asked the Minister for Health the steps he intends to take to curb profits of the pharmaceutical industry.

I take the question to apply to that part of the industry which supplies drugs and medicines to the health services. Since 95 per cent of these drugs are imported the basic prices, and consequently the level of profit for the parent companies, are determined outside our jurisdiction. We can, and do, control prices here by relating them to those charged in the United Kingdom, which is the source of 85 per cent of our drugs.

The control of prices generally is a matter for the Minister for Industry, Trade, Commerce and Tourism on the advice of the National Prices Commission. The prices of drugs and medicines for the health services are governed by an agreement between the Department of Health and the Federation of Irish Chemical Industries.

The current agreement between the Department and the Federation of Irish Chemical Industries provides for a direct relationship between trade prices here and in the UK. No company may charge more than 15 per cent in excess of UK price and the average industry-wide differential may not exceed 7½ per cent over UK trade prices, allowances being made for the currency differentials. In addition, discounts are provided for both hospital and GMS purchases.

The present agreement expires at the end of September 1985. It is due for review beginning in April 1985.

Can the Minister say if any consideration has been given, or will be given, to establishing a national drug company to manufacture and supply the general medical services with drugs so that substantial savings could be effected?

The prospect has been examined on a number of occasions in the past two and a half years but there are considerable difficulties in that regard because of the multiplicity of brand and generic drugs used. Furthermore, most of the pharmaceutical companies operating here are branches of the large multinationals and 95 per cent of our drugs are imported through these companies. The price of generics within the Republic is not significantly cheaper than the imported brand products.

Did the Minister see a recent report which stated that a directive was given to doctors in the UK to prescribe generics which would have the effect of reducing prices? I should like to ask the Minister if he would consider giving the same directive?

It is of great benefit to this country that the British Government have significantly reduced the price of drugs and the profits of drug companies in the UK. From August to December 1983 the UK controls cut the price of drugs by £25 million and further reductions were introduced by the UK Government which will effect a saving of £60 million this year and £100 million in 1986. We benefit from the reductions which the British Government have imposed on UK manufacturing companies and the price of drugs has dropped considerably. I estimate that, since 1983, we saved up to £25 million in payments for drugs.

The Joint Programme for Government provided for the establishment of a national drug company. Can the Minister say if consideration will be given to setting up such a company to manufacture and supply at least some of the drugs which are used in large quantities in the general medical services?

The Minister for Industry, Trade, Commerce and Tourism and I are examining this prospect within the framework of a national development corporation. However, one plant producing a drug or a group of drugs in this country would produce in one day our requirements for a year. The bulk of drug production — 95 per cent — is exported and reimported in small quantities for the Irish market.

There is no law which would prevent a national drug company from exporting.

Yes, that is a possibility and some Irish companies are doing that at present.

In an earlier reply the Minister said that the agreement with the drug companies is due for review within the next few months. Does he consider that the present agreement is satisfactory?

The agreement came into effect on 1 April 1983 for hospitals and on 1 May for the general medical services. At that time, largely because I wanted an opportunity of reviewing it, I signed a two year agreement — as short a time as possible — and there will be a review of this agreement next month. In the interim, we will consult the Federation of Irish Chemical Industries.

Does the Minister find the present agreement satisfactory?

There was very rigorous preparation towards the end of 1982 — I was not Minister at the time — up to March 1983 when I signed the agreement and, from the point of view of the Exchequer, a much better agreement was produced. I think we can do an even tougher deal in the months ahead but that is another story.