Delivered by Mr David Gallagher, IPHA President, at the IPHA Annual Meeting 2010 during the Session entitled "Ensuring the best health outcomes for Irish patients while securing value for money".

1. Value of Medicines and Vaccines
Delivering value to the Irish health services and the Irish economy
David Gallagher, IPHA President

2. State expenditure on healthcare
 Public health expenditure in 2009 – €15 billion.
 Accounts for 11.9% of national income.
 Accounts for 25.4% of total public expenditure.
 Sustainability of Irish health expenditure is a
concern.
Source: ESRI, 2010

3. Increasing State expenditure on
medicines has led to calls for reform
 As a result of new discoveries, medicines and
vaccines are taking on an increasingly
important role in patient care. Partly because
of this, we are spending more on
pharmaceuticals.
 In the period 2000 to 2008 State expenditure
on medicines grew from €565 million to €1,901
million.
Source: PCRS, 2000 - 2008

4. Need to look at the big picture
 Reasons for the growth in the State medicines
bill.
 Benefits of this investment in terms of public
health.
 Benefits to the Irish State of taking a pro-
innovation approach.

5. Pharmaceutical expenditure per capita
in Western Europe
Ireland: Well below average
Source: OECD Health Data, 2008

6. Percentage of total health expenditure
spent on medicines
Ireland: Average
Source: OECD Health Data, 2010

7. Per item cost on the Community Drug
Schemes
High-Tech Scheme
Cost increase linked to
increasing number of
patients covered.
Source: PCRS, 2000 - 2008

8. Reasons for the growth in the State
medicines bill
 Increasing Population – up 1/6th since 1996 and
projected to rise to nearly 7 million by 2041.
 Ageing Population – 0.5 million over 65, projected to
rise to 1.43 million by 2041. The number of those aged
80 and over is set to quadruple from a 2001 level of
98,000 to 465,000 in 2041.
 New treatments becoming available and more patients
availing of them e.g. cardiovascular, acid related
disorder medicines, oncology medicines.

9. Reasons for the growth in the State
medicines bill (contd)
 State decisions on eligibility and administration of the
community drug schemes.
 The increased incidence of chronic and non-
communicable diseases e.g. asthma, diabetes and
obesity.
 State investment in health since 1997 e.g.
cardiovascular and cancer strategies.
 Increasing research and development costs.

10. Benefits of this investment in terms
of public health
 Helped to improve life expectancy by over a
third in the last eighty years to 79 years today.
 Helped diminish the number of hospital
admissions for 12 major diseases by half,
including peptic ulcers, mental illness and
infectious disease over the past 40 years.
 Assisted in the reduction of the average length
of hospital stay from 9.6 days in 1981 to 6.3
days today.

11. Benefits of this investment in terms
of public health (contd)
 Enabled hospitals to treat many more patients
on a day case basis, up from 85,000 cases in
1987 to 770,000 in 2008 (now constitute 50%
of all acute hospital in-patient treatment).
 Given the cost of an in-patient bed is €890 per
day the ability to treat patients on a day case
basis is worth hundreds of million to the State
annually.

12. Proton pump inhibitors
 The discovery of H2 antagonists, PPIs and
triple therapy has revolutionised the
management of peptic ulcer diseases.
 For example, in Sweden, from 1956 to 1986,
elective surgical operations for peptic ulcers
steadily declined from 72.1 to 10.7 per
100,000 inhabitants.

13. Statins
 Several studies have found that use of statins
to treat people with high cholesterol reduces:
– hospital admissions.
– cardiac surgeries, e.g. bypass surgery and
angioplasty.
– number of days patients had to spend in the
hospital.

14. Statins – a good example of the value of
incremental innovation
Source: IFPMA, The Value of Innovation, 2008

15. Breast cancer therapies
Source: OECD; National Cancer Registry

16. Vaccines
 Consistent wide-spread use of vaccines has proven
successful in controlling or even eliminating disease.
 With sufficiently wide-spread vaccination even those who
are not immunised can be protected via ‘herd immunity’.
 While vaccination programmes require support and
adequate funding, the associated prevention of mortality
and morbidity provides long-term cost savings, increased
productivity and economic growth.
 This makes them one of the most cost-effective and
successful health investments available.

17. Benefits to the Irish State of taking a
pro-innovation approach
 More than 120 pharma companies have a presence
here, including 13 of the world’s top 15 pharma
companies.
 The industry directly employs over 25,000 people, half
of whom are third level graduates, with as many again
employed in the provision of services to the sector.
 The industry contributes approximately €3 billion
annually in taxes to the State.
Source: IPHA Facts and Figures, 2010; Future Skills of the Biopharma-Pharmachem Sector, 2010

18. Benefits to the Irish State of taking a
pro-innovation approach (contd)
 Pharmaceutical production generates over 50% of the
country’s exports and 11% of its GDP (Ireland the
second largest net exporter of medicines in the world).
 Over €7 billion has been invested by the pharma
sector over the last ten years.
 The replacement value of the investment by the
pharmaceutical sector in the Irish economy is over €40
billion.
Source: IPHA Facts and Figures, 2010; Future Skills of the Biopharma-Pharmachem Sector, 2010

19. Benefits to the Irish State of taking a
pro-innovation approach (contd)
 The Industry responded to the demand to provide
further value for money.
 2006 IPHA/HSE Agreement - provided savings of
€250m in the period in the 4 years to September 2010.
 Additional arrangements agreed this January to
provide savings of nearly €100 million over the
following 12 months given the economic crisis.
Source: Department of Health and Children

20. Benefits to the Irish State of taking a
pro-innovation approach (contd)
 Provision of value-added services such as:
– Nursing support – in-home instruction, helpline,
sharps waste collection and safe disposal, blood
sampling etc.
– Continuing medical education – meetings, e-
learning tools etc.
– Clinical research and investigator initiated studies –
grants etc.
– Patient awareness campaigns.

21. Conclusion
 Pharmaceutical innovation is providing many exciting
new treatments which save lives and improve quality of life
for Irish patients.
 Failure to invest in innovation is not cost free as an
investment in innovative medicines has been proven to
keep people out of hospitals, nursing homes and doctor's
surgeries and shorten stays in these facilities where they
are required.
 Innovative medicines reduce the cost of poor health to
individuals, families, the State, strengthen the Irish
economy and improve worker productivity.

22. Support slides

23. New medicines in development
Source: PhRMA, Oct 2010

24. Advances in breast cancer therapies have
contributed to an increase in survival rates
 The five-year relative survival rate is about 80% for the period
1999-2004, the highest rate of improvement in the OECD.
Source for graph: National Cancer Registry
Linked to
BREAST
CANCER
THERAPIES
SLIDE 15