THIS TIME last year the Health Service Executive (HSE) was planning to save about €100 million by introducing a new payment structure in the pharmacy sector.
However, 12 months later, following rows and ultimately a legal action, the former payment system has been reintroduced and the HSE is potentially facing having to pay tens of millions of euro back to pharmacists.
In September 2007, the HSE said it wanted to reduce the margins paid to wholesalers for drugs from 17 per cent to 8 per cent.
However, as it had no direct relationship with wholesalers, to achieve this aim it reduced the reimbursement it paid to pharmacists for dispensing drugs and medicines. The HSE argued that the 17 per cent margin was shared between wholesalers and pharmacists in the form of discounts.
Ultimately, the HSE introduced the new payment system in March.
Legal action was later instituted and, last September, the High Court found the HSE was in breach of its contract with pharmacists when it decided to reduce payments for provision of drugs and services under the medical card scheme. The HSE was ordered to pay the costs of the case.
In October, the HSE decided to restore the original mark-up arrangements. The High Court has now ordered that the HSE must pay for the losses suffered by the Hickey group of pharmacies as a result of the decision to reduce the payments last March.
The total bill could be substantial if other pharmacies also seek for their losses to be reimbursed.
Official HSE reports in recent weeks suggested that the court action could cost it €50 million.
The HSE’s difficulties do not end there. It still wants reforms in the payment system for pharmacists, this week warning that further cost-containment may be needed if reduced payments introduced last year are not restored.
