The adverts promise big cuts in the cost of medicines here, but patients are right to be sceptical about whether there will be major falls in the cost of their prescriptions, writes Carissa Carey
Published 23/02/2010 | 05:00
SAVE €3 to €4 on every €10 you spend on prescription medicine, claim the ads promoting the latest price cuts from the big drug companies.
The reductions are certainly welcome. For the past few years, drug prices in Ireland were among the highest in Europe.
But is this all good news for private patients -- people not covered by the medical card, the long-term illness scheme or who are spending below a monthly threshold of €120?
The latest cuts are on branded medicines that are 'off-patent', an area of the market which is already at least technically competitive.
Pharmaceutical companies spend a lot of time and money researching drugs. In order to recoup those costs, the drugs are covered by patent for the first few years on the market.
This means that only the drug company which developed it can sell it. Patented drugs, particularly if they are innovative, are often expensive. After a while, the patent runs out and other companies can then manufacture the drug.
These competitor drugs are the same as the original drug but go by a different name and are referred to as 'generics'.
For example, Atorvastatin helps lower cholesterol and is currently sold only by Pfizer under the brand name 'Lipitor'.
Lipitor is the top-selling branded pharmaceutical in the world. Next year, the patent runs out and Atorvastatin will start to be sold by other companies under different names.
The increasing number of generic drugs has had a huge impact on the global drug market. The giant US pharmacy Walgreen blamed the popularity of generic drugs for a sales drop last month.
In Germany, about 30pc of prescribed drugs are generic. But the situation is different here. Generic drugs are not much cheaper than their branded rivals -- only 5-10pc, compared with up to 40pc in Germany -- and doctors have been slow to prescribe them.
What's even more bizarre is that after the latest round of price reductions on branded drugs, generic drugs are now more expensive here.
"I'm not sure of anywhere else in the world where this is the case," says Dr Michael Barry of the National Centre for Pharmacoeconomics.
"We haven't had an effective generic market in the past and now there's no incentive for doctors to prescribe generics."
But surely a price cut -- whether it is on branded or generic drugs -- is good news for consumers?
The association which represents generic manufacturers is due to negotiate a new deal with the Department of Health in September. It is likely that it will also agree to cut prices.
Still, Stephen McMahon of the Irish Patients' Association (IPA) is sceptical. He notes that there have been no price cuts on the other 70pc of branded drugs in the Irish market, those that are still covered by patent.
THE mechanism which determines the price of these is now set until March 2012, under the deal which saw reductions on the off-patent drugs.
Ronan Collins of the Irish Pharmaceutical Healthcare Association, which represents the branded drug companies, says that the price of patent drugs will still vary over the lifetime of the new agreement.
The prices are now determined according to a basket of prices for the drug in other European markets. If the price falls in other markets, it will fall here too.
"As drugs come off patent, for example Lipitor, they'll also drop in price by 35pc under the agreement," says Collins.
From January 1 next year, the State will also introduce reference pricing. It will set a price for a drug, determined by a spread of prices for both generic and branded versions.
It will only pay this price under the drugs-payment scheme which, according to Mr Collins, is another incentive for both branded companies and generic companies to keep their prices low.
The State has the wherewithal to demand specific price targets, but private patients don't. There is no price regulation of sales of drugs in the private market in Ireland.
Stephen McMahon says there is anecdotal evidence that some pharmacies are not passing price cuts on to the consumers.
But a spokeswoman for the Irish Pharmaceutical Union says that this was because some chemists are selling old stock that was bought before the price cuts came in.
She said that Mr McMahon's suggestion that prices should be displayed in pharmacies was not practical.
"The average pharmacy dispenses thousands of drugs. I just don't see how that would work," she said.
However, she did admit that prices vary for private patients and that consumers are free to shop around.
"I suppose you have to remember that your local pharmacy will have your drug records and will be able to spot any issues with interactions of drugs. It's useful for people to have that advice," she said.
While price cuts are always welcome, private patients should do their research. And if the drugs are not off-patent, don't expect to benefit from these reductions.