Medicine prices in Ireland are amongst the highest in Europe, a new paper shows, following a five-fold increase in Government spending on drugs over the last tenyears. Dr Michael Barry, who has delivered a report to Health Minister Harney on ways of reducing spending under the Community Drugs Schemes, has published a paper, which outlines some of the major issues involved, in the Irish Medical Journal.
In terms of cost containment a move towards a flat fee structure for drug reimbursement is highly desirable, Dr Barry’s paper says. It would also remove the current anomaly where the GMS medical card scheme is more cost effective than the Drugs Payment scheme.
There is little doubt that the demand for Health Technology Assessments (HTA) will increase in Ireland owing to factors such as the IPHA/HSE agreement, National Cancer Strategy (NCS) and the strategy for Science, Technology and Innovation (STI), says Dr Barry’s paper. Increasing the current HTA capacity will be a major challenge and will require a greater level of investment than has been evident to date.
Dr Barry also recommended reviewing products that are currently reimbursed with the aim of excluding those where the evidence base is weak or indeed non existent. There were 44.3 million prescription items issued under the GMS scheme in 2007 and drug expenditure under the scheme exceeded €1 billion. Aspirin is the most frequently prescribed medication and atorvastatin (Lipitor) is the number 1 selling drug.
2.5 per cent of the population are registered under the Long Term Illness (LTI). The number of prescription items issued under the LTI scheme exceeded 2.3 million in 2007 with an associated expenditure of €125.8 million. Therefore approximately one third of the population are eligible to receive free medications under the GMS and LTI schemes. This one third of the population accounts for over two thirds of total drug expenditure. The remaining two thirds of the population pay towards the cost of their medication.
Spending on community Drugs Schemes (approximately 85% of total drug expenditure) was €1.74 billion, a greater than five-fold increase over the decade 1997 to 2007. The year-on-year increase in pharmaceutical expenditure in Ireland is amongst the highest in Europe with medicines now accounting for approximately 13.5% of total healthcare spending. An agreement between the Health Service Executive (HSE) and the Irish Pharmaceutical Healthcare Association (IPHA) on the pricing and supply of medicines to the Irish Health Service came into effect on 1 September 2006.
It applies to all medicines granted marketing authorisation by the Irish Medicines Board or European Commission that can be prescribed and reimbursed under the Community Drugs Schemes and all medicines supplied to the HSE, state funded hospitals and to the state agencies whose functions normally include the provision of medicines. Dr Barry’s group reviewed the pricing and reimbursement of medicines in Ireland and the implications of the IPHA/HSE agreement including the introduction of pharmacoeconomic assessment.
Since 1993 the price of medications introduced into Ireland were linked to the currency adjusted wholesale price in the UK, or the average of the wholesale price in Denmark, France, Germany, the Netherlands and the UK (whichever was lower). As all of these countries with the exception of France were recognised “high priced” member states, the price control formula for Ireland established a “Northern European” price that was above the community norm. As a consequence, medicine prices in Ireland are amongst the highest in Europe.
A study conducted by the National Centre for Pharmacoeconomics in 2004 demonstrated savings in excess of €16 million per annum could be anticipated if Ireland reimbursed medication at the average European price. The new IPHA/HSE agreement links the price of medicines in this country to nine EU states including Austria, Belgium, Finland, Denmark, France, Germany, the Netherlands, Spain and the UK.
The inclusion of countries such as Austria, Belgium, Finland and Spain, whilst not resulting in an average European price, ould be expected to reduce the price of medicines in Ireland over time. The price to the wholesaler of any new medicine introduced to Ireland under the new agreement shall be realigned to the currency adjusted average price to the wholesaler in the nominated EU member states in which the medicine is available two and four years following commencement of the agreement.
Frequently, medicines are available prior to their launch in the reference countries and therefore the key to delivering savings from this new pricing mechanism resides in the ability to monitor the pricing and reimbursement of medicines in the other EU states and adjusting accordingly at two and four years.
Following the receipt of market authorisation of a new product, the time to reimbursement is variable across EU member states but may exceed 18 months in countries such as Belgium. Traditionally, there has been a short delay to reimbursement in Ireland. The IPHA/HSE agreement confirms that new medicines including new preparations and applications, granted a marketing authorisation by the IMB or European Commission will become reimbursable under the Community Drugs Schemes within 60 days of the date of the reimbursement application. This is an important component of the agreement for the pharmaceutical industry where the single pricing and reimbursement step should maintain speed to market. Where a pharmacoeconomic assessment is requested the 60-day rule for reimbursement will not apply.
The HSE/IPHA agreement has the potential to make a significant impact on the annual increase in drug expenditure. However, it will not result in the anticipated €300 million savings over the next four years unless the monitoring of drug prices in the reference countries at the planned two and four years, and the identification of off patent medicines to facilitate the 35% two-phased price reduction, actually take place. In relation to pharmacoeconomic assessment, the 90 day time frame is a demanding goal for those involved in the evaluation process. There is little doubt that the demand for HTA will increase in Ireland owing to factors such as the IPHA/HSE agreement, National Cancer Strategy (NCS) and the strategy for Science, Technology and Innovation (STI).
Increasing the current HTA capacity will be a major challenge and will require a greater level of investment than has been evident to date. We believe Ireland will continue to reward innovation in the pharmaceutical industry where products will continue to be reimbursed at a satisfactory price whilst maintaining speed to market. However there will be downward pressure on drug expenditure with the HSE examining all aspects of the drugs supply chain as evident in the recent reduction in the wholesale margin to 8% and consideration of a flat fee structure for payments to pharmacies. In terms of cost containment a move towards a flat fee structure is highly desirable.
It would also remove the current anomaly where the GMS medical card scheme is more cost effective than the Drugs Payment scheme. There should be an ongoing demand to demonstrate value for money with an associated increase in pharmacoeconomic assessment of new and existing products. Products failing to demonstrate cost effectiveness should be excluded from reimbursement and omitted from the Community Drugs schemes. Another cost containment measure widely used throughout the EU is patient co-payment.
Whilst this measure may result in savings it may also discourage adherence to drug therapy with potential adverse clinical outcomes. Furthermore, increasing patient co-payment is not always greeted with enthusiasm, as recent events Community prescribing accounts for approximately 85% of total drug expenditure.
In 2007 expenditure on medicines under 2007 spending on medicines under the Community Drugs Schemes exceeded €1.74 billion, a five-fold increase over the decade 1997–2007. The year on year increase in spending on medicines is amongst the highest in Europe. The desire of the HSE to reduce or at least contain drug expenditure is appreciated and is consistent with approaches across other EU member states. Recent developments in drug pricing and reimbursement as outlined here may help to contain the drugs bill. However, the emergence of promising but expensive biologic agents for cancer therapy and other chronic conditions threaten any cost containment measures.
Another strategy that could help reduce drug expenditure is disinvestment i.e. reviewing products that are currently reimbursed with the aim of excluding those where the evidence base is weak or indeed non existent. The net effect of such developments is difficult to predict however we anticipate that the year on year expenditure in pharmaceuticals will continue to grow driven, in part, by the increasing numbers of promising but expensive biologic agents being introduced for use as medical treatments.
The largest community drugs scheme is the General Medical Services (GMS) scheme where the number of eligible patients was 1,276,181 in 2007, approximately 30% of the population. The number of persons registered under the Drugs Payment scheme was approximately 1.6 million in 2007 and the cost of the 13.4 million prescription items issued under the scheme was €307.5 million. The European Economic Area (EEA) scheme provides visitors from other member states with established eligibility emergency GP services while on a temporary visit.
Expenditure under the scheme was €2.34 million in 2007. The High Tech Drugs (HTD) scheme introduced in November 1996 facilitated the supply by community pharmacies of certain high cost medicines (e.g. those used in conjunction with chemotherapy), which have previously been supplied primarily in the hospital setting. The cost of medicines dispensed under the HTD scheme is paid directly to the wholesalers and pharmacists are paid a standard patient care fee of €59.04 per month to cover dispensing. In 2007 payment to wholesalers under the HTD was €238.5 million and payment to pharmacies to cover dispensing fees was €11.4 million. The €249.9 million expenditure under the HTD scheme in 2007 represents a nine-fold increase since 1997.
The TNF antagonists etanercept (Enbrel) and adalimumab (Humira) which are used for the treatment of conditions such as rheumatoid arthritis and psoriasis account for over 25% of total expenditure under the HTD scheme. The growing number of biologic drugs for cancer therapy and other chronic conditions represent a major challenge for reimbursement agencies. Factors contributing to the observed increase in drug expenditure include the prescribing of newer more expensive medications i.e. “product mix”.
In 1997 the average cost per dispensed item under the GMS scheme was €11.20 as compared with €23.27 in 2007. In addition to the “product mix” there is the “volume effect” comprising of growth in the number of prescription items issued. In 1997 twenty million prescription items were issued under the GMS scheme. This increased over two-fold to 44.3 million items in 2007.
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