Pharmacists at loggerheads with Mary Harney

Posted in Blog by saraburke on July 9, 2009

In straightened times, it makes sense that the HSE is looking to cut its costs, particularly costs which have escalated and the Fianna Fail/PD government failed to do anything about over the last 12 years, until now. So HSE is trying to save money on the drugs bill and the pharmacists are objecting to the extent of savings trying to be made and are saying it will put them out of business.

Minister of Health, Many Harney is using a very blunt instrument to reduce fees paid to pharmacies. On 18 June, Harney announced details of the scheme which came into effect on 1 July. Meanwhile the Irish Pharmacy Union (IPU) have issued notice that 1,000 pharmacies will withdraw from the community drugs schemes on 1 August.

What another damn mess… So how did this all come about? 

About 16% of the overall €16 billion health budget is spent on drugs. Currently €1.7 billion is spent on the community drugs budget. The community drugs budget is made up of two schemes. 

The state pays for two sets of drugs bills – one is the drugs of medical card holders of which they cover the full cost and pay the pharmacist €3.60 for each item dispensed to a medical card holder. This constitutes 75% of the pharmacies’ community drugs scheme work. 

The second scheme is one availed of by people who don’t have medical cards – the drugs reimbursement scheme for those without medical cards – under which the state pays anything over €100 per month, In this scheme, the state pays the pharmacist, €3.16 for each item and a 50% mark up on the cost of the drug.  This constitutes 25% of  the pharmacies’ community drugs scheme work. )

Mary Harney and the HSE say that  €1.1 billion was spent on the costs of drugs, the rest (€600 million) was fees and mark up which go to the pharmacists. They say this is no longer sustainable, and are introducing a new method of payment.

This new method of streamlined payment is LONG overdue. The pharmacists say they have been looking for it since 2002. Niamh Brennan’s report ( the Commission on Financial Management and Control Systems in the Health Service) recommended reform of how and how much pharmacies were reimbursed for involvement in the community drugs schemes. (See

As 2004 and 2005 was spent establishing the HSE, little progress was made on this issue. Under the HSE, a new deal was done with the drug manufacturers in 2006. This sought an initial reduction of 20% reduction on off patient medicines and a further reduction of 15%. THis agreement with pharmaceutical companies also insured that pharmacists were not allowed to dispense generic drugs. It seems that big pharma in ireland is too important to the ‘economy’, so much so that the State have failed to negotiate a better deal for public money being spent on drugs. This deal is up for renegotiation in 2010. Hopefully then, the whole issue of generic drugs will be back on the table. Ireland has one of the lowest generic prescribing and dispensing in Europe. 

So in 2007/8, the HSE decided pretty much unilaterally, that it would reduce reimbursements to pharmacies by 8.5%. this was challenged by individual pharmacists and the IPU and in October 2008, the High Court ‘Hickey judgement’ ruled in favour of the pharmacists. It found that the process by which the HSE was trying to impose the cuts was not legal, howver it did not find against the principle. 

In February of this year new emergency legislation (Financial Emergency Measures in the Public Interest ) legislated for cuts in fees paid across the board, to GPs, pharmacists, dentists etc… The act says minister must engage in consultations but in effect allows the Minister to do whatever she chooses. The act says that if a professional does not like the conditions they can withdraw services.

On 18 June Minister Harney announced the details of new scheme with effect from 1 July. It provides the rational for the cuts as the ‘rapid expenditure on drugs and medicines’. The press release announcing the new scheme says “The rapid escalation in cost must be curtailed. An average of a 12.5% increase each year over six years in costs is not sustainable. Dispensing fees alone have doubled since 2002.”

And drug costs have escalated since 2002, but mainly because there are more drugs being prescribed to a growing, aging population and drugs are increasingly expensive. YEs, pharmacy fees have escalated, under the fees overseen and agreed by government. Pharmacies have gained €100s of millions of euros over the last decade but they would make the care that they provide an important role – and dispensing the right drugs can be a life or death matter. Plus pharmacies provide a quality, swift services – there are not many queues in pharmacies. THey also point out that they provide many services that they get no reimbursement for, they keep patients in the community, out of hospital so while they did get a 50% mark up on the DPS scheme, this is just 25% of their community drugs scheme work, plus it covers other work for which they obtain no fee. 

Under the new scheme, three changes are in place: 

  1. there is a new sliding scale payment scheme per item, which is the same for all scheme (€5 for first 20,000 items dispensed, €4.50 for next 10,000 items and €3.50 for reaming items) and it reduces the mark up from 50% to 20% on the DPS
  2. it abolishes the payments for over 70s, when over 70s medical card introduced in 01/02, a special payment of €1 was agued for every item dispensed to patients
  3. it cuts the mark up for wholesale distribution cost from 17 to 10%

Mary Harney says this will save €55 million this year and €133 million next year. IPU say it is significantly more and will result in pharmacies going out of business, 5,000 job losses and irreparable damage to pharmacy work in Ireland. 

So which side is right?

Right now there seems to be a total failure of government or the HSE to instigate change without marginalising the entire sector it is trying to ‘change’. Pharmacy fees are a complex business and changing the fee structure with this emergency legislation seems like a very blunt instrument. 

On the pharmacy side, they do seem to have been paid vast sums of money, some much more so than others, but many or most dependent on these drugs schemes for  profit or even survival. Also, many in the  last decade have bought expensive land, extended their premises and services with generous bank loans, on business plans based on the old reimbursement schemes. Also there are 500 more pharmacists in Ireland now than there was in 2001/2. THe pharmacy market was deregulated and perhaps over expanded like many other businesses during the boom.Some really will be in trouble.

So what happens now?

There is a significant stand off btw the Minister and the pharmacists, 2/3s say they will withdraw from community services, HSE assure us that no one will do without their prescription however, the logistics of that are enormous especially for those in rural areas.

Savings need to be made but they need to be done in cooperation with professionals rather than antagonising them. Pharmacy is an important component of the primary care strategy, IPU say they are happy to talk, government say there is nothing to discuss.

One of the few independent reports in this areas details the extent of the complexity, that it takes time to change, and that blunt instruments are not useful way to progress, it seems to be what is being done now is a blunt instrument.

Also other areas where savings can be made have not been progressed as government does not want to antagonise big pharma companies… 

What more can I say?  

PS This is the first time I have researched and written about the pharmacy issue, all comments and feedback and thoughts welcome…


7 Responses

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  1. paul sheahan said, on August 4, 2009 at 9:49 am

    sara for your first time writing about pharmacy in ireland you are spot on. Rural pharmacy services are the ones that are being hit the hardest with these cuts.

    • saraburke said, on August 10, 2009 at 11:03 pm

      I have interviewed Paddy Burke – a cultural experience indeed.
      Am taking August off but may be in touch in September
      Thanks for comment


  2. annette said, on August 4, 2009 at 9:53 am

    just wanted to say thanks for a balanced objective and well researched piece – it makes a nice change from the blatant spin being propagated in the media these days .

  3. Fintan Moore said, on August 4, 2009 at 10:08 am

    Very well-written article – hard to believe that you’re new to the subject. It’s a fair assessment of where we’re at.
    One point worth making is that the original HSE attempt to reduce our reimbursements by 8.2% was to be 8.2% off the cost of the drugs we dispense, not off our fees and markups. (You may well be aware of that – but opted to simplify it to avoid peoples’ eyes glazing over)
    I’m a community pharmacist working in Dublin – that’s my built-in bias!

    • saraburke said, on August 10, 2009 at 11:00 pm

      THanks for positive feedback
      Nope was not in Trinity then
      Am taking August of but maybe will get in touch iN September if covering the issue
      Many thanks for comment


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