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Unequal treatment?
31 January 2010 By Susan Mitchell
Picture this: you walk into your local pharmacy to collect your monthly prescription of the drug Nexium, a medicine you take to treat excess stomach acid. If you are one of the country’s 1.5 million medical card holders, the state will pay the bill, which would come to €50.34.
If you are one of the 1.6 million people registered under the Drug Payment Scheme (DPS) and your total medicine costs is more than €120fo r that month, the state will pay the bill, which comes to €59.41 under that particular scheme.
However, if you are paying for the medicine yourself, the pharmacy will charge about €86.33 for a month’s supply.
The differential is considerable, particularly if worked out over a 12-month period.
Twelve months ago, the cost of medicines to private payers was broadly equivalent to the price paid by the state under the DPS scheme. That is no longer the case and has resulted in wide price differentials.
These differentials emerged after Minister for Health Mary Harney announced considerable cuts to the fees and markups paid to pharmacists under the Financial Emergency Measures in the Public Interest (FEMPI) Act 2009.
The state now pays a flat fee for medicines dispensed to medical card holders, while it pays a flat fee and a mark-up for medicines dispensed to people under the DPS.
The new reimbursement arrangements resulted in sizeable savings to the state - an estimated €133 million in a full year. They were a considerable blow to the pharmacy sector, but private customers have not benefited in any way. Instead, a two-tier system of payment has emerged for the first time.
A sample survey carried out by The Sunday Business Post found that private patients were being charged as much as 45 per cent more for certain medicines than the state is charged for these same medicines under the DPS scheme.
It is worth noting that those price differentials would be even greater if compared to the general medical scheme, as the state pays no mark-ups on these medicines.
The Sunday Business Post has learned that, in the immediate aftermath of the state cuts, the Irish Pharmacy Union (IPU), which represents more than 1,600 pharmacists throughout the country, spoke to the three companies that provide software systems to pharmacists in the Republic.
The IPU asked all three - Helix Health, Ocuco (Integra) and McLernon Computers - to create a new price field for private customers. The move created a two-tier payment system and, for the first time ever, differentiated between the fees charged to private patients and the fees charged to the state for people under the DPS.
The state is charged a 20 per cent mark-up on medicines for people on the DPS, plus a flat fee. Private patients are invariably charged a 50 per cent mark-up plus a flat fee. The situation has been exacerbated by the IPU’s interpretation of the new legislation.
Under the DPS, the state pays for any medication people purchase over and above a €120 threshold each month.
The HSE is adamant that people with DPS cards should be charged the revised fees introduced under FEMPI, even if their medicines bill falls below the €120 threshold.
The IPU disagrees. It believes that pharmacists can charge whatever fees they like under the €120thres hold. The interpretation of the legislation appears to be debatable and, to be fair to the IPU, nobody has suggested pharmacists are breaking any laws.
The HSE argued that it was disingenuous. ‘‘People are being shortchanged," said a senior HSE spokesman. ‘‘If people are registered with the DPS, they should be able to take advantage of the fees set by the minister. What is happening is not fair."
Consumers with DPS cards are confused. One man who had a DPS card described how he presented his card at his local pharmacy, expecting to be charged the dispensing price as set by the Minister for Health last July.
That would have resulted in a €36 charge. Instead, he was charged €45.After questioning the pharmacist about the charges, he said he was simply told to take his business elsewhere.
When it emerged that the IPU did not believe its members had to reduce fees to DPS card holders whose medicine bills were not being reimbursed by the state (as they did not exceed the €120 threshold), McLernon Computers expressed concerns.
In a statement seen by this newspaper, it said its work was ‘‘complicated’’ by the ‘‘lack of clarity on the rules’’ and the company’s desire to avoid making changes which could ‘‘place in jeopardy the probity and integrity of the profession’’.
Experts in competition law also said the IPU’s decision to suggest creating a new field could raise questions with the Competition Authority.
Patrick Massey, who runs Compecon, a consultancy that advises on competition, said:
‘‘Trade associations and professional bodies have to be extremely careful, from the point of view of competition law, about what they do. Any sort of collusive behaviour could amount to a criminal offence."
In a statement to The Sunday Business Post, the IPU said: ‘‘Pharmacy IT systems have been amended to enable the introduction of recent changes to payment arrangements for the community drugs schemes.
‘‘The systems also allow individual pharmacists to determine pr ices for al l other transactions, which facilitates competition. In our view, it would be inappropriate, if not illegal, for any organisation to direct pharmacists to fix prices for any transaction, apart from those covered by the Community Drugs Schemes."
One of the computer software companies stressed: ‘‘We don’t set the prices. We simply provide the matrix that pharmacies can use."
Pharmacists are obviously entitled to charge private patients what they wish, but a random survey carried out by this newspaper found they all charged similar, if not identical, prices. Take Viagra, for example:
it cost €45.91 in one pharmacy and €46.21 in another three pharmacies that were telephoned by this newspaper.
Similarly, Larium cost €31.62 in one pharmacy and €31.63 in another three pharmacies that were telephoned by this newspaper.
Adrian Conlon, a Dublin based pharmacist, said pharmacists had taken a greater hit than any other sector of the economy.
He said they had every right to charge commercial prices ‘‘just like every other business’’.
‘‘We charge less of a mark-up than Dunnes Stores have on a packet of cornflakes," he said. The decision to create a two tier pricing structure means that pharmacists throughout Ireland now charge private payers similar, if not identical, prices.
‘‘Do doctors not charge similar fees to each other?" asked Conlon. ‘‘And what about newspapers? They broadly cost the same."
He said that pharmacists in Ireland paid a much ‘‘higher ex-factory (wholesale) price than they do elsewhere. I hear people saying they bought their medicines in Spain for whatever price, but they are sold to Spanish pharmacists for a fifth of what we pay’’.
He said that this had an obvious knock-on effect on the price to the consumer.
Consumers may feel they are still paying considerably over the odds for their medicines.
This becomes all the more apparent when the prices charged by pharmacists in the North are examined.
Harney plans to have the price that the state pays for medicines clearly outlined to all customers. She is looking at options, including having prices stated on packaging. The move would ensure that private patients have a clear picture of the price differentials.
Medical card holders would also know just how much the state is paying out on their behalf.
Should Harney manage to get this done before April, which is when medical card holders have to pay 50 cent for each item they are prescribed, it may help to stem the tide of criticism that is likely to result.
The public has not been overly sympathetic to pharmacists in recent times, largely to the perception that they had enjoyed excessive profits for too long. While the state cuts to their fees were substantial, the HSE said they were paid €428 million in fees and markups in 2009, €421 million in 2008, and €383 million in 2007.
In the pharmacists’ defence, the ex-factory price for many medicines is also considerably higher in Ireland than it is in other European countries. Generic drugs are particularly expensive.
Pharmacists also pay much higher wages, rates and rents than pharmacists in other European countries. But those factors may not be enough to stem the criticism pharmacists are likely to face as more people begin to question their prices.
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