When Health Minister Leo Varadkar says that dealing with the pharmaceutical industry brings out ‘socialist instincts’ in him, you know there is something seriously wrong.
The facts speak for themselves. Ireland spends nearly €2 billion every year on its drugs budget – that is €1 for every €7 spent on its overall health budget. We have become the third highest spender on drugs per head of population in the OECD countries.
The state itself and private citizens are being ripped off by Big Pharma. There is a relatively low use of generic drugs rather than patented drugs compared to other countries. But even the generics are being charged at a higher price. Commonly used generic drugs are up to 25 times dearer in Ireland than in New Zealand.
For in-patent drugs, Ireland was among the three most expensive countries for ten leading products.
This situation arises from an extraordinary agreement negotiated by Mary Harney in 2006. Although the state purchases 85 percent of the drugs sold in Ireland, it concluded a series of terrible deals with the main industry associations. These were the Irish Pharmaceutical Healthcare Association (IPHA) which produces patented drugs and the Association of Pharmaceutical Manufacturers of Ireland (APMI) which produces generic drugs.
The agreement meant that drugs prices in Ireland were set according to an average price for nine other countries or – in the case of less common drugs – against three other countries.
However this agreement gave Big Pharma huge latitude. Average prices can be calculated different ways, depending on whether you use the mean or median. The drugs companies had more extensive access to data. And in the case of less common drugs, they could release the drugs to the first country that gave them the highest possible price.
At the root of the problem, was an acceptance by the Irish state that they should conclude a formal agreement with a cartel. Despite the much vaunted neoliberal philosophy, there was no attempt by the Irish state to search throughout the world market for cheaper prices.
The first agreements with the IPHA and the ASMI were concluded when Mary Harney was Health Minister.
Strangely enough, Ms Harney started to work directly for the pharmaceutical industry after leaving office. She joined the board of Biocon, a manufacturer of generic drugs, and the advisory board of the European Federation of Pharmaceutical Industries and Associations.
Even stranger, Harney had appointed the owner of Biocon, the Indian pharma tycoon Kiran Mazumdar-Shaw, to the board of Science Foundation Ireland while she was a Minister.
A special adviser to Harney, Oliver O’Connor has gone on to become the CEO of the Irish Pharmaceutical Healthcare Association.
At the very least, these developments would suggest that key figures at the heart of the Department of Health did not have very ‘socialist instincts’ when it came to dealing with Big Pharma.
And despite his own rhetorical flourish, it would appear that Varadkar is also lacking in such instincts.
The most recent series of agreements with IPHA and the ASMI came to an end in November of this year. If Varadkar had the slightest interest in facing down Big Pharma, he would take a number of simple steps.
He would scrap all agreements with these drugs cartels and organise for the Irish health service to purchase drugs at home and abroad.
He would threaten the drug companies with bans on exports if they attempt to sabotage supplies. Ireland is the largest exporter of drugs in Europe and such a threat would have a real impact. In recent years, Spain invoked such powers against the drug companies.
And if he were a really serious socialist, he would even talk about taking these companies into public ownership.
But, of course, he will do none of this. Instead there will be talk about ‘we cannot scare off the multi-nationals because they create jobs’.
So as well as giving them plenty of tax breaks, we will continue to subsidise them by paying rip off prices for drugs.
Which only begs the question: When is this economic blackmail going to stop? Answer: when we get a real left government that stands up for its people and not the big corporations.
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