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Although many pharmacies have taken some comfort from the recent High Court judgment in the action by the Hickey Group of companies against the Health Service Executive, the judgment itself will make little, if any, difference in the long run. However, it clarifies that certain procedures must be followed and that key decisions must be made by the Minister.

In the health sector, as in other sectors, the lines of authority have become increasingly blurred as more and more public functions, which were previously carried out by ministers and by civil servants acting on behalf of ministers, were farmed out to a myriad of quasi-autonomous, non-governmental organisations.

Quangos, as they are more commonly known, appear to be an inevitable if not always a welcome consequence of the increasing complexity of the public sphere. However, problems can arise when they take decisions in the absence of certainty as to whether they have the right to make them at all.

Rate of payment

As IMT’s columnist, Ed Madden, has pointed out (, this judgment establishes that the rate of payment in respect of the ingredient cost of a medicine reimbursed under the community drug schemes (ex-factory gate price + 17.66%) is capable of being varied, but only by a decision of the Minister for Health.

It would be a nonsense if the State were to be bound in perpetuity by a contract whose terms could never be varied. But that was never the issue here. The real issue was what process should be followed and who should make the decisions.

No right at all

The outcome is that the HSE has no right at all under the existing community pharmacy contractors’ contract to vary the amount it reimburses for the ingredient cost of prescription drugs in the absence of an explicit ministerial decision, which can only be taken after consultation with the Pharmacy Contractors Committee. Crucially, that committee has no veto.

The Minister, in turn, may authorise the HSE to implement her decision to vary the rate of payment in respect of the ingredient cost of drugs, but she cannot hand the Executive the authority to make the decision, or nod approval for a decision they have taken, even if it was a decision to implement the decision which the Government had made earlier.

Persistent criticism

In that sense, the judgment provides an important clarification of the lines of authority between the Department and the Executive. A persistent criticism of the legislation and the operation of the Department and the HSE since the enactment of new health legislation four years ago, is that when push comes to shove, nobody really knows who is responsible for policy and who is responsible for implementation. On this issue, for the moment at least, that question has been settled.

However, it would be unwise to think the judgment will do anything other than delay the decision to slash the price which taxpayers fork out for prescription drugs. The judgment confirms that the right to vary the rate exists, that the decision must be made by the Minister after consultation, but that the right to be consulted does not confer the right to veto.

The big question is what happens next. In sunnier economic times, things would have been simple: cut the ingredient costs, increase the dispensing fees, and negotiate a new contract to bind the sector more closely into the primary care loop with an array of new clinical services.

Global financial failure

But in these dark days of global financial failure and collapsing tax revenues at home, there must now be a serious question over whether the will, not to mention the money, is there for the change.

And that brings a further level of uncertainty. The HSE is reportedly continuing to pay the reduced reimbursement rates, which is not all that surprising given the parlous state of its own finances, but it does raise questions about whether talks on a substantive new contract involving the Irish Pharmaceutical Union can even get off the ground without movement to repay the arrears that are owing, arising from an administrative decision which has now been found to be unlawful.

Unnecessary controversy

The State’s preferred formula — ‘unilateral fee-setting by the payer’ — is both simple and sophisticated. But the decision to try and railroad it through (on the strength of legal advice which apparently stated that consultation or discussion of any kind with those affected would be in breach of competition law) introduced an unnecessary controversy into a dispute that could, and which the judgment said, should have been settled with an appropriate consultation prior to decision.

The Minister is confident that the €100 million of anticipated savings will be achieved. Clearly, that is not going to happen this year. But it could happen next year. Let us hope it does. We have been paying too much for too long, for too many things.