Ireland’s Health (Pricing and Supply of Medical Goods) Act 2013 introducing generic substitution and referencing is set to commence this month.
IHS Global Insight perspective | |
Significance | Ireland's Health (pricing and supply of medical goods) Act 2013 is set to commence during June. |
Implications | The act introduces a system of generic substitution and reference pricing. |
Outlook | With the act, the government will be hoping to encourage generic uptake and subsequently cut costs. |
The provisions in Ireland's Health (Pricing and Supply of Medical Goods) Act 2013 are set to commence in June. The act, signed into law by the country's president on 28 May, introduces a system of generic substitution and reference pricing. The full act is available here.
Generic substitution
The act allows pharmacists to substitute drugs that have been established to be interchangeable by the Irish Medicines Board (IMB). Thus, when a more expensive product had been prescribed, the pharmacist will, at the patient's request, be able to substitute it with a cheaper generic. As per the Department of Health, it had asked the IMB to prioritise the review of drug classes that result in the highest costs at the moment. A total of 20 medicines have been identified, including statins, proton pump inhibitors, angiotensin-converting enzyme inhibitors and angiotensin II receptor blockers. The list of 20 drugs is available here. The first list of interchangeable drugs is expected to be published within two to three months of the commencement of the act.
Reference pricing
The act further introduces a system of reference pricing on the list of interchangeable drugs, with patients not having to pay additional costs for medicines for which the price is equal to or below the reference price. However, the patient would have to pay the difference if they were to choose a certain brand that is more expensive than the reference price. The reference price will be set by the Health Service Executive (HSE). As per the act, the HSE will set the reference price by taking into consideration: "(a) the ability of suppliers of the relevant listed items to meet patient demand for the relevant listed items, (b) the value for money afforded by the relevant listed items, (c) the equivalent relevant prices (if practicably available) of the relevant listed items in all other Member States where one or more than one of the relevant listed items is marketed, (d) the relevant prices of therapeutically similar listed items, (e) the resources available to the Executive, and (f) the terms of any agreement in place (whether entered into before, on, or after the commencement of this section) between the Executive and any representative body of the suppliers of drugs, medicines, or medical or surgical appliances where the agreement relates, whether directly or indirectly, to the price of one or more of those items". Furthermore, the HSE "may use a competitive process to set the reference price for a relevant group of interchangeable medicinal products". The reference prices will be put into effect no later than four weeks after they are set.
Reimbursement list
According to the act, the HSE will establish and maintain a list of reimbursable medicines or other items, with the items that are on the list at the moment to be automatically transferred to the new list. The HSE will take the following into account when considering the price by the supplier: (a) the equivalent relevant prices of the item in all other member states where the item is marketed, (b) the relevant prices of therapeutically similar listed items, (c) the potential therapeutic benefits of the item for patients if it were to become a listed item, (d) the potential budget impact of the item if it were to become a listed item, (e) the ability of suppliers to meet patient demand if it were to become a listed item, (f) the resources available to the Executive, and (g) the terms of any agreement in place between the Executive and any representative body of the suppliers of drugs, medicines, or medicinal or surgical appliances where the agreement relates to the price of the item.
Outlook and implications
The Health (Pricing and Supply of Medical Goods) Act 2013, set to commence in June, introduces a system of generic substitution and reference pricing in the country. By enabling the pharmacists to substitute medicines with a cheaper generic as well as introducing reference pricing on the previously determined list of interchangeable drugs, the government will be hoping to increase generics uptake, increase competition in the market, and subsequently increase cost savings to the healthcare system. The government's intention to start cost savings through the system in the near future is further reflected in the Department of Health's request that the 20 drugs that currently result in the greatest costs be prioritised first for the review.
The act thus reflects the Irish government's ongoing efforts to decrease drug expenditure by introducing cost-containment policies (see Ireland: 9 December 2011: Cost-Containment Measures Dominate Ireland's 2012 Healthcare Budget and Ireland: 27 June 2012: Irish Ministry of Health and IPHA Sign Interim Agreement on Price Reductions).