The Irish state is forecast to achieve total savings of EUR140 million (USD152 million) during the first 12 months of a multi-year price reduction agreement with the pharmaceutical industry.
Implications | The Irish Pharmaceutical Healthcare Association (IPHA) has produced an analysis of individual price cuts following the finalisation of a four-year USD785 million price reduction agreement with the pharma industry in July 2016. |
Outlook | Price reductions on 948 of the most commonly used medicines in Ireland are expected to generate savings to the state of EUR78.4 million in the 12-month period until mid-2017. An additional EUR65 million in rebate payments is due from IPHA members to the Health Service Executive (HSE), bringing total savings in the first year to EUR140 million. Price reductions and rebate payments will also be imposed on non-IPHA pharmaceutical companies from 1 November 2016. This will deliver smaller, but still significant, savings for the state. |
A recently agreed price reduction agreement between state authorities and pharmaceutical manufacturers is on course to generate savings totalling EUR140 million (USD 152 million) during the first year, the Irish Pharmaceutical Healthcare Association (IPHA), the representative organisation of the innovative pharmaceutical sector in Ireland, announced on 21 October. Savings amounting to EUR78.4 million are expected through individual price reductions implemented since August 2016 for about 948 of the most commonly used medications in the country.
An IHS Markit Life Sciences Blog published in September 2016 that examined the new pricing landscape in Ireland following the negotiation of July's price reduction framework (available to view here) highlighted possible impacts for individual products, forecasting price cuts of more than 25% in some cases. The latest information for separate product price changes, as listed by the HSE and published by the IPHA, appears to confirm this analysis. The price realignments also signal that a number of individual off-patent medications are now facing increased price competition. An additional EUR65 million in rebate payments is due from IPHA members to the HSE.
Looking ahead, the HSE is due to apply the same level of price reductions and rebate payments on non-IPHA companies from 1 November 2016. It is anticipated that this should generate savings of about EUR150 million over a four-year period, equivalent to EUR37.5 million per annum. According to a statement by the IPHA, it is "established practice" that the "manufacturers of certain generic medicine products would also face price cuts after an IPHA agreement". Confirmation of this is expected to be forthcoming from the HSE authorities later in 2016 or perhaps early 2017.
Ireland's health authorities assess biosimilar legislation
Also included in the IPHA/HSE framework agreement is a 30% price reduction "as biologic products losing patent-protection face competition from biosimilars". The country's Minister for Health, Simon Harris, issued a statement in parliament in October indicating that the Department of Health (DoH) has now begun the process of examining potentially controversial legislation aimed at improving the uptake of biosimilar medicines in Ireland. Unusually, the legislative bill was published by the opposition Fianna Fail (FF) party. The FF party is not a member of the minority government administration, but has agreed to abstain on no-confidence parliamentary motions in the government in return for an input in several policy areas, including health. The uneasy alliance is expected to continue until at least mid-2017, but may face the threat of dissolution either before the DoH review of the biosimilar legislation is completed (probably in late 2017) or before possible legislation supporting the interchangeability of biologic drugs can be enacted. This uncertainty could delay or even throw into doubt the passage of biosimilar legislation.
In 2015 HSE reimbursement for medicines amounted to EUR1.9 billion under the general medical scheme (GMS), High Tech Drugs (HTD) scheme, and Long Term Illness (LTI) scheme. Of this, about EUR1.3 million was allocated to pharmaceutical manufacturers (up 1.5% year on year). Expenditure on hospital drugs exceeded EUR300 million in 2015. A detailed annual report by the HSE Primary Care Reimbursement Service (PCRS) is due to be published (here) later this week.
Outlook and implications
The IPHA has stated that the price realignments and savings should create "headroom" to fund new high-cost innovative medicines in the country. The chief executive of the IPHA, Oliver O'Connor, said the "central purpose of the [framework agreement was] to ensure medicines are supplied at reasonable prices and that savings are generated enabling new, innovative medicines to be made available" on the Irish market. In that context, the IPHA has warned that the "policy goal of providing new medicines to patients is as important as [the] savings" captured and therefore that the IPHA would monitor the situation carefully to ensure the HSE and government lived up to their end of the agreement by ensuring new drugs are supported. The IPHA/HSE agreement also contains an affordability clause, looking at the five-year cost of new medicines, as part of the assessment. This feature, alongside more frequent price reviews, should ensure annual savings of about EUR140 million.