have said.

A key feature of the agreement between the Irish Pharmaceutical Healthcare Association (IPHA), which represents the research-based industry, and the Health Services Executive (HSE) was a series of price cuts, the most recent being implemented on January 1, 2009. While these concessions were onerous for the industry, they were offered on the basis that the agreement would provide a stable framework for the following four years, the industry group has told the Cabinet committee on health.

IPHA also points out that the deal was reached after the government had made it clear that this would be the first in a series of negotiations by the committee “to examine all aspects of the drug delivery system, from the manufacturer to the patient.”

However, to the industry’s “disappointment and frustration,” government negotiations with the other elements of the supply chain – the wholesalers and pharmacists – “have utterly failed to produce a single euro of savings,” says the Association.

New pharmacy payment structures were announced by the HSE in September 2006 and September 2007, aimed at saving around 100 million euros, but a court action brought against them by a group of pharmacists in July 2008 was successful and could cost the Executive as much as 50 million euros in repayments.

"The industry has honoured its commitments under the agreement and fully expects no less of its partners on the state side,” the industry group has told the Cabinet committee, and it goes on to warn that any expectation of further savings to be gleaned from IPHA members “could not possibly, under any circumstances, be met."

The Association’s president, Gerald Farrell, also emphasized this point late last year at the IPHA annual dinner, which was attended by the Minister for Health and Children, Mary Harney. “Any suggestion or expectation that there are further savings to be gleaned from my members…is unacceptable and will send a very negative signal to those in our corporate boardrooms who make decisions about continuing investments in Ireland,” Dr Farrell, who is managing director of Eli Lilly in Ireland, warned the Minister.

The row comes in the context of last month’s report in the Irish Medical Journal that drug spending in Ireland rose fivefold in the last decade to reach more than 1.74 billion euros in 2007 and account for 13.5% of the national health care budget. The increase, which is one of the highest in Europe, is due not only to the aging population and the General Medical Services (GMS) scheme being extended to cover 1.27 million people (about 30% of the population), among other factors, but also because only 19% of prescriptions in 2007 were written generically.

The average cost of a drug prescribed under the GMS went up from 11.20 euros in 1997 to 23.27 euros in 2007, says the study, which was conducted by researchers at the National Centre for Pharmacoeconomics at St James’s Hospital in Dublin. Aspirin is the most frequently-prescribed drug on the GMS, and the Scheme spends the most money on Pfizer’s cholesterol-lowerer Lipitor (atorvastatin), at 47.4 million euros in 2007, it shows.

Meantime, latest government figures show that pharmaceuticals and chemicals now account for more than half of Irish exports. While the overall export total fell 4% during January-September last year, overseas sales of medical and pharmaceutical products rose 9% to 12.12 billion euros, and exports of chemical materials were up 41% to 2.78 billion euros.