The ever-increasing cost of prescription drugs in Ireland is troubling consumer interests. Eibhir Mulqueen reports
The Director of Consumer Affairs, Carmel Foley, believes it is extraordinary that private customers purchasing prescription drugs in Ireland subsidise medical card holders' purchases.
"I cannot see that this is an equitable way to operate," she adds.
The Irish Pharmaceutical Union, which represents pharmacists, graphically illustrated how most consumers lose out in a submission to the Department of Health late last year to review the General Medical Services (GMS) medical card scheme by which the State reimburses drugs purchased at cost price plus paying a €2.98 dispensing fee per item.
"The pharmacist depends on his private patients to carry the GMS scheme," the IPU stated bluntly.
In effect, this means that private patients who pay up to €78 a month for prescription drugs are helping to fund the GMS scheme for pharmacists.
"If pharmacists only had GMS patients, it would not be a viable business for them," IPU spokeswoman Olive Stephens points out.
Of the prescription drugs sold through pharmacies, 72 per cent are dispensed under the GMS. Private customer expenditure, which includes the Drug Payment Scheme (DPS), accounts for the remainder. Under the DPS, monthly payments over €78 for prescription drugs and medical and surgical appliances are reimbursed by the State.
Being the wrong side of the threshold, and without a medical card, could see a patient/consumer footing a bill of up to €930 a year up front - though some tax relief can be claimed on bills later.
The State pays a 50 per cent mark-up on the cost price of prescription drugs plus a €2.49 dispensing fee.
"There is considerable cross-subsidisation between the GMS and DPS schemes," the IPU spokeswoman stresses. "The current payment levels for the GMS scheme, which were set down over 30 years ago, are no longer sustainable."
Asked if this meant that private customers were paying artificially high prices, Olive Stephens says they are paying "more than they perhaps need to" and that the Department of Health knows this. "We have put forward proposals that would essentially lessen the burden. It would mean a better deal for private patients."
The IPU wants the GMS to be more viable, allowing it and the DPS to be standalone schemes. According to a PriceWaterhouseCoopers study carried out for the IPU last year, the average net profit margin for pharmacies is about 10 per cent.
But the recommended IPU profit margin on prescription drugs is 33 per cent - a 50 per cent mark-up on the wholesale price - although pharmacists have flexibility on what they could charge. A 2002 report by Indecon International Economic Consultants cited a survey which found Irish pharmacies' 33 per cent profit margin was the highest in the EU.
The IPU insists final prices still represent value for money, citing the Government's 2001 Value for Money report by Deloitte & Touche. It found: "As a result of this restraint on prices, the cost per item prescribed in Ireland under GMS has grown relatively slowly."
Consumer organisations are, however, questioning the wholesale drugs price agreement which fixes the price of every licensed prescription drug in the State.
Director of Consumer Affairs, Carmel Foley, says she is struck by what appears to be high prices charged for prescription drugs. She also questions why so many medicines need to be on a prescription-only basis.
"I question the way in Ireland so many things are on prescription that are not in Spain. I wonder is that too cosy."
Wholesale prices are fixed by the Department of Health and the Irish Pharmaceutical Healthcare Association (IPHA), representing drug research companies, since 1982 under a system of rolling agreements. The latest one runs out in 2005.
The price of a particular drug is based on either the average of that product's price in Denmark, France, Germany, the Netherlands and Britain or the British wholesale price, whichever is the lower.
"For the vast majority of consumers, arguably it is uncharted territory," says Dermot Jewell, chief executive of the Consumers' Association of Ireland.
"They have absolutely no idea what they should be paying. They just pay what they are told to."
The lack of transparency surrounding the price agreement leaves much to be desired, he says. "We are being made to feel not insignificant but certainly not knowledgeable about disputing this."
In contrast, he notes, farmers regularly complained about veterinary medicine prices. "I have rarely met anyone who has disputed a price on a prescription."
The IPHA, however, claims the agreement between it and the Government benefits both parties and "ultimately", patients. It notes that, in 2002, 10.7 per cent of State expenditure on health was accounted for by spending on medicines, compared to a European average of 14.9 per cent.
In addition, prices agreed have to pay for pharmaceutical research and development, "a risky, lengthy process", IPHA spokesman Brian Murphy says.
"On average only one or two of every 10,000 promising substances will successfully pass extensive testing to be approved as a marketable product. Even then only three out of every ten marketed medicines produce revenues that match or exceed average R&D costs," he adds.
Shane Howard, who set up a pharmacy in Moycullen, Co Galway, six months ago, points out he had to build up his business on volume and service rather than price.
He believes the independent pharmacist's business rises or falls on the quality of service and healthcare advice for which a dispensing fee is charged. This advice can be crucial. So called "drug misadventures" can compound healthcare costs and compromise the medicine taker's health; a medical sociologist attached to Kings College at the University of London had found 18 per cent of patients attending corporately owned pharmacies were found to be at risk of "moderate to serious" dispensing errors compared with four per cent of those attending independent outlets.
Howard's dispensing fee is €2.25, again, taken from the IPU guidelines. "I am striving to work off a zero margin of error," he adds.
Having worked in a number of other pharmacies, he says he believes Irish consumers get value for money. He cites the case of a person he knows who paid over €100 in the US for two sets of antibiotics for a chest infection. They would cost about €30 here.