Irish Pharmaceutical Healthcare Association claims 500 jobs lost due to drug-pricing

Monday, Mar 30, 2015

The pharmaceutical industry claims that 500 jobs have been lost as a result of the Government's drug-pricing policies.

The Department of Jobs, Enterprise, and Innovation said there is "no evidence" for the claim, which is contained in correspondence between the Irish Pharmaceutical Healthcare Association and the Department of Health seen by RTÉ's This Week.

On 12 December 2014 the IPHA's Director of Operations wrote to a senior official in the Department of Health to outline the association's concerns about Government moves to reduce medicine prices.

The letter states: "Given the price reductions which have taken effect through the 2012 Framework Agreement and other instruments such as the Health (Pricing and Supply of Medical Goods) Act 2013, we now find ourselves at price levels which existed in 2001/2.

“This has resulted in significant job losses in the commercial part of the industry, with an estimated reduction in headcount of about 500 people over the past five years".

The IPHA said the estimate was based on a survey of the top-10 companies in the sector.

A spokesman for Jobs Minister Richard Bruton told RTÉ’s This Week "there is no evidence that 500 jobs have been lost in the pharma sector as a result of health policy.

“It is important to note that despite the well-publicised difficulties in the life sciences sector in recent years, with the patent cliff and global consolidation, more than 5,000 extra jobs have been created in multinational companies in this area."

IPHA Chief Executive Oliver O'Connor told This Week the losses are "a fact" and the jobs were lost over the past five years.

The letter from the IPHA to the Department of Health, which RTÉ’s This Week accessed under Freedom of Information, was written as the two parties are currently negotiating a new Framework Agreement for the pricing and supply of medications.

Negotiations around the last agreement in 2012 also saw high level representations to Government about the potential fallout for employment of price reductions.

However, the December 2014 letter appears to be the first time the industry has given Government an estimate of the amount of jobs lost.

Commenting on the letter, a spokesman for the Department of Health also told the programme: "The Government is determined that the State will have the funds to ensure patient access to effective new therapies.

This requires savings in the existing cost of medicines. The Government wants to achieve this in co-operation with the industry".

Mr O'Connor told This Week: "We are looking forward to concluding a new agreement which will take effect from November".

He said he hoped an improvement in the economy would result in more resources being allocated to the supply of medicines.

Concern over impact of austerity on pharmaceutical sector

In a separate Freedom of Information request to the Department of Jobs, Enterprise and Innovation, This Week has also seen correspondence to the Taoiseach and the Jobs Minister by global, European and Irish representatives of the pharmaceutical industry expressing concern over the impact of austerity on the sector.

The correspondence dates from spring 2012 when the industry felt its negotiations on a Framework Agreement with then health minister James Reilly were, in the opinion of the IPHA's Chief Executive, "going backwards".

The HSE was seeking savings of €112m in its drugs bill in 2012 and estimated that approval of new medicines for the Drugs Payment Scheme that year would cost a further €30m.

Several of the letters sent to the Taoiseach stress the importance link between economic growth and new drugs being approved by the Government for inclusion in the HSE Drugs Payment Scheme.

Letters from a global pharmaceutical representative body (IFPMA) as well an association in Europe (EFPIA) and the US (Pharma) contain the phrase "The recent jobs announcement in your own constituency in Mayo is a good illustration [of the link]."

The letters also contain warnings that the Taoiseach's aim to "make Ireland the best small country in the world in which to do business by 2016" may be threatened by Government "austerity", a reference to attempts to make savings on drugs by the HSE.

Individual companies also wrote to the Taoiseach; Swiss-based Novartis, which employs around 100 people in Ireland, wrote to Enda Kenny to express its alarm that a new product for treating MS was not approved for the drugs reimbursement scheme.

The company's division head David Epstein told Mr Kenny that Novartis wished "to avoid any downsizing [of manufacturing] if possible. To follow this path we however need your support".

In February 2012 pharmaceutical company Merck's Europe & Canada President Bruno Strigini wrote to the Taoiseach expressing concern the Government had contributed to a "sizeable decline" in the pharmaceutical market.

Dr Strigini continued: "I am sure that you understand that International Price Referencing results in pricing impacts in Ireland having links to the pricing of medicines in 11 other European countries and up to a further 37 countries worldwide; this has been reported as having potential implications for the Irish pharmaceutical manufacturing base ... I would be grateful if you could give the concerns outlined above your consideration and advise your colleagues in Government and the HSE accordingly".

The matter was also raised personally with the Taoiseach by Merck representatives at the opening of a facility in Clonmel, Co Tipperary.

When questioned about the tone of some of this correspondence, Mr O'Connor said: "I hope that it would never be interpreted as a threat" and that "the circumstances of the time dictated how the industry responded".

Mr O'Connor said the Government sought close co-operation with multinationals and that an exchange of views should be seen  in that context.

Correspondence in a similar vein was also sent to Jobs Minister Richard Bruton.

In a letter from the pharmaceutical division of employers' group IBEC, Mr Bruton was sent two weblinks to RTÉ's Liveline programme in which patients who were not able to access new medications discussed their cases on air.

The letter reads: "The perception that media and patient pressure is the only way to finally get a resolution regarding access to these products is growing and is potentially very damaging."

Letters of reply issued from the Mr Bruton’s department all contained the same wording: "The Minister has asked me to inform you that enquires made of the Department of Health have confirmed that discussions are ongoing with a view to proceeding towards a new and inclusive agreement which will address all outstanding matters ... The Minster wishes to assure you that he greatly appreciates the role played by the pharmaceutical/healthcare companies in creating an sustaining jobs in Ireland and looks forward to a successful outcome of the current round of negotiations".

Representatives of the pharmaceutical industry also met with Mr Bruton in spring 2012 during difficulties in negotiations with the HSE and again in December 2012.

In January 2013, the IPHA wrote to the minister thanking him for meeting with the association's President and Chief Executive as well as Stuart Hurst, a senior European-based lobbyist for pharmaceutical company Elli Lily.

The letter said: "We greatly appreciate the opportunity to apprise you of this important issue [price and supply of drugs] and hope that you will be in a position to support the industry case when discussions of this topic arise. Thank you also for your assistance during 2012 when we experienced difficulties with the reimbursement of new medicines."

In reply to queries by This Week as to the nature of the "assistance" referred to in the letter, a spokesman for the department said: "As part of our efforts to win new investments and jobs, we constantly engage with companies on issues that may affect their ability to invest and expand in Ireland.

“This is a key part of the job of the minister and the department of jobs, in the context of our responsibility to expand employment in Ireland, and on the whole has been successful in recent years, with 25,000 extra jobs created in multinational companies over the past four years.

The Minister provided assistance by agreeing to meet with the IPHA and asking his officials to remain in contact with the Department of Health on all issues and to keep him informed on all issues".

An interim agreement on drugs pricing was concluded in June 2012 by former health minister James Reilly.

However, sources involved with the 2012 negotiations told This Week no pressure was exerted by Government on the HSE during talks with the IPHA and that Mr Bruton's department "played a listening role" and "had not helped [the pharmaceutical industry] in the process".

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