The savings from the 2016-2020 Framework Agreement on the Supply and Pricing of Medicines in Ireland: which counterfactual?

Gorecki, Paul (2017): The savings from the 2016-2020 Framework Agreement on the Supply and Pricing of Medicines in Ireland: which counterfactual?

Abstract

The Minister for Health claims savings of €600 million due to the 2016-2020 framework agreement (the Agreement) with the Irish Pharmaceutical Healthcare Association. But relative to what? No agreement. That seems implausible since such State/industry agreements have been in operation continuously since 1969. Furthermore the State has powers to set medicine prices under the Health (Pricing and Supply of Medical Goods) Act 2013? Agreed, but what would be a more appropriate counterfactual? The status quo: replicating the 2012-2015 agreement and extending its length for one year. That seems a sensible credible alternative. But what would the savings be if the status quo is the counterfactual? €290 million. Wow, less than half the Minister’s estimate. But won’t that make the Health Service Executive (HSE)’s task in deciding which new high cost medicines to fund much harder? Yes. Perhaps the HSE should set out guidance as to when a new medicine will be funded, with, for example, an upper cost-effectiveness limit. But surely the methodology and assumptions underlying the Minister’s claimed savings are published, as part of a transparent, open evidenced based policy? Afraid not. Why? Good question. This paper attempts, albeit partially, to fill the void in the analytics.

• Item Type: MPRA Paper
• Language: English
• Keywords: medicine prices; government/pharmaceutical industry agreements; savings.
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H51 - Government Expenditures and Health; I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets; I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health

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