The Irish Life Sciences industry is now fast-approaching the end of July 2021 expiry date of the Agreement on the Supply and Pricing of Medicines between the Irish Health Service Executive ("HSE") and the Irish Pharmaceutical Healthcare Association (the "IPHA Agreement"). While it appears likely that the IPHA Agreement may be extended for a few months in particular due to the HSE Ransomware attack, the industry is likely to soon see the results of a full renegotiation of the Agreement which was initially intended to have a four year duration from August 2016-2020.
In this context, it is timely to recall what the IPHA Agreement covers and its importance to industry.
The IPHA Agreement strictly applies only to IPHA members, and governs their supply of medicines which are paid for by public sector payers and in particular are on the HSE Reimbursement List.
The Health (Pricing and Supply of Medical Goods) Act 2013 provides for the HSE to take account of any IPHA Agreement, as well as other factors, when deciding on the price of a medicine. Therefore, were there no IPHA Agreement, the industry would face the risk of the HSE acting unilaterally to control medicines pricing, using the various statutory and procurement mechanisms which are available to it and without taking into account terms which have been negotiated with IPHA.
In terms of the pricing rules, the IPHA Agreement provides that a price of a medicine is (i) calibrated against the average of the currency adjusted ex-factory price in 14 countries1), (ii) subject to a 'downward-only' annual price realignment, and (iii) subject to a rebate payable to the HSE.
In addition, there are specific rule for patent-expired medicines. The IPHA Agreement provides for a 50% reduction to the original ex-factory price following HSE notification to the supplier of the availability of a substitutable generic medicine. It also provides for a 20% reduction for patent-expired biological medicines following market entry by a biosimilar.
The IPHA Agreement also covers important non-pricing issues, such as (i) continuity of supply, and (ii) the process for review, approval and funding of new medicines including through the Rapid Review and HSE Drug Group Processes.
A copy of the IPHA Agreement is available here: https://www.ipha.ie/about-us/our-role/agreement-on-the-supply-of-medicines/
Matheson will be watching developments in this area with interest in the coming months.
Footnote
1. Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg the Netherlands, Portugal Spain, Sweden and the UK.
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