The Health Service Executive (HSE) has warned it may tender internationally for the supply of drugs and medicines to pharmacists if existing wholesalers fail to absorb the cost of planned reductions in profit margins.
The HSE has written to the three main wholesalers - United Drug, Uniphar and Cahill May Roberts - in recent days seeking clarification on whether local pharmacists could end up having to pay more than the amount reimbursed by the State under a controversial new pricing system to be introduced next month.
The Irish Times has learned that the HSE advised the Department of Health and Minister for Health Mary Harney that it is "actively considering" alternatives to the current service - which costs around €280 million annually - if such a guarantee is not provided by the wholesalers.
The HSE said that the alternatives included seeking tenders internationally for companies to provide the service either on a regional or national basis, or to enter into new arrangements with manufacturers to distribute their products to pharmacists and hospitals.
It is understood that the HSE indicated it had also been approached by some courier companies about the business.
The move represents a potential further escalation in an already-bitter dispute over the HSE's plans to reduce its drugs bill by €100 million by reducing wholesale margins by 9 per cent. The HSE and the Government have argued existing margins are more than double the level in other European countries.
Pharmacists have warned they could end up being reimbursed for less than the wholesale cost by the HSE and that hundreds of outlets could face closure.
Pharmacists have also warned that medical card holders would have to pay for their drugs from next month and seek refunds from the State unless the HSE abandoned attempts to introduce new contracts containing the new pricing system before then.
A well-organised lobbying campaign by pharmacists, as well as fears expressed by patients, has resulted in Fianna Fáil backbenchers putting strong pressure on the Government over the HSE's plans.
The HSE has stated that it had "understandings" with the wholesalers that community pharmacists would not be left out of pocket under the new pricing structure. However, it is unclear as to how such "understandings" came about.
Last week in a note for Fianna Fáil deputies, United Drug said there was "no question" of wholesalers being able to make up for the 9 per cent reduction in margins.
"We only make net margins of 1-2 per cent, and so don't have an extra 9 per cent to play with," the note said.