Good and bad in new prescription laws

The political drive to use more generic and cheaper drugs will be good for the public purse. But imposing prescription charges on medical card holders is wrong. By Sara Burke.

At 6.30pm, on Friday 25 June, the Department of Health and Children issued a press release announcing the introduction of a new prescription charge for medical card holders. Henceforth, a charge of 50 cent will be imposed on each prescription item dispensed by a pharmacy to people on the medical card scheme. The prescription charge will be capped at €10 per family per month.

The introduction of such charges are conclusively shown to deter people from purchasing medicines. This is particularly true of those on low incomes, those with chronic diseases and older people.

Mary Harney says that evidence of this is not unanimous, which contradicts the WHO, the EU, BMA (British Medical Association) and the Cochrane Collaboration (experts in evidence-based healthcare). She said ‘a small prescription charge is appropriate’, that ‘there will be some exemptions’, (she would not elaborate on what these exemptions would be) and that '50 cent is not a barrier’. She also maintained that the government are behind the measure.

In New Zealand, where a similar charge is in place, significant exemptions exist, encompassing children under 6 and those on low incomes.

The publication of the Health Amendment Bill on 25 June clarifies that those on long term illness scheme will not be charged for prescription items but those on medical cards will. The only exemptions are children under the care of the HSE (per the Child Care Acts 1991 to 2007), and persons who are supplied with specific controlled drugs such as Methadone. With just over 70,000 claims under the long term illness scheme, and over 1.5 million people now covered by medical cards, the exemptions are minimal.

Ten days prior to this, Minister Mary Harney announced new legislation which will deliver savings for individuals and the public purse on drugs prices. From early 2011, legislation will be passed which allows for greater generic substitution and reference pricing. Ireland has a very poor track record on generic prescribing – less than 20% of all drugs prescribed here are generic; 80% are generic in the UK.

So what’s going to change from this announcement?

Currently, Irish pharmacists must dispense the drug named on the prescription which is usually a branded drug - Irish doctors tend to prescribe branded drugs. From next year pharmacists will be able to substitute a generic drug which should be cheaper for the patient and the State.

Reference pricing means that the government will negotiate a price with manufacturers at the lowest price for drugs that are interchangeable. The govermment will pay only that lowest price – so it's better value for money. The net effect should be cheaper drugs for citizens and for the State from next year.

Everyone will have choice as to the brand of drug they are prescribed; those who choose the branded or more expensive drug pay the difference. Exceptions will be made for patients with certain conditions. For example, it's important that people with epilepsy take a particular brand of drug. A government-appointed group will assess and recommend which drugs are interchangeable and which generics to use.

This measure is estimated to save €78m annually - and that’s just from the medical cards and drug reimbursement scheme. It does not count private out-of-pocket payments that the majority pay – so there should be significant savings evident to people next year.

So why are drugs so expensive in Ireland compared to most other countries? The simple answer is that we have not had a competitive market for drugs in Ireland. But in the last 18 months, the government has introduced a range of measures which makes the market more competitive. This was evident last year in the standoff with pharmacies where substantial savings were made in terms of fees paid to pharmacies for dispensing drugs.

The government also negotiated with pharmaceutical companies and manufacturers in 2006 and again earlier this year, with the result that prices for patent drugs was reduced by 35%. Between these measures €250m will be saved this year.

Up to last year, there was no ‘competitive market’ in any aspect of the drugs market in Ireland. Drug companies, manufacturers, wholesalers and distributors could charge what they liked. Pharmacists had a very good deal in terms of dispensing and doctors could prescribe whichever brand they chose.

However, in the last year and half, a series of measures have made each of these aspects more competitive. The announcement on reference pricing and generic substitution was another piece of the jigsaw, which in time should drive prices down.

So why is it only happening now? I asked Minister Harney this and she said ‘we are doing it now and that’s what’s important’ but gave no real explanation (even when pushed).

My analysis on this is that up to now there has been a pretty cosy relationship between government and 'big pharma' and between doctors and pharmaceutical companies. It's only now that when budgets are more constrained that action is being taken in the interest of the public and the public purse.

But the question remains why on earth were we not making these savings over the last 10 years?