1. 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

2. 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

3. Ireland High & Rising Pharma Expenditure:2010 Ireland’s Ranking in Pharmaceutical Expenditure Per Head Cp Other OECD Countries: 2000 – 20 th 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

4. 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

5. Pharmaceutical Prices: 2010 Generic pharmaceuticals: Low generic usage cp other MS High generic prices cp to other MS New pharmaceuticals: 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

6. Pharmaceutical Pricing: 2013 Framework for Price Setting Health (Pricing & Supply of Medical Goods) Act 2013 Generic Pharmaceuticals (28% expenditure) 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

7. 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

8. 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

9. 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. 9