Generic drugs online

Source: Sunday Business Post

Date: 10-Aug-2008

Author: Samantha McCaughren

The much-anticipated report on pharmacy fees by the independent body headed by Sean Dorgan appears unlikely to resolve the row between the HSE and Irish pharmacies.

The report, which has yet to go before cabinet, contains criticisms of the HSE and outlines the complexity of the current payments system. It proposes an increased interim dispensing fee on a sliding scale. It also recommends that the proposals be temporary "because of our strong view that a new contract is required urgently".

However, a number of pharmacists told The Sunday Business Post that the fees suggested fall short of what is needed to bring an end to the current standoff. With a judgment on a legal challenge to the HSE by one chain, The Hickey Group, due in September, some in the sector believe a legal resolution is now the only one left.

The Independent Body on Pharmacy Contract Pricing was set up by Minister for Health Mary Harney in an effort to avert the nationwide withdrawal of pharmacists from all state-supported drugs schemes.

The row centres on discounts that wholesalers give pharmacists and the HSE's decision to subtract these margins or discounts from the amount it reimburses chemists for medicine. The HSE wants to cut €100 million from its escalating drugs bill, but pharmacists say that many chemists will close if this revenue is slashed suddenly from the bottom line.

The Dorgan report concludes that an interim sliding scale of fees should be introduced for dispensing medicine in community drugs schemes, such as the medical card scheme. At present, the average fee paid is €4.39 per item dispensed, but the report recommends fees of between €6 to €7 as a temporary measure.

Seamus Feely, secretary general of the Irish Pharmaceutical Union (IPU) told The Sunday Business Post: "The report doesn't really resolve anything and I think Dorgan acknowledges that himself.

"From our perspective, he has drawn attention to the fact that it's a sophisticated, complex issue and it requires a sophisticated response. We were somewhat disappointed that he didn't come up with that response himself, but he was constrained obviously by the terms of reference in what he could do."

Dorgan was only asked to look at fees paid to pharmacists rather than the impact of the HSE reduction in prices paid for medicine. Dorgan said more analysis of the wider impact of such changes to the sector was needed.

In a criticism of the HSE's decision on reducing reimbursement levels, the report said that "it appears that the totality of this change was not fully evaluated, in relation to both the cut in wholesale margins and the loss of margins on private prescriptions".

While the Dorgan report does endorse many of the key objections from pharmacists to recent moves by the HSE, it also acknowledges that the spiralling drugs bill is an issue for the exchequer. In a blow to the pharmacy sector, the body did not agree "that there should be full recompense for 'lost' revenue" caused by the HSE reduction in reimbursement levels.

The interim fees proposed in the Dorgan report are based on the number of drugs dispensed annually. A fee of €7 per item would be paid for the first 20,000 items dispensed, falling to €6.50 for items 20,001 to 30,000 and €6.50 for anything over 30,001 items.

The body found that higher fees would be needed to maintain revenue and profitability at 2007 levels. This would equate to €8.67 in the case of an average semi-urban medium-sized outlet. It would need to be €7.82 in the case of an average small rural pharmacy. Submissions from the sector on the level of the fees required ranged between €6.05 and €12.69.

So while the Dorgan report does makes some comments that are welcome by pharmacists, the fees suggested fall short of expectations. One senior industry player said: "The words are fine but the numbers don't add up from our point of view."

The source said that the recommended fees were such that they were unlikely to cause any division among the pharmacies, as he believed there would be little or no take-up for such a fee structure.

"It might benefit relatively small pharmacies doing a huge proportion of GMS business but apart from that it is not really much of an incentive," he said.

Another pharmacy chain executive said: "What we really need to see is some element of margin or mark-up in relation to parts of the scheme. Suddenly wiping out the margin is an absolute disaster.

"I've taken a lot of soundings and I don't think this report will bring us any closer to a resolution, the reasons being that Dorgan was given a very limited brief and there was no input from pharmacies into the brief," he said.

"The financial structure of what he has put in place is negative from our point of view but when you look at the figures, the state's drug bill is escalating and does need to be looked at. We have to find ways of controlling it," he said.

"We all accept we're going to have to take some pain on it. Everybody is going to have to give a little but it should at least be done in a fair and equitable way," he added.

For now, many pharmacists are putting their faith in the legal system and the ruling on the Hickey case will dictate the next step in this dispute.