The issues behind the pharmacists' dispute are explained by Martin Wall
WHAT IS the dispute between pharmacists and the Health Service Executive (HSE) about?
The row between pharmacists and the HSE stems from the Government's plan to reduce its spending on drugs and medicines. Under a new system introduced last week, the HSE has reduced the margin paid to pharmaceutical wholesalers from 17 per cent to 8 per cent in a bid to save €100 million. As it has no direct relationship with wholesalers, to achieve its aim the HSE has reduced the reimbursement it pays to pharmacists for drugs and medicines. The HSE argues that the current 17 per cent margin is shared between the wholesalers and the pharmacists in the form of discounts. The Irish Pharmacy Union maintains these discounts have become an integral part of the viability of the sector.
What are the implications?
The union contends that the new HSE payment system, which has been introduced unilaterally, will cut the income of pharmacists by €100 million. It argues that the measure will result in up to 300 pharmacy outlets being forced out of business with the potential loss of up to 5,000 jobs.
Why does the HSE want reforms in drug payment arrangements?
The HSE says State expenditure on drugs has increased by 370 per cent over the last decade. Last year the State paid more than €1.745 billion on drugs and medicines for patients under various community schemes, including the medical card scheme, the long-term illness scheme and the drug payment scheme under which private patients can reclaim any expenditure over €90 per month.
Minister for Health Mary Harney says €600 million went to wholesalers and pharmacists, and that the wholesale margin is double the European average.
How much are pharmacists paid by the State?
Pharmacists are reimbursed by the State in two main ways through dispensing fees and a mark-up on the cost of a product.
Last year about 1,600 pharmacies shared €367 million in fees and mark-up payments. Pharmacists also receive other income from private patients and from supplying ancillary products such as cosmetics, etc. However, some pharmacies rely almost completely on the medical card scheme for their income. Under the existing contract, pharmacists are paid a fee of €3.27 for each item dispensed to medical card patients. Under this scheme they receive no mark-up on the drugs, which are sold at cost price. For patients claiming under the drug payment and long-term illness schemes, pharmacists receive €2.86 per product and a mark-up on drugs of 50 per cent. The HSE is seeking to "decouple" the payment for the pharmacist from the cost of the drug. It maintains that as medicines become more expensive, pharmacists receive more money themselves.
How would this change under the HSE's new system?
The HSE has offered an interim deal that would see pharmacists paid a flat fee of €5 for each item dispensed under all schemes, but no mark-up.However, based on advice from the Attorney General, the State argues that under competition law it cannot negotiate on fees for pharmacists. It has set up an independent body to agree a new set of fees.
What will happen now?
A number of pharmacists have initiated legal action against the HSE for breach of contract. Some have also signalled they may withdraw from their contracts to operate the community schemes. This could leave medical card patients having to pay for drugs and seek a refund from the HSE.