State/Industry Medicine Pricing Agreements, Cost Savings and Counterfactuals: the Case of Ireland

Abstract

Ireland’s Minister for Health claimed cumulative savings of €600 million for the 2016-2020 framework agreement with the Irish Pharmaceutical Healthcare Association. These savings are estimated using an implausible counterfactual of no agreement, since multiannual State/industry agreements are longstanding, while, since 2013, the State has powers to set medicine prices. A better counterfactual is the status quo: replicating the 2012-2015 agreement and extending its term for one year. This alternative counterfactual results in estimated cumulative savings of only €290 million. Greater transparency and more prudent choice of comparator for savings estimates would provide confidence in the estimates and more accurately demonstrate the likely savings that will be achieved.