The State Medicines Bill

The State spends 14.7% (OECD average is 17.6%) of its healthcare expenditure on medicines. In the period 2000 to 2008 the State Expenditure on Medicines grew from €565 million to €1,901 million – the key factors behind that growth include:

• Ireland’s rapidly increasing and ageing population.
• The development of newer and better treatments becoming available and more patients availing of them: for example in the areas of preventative medicine and the long-term treatment of chronic illness. The number of patients registered under the High Tech Scheme in 2007 was 41,500, a five fold increase on the figure in 1997 (8,250).
• The introduction of Government initiatives to improve public health: the cardiovascular and the cancer strategies were launched with a view to improving poor health outcomes in these disease areas. They have resulted in more people being treated and naturally an increase in the utilisation of medicines. For example the prescribing frequency of cardiovascular system medication under the GMS Scheme increased from 3.6 million in 1996 to 11.1 million in 2007 (an increase of 208%).
• Epidemiological evolution: the increased incidence of chronic and non-communicable diseases is generally quite costly to treat. Ireland has one of the highest incidences of asthma in the world, currently 12%, and increasing levels of diseases like diabetes and obesity.
• State decisions on eligibility and administration of the community drug schemes: the granting of medical cards to everyone over 70 and the introduction of the Drug Payment Scheme resulted in substantial growth in the State bill. For example the Deloitte review of the Governance and Accountability Mechanisms in the Community Drug Schemes (2003) noted that the provision of medical cards to the over 70s cost an additional €126m in the first full year of the arrangement in 2002. It also noted that number claimants under the DPS increased by 40% between 2000 and 2002.
• Ireland historically had low levels of consumption of medicines per head of population: it is only to be expected that spending on medicines will increase as the healthcare system endeavours to improve life expectancy and quality of life. It also has to be seen in the context of the large scale and ongoing increases in Irish health spending.
• The increasing research and development costs of new medicines: up from €344 million in 1987 to €1,059 million in 2007.

The pharmaceutical industry has recognised that the State faces a challenge in funding healthcare and has agreed robust, cost effective arrangements for the supply of medicines to the health services. The State has estimated that these arrangements will result in savings of €300 million in the State medicines bill in the period through to September 2010, savings which provided the State with the monies to fund new therapies which offer hope to patients of longer, healthier and more active lives.

In February 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.

It is important to remember that the alternative to the use of innovative medicines is not cost free; it may involve longer hospital stays, longer less effective treatments, invalidity, sick pay and a poorer quality of life.