|Click here to enlarge. The use of GDP for Ireland in the right-hand chart, understates the real ratio.|
The ESRI (Economic and Social Research Institute)
today published a report on the prices of drugs/ pharmaceuticals. Last year, the
Organisation for Economic Cooperation and Development (OECD) reported that in
2010, at €528, Ireland spent more on pharmaceuticals than any other European
country on a per capita basis. This is 50% above the average across EU member
states of €349.
Other countries with relatively high
pharmaceutical expenditure include Germany (€492), Belgium (€479) and France
(€468). At the other end of the scale, Romania spent only €164 per capita.
Denmark, Estonia, Latvia and Poland are also among the countries that have
relatively low pharmaceutical spending per capita, at less than 70% of the
expenditure accounted for almost a fifth (19%) of all health expenditure on
average in EU member states and the total pharmaceutical bill across the
European Union reached more than €190bn in 2010.
Today's ESRI report says the cost of in-patent
and generic drugs in Ireland remains high despite some efforts by the Government
to tackle the problem.
The report was commissioned by the Department of
Health and the HSE, following a request from the bailout Troika.
Ireland's prices are the
highest in Europe for 9 out of 13 commonly used generic medicines and for
in-patent drugs, Ireland is among the three most expensive European countries
surveyed for 10 leading products.
The researchers compared factory gate prices and
in 2008, the State's drugs bill of €1.6bn had an estimated factory gate value of
Pharmacy margins have been cut since but they are
likelier to be higher than in other European countries.
The use of generic drugs in Ireland have
increased but because of payments/ inducements to generic manufacturers, they
tend to be similar to that of the original branded drugs.
Not only is the State being gouged but
individuals without a medical card are also caught.
In a decision earlier this month that is a setback
for the pharmaceutical industry, the US Supreme Court ruled that antitrust
regulators should be able to challenge the arrangements that allow drug makers
to delay the sale of a generic drug. In deals known as “reverse payments” or
“pay for delay,” brand-name drug makers facing a patent challenge from generic
competitors pay them to temporarily stay out of the market. Last year, there
were 40 patent-dispute settlements between brand-name and generic drug makers
involving a payment to the generic firm and restricted sale of a generic
medicine, according to the US Federal Trade Commission (FTC.) The agreements
related to 31 brand name drugs with yearly US sales of more than $8.3bn, the
The ESRI report,
Ireland: Pharmaceutical Prices, Prescribing Practices and Usage of Generics in a
Comparative Context, [pdf] is authored by Aoife Brick, Paul K. Gorecki and
Anne Nolan (ESRI).
The report assesses the level of pharmaceutical prices, the usage of generics
and the prescribing practices of medical practitioners in Ireland in comparison
with other EU member states and OECD countries.
It is based on the latest HSE data for Ireland and comparable data from other
The key findings of the
research are: Pharmaceutical Prices
- Relative to other EU Member States:
- originator in-patent pharmaceutical
prices are higher in Ireland;
- originator off-patent pharmaceutical
prices are lower in Ireland; and
- generic pharmaceutical prices are higher
- Comparisons were based on March 2013 prices
of leading pharmaceuticals.
- The market share of generics for the leading
pharmaceuticals in the GMS Scheme doubled between 2010 and 2012, to reach 50
- Increased generic penetration has not led,
up until now, to substantial savings for the State or the cash-paying
- This reflects the fact that, in contrast to
much of the EU, generic prices tend to be similar to those of the brand name
- Where prescribers in Ireland have a choice
between different pharmaceuticals within the same therapeutic sub-group –
statins, ACE inhibitors, and proton pump inhibitors, they tend to select the
most expensive pharmaceutical product.
- In contrast, prescribers In the UK tend to
prescribe the least expensive pharmaceutical product within each of the
three therapeutic sub-groups.
- These three therapeutic sub groups accounted
for nearly one fifth of spending by the State under the GMS Scheme in 2012.
Restructuring the Price Setting Mechanism
- The Health (Pricing and Medical Goods) Act
2013, which was signed into law on 28 May 2013, holds out the possibility of
radically changing the way in which pharmaceutical prices are set in
- Pharmacists will be able to select a
lower-priced pharmaceutical product than that prescribed for the patient by
a medical practitioner for interchangeable pharmaceutical products.
- Lack of clarity and precision as to how
prices will be set under the Health (Pricing and Medical Goods) Act 2013
means that it is not possible to predict with any certainty that originator
and generic pharmaceutical prices in Ireland will fall vis-à-vis other
- The Act builds on a series of reforms that
the State has introduced since the mid-2000s to reduce pharmaceutical prices
Patient Access Agreements
- The research also highlights the increasing
use of 'patient access agreements' (in Ireland and in other countries) as an
alternative mechanism for setting pharmaceutical prices.
- Under 'patient access agreements', prices
are negotiated between the State and manufactures but kept confidential.
- The increasing use of this mechanism should
prompt a wider discussion about:
- transparency; and
- how the benefits of new pharmaceutical
products should be evaluated.
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