New agreements should push down price of medicines

A blizzard of surveys in recent years has told Irish consumers what they already suspected; that they are paying through the nose for commonly-used medicines.

What patients would like to know now is: why are drugs so expensive; and will things improve? This comprehensive study from the ESRI adds to the debate by answering the first question and sounding a warning on the second.

The reasons why prices are so high are complex, but they start from the fact that Ireland is an early adopter when it comes to pharmaceuticals. Life-saving medicines are made available to patients as soon as they become available. This is good for patients, but it means that prices are set at the highest point. As time passes, availability widens and prices fall in other countries, but not here.

Drugs eventually go off patent, but that original price is a key determinant is setting the level of the off-patent price and the cost of generic copies of the original. And while prices are regularly realigned (downwards) in other countries, in Ireland the negotiation of agreements with the drug industry are, as the study points out, drawn-out affairs lasting up to five years.

Some believe high costs are the price Ireland pays for having a big pharma sector, but the study dismisses this notion. Ireland accounts for a very small share of the EU market, so prices here affect profit levels minimally. Besides, the UK managed to cut prices aggressively and it has a substantial pharma sector.

The report finds the use of generics is increasing dramatically but this isn't cutting costs because in Ireland these drugs are priced at almost the same level as the original medicine. Irish doctors' penchant for prescribing the dearest generic "needlessly raises State and patient pharmaceutical costs, but with little or no improvement in the quality of care".

New agreements
So will prices drop? On the face of it they should. We have new agreements with the drugs manufacturers. New legislation requires pharmacists to substitute cheaper generics even where doctors have prescribed more expensive branded drugs. A new system of reference price will mean the HSE reimburses for drugs only up to the level of the cheapest product in a group of interchangeable medicines.

One bitten, twice shy, however. Some previous deals failed to arrest the upward trend in drug prices. The ESRI says only that the latest legislation offers the “possibility” of lowering prices. Much will depend on what level the Government sets for reference prices.