Ireland will introduce reference pricing for medicines next year, government officials have confirmed.

Around 1.6 million people are expected to be affected by the new system, under which only the “reference drug” selected by the Health Service Executive (HSE) from a group of treatments will be reimbursed. Patients who want a more expensive product and are covered by the Drugs Payment Scheme – which enables individuals or families who do not hold medical cards to limit their spending on prescribed drugs to no more than 100 euros a month - will have to pay the difference in price.

The use of reference pricing has been recommended by the Irish Medical Organisation (IMO) as an alternative to the introduction of the nation’s first-ever prescription charges, which Health Minister Mary Harney says she is considering, as the government seeks to make savings of over 1 billion euros next year on the country’s 16 billion-euro annual health budget.

Her proposal, for a 50-cent charge on each prescription item dispensed to the nation’s 1.4 million medical card-holders under the Community Drugs Schemes, has been widely condemned by health care professionals, consumer groups and opposition politicians, but the Taoiseach (Prime Minister), Brian Cowen, said last week that it would generate savings of some 30 million euros a year. While no decision has yet been taken as to whether charges will be introduced, Mr Cowen pointed out that prescriptions have increased by 22 million since 2003 and that “a sustainable way forward” for dealing with the rising drugs bill, which is forecast to reach 3 billion euros in 2010, has to be found.

It is forecast that around 60 million medical items will be prescribed for Ireland’s medical card holders next year.

However, the IMO and other groups are calling for savings to be made through increased generic prescribing, pointing out that in 2007 only 19% of prescription items were dispensed generically in Ireland compared to as much as 64% in the rest of the UK, and also that prices of generics are too high. According to the European Commission inquiry into the pharmaceutical sector, prices of generics in Ireland remain on average at 80% of the originator price, one year after patent expiry.

“Unless there is a real financial saving to be made in terms of generics, neither the prescriber nor the recipient of the drug will be sufficiently motivated to make the move to generic medicines,” says Dr Ronan Boland, chairman of the IMO’s general practitioners committee.