The Health Service Executive (HSE) discovered only by accident that it should not be negotiating fees with the representative bodies for pharmacists and pharmaceutical wholesalers, it has emerged.
Prof Brendan Drumm, the HSE's chief executive, has revealed that it was only when the Irish Pharmaceutical Union (IPU) - which represents around 1,600 community pharmacists - wrote to the HSE complaining that it should be part of negotiations which were taking place with wholesalers as it would affect their income, that the HSE decided to seek legal advice.
The advice it received was totally unexpected.
"The legal advice we received was unexpected in that it stated not only should we not be dealing with the IPU when dealing with the wholesalers, but that we should not, under competition law, be dealing with the wholesalers or any other group representing suppliers," Prof Drumm told the joint Oireachtas Committee on Health and Children last Thursday.
"The legal opinion was generated from a challenge from the pharmaceutical side. This was subsequently taken back to the Department and from there to the Attorney General who has issued a forthright view that the legal opinion is correct," he said.
The HSE then wrote to the IPU stating that for it to negotiate fees with the union in future on behalf of its members would be in breach of competition legislation and could be regarded as price fixing.
The IPU is outraged at this suggestion however and said its legal advice was contrary to that of the HSE.
Pharmacists are paid set fees by the State to dispense prescribed medicines to medical card holders and it said members could pull out of the scheme if the HSE did not change its attitude to negotiating with the IPU.
The IPU also claimed the current situation was an attack on the right of pharmacists to be represented by a trade union.
Prof Drumm said the legal advice had implications not just for the health sector but for many other areas. "I have received verbal representations on the issue from the dental association.
"I was asked if it affects negotiations on behalf of general practitioners," he said.
"We have sought clarity from the Attorney General on whether the same advice would apply. I am not a lawyer. However, it does not look on paper as if that advice will be significantly different. We are still awaiting the advice."
Dr Jimmy Devins, a member of the committee, asked if it would result in every pharmacist having to negotiate a contract with the HSE on an individual basis.
Prof Drumm replied: "We do not want to reach a stage where we have to negotiate with each pharmacist. That would be an enormous challenge."
He said the situation would be dealt with in accordance with the rules operating across Europe and these rules were being used now to reach a deal with wholesalers.
This involves placing advertisements seeking an input from everybody with an interest in how prices are set and then economic analysts are brought in to examine the costs involved and to suggest a fair price.