It is widely acknowledged that the political and administrative class allowed public spending to run out of control during the boom and bubble periods. But even by the wasteful and reckless standards of that time, the increase in spending on drugs was exceptional.
Europeans who point their finger at the US, when it comes to "gone out of control" medical and pharmaceutical industry pricing structures should instead look more closely at similar trends at home.
The fact is that the global Pharmaceutical industry has become an uncontrollable "monster" threatening governments and taxpayers economic well being.
In 1995 Ireland spent €279 million on pharmaceutical products and medical equipment. By 2008 that figure had not doubled, trebled nor quadrupled, but was 640 per cent higher at more than €2 billion. (It has since fallen only marginally despite much talk of the State getting a better deal from drugs companies.)
This is not just astounding, it is scandalous. To see how scandalous it is, comparison with peer countries is needed. Of the western European countries for which figures are available (from Eurostat), the second biggest increase in pharma spending over that period took place in Spain. In Spain spending increased by 176 per cent.
The formidable lobbying power of the Pharmaceutical industry is a vital context in all of this. When it comes to influencing governments, big pharma has few rivals. One lever the industry has is the threat of withdrawing supplies of a drug in a given country if a government displeases it.
In the case of Ireland the Pharmaceutical industry has a very strong economic grip on that country, because their economy stands out from others in that many of the world’s leading drugs companies have large-scale operations there. In 2011 the Pharmaceutical Industry shipped €26.4 billion, equivalent to 17 per cent of GDP of their products out of Ireland.
Obviously, since their contribution to the Irish economy is great – in terms of jobs and taxes paid, as well as technology and know-how spillovers the Irish government does not dare to "rock the boat" when it comes to the Pharmaceutical industry excesses.
There are strict and comprehensive EU rules on how states aid industry with taxpayers’ money. In the interests of European taxpayers the competition authorities in Brussels should investigate the matter rigorously because local governments apparently don't dare to do so.
Read more: The scandalous rise in drug costs needs to be tackled - The Irish Times - Fri, Jan 11, 2013
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