Overview

Ireland's Health Service Executive (HSE) recently commissioned and funded a report from the Economic and Social Research Institute (ESRI).

The report, Delivery of Pharmaceuticals in Ireland - Getting a Bigger Bang for the Buck, has just been published.  The report records that Ireland spent about €1.9 billion (17.5% of public health expenditure) on pharmaceutical products in 2010, while in 2009, Ireland spent more on pharmaceuticals per capita than any other OECD country apart from the US, Canada and Greece.  In that context, the stated objective of the Report is to:

"set out the roadmap for reforming the delivery of pharmaceuticals to the patient "...within a framework that guarantees security of supply and value for money". Furthermore the report will "provide guidance as to how the HSE can lead in fashioning the new institutional and market arrangements"."

The report is very significant in that: (a) the HSE was involved not only in funding the report but also because the HSE "provided extensive comments, suggestions, data and advice as the report progressed" and (b) the Report's authors include Paul Gorecki, a member of the Irish Competition Authority between 2000 and 2008, who is one of the leading competition economists in Ireland. The report analyses the role and policy considerations in respect of a range of stakeholders in the pharmacy supply chain including, manufacturers, parallel importers, wholesalers, pharmacists, prescribers and the HSE, and the evolutionary reforms necessary to improve the pharmaceutical delivery system.  The report acknowledges that legislative, contractual and administrative changes may be required to implement the proposed reforms. 

The report says that it is not prescriptive as regards the proposed reforms; rather it sets out a range of options which can be introduced over time.  The proposed reforms range from:

  • ensuring that the HSE has greater visibility of the pharmaceutical supply chain, in particularly pricing;
  • changing the formula to calculate the ex-factory price by reference to the lowest price of the basket of nine Member States in the 2006 IPHA/HSE agreement;
  • introducing risk sharing between the HSE and suppliers seeking eligibility for reimbursement under the Community Drugs Schemes;
  • establishing new procurement arrangements;
  • alternatives to the wholesale margin; to
  • a greater emphasis on generic prescribing.

The ESRI's Recommendations were:

Data Collection

The HSE should be responsible for the collection, preparation and publication of a comprehensive time-series of all components of pharmaceutical expenditure (public, private, community and hospital) on an annual basis.

Pharmacists should be required to inform the Primary Care Reimbursement Service (PCRS) of the out-of-pocket expenditure, i.e., sub-threshold expenditure, by those who do not exceed the Drug Payment (DP) threshold.

Objectives

The two objectives of the pharmaceutical delivery system from the perspective of the HSE should be obtaining value for money and ensuring security of supply.

Ex-Factory Pricing of In-Patent Single Source Pharmaceuticals

  • Initially at least, the basket of Member States used for the purposes of determining the maximum ex-factory price of in-patent pharmaceuticals should be confined to the nine Member States in the 2006 IPHA/HSE agreement.
  • The maximum ex-factory price of in-patent pharmaceuticals should be the lowest price of the basket of nine Member States in the 2006 IPHA/HSE agreement.
  • The maximum ex-factory price for in-patent pharmaceuticals should be updated every six months, i.e., on 1 January and 1 July.
  • The HSE should monitor parallel imports in order to assist it to:
    1. validate the pricing information provided to set the maximum ex-factory price for the current basket of nine Member States; and
    2. determine whether additional Member States should be added to the basket of Member States.
  • The HSE should negotiate risk sharing agreements with firms seeking eligibility for reimbursement under the General Medical Scheme (GMS) and Community Drug Schemes for new pharmaceuticals on introduction in terms of expected sales and market penetration.

Ex-Factory Pricing of In-Patent Multi-Source Pharmaceuticals

  • The HSE should set an ex-factory price for parallel imports that shares the difference between the imported price of the parallel import and the brand name ex-factory price of the in-patent pharmaceutical between the parallel importer and the HSE.
  • The reference price for high volume off patent interchangeable pharmaceutical products should be set through competitive tendering.
  • For the HSE to reimburse an interchangeable pharmaceutical product at a price higher than the reference price, the medical practitioner must complete an Irish Medicines Board (IMB) Adverse Reaction Report Form and write, in his/her own handwriting, 'no substitution' across the prescription form.
  • If a prescription is written using the international non-proprietary name then the pharmacist should be reimbursed at the reference price.
  • The definition of interchangeability should be broad enough to accommodate minor changes in formulation (e.g., use of different salts) and presentation (e.g., different shaped solid dose forms).

Monitoring Wholesale Development

  • The HSE should actively monitor the importance and service levels offered by Direct to Pharmacy (DTP) brand name manufacturers. If the service levels fall below levels considered acceptable to the HSE, then it should negotiate minimum quality standards with brand name manufacturers using the DTP model.

Providing More Information to Patients

  • Pharmacists should be compensated for dispensing a prescription on the basis of a professional dispensing fee only. This should apply to both prescriptions dispensed under the GMS and Community Drug Schemes as well as for the cash paying patient.
  • All pharmacies should be required to post, in a manner clearly accessible to patients, a notice setting out their usual and customary dispensing fee and mark-up together with what services are included for the dispensing fee. A standard template should be used.
  • Pharmaceutical Society of Ireland (PSI) should permit pharmacists to advertise dispensing fees, services provided and price discounts and rebates with respect to prescription pharmaceuticals.
  • Pharmacists should be able to offer and to advertise that they will pay, in part or whole, any patient co-payment that is part of the GMS and Community Drug Schemes.
  • The HSE should carefully monitor the pharmacy market, conducting regular surveys of dispensing fees and offers made by pharmacies.

The Prescriber

  • Taking into account forthcoming legislation on reference pricing and generic substitution, including interchangeability and no substitution prescriptions, mandatory prescription by the International Non-Proprietary Name should be introduced for all medical practitioners to encourage safe and cost-effective prescribing.
  • On the basis of existing evidence, financial incentives to reduce pharmaceutical expenditure should not be introduced for medical practitioners in Ireland;
    1. the PCRS should coordinate the provision of periodic benchmarking information to General Practitioners (GPs); and
    2. the HSE should undertake a similar exercise for hospital consultants practising in public hospitals. Both the PCRS and the HSE should be pro-active in following up with individual medical practitioners who demonstrate prescribing behaviour that is at variance with clinical guidelines. Protocols should be developed with the Medical Council that specify the procedures to be followed for cases referred to the Medical Council for inappropriate prescribing.
  • Consideration should be given to centralising and standardising the provision of prescription guidelines to both GPs and hospital medical practitioners.

The ESRI's recommendations, if implemented, would lead to substantial reforms in the pharmaceutical supply chain, which would have consequences for all stakeholders in the sector.

It is hoped that there would be a full and informed debate on these recommendations and a detailed analysis of the situation generally in Ireland.