Pharmaceutical Prices, Prescribing Practices and Usage of Generics

June 27, 2013

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The ESRI is today (27 June, 2013) publishing the report Ireland: Pharmaceutical Prices, Prescribing Practices and Usage of Generics in a Comparative Context, by Aoife Brick, Paul K. Gorecki and Anne Nolan (ESRI). The report assesses the level of pharmaceutical prices, the usage of generics and the prescribing practices of medical practitioners in Ireland in comparison with other EU Member States and OECD countries. It is based on the latest HSE data for Ireland and comparable data from other countries. The key findings of the research are: Pharmaceutical Prices

  • Relative to other EU Member States:
    • originator in-patent pharmaceutical prices are higher in Ireland;
    • originator off-patent pharmaceutical prices are lower in Ireland; and
    • generic pharmaceutical prices are higher in Ireland.
  • Comparisons were based on March 2013 prices of leading pharmaceuticals.

Generic Usage

  • The market share of generics for the leading pharmaceuticals in the GMS Scheme doubled between 2010 and 2012, to reach 50 per cent.
  • Increased generic penetration has not led, up until now, to substantial savings for the State or the cash-paying patient.
  • This reflects the fact that, in contrast to much of the EU, generic prices tend to be similar to those of the brand name manufacturer.

Prescribing Practices

  • Where prescribers in Ireland have a choice between different pharmaceuticals within the same therapeutic sub-group – statins, ACE inhibitors, and proton pump inhibitors, they tend to select the most expensive pharmaceutical product.
  • In contrast, prescribers In the UK tend to prescribe the least expensive pharmaceutical product within each of the three therapeutic sub-groups.
  • These three therapeutic sub groups accounted for nearly one fifth of spending by the State under the GMS Scheme in 2012.

Restructuring the Price Setting Mechanism

  • The Health (Pricing and Medical Goods) Act 2013, which was signed into law on 28 May 2013, holds out the possibility of radically changing the way in which pharmaceutical prices are set in Ireland.
  • Pharmacists will be able to select a lower-priced pharmaceutical product than that prescribed for the patient by a medical practitioner for interchangeable pharmaceutical products.
  • Lack of clarity and precision as to how prices will be set under the Health (Pricing and Medical Goods) Act 2013 means that it is not possible to predict with any certainty that originator and generic pharmaceutical prices in Ireland will fall vis-à-vis other countries.
  • The Act builds on a series of reforms that the State has introduced since the mid-2000s to reduce pharmaceutical prices and expenditure.

Patient Access Agreements

  • The research also highlights the increasing use of 'patient access agreements' (in Ireland and in other countries) as an alternative mechanism for setting pharmaceutical prices.
  • Under 'patient access agreements', prices are negotiated between the State and manufactures but kept confidential.
  • The increasing use of this mechanism should prompt a wider discussion about:
    • transparency; and
    • how the benefits of new pharmaceutical products should be evaluated.

Note to Editors:

  1. Ireland: Pharmaceutical Prices, Prescribing Practices and Usage of Generics in a Comparative Context, by Aoife Brick, Paul K. Gorecki, and Anne Nolan (ESRI), will be published online on the ESRI website at 00:01 am Thursday 27 June.
  2. Members of the media are invited to attend a media briefing on Wednesday 26 June, at 10.30 am, in the ESRI.
  3. Dr Aoife Brick is a Research Analyst, Professor Paul K. Gorecki is a Research Professor and Dr Anne Nolan is a Research Officer at the ESRI.
  4. The Department of Health and the Health Service Executive commissioned the ESRI to undertake a study on 'Ireland: Pharmaceutical Prices, Prescribing Practices and Usage of Generics in Comparative Context'. The terms of reference are set out in Appendix A of the report.
  5. The study fulfils a requirement of the EU-IMF Programme of Financial Support for Ireland. In the seventh uptake of the Memorandum of Understanding on Specific Economic Policy Conditionality, it was stated that, "[T]he authorities will conduct a study to compare the cost of drugs, prescription practices and the usage of generics in Ireland with comparable EU jurisdictions."
  6. The report is being published by the ESRI after peer review.
  7. Pharmaceutical prices at both the ex-factory and wholesale levels were examined in the report. Ex-factory price means the price charged by the manufacturer or the list price. It excludes the wholesale mark-up and any mark-ups/dispensing fees charged by the pharmacist. The wholesale price means the ex-factory price plus the wholesale mark-up.
  8. New pharmaceuticals are those recently introduced pharmaceuticals subject to patent protection with no direct competition.
  9. The General Medical Services (GMS) Scheme is the largest State pharmaceutical reimbursement scheme in Ireland. Those eligible for the GMS Scheme pay a €1.50 charge per prescription item, up to a maximum of €19.50 per family per month.
  10. An interchangeable pharmaceutical product is one that contains the same amount of the same active ingredients, possesses comparable pharmacokinetic properties, has the same clinically significant formulation characteristics, and is to be administered in the same way as the pharmaceutical prescribed.
  11. Cash-paying patient refers to those patients that make out-of-pocket payments for pharmaceuticals.
  12. The report builds upon Delivery of Pharmaceuticals in Ireland – Getting a Bigger Bang for the Buck, by Paul K. Gorecki, Anne Nolan, Aoife Brick and Seán Lyons (ESRI), which was published in January 2012.
  13. In 2011, the State spent approximately €1.9bn on pharmaceuticals and payments to pharmacists. This amounted to approximately 13 per cent of total public health expenditure in 2011. The GMS Scheme is the most important State pharmaceutical reimbursement scheme.

The ESRI is an independent research institute. The Institute does not take policy positions and the views expressed in ESRI publications are those of the authors. All ESRI reports are peer-reviewed prior to publication.