Projected impact of demographic change on

the demand for pharmaceuticals in Ireland

Kathleen BennettDepartment of Pharmacology &

Therapeutics,Trinity College, National Centre for

PharmacoeconomicsDublin

Pharmaceuticals

Prescribing of medicines is one of the most common healthcare interactions

Majority of pharmaceutical expenditure in primary care (86%)

In 2006, total ingredient cost €1.1 bn, in 2007, had risen to €1.26bn

Total Expenditure on medicines (Community Drug Schemes 1991-2007)

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1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

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•Product Mix: Prescribing of newer more expensive medications:

OmeprazoleLansoprazoleEsomeprazolePantoprazoleRabeprazole

AtorvastatinPravastatinSimvastatin

• Volume effect: Growth in the number of prescription items Number of eligible GMS persons ~10% over last decade. Number of items prescribed almost doubled between 1995-2005

•Increased evidence based prescribing (e.g. statins)

•Changes in terms of eligibility criteria. Increase in elderly population

9.91% of GMS expenditure 2006 (€75 million)

10.1% of GMS expenditure 2006 (€76 million)

The main reasons driving such growth in pharmaceutical

expenditure include:

Four major community schemes

General Medical Services (GMS) Drug Payment Scheme (DPS) Long Term illness (LTI) High tech drug (HTD)

Community Drugs SchemesApproximately 85% of total drug expenditure is through the Community Drugs Schemes. Three schemes cover 2.9 million (67%) of population.

Ingredient cost was €1.1 billion in 2006 for first 3 schemes.Scheme %

population% prescriptions (55 million items)

% expenditure

General MedicalServices (GMS)

28.85% 73.4% 60%

Drugs Payment (DP) 36.03% 21.5% 18%

Long Term Illness (LTI)

2.51% 3.9% 7.4%

High Tech Drug (HTD) - 0.46% 14%

% taken from HSE – PCRS 2006 annual report

General Medical Services GMS scheme (as of Sept 2008)

Available to all over 70 years of age (from July ’01); now no longer available to all over 70 years

Means tested for those under 70 years Important implications for the likely future

costs Population over 70 years is growing relatively

rapidly in both absolute and relative terms. Rapid increase in uptake and expenditure

of medicines in Ireland over recent years.

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Number of GMS eligible patients by age (2006)

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Average cost (ingredient) per year by age and gender (2006)

Average number of items per year by age and gender (2006)

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Average ingredient cost/item and items/form 2000-2007

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Methodology for projections 2006 used as the base year; projections

from 2007-2021 Age-sex population projections from

Morgenroth Projected use model

Applied adjusted trends from 2002-2006 in age-sex specific GMS prescribing rates and costs/patient to project future trends 2007-2021

Assumes increasing trend will continue over time.

Projected use model - Assumptions

For LTI and DPS scheme – age/sex specific data not available. Applied overall prescribing and cost data per patient.

Assumed the same proportion of patients in GMS/DPS/LTI schemes in 2006 applied throughout.

Assumption that 20% of scripts off patent drugs and applied 20% reduction in costs (IPHA 2006).

Projected use model

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Total projected prescription items - GMS, DPS and LTI scheme

110 million items

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Total projected ingredient costs –

GMS, DPS and LTI schemes€2.4 bn in 2021

Total prescription items by scheme – projected use model

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GMS DPS/Private LTI

76% GMS; 18.5% DP; 5.5% LTI scheme for distribution of items in 202167% GMS; 24.5% DP; 8.8% LTI scheme for distribution Ing costs in 2021

Sensitivity analysis for predicted prescription items

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-10%Trend Projected trend +10% Trend

Sensitivity analysis for predicted ingredient cost

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Limitations Assumptions made Recent changes to schemes not factored in

Changes to eligibility in over 70 year olds IPHA agreement further 15% reduction post-

patent (from Jan ’09) and future changes to IPHA Only public spending No Pharmacy fee or VAT included, only

ingredient costs. No High tech scheme data. New treatments, changing expectations,

changing disease epidemiology not possible to predict

Key Changes to the Pricing and Reimbursement System

1. Price of new medicines linked to average European price.

2. Regular monitoring and revision of prices.

3. Price reductions for off-patent medicines (e.g. IPHA agreement 2006)

4. Pharmacoeconomic assessment.

Conclusions

Prescription items and costs are likely to continue to increase, particularly within the GMS scheme and with the increasing elderly population.

Estimated numbers of prescription items will increase from 54 million in 2006 to approx. 110 million in 2021.

Estimated drug ingredient costs are likely to increase from €1.1bn in 2006 to approx. €2.4bn by 2021.

Acknowledgements

Dr Lesley Tilson, Dr Michael Barry – National Centre for Pharmacoeconomics

HSE-PCRS for supply of data on which the study is based

HRB for funding