Driving change - the Health (Pricing and Supply of Medical Goods) Act 2013

The Health (Pricing and Supply of Medical Goods) Act 2013 (the "Act") introduces a system of generic substitution, which enables pharmacists to substitute a cheaper “generic” medicine when a more expensive medicine has been prescribed. The Irish Medicines Board (the “IMB”) has been given the task of deciding what medicines are interchangeable and compiling an online list of interchangeable medicines. The Act sets out the criteria to be considered by the IMB. Medicines may be considered interchangeable if the IMB is satisfied that the products have the same active ingredients in terms of qualitative and quantitative composition, the same (or appropriately substitutable) pharmaceutical form, and the same route of administration.

The IMB started work on identifying classes of interchangeable medicines before the Act was passed. It is prioritising the most expensive classes of products, including statins, proton pump inhibitors, ACE inhibitors, and angiotensin II receptor blockers.

The Act also establishes a ‘reference pricing’ system, which gives the Health Service Executive (the “HSE”) the power to set a common price that it will pay for interchangeable medicines. The system does not affect a manufacturer’s ability to fix the retail price of a particular medicine. However, where an interchangeable medicine is dispensed under any of the State-sponsored Community Drug Schemes, the State will only reimburse the reference price for the group of interchangeables to which the dispensed medicine belongs.

The HSE will review the reference price set for a group of interchangeable medicines at least once a year. The HSE has a wide discretion in setting the reference price and it is widely anticipated that the reference price will be the price of the cheapest medicine in a particular group of interchangeable medicines.

Finally, the Act imposes an obligation upon the HSE to formally establish and maintain a list of medicines and appliances reimbursable under the community drugs schemes. This is not a new development, as details of products currently reimbursable in Ireland are already maintained by the HSE on the reimbursement list. All products on the existing list will be automatically deemed to be on the reimbursement list established under the Act. A minimum notice period of 28 days must be observed by the HSE before items can be removed from the reimbursement list. This is to allow the supply chain time to adapt to a decision to remove products from the list.

It remains to be seen how the reforms will operate in practice in the marketplace, and how decisions on interchangeability and pricing will be received by industry. Where a party is aggrieved by a decision of the HSE or IMB under the Act, it may appeal to the High Court within 30 days. This short timeframe emphasises the need to take advice at an early stage and act quickly regarding any anticipated decisions under the Act that could affect your business.

For more detail regarding the Act, please click here*.

These articles first appeared in International Law Office Healthcare & Life Sciences newsletters on 19 June 2013 and 28 November 2012.