Supply and Reimbursement

The international research-based pharmaceutical industry has worked for a long number of years with the State to ensure that in Ireland we have a single tier system of access to medicines, whereby all patients, regardless of income have access to the medicine which their doctor believes is best suited to their needs.

How medicines get to the patient

The medicine supply chain has three elements:

1. The manufacturers, principally members of the Irish Pharmaceutical Healthcare Association (IPHA), who develop, manufacture and bring innovative medicines to the Irish market.
2. The wholesalers who store and transport these medicines to hospitals and community pharmacies across the country
3. The community pharmacists who dispense the medicine chosen by the doctor for the patient.

How medicines are payed for

In Ireland, the State pays for approx 80% of all medicines. The ultimate cost to the State of medicines dispensed in the community depends on which community medicine scheme the patient uses to access the medicines. There are four principal schemes which determine whether people get free or subsidised medicines. They include:

• General Medical Services Scheme (GMS - medical cards) – the patient receives their medicines after paying a 50 cent per item prescription charge (up to a maximum charge of €10 per family per month)* and the pharmacist receives a dispensing fee but no mark up.
• Drug Payment Scheme (DPS) – the patient pays a maximum of €120 per month for medicines, the pharmacist receives both a mark up and a dispensing fee.
• Long Term Illness Scheme (LTI) – the patient receives medicines for specific conditions such as diabetes, epilepsy and multiple sclerosis free of charge. As with the DPS the pharmacist receives a mark up and a dispensing fee;
• Hi-Tech Scheme – the cost of these medicines is comprised of the ex-factory price, in line with the IPHA/HSE Agreement framework, a wholesale mark up of approximately 12% and a patient care fee paid monthly to the pharmacist of €60.52. Where the patient has a medical card or the medicine is for a specific condition covered by the LTI they do not pay anything, otherwise they pay the first €100 a month of the cost in accordance with the rules of the DPS.

The role of the pharmaceutical industry

The supply of medicines to the health services by pharmaceutical companies has been governed by a series of agreements between the State and the IPHA, on behalf of the international research-based pharmaceutical industry.

These agreements through a number of innovative arrangements ensure that patients continue to have access to the most up to date and highest quality medicines when they need them.

The latest agreement was implemented on the 1st September 2006 and contains elements which the HSE has estimated will result in savings of €300 million in the period through to September 2010. As well as providing this significant additional value for the Irish taxpayer, it also ensures that Irish patients continue to have access to new innovative treatments in a timely manner.

Under the Agreement, the price of new medicines coming onto the Irish market is set by reference to prices in nine other markets across Europe (Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands, Spain and the UK). These prices are reviewed every two years and adjusted to take account of pricing developments in these markets (the first such review took place in September 2008). The HSE has estimated that the price of new medicines will, as a result, be 10% less than would otherwise be the case.

In relation to many leading, long established, post patent medicines, the Agreement provides for price cuts of up to 35% over a 22 month period.

At a time of significant retrenchment for the pharmaceutical industry internationally and rising costs in Ireland, the industry accepted that it had to play its role in ensuring that value was provided and resources freed up so that the State could invest in the most advanced, innovative, cost effective medicines, ultimately helping Irish people live longer, healthier and more active lives.

In 2010, understanding the difficult state of the public finances as a result of the downturn in the economy and following a request from the Minister for Health and Children for immediate savings, the industry put in place further arrangements – a price cut of 40% on post patent medicines with a generic equivalent on the market – which will yield savings to the State of approximately €94 million in a full year. This saving is in addition to the savings of over €105 million to be generated, from the 2006 Agreement, in 2010. More information is available on www.checkthelist.ie.  

* Has yet to be introduced.

Updated: 27 April 2010