Donnelly privately warns drug firms no funds for new medicines are likely due to health overruns

The Minister for Health has privately warned drug companies that there is likely to be no additional funding for new medicines in the budget, The Irish Times has learned.

Stephen Donnelly met trade groups representing the pharmaceutical sector last week, as well as several other stakeholder organisations, where he communicated that due to the challenges associated with spending overruns at his department, the expectation was that budget day measures would be extremely limited, including provision for new drugs.

Final agreement on outstanding issues in the health budget is not expected to be reached until the weekend as party leaders met finance Ministers last night to continue negotiations.

There are concerns in other Government departments that in addition to limiting room for new spending in health, other Ministers will see their own ambitions curtailed by the overspend.

‘You couldn’t make it up’: David McWilliams gives his verdict on Budget 2024

---

Inside ‘the weirdest budget ever’: Climate bust-ups, a mortgage surprise and the Stephen Donnelly saga

---

We cannot aspire to EU-style public services and US levels of tax

---

Budget 2024 calculator: How this year’s budget will affect your income

---

It is understood that Mr Donnelly also met the National Women’s Council of Ireland and indicated that increased spending in some policy areas would be a significant challenge. Mr Donnelly is known to be eager to expand access to State-funded IVF schemes and free contraception.

Following last week’s meeting, the Irish Pharmaceutical Healthcare Association (IPHA), which represents drug companies, wrote to Mr Donnelly, as well as Minister for Public Expenditure Paschal Donohoe and Minister for Finance Michael McGrath.

[ Budget 2024 set to be an exercise in balancing expectations with resources ]

The trade body expressed its disappointment at the suggestion that “there may be no new developments funding next year, in particular, for new medicines” with spending in this area “at best” being funded by savings achieved in the area as the year goes on.

It urged the Government to “think and act beyond blunt spending control measures”, which it said was similar to those employed during the financial crisis.

Overspending in health is now expected to require a supplementary budget this year of €1.1 billion, which will need to be replicated in the baseline spending for 2024 – alongside increased spending which will have to be provided to cater for demographic pressures, suggesting an overall health budget approaching €25.5 billion.

Nerves over the healthcare budget have also led to interventions late in the day from other lobby groups. Chief executive of the Irish Cancer Society Averil Power told The Irish Times that the national cancer strategy needs an allocation of €20 million in the budget and that not doing so will be “at the expense of people affected by cancer right across the country”.

The Irish Medical Organisation said the overspend in health was in fact down to “not allocating enough funds to manage patient demand, new services, new technology and the urgent need to continually increase bed capacity”.

In its letter, IPHA warned of “stop-start funding” of new drugs and a risk of a perception that one of the wealthiest countries in Europe, despite having fiscal surpluses, “would be unable to implement consistent, predictable medicines policy to develop standards of care”. The spate of last-ditch pre-budget lobbying comes as Mr Donnelly said an “honest conversation” was needed about healthcare budgets and overspending”, as well as historic underinvestment in the health sector.

“I make no apologies and this Government makes no apologies for a significant investment in healthcare over the last three years,” he said on Tuesday.

[ Miriam Lord: What’s in the budget? No one knows - it’s a secret, like the Toy Show ]

Meanwhile, the party leaders met the two budget Ministers Mr McGrath and Mr Donohoe last night, as budget wrangling intensified in the final week before the package is announced next Tuesday.

There is said to be continuing disagreement on a number of issues, though most Government departments have now agreed their settlements. It is understood that several issues in the health and social protection budgets remain outstanding, with sources involved in the discussions saying final agreement is unlikely until the weekend. The Department of Education and the Office of the Attorney General are also still in discussions, sources say.

There is said to be intense discussion in Government over how to present the plan to establish a long-term savings and investment fund with windfall corporation tax revenues, expected to be as large as €10 billion.

The fund is likely to form part of the budget day announcements by Mr McGrath, with the scheduled spending increases, tax cuts and once-off giveaways amounting to another €10 billion.

Meanwhile, Mr Donohoe told Fine Gael’s parliamentary party meeting that the latest corporation tax figures will not change the Government’s budget planning.

[ Ireland’s growth has run out of steam: the post-Covid economic bounce is well and truly over ]

The Department of Finance confirmed this week that corporation tax is now expected to undershoot levels forecast for this year with receipts in the third quarter of the year dropping by 23 per cent on the 2022 figure.

Mr Donohoe is understood to have told the Fine Gael meeting that the budget planning will not be impacted by this.

He highlighted preparations already under way including plans to setting up new funds to invest the current surplus for the future.

Last month – after corporation tax receipts fell in August – Mr Donohoe publicly signalled that plans for a €6.4 billion budget package would proceed “even if we see some more volatility in tax during this year”.