On 20 July 2016, the Irish Pharmaceutical Healthcare Association (“IPHA”) and the Government concluded a new four-year Framework Agreement on the Supply of Medicines to the Public Health Services. The Agreement, which is being publicised as the largest public savings’ scheme to have been introduced here, came into effect on 1 August 2016 and replaces the preceding 2012 Agreement.

The deal is expected to save the Exchequer €785m, or roughly €12m a month. Under the Agreement, medicine prices will be reduced annually starting on the 1 August 2016 and on 1 July thereafter. Currently, there are 38 international pharmaceutical companies in the IPHA, including companies such as Pfizer, GSK, AstraZenca and Sanofi Aventis, who are party to the Agreement. 

Highlights from the new Agreement include: 

• Drug prices will be subject to an annual review and critically, the cost of medicines to the Health Service Executive, save in exceptional circumstances, can only fall – not rise; 
• Annual re-alignment of drug prices will be in line with the pricing of medicines in 14 European Member States;
  A detailed pathway for the approval by the Health Service Executive of new medicines is set out; 
• The State will benefit from rebates on sales of 5.25%, moving to 5.5%; 
  A 20% price cut on biologic medicine prices upon the availability of a biosimilar in the market; and 
• A 50% decrease in the price of a one-off patent expired drug, once a generic alternative is available in Ireland. 
• The hope is that the new deal will free up resources which the State can use for the investment in new and innovative medicines not yet available here, and reduce the cost of drugs to private patients. 

Contributed by: Charleen O’Keeffe