Promised savings to the State’s bill for prescription drugs will not materialise under a new pricing agreement to be announced imminently, it has been alleged.

The new Medicines Pricing Agreement provides for savings of €775 million from the Governments’s €1.2 billion annual drugs bill over the next four years.

However, a lobby group representing the makers of generics and “biosimilars” – copies of biologic pharmaceuticals that no longer have patent protection – say its wording will effectively protect the current pricing of many key drugs.

In a letter seen by The Irish Times, the Healthcare Enterprise Alliance says the agreement includes "artificial pricing thresholds".

‘Biosimilar medicines’

“Specifically, we understand that consideration has been given to protecting a segment of the pharmaceutical sector whereby certain medicines – biologics – will be reimbursed at a price 30 per cent less than current level, but only when competitor biosimilar medicines enter the market,” the letter signed by

Sandra Gannon

says.

Ms Gannon is chief executive of the Irish operation of generics giant Teva and president of the alliance. She says the clause is "nothing more than a biosimilars blocker".

Biosimilars are generally priced at between 25 per cent and 30 per cent less than the original biologic drugs, the letter states says, but the 30 per cent “blocking clause” would require companies to drop prices to a levels “that are beyond commercial reality”.

“This simply will not happen. The fallout will be twofold – firstly the fictional savings would not be realised and secondly biosimilars would be shut out of the market,” Ms Gannon says in the letter.

Sent to Minister for Health Simon Harris and copied to Minister for Public Expenditure and Reform Paschal Donohoe among others, the letter warns the Government "may be on the cusp of being a party to an agreement that will stifle competition".

The last government moved to increase the use of generics in efforts to cut a drugs bill under pressure from greater patient demand and the introduction of very expensive new drugs for niche conditions.

Pricing agreement

The Government has been in discussions with the

Irish Pharmaceutical Healthcare Association

, which represents the major drug companies in Ireland, on the terms of a deal to replace the previous pricing agreement which has expired. It had threatened to introduce unilateral price cuts of up to 30 per cent in the absence of an accord.

The effect of the deal is intended to be that there will be no increase in the State’s annual drug bill over the four-year life of the agreement.

The alliance is calling on the Government to ensure any biosimilars blocker is removed from the agreement before it is signed and to introduce a quota system that would see HSE prescribers forced to opt for biosimilars in 40 per cent of cases.

It also wants the removal of the confidential rebate structure which reduces the price of drugs to State payers while leaving the headline price unchanged for private users.