From Department of Public Expenditure, NDP Delivery and Reform
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The Minister for Public Expenditure and Reform, Michael McGrath TD, welcomed the substantial cost efficiencies that have been secured as part of two new Framework Agreements on Pricing and Supply of Medicines 2021 - 2025.
The agreement is a culmination of many months of engagement between industry representatives and the State side which comprised of the Department of Health, HSE and officials from the Department of Public Expenditure and Reform, seeking to ensure that the State achieves the best possible deal in terms of value for money regarding the pricing and supply of medicines.
Over the next four year, it is estimated that the deal will provide efficiencies of between €600 million and €700 million which will help offset the cost of continued investment in medicines the State provides for patients.
Minister McGrath said:
"This deal is good news for patients and taxpayers. This Government is committed to ensuring our citizens have access to the most effective new drugs available globally. Budget 2022 provided an additional €30 million for new medicines and for the expanded use of existing medicines.
"The cost impact of new medicines over the medium-term can often be significant, with State expenditure on pharmaceuticals well in excess of €2 billion per annum.
"This Agreement maintains a focus on patients access and the best possible outcomes while also delivering value for money for the taxpayer.
"I welcome the broad nature of the measures included in the Agreement including increased rebate contributions from on-patent medicines, changing the reference date for price cuts, and increased efficiency from off-patent medicines. It is particularly welcome that the overall rebate to the HSE on all sales increases from 5.5% under the current Agreement to 9% in 2021."
ENDS
Notes to Editors:
The State has entered into agreements with the pharmaceutical industry since the 1970s, bring certainty and stability to the supply and pricing of medicines.
The previous Agreement with the Irish Pharmaceutical Healthcare Association, (IPHA) , on behalf of the originator bio-pharmaceutical industry in Ireland, came into effect on 1st August 2016 and, after two periods of extension, expired on 30th September 2021.
The Agreement with the IPHA is in relation to pricing and supply of on-patent and originator medicines. This Agreement, for a four-year period, 1st October 2021 to 30th September 2025, builds on the 2016 Agreement, with all provisions of that Agreement being carried forward , but substantially enhanced in a number of key respects, and providing significant additional value for the State.
The new measures in the Agreement include increased rebate contributions from on-patent medicines, closing loopholes in relation to hybrid medicines, changing the reference date for price cuts, and increased efficiencies from off-patent medicines.
The rebate to the HSE on all sales is increased from 5.5% under the current Agreement to 7.75% in 2022, 8.25% in 2023, 8.5% in 2024 and 9% in 2025.
A parallel Agreement has also been secured with Medicines for Ireland, (MFI) , on behalf of the generic and bio-similar industry in Ireland. This four-year Agreement runs from 1st December 2021 to 30th November 2025 and like the IPHA Agreement, provides for enhanced price cuts in the case of generic and bio-similar medicines. The provision of this Agreement will complement the State's overall efforts in managing the drugs budget, including supporting a competitive market in the off-patent space.
These Agreement represent one element of the suite of measure available to curb the growth in the medicines bill and will not preclude the HSE from applying other saving measures under the relevant legislation, including reference pricing and interchangeability, or from pursuing value improvement measures such as best-value-biologic initiatives and increasing bio-similar usage.