COMPETITION IS the consumer’s friend. It helps to reduce prices and, in most cases, to improve services. For the first time, there are positive signs that change is coming from within the pharmacy sector, instead of being imposed from outside it. The decision by a second pharmacy chain to abandon traditional pricing structures, based on a 50 per cent drugs mark-up and a €5 prescription charge, in favour of a flat professional service fee of €7 is a step forward. The fact that the Irish Pharmacy Union has moved from criticising such developments to identifying them as evidence of the sector’s competitive nature reflects a new reality.
Significant savings will be available to those citizens who need the most expensive prescription drugs. And Minister for Health James Reilly has indicated he intends to take legislative action later this year regarding cheaper generic drugs. A drugs reference pricing Bill is being prepared that will allow patients and pharmacists to replace branded drugs, prescribed by a GP, with cheaper generic ones. The National Consumer Agency is pressing for greater price transparency in the sector, in line with an Economic and Social Research Institute recommendation earlier this year that there should be in-store displays on prices and rebates.
The recession has caused all governments to examine the high cost of drugs. Here, negotiations between Government and the pharmaceutical industry on pricing became particularly fraught. The savings being sought led to Ireland’s attractiveness as a future investment location being raised by the industry. Notwithstanding such bluster, pharmacy costs have continued to rise as a percentage of public health expenditure and the State bill came to €1.9 billion in 2009. Last February, a Dail committee heard that spending on drugs was growing by 9 per cent a year, compared to 2-3 per cent in the UK.
Competition and an opening up of the pharmacy sector began to emerge in recent years. Previous governments co-operated with some of the more restrictive practices. The Department of Health set the “trade” price for prescription drugs at plant level; negotiated the wholesale distribution margin; agreed the drugs mark-up price and the dispensary fees for pharmacists. Those controls are now being eroded. The ESRI has estimated that State costs could be cut by a further 10 per cent if the HSE moved immediately to generic drugs, once patents lapse, and accepted the lowest tender.