Basing the prices of new branded drugs on the lowest instead of the average price in nine European Union (EU) member states could cut drug prices by up to 25%, the Irish government has been told.

Currently, Ireland bases the ex-factory price of new branded drugs on their average price in Belgium, Denmark, France, Germany, Netherlands, Spain, Finland, Austria and the UK. The report, which was commissioned from the Health Service Executive from the independent Economic and Social Research Institute, says that prices in Ireland should instead be based on the lowest price among these nine nations, and also that the prices of new branded medicines should be updated every six months, instead of between one and three years as at present.

The report also calls for the prices of high-volume drugs with generic competition to be set on the basis of competitive tenders, rather than based on the price of the originator product as is currently the case, and that the state pharmaceutical schemes should pay the lowest price among a group of interchangeable products. At present, the state pays the price of the product dispensed which is decided by the medical practitioner.

Pharmacists should also be able to dispense a medicine which is interchangeable with that prescribed by a healthcare professional, rather than having to dispense the brand written on the prescription, as they are now required to do, and prescriptions should be written generically, subject to certain exceptions, the study recommends.

Its authors note the progress made in Ireland over recent years in reducing the cost of medicines delivery, but say that more needs to be done. Pharmaceuticals currently account for around 17.5% of public health expenditure in the country, up from 14% in 2000, while Ireland's per capita spending on pharmaceuticals in 2009 was among the highest for Organisation for Economic Cooperation and Development (OECD) member nations, they say.

Their report also calls for more information for patients to be made available at pharmacies. In-store displays, using a standard template, should inform the public of the pharmacist's dispensing fee, pharmacy services and mark-ups, it says, and pharmacists should also be able to offer and to advertise that they will pay, in whole or in part, any patient co-payments for state pharmaceutical schemes. At present, this is prohibited.

Implementation of these recommendations will lead to better value for money via lower prices, better-informed patients and a more competitive and patient-responsive pharmacy sector, say the report's authors. They also note the timeliness of their proposals, given that the government's agreements with the pharmaceutical industry expire this year, and legislation on reference pricing and generic substitution is set to be introduced.