Pricing Pharmaceuticals:
Has Public Policy
Delivered?
Paul K Gorecki
ESRI & TCD
Irish Economic Policy Conference 2014:
Economic Policy After the Bailout
Institute of Bankers, IFC, Dublin
31 January 2014
STRUCTURE OF PRESENTATION
 2010:
What was the problem?
 2013: Towards a successful
resolution?
 Two Observations on 2010-2013
 Future Policy: What Remains to be
Done?
2
Ireland High & Rising Pharma Expenditure:2010
Ireland’s Ranking in
Pharmaceutical
Expenditure Per Head Cp
Other OECD Countries:
2000 – 20th highest of
27 OECD countries
2005 – 9/31
2010 – 3/25
US Pharmaceutical
Expenditure Per Head
Set = 100, then Ireland
would be as follows:
2000 – 46
2005 – 58
2010 - 70
3
High Input & Mediocre Outcome:2010
“In 2010, per capita expenditure spending on
pharmaceuticals in Ireland was the highest in
the EU, 34% above the average, while health
outcomes are not better than the average for
EU countries over a range of high-level
indicators.” European Commission, Economic
Adjustment Programme for Ireland, Autumn
2012.
4
Pharmaceutical Prices: 2010

Generic pharmaceuticals:



New pharmaceuticals:



Low generic usage cp other MS
High generic prices cp to other MS
Consistently high prices cp to other MS
Germany only MS consistently higher prices
Framework for Pricing Decisions:


Voluntary DoH/HSE & industry agreements
No legal basis for generic substitution
5
Pharmaceutical Pricing: 2013

Framework for Price Setting


Generic Pharmaceuticals (28% expenditure)




Health (Pricing & Supply of Medical Goods) Act 2013
Generic substitution permitted
IMB certified 13 active substances (statins, ACE inhibitors)
HSE has set reference price for two drugs (atorvastatin,
esomeprazole), large decline in price
New Pharmaceuticals (72% expenditure)


Stock -HSE rolling assessment as per the Act (pregabalin)
Flow – default status quo or use of Act’s powers?
6
Two Observations on Pharmaceutical Pricing:
2010-2013

DoH/HSE strategy since 2009 to reduce
pharmaceutical expenditure through eg
reductions in wholesale & pharmacy margins.

2010 – 2013 favourable conditions for
reform of pharmaceutical pricing



Agreement on problem/solution
Austerity – greater emphasis on VFM
EU-IMF Programme for Reform for Ireland
7
Future Policy: What Remains to be Done?

Building on the Health (Pricing & Supply of
Medical Goods) Act 201



What is DoH/HSE policy towards pricing of new
drugs?
Release on a monthly basis PCRS data
Quality Adjusted Life Year (QALY)


Is €45,000 threshold the right price?
If so, under what conditions, if any, should the
threshold be exceeded?
8
Further reading


P. Gorecki, A. Nolan, A. Brick & S Lyons (2012)
Delivery of Pharmaceuticals in Ireland. Getting
a Bigger Bang for the Buck. RS 24. Dublin:
ESRI.
A. Brick, P. Gorecki & A. Nolan (2013) Ireland:
Pharmaceutical Prices, Prescribing Practices
and Usage of Generics in a Comparative
Context. RS 32. Dublin: ESRI.
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