Influential parliamentary committee report recommends revising Ireland international reference pricing model by expanding the basket of reference countries from 9 currently to 15.
IHS Life Science perspective | |
Significance | A parliamentary report on the cost of prescription drugs in Ireland has identified significant scope to reduce pharmaceutical prices and to incentivise the uptake of generic and biosimilar medicines. |
Implications | The report's main recommendation is that Ireland should use a larger basket of countries when referencing pharmaceutical prices in order to include low-cost European Union member states. |
Outlook | Health Minister Leo Varadkar will consider the conclusions of the report over the coming months. No decision is expected until after 2016 parliamentary elections. If implemented, the changes to the reimbursement methodology would be significant and would likely also have a knock-on impact on other countries that reference drug prices in Ireland. |
Ireland's parliamentary committee on health (known as the Joint Oireachtas Committee on Health) published recommendations yesterday (12 October) aimed at reducing the cost of prescription medicines and increasing uptake of cost-effective generic alternatives. The full report is available to view here. Included among the report's recommendations are proposals to expand the basket of nine international reference countries that Ireland uses. Currently, Ireland references the pharmaceutical prices of comparatively similar European Union (EU) member states (namely Austria, Belgium, Denmark, Finland, France, Germany, Netherlands, Spain, and the United Kingdom). Examples of the types of lower cost countries that could potentially be added to Ireland's reference basket were not considered by the report's authors. However, if the recommendations are adopted, the probability is that government would look to expand the list of reference countries by including Sweden and Slovakia among others. Where international reference pricing (IRP) calculations are based on a small sample of international reference countries, the report raises the possibility of Ireland adopting an "automatic annual review mechanism to ensure value for money".
In addition the committee signalled its support for proposals submitted by Teva Pharmaceuticals (Israel) to increase the use of generic and biosimilar products in Ireland and to apply more cost effective prescribing methods. The plans submitted by Teva earmark a potential EUR113 million in savings for the Irish state. According to the generics manufacture, EUR60 million (USD68.3 million) could be achieved by "opening up generic competition in the low value/volume sector of the medicines market which currently costs EUR200 million annually". The enhanced use of biosimilar products was also proposed by Teva. Evidence submitted by Teva (available here) concluded that the government could save a further EUR25 million by "instructing prescribers in hospitals to switch from expensive biological medicines to more affordable biosimilar alternatives". This would involve the introduction of new legislation to enable the interchangeable prescription of biosimilar products in Ireland. Meanwhile, Teva forecast that Ireland's ageing demographic profile would contribute to increased long-term demand for pharmaceutical products in Ireland (by as much as 25–33% according to an assessment by Teva).
Other options which were presented by the health committee for consideration focus on proposals for the publication of annual baseline comparisons of prescription drug costs for EU member states. Addressing the need to regulate parallel drug trading, the committee also suggests that the government should examine the feasibility of export controls where there are shortages of specific medicine products. Specifically, the report highlighted Spain as a template for legislation on export controls. Separately, the report also states that where there are security of supply issues for individual medicine, Ireland should make better use of contingency "concessionary pricing" arrangements.
Implications and outlook
The report provides a "future focused assessment" of Ireland's pharmaceutical pricing system. There is good reason to believe that the policy recommendations have cross-party political support given that the health committee is comprises senior members of both ruling and opposition political groups. The most likely scenario is that the country's current Minister for Health Leo Varadkar will make a decision on the committee's recommendations after parliamentary elections which are due in April 2016. However, regardless of whether the ruling Fine Gael/Labour coalition administration is re-elected, there appears to be at least some political support in favour of tweaking Ireland's IRP system. If Ireland does expand its basket of reference countries, this would likely lead to price reductions for originator medicines on the country's reimbursement list. The addition of new countries to Ireland's reference basket could also result in changes to IRP calculations for other countries that reference drug prices in Ireland. These recommendations could also be seen as somewhat inauspicious for the innovative pharmaceutical sector in Ireland (represented by the Irish Pharmaceutical Healthcare Association) which is engaged in negotiations with the Health Service Executive (HSE) on a successor to a pharmaceutical price-reduction agreement that is due to expire on 31 October 2015 (see Ireland: 14 August 2015: Irish pharmaceutical association proposes national cancer development strategy).
In 2014 the committee noted that 14.5% of Ireland's health budget (equivalent to EUR1.8 billion) was spent by the state on medicine reimbursements. However, the penetration of generic medicines remains low by European standards – 34% of the total pharmaceutical market by volume or 18% of medicines in Ireland according to the report's conclusions. The government policy of reducing public spending on patented medicines in favour of generics and biosimilars is likely to remain unchanged and was recently given a seal of approval by the European Commission (see Ireland - Europe: 30 June 2015: European Commission tells Ireland to reduce spending on patented drugs).