I join Deputy Kenny and the Taoiseach in congratulating Anne Enright on winning the Man Booker Prize and to express my delight that she has a family connection with Dún Laoghaire.

From the beginning of this week, approximately 4,500 recovering heroin addicts, almost 3,000 of whom reside in Dublin, have had their lives thrown into chaos as a result of the withdrawal of the methadone dispensing service provided to them by pharmacists. These people are, in the main, recovering heroin addicts who have been receiving methadone treatment in the community pharmacy arena. Many of them have been getting their lives together, returning to work and so on. The withdrawal of this service has thrown them back into the ad hoc arrangement of drug treatment clinics which brings them back into the same type of environment and company which may have been responsible for their problems in the first instance. Not alone is their health being exposed, but they are being exposed to the possibility of a return to heroin addiction. Despite what is claimed, the decision of pharmacists to withdraw the methadone service appears to be directly connected with the dispute which has been taking place for some time between pharmacists and the Health Service Executive about the method of payment for the dispensing of drugs under the GMS scheme and, to some extent, under the drugs refund scheme. As I understand it, the Health Service Executive has unilaterally decided to cut the margins pharmacists receive for the drugs they dispense under the GMS scheme and the drugs refund scheme. Some pharmacists tell me that the extent of the cut, in respect of some drugs, means they are now required to dispense at either below cost or with a very low margin. In the long term the consequences of this will be to put at risk the independent local pharmacy with which we are all familiar. It will be of huge concern, in time to come, if people are given a prescription from their doctor but there is no local pharmacy, meaning they have to travel to the nearest big town or city for the prescription to be dispensed at one of the big pharmacy chains.

At the heart of the dispute has been the refusal of the Health Service Executive to negotiate margins and the method of payment for drugs with the Irish Pharmaceutical Union, apparently because the Health Service Executive interprets the Competition Act 2002 as prohibiting it from negotiating with the IPU because they are independent businesses and issues arise related to competition. The rows about not negotiating with the IPU and about margins on drugs dispensed by pharmacists have been rumbling on for well over a year. Does the Taoiseach agree that, whatever about the merits of the dispute, it is not right that some of the most vulnerable people in society are made a target and used in a dispute such as this to the extent that their needs and rights are seriously put at risk? Does he agree there is a necessity to return to dispensing methadone in community pharmacies? What can be done to bring that about as quickly as possible? Can the Taoiseach explain how the dispute between the pharmacists and the HSE, which has been rumbling on for so long, has been allowed to come to this pass? What will be done to facilitate discussions between the HSE and the Irish Pharmaceutical Union to settle the outstanding issues relating to the dispensing of methadone and the payment under the drugs scheme?

There are three issues. The first relates to methadone, the second relates to ongoing negotiations between the HSE and the pharmaceutical organisations about prices and the third relates to the legal position in the context of competition law.

On the first issue, this is a dispute between pharmacists and the HSE over the price of drugs, which the former dispense and for which they are reimbursed. The HSE has set a new price which, because of competition law, could not be negotiated. This issue is separate from the level of fees paid to pharmacists under the community drugs schemes, which amounted to almost €300 million last year.

While disputes have to be resolved by negotiation, there is no justification whatever for bringing recovering drug addicts into a dispute, no matter whether it is called a commercial dispute or an industrial relations dispute. The dispute has nothing to do with people who are doing their best to recover from an addiction problem. The HSE has stated there is a significant clinical risk to clients who revert from a methadone maintenance programme to opiate use. In light of this the action of 140 pharmacists to withdraw services from approximately 3,000 methadone patients is totally wrong and the same applies to threats to withdraw from dispensing drugs to medical card holders. It should be noted that this is not an act of the Irish Pharmaceutical Union and I ask those who are doing this to drug addicts to stop immediately. The latter have nothing to do with the dispute in which the pharmacists are engaged and it is a very unfair way of fighting their cause.

On the wider issue, a number of difficulties are involved in the discussions, which are ongoing. The new price arrangements involve revised rates for community and hospital supply. In the existing arrangements for community supply pharmacists enjoy a wholesale margin of 18%, which is being reduced to 8% from next January and to 7% from January 2009. As regards hospital supply, the new interim margin of 5% will apply from 1 January 2008, with further discounts for efficient ordering of supply in the sector. Savings of approximately €100 million per annum are expected, almost all in the area of community supply, which will mean a reduced price base will apply for all medicines dispensed under the various GMS systems.

The pharmacists have arguments and difficulties with this but we do not have time to go into that. I accept the IPU has concerns on behalf of community pharmacists about the implications of the legal advice in respect of their right to negotiate fees within the State. To address these concerns the Minister agreed to the establishment of a process of dialogue, which is chaired by Mr. Bill Shipsey SC, to explore the ways pharmacists' concerns could be addressed, subject to the legal position. The HSE and the departmental negotiating team met with them last week to discuss implementation issues arising from the new wholesale arrangements and both sides have agreed to meet again. They met on 3 October and 11 October, under Mr. Shipsey's chairmanship, and have agreed to continue to engage. Summaries of the HSE's position are in the public domain and an information note has been given to Deputies. The discussions should continue.

The view of the HSE, with which the Government agrees, is that there is considerable room for savings in the overall supply of drugs. The drugs and medicine budget is going up astronomically every year. The figure is enormous and we believe that, using price margins and economies of scale, savings can be achieved. Wholesalers are also involved and have a role to play. As with all industrial relations and supply issues, I could make many arguments if the House had time but the resolution must come from the negotiations.

The legal position can be explained by competition law. Competition law has been examined by the Attorney General and, independently, the HSE and the Irish Pharmaceutical Union. The legal position is based on the Competition Authority view that to deal directly with a large group is to effectively create a cartel, which goes against competition law. The Competition Authority has also made that case in other areas. The legal opinion of the way the Competition Act 2002 is drafted is unanimous and there is no dispute among legal representatives of the parties. Some further examination is taking place but I do not know if anything can be done in that regard. My advice at the moment is to the contrary.

The Taoiseach refers to negotiations and talks which have been initiated under the chairmanship of Bill Shipsey SC and we hope they succeed. However, this problem has arisen because negotiations could not take place in the normal way. It was decided that negotiations could not take place with the IPU because of the provisions of the Competition Act 2002. When the Competition Bill was going through this House in 2002 I do not think any Member anticipated it would be interpreted in such a way as to prevent the negotiations between the HSE and the IPU, which have been required in this case for some time. I do not understand why this has arisen only in the case of pharmacists. Over the course of the past year the Bar Council and the Law Society have negotiated with the State on the levels of legal fees for the criminal legal aid board and the civil legal system and I think it resulted in double digit increases in some cases. There have been negotiations between the HSE and the IMO in respect of general practitioners who are practising on their own. There have been negotiations between the HSE and the dental association on behalf of dentists who are functioning on their own. There have been negotiations between the Department of Agriculture, Fisheries and Food and veterinarians on the various schemes for animal testing. How is it that the Competition Act which does not seem to have caused any problem in preventing negotiations between sole traders in other professions has suddenly given rise to this difficulty in the case of pharmacists alone?

The legal advice is interesting. Will the Taoiseach say who has given it? Is it the advice given to the HSE or has the Attorney General expressed an opinion on the matter? If the Competition Act is so rigid that it is preventing the sensible negotiations that need to take place between the HSE and the IPU, the Government should amend it in a way that would allow negotiations to take place. If a State agency comes to a group of professionals or businesses and states it will cut fees or their margins by half, no matter what the merits of the case might be, they will at least want to talk about it and discuss the implications. We now have a difficulty that recovering heroin addicts cannot get methadone — I appreciate that distinctions are being drawn — but the reason pharmacies are talking about closing down is that they have been flagging a problem for the past year but they have not been able to get to the table to negotiate. That needs to be resolved. By all means, let the discussions chaired by Bill Shipsey go ahead but a method needs to be found, if necessary by changing the Competition Act, to allow the IPU to represent pharmacists in the normal way that business associations or professional bodies represent their members in their dealings with the State.

The dispensing of methadone does not come under the agreement, which is the subject of the dispute. Whatever the merits of the dispute, the 3,000 methadone users should not be affected by it. There are ongoing talks with the HSE. The parties met on 3, 11 and 16 October under the auspices of Mr. Bill Shipsey SC. I do not know whether they can resolve the issue.

The savings on the new wholesale margins are substantial. In the next three or four years the estimated savings will be €260 million on a drugs bill that is rising significantly year on year. As the HSE sees it, in its examination of the issue — the Department of Health and Children and the Government agreed with it — this is not an enormous amount in what is a very lucrative business. We can see what is happening. Three or four years ago I was listening to the argument that pharmacies would be put out of business, but since the last dispute, a further 300 have opened and are, according to the figures I have seen, are doing very well.

Let me explain the legal position. Whatever about its unsatisfactory nature, when the HSE team sought to negotiate the new wholesale margins with the Pharmaceutical Distributors Federation, PDF, which represents full-time wholesalers, it refused to negotiate new margins for community pharmacists because it was its legal advice that it did not have to negotiate them. The HSE also received advice that under section 4 of the Competition Act 2002, it was prevented from negotiating directly with undertakings or associations of undertakings. This applies also to the representative body for pharmacists, the IPU. Deputy Gilmore asked who gave the legal advice. First, the Pharmaceutical Distributors Federation took legal advice. The HSE then sought such advice, as did the Department of Health and Children, which advice concurred with that of the HSE. The Office of the Attorney General and an independent senior counsel have endorsed this advice. They all agree this is the position.

Why does it apply to pharmacists only?