The Government announced on Thursday plans to cut to €133 million in payments to pharmacists over the coming year. The Irish Pharmacy Union (IPU), which represents about 1,900 pharmacists, said up to 5,000 pharmacy jobs could be lost as a result of the cuts and that frontline health services would be seriously damaged. The cost to the State of  providing drugs has doubled since 2002 to over €1.68 billion in 2008  -- up from €332 million in 1997 - -and it costs €640 million to provide €1.04 billion of drugs at ex-factory prices, to patients.

Minister for Health Mary Harney said that as a result of the new measures, pharmacists’ income under the various State schemes would revert to the levels paid in 2006.

"The cost of the drugs and medicines under these schemes - including ingredient costs, payment for wholesale delivery and pharmacy dispensing fees and retail mark-ups - has doubled since 2002 and totalled over €1.68 billion in 2008.

This was made up of

• Ingredient costs €1,240 million (ex-factory price of €1,040 million plus wholesale mark-up of €200 million)

• Dispensing fees and mark-up, including over 70s fee: €440 million

• Total €1,680 million

Put simply: it should not cost €640 million to get €1.04 billion of drugs from the factory gate to the patient.

The rapid escalation in cost must be curtailed. An average of a 12.5% increase each year over six years in costs is not sustainable. Dispensing fees alone have doubled since 2002.

The measures I am taking to reduce costs must be seen in the context of overall savings needed in public spending in order to use scarce resources for services, and to put our public finances on a sustainable footing, to help return the country to growth and job creation.

The HSE’s (Health Service Executive) budget for this year assumes savings of at least €50m in this area. These are essential to avoid the HSE having to make alternative, immediate savings on other services, such as reductions in home helps hours, reduced home support for people with disabilities and reductions in acute hospital activity levels.

Pharmacists’ income under these schemes, on a full year basis, can be estimated to be returning to the levels paid in 2006, approximately €418 million. In 2009 specifically, this income will be back to the level of 2007. With many people having lost their jobs, and wages and incomes being reduced throughout the economy, it is not unreasonable to bring income to pharmacies from State sources back to the level of three years ago,"she said.

Harney announced she was also putting in place a new dispensing fee structure for community drug schemes based on a sliding scale -- pharmacies will get €5 for the first 20,000 items, €4.50 for the next 10,000 and €3.50 for the remainder.

The changes, which come into effect next month, will also end the special payment made to pharmacists under the scheme to provide automatic entitlement to a medical card for a person aged over 70 years.

The wholesale mark-up paid for the delivery of drugs to community pharmacies, will be cut from 17.66% to 10%.

Last year, an attempt to introduce the cuts in order to save €100 million was stalled after High Court action by pharmacists. However, the ruling said the health minister had the power to bring in the reductions.

Liz Hoctor, president of the Irish Pharmacy Union, warned that frontline services provided by pharmacists would be curtailed. The cuts amount to 36%, she warned.

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