Statement from the Irish Pharmacy Union on the Supreme Court Ruling in favour of the Department of Health and Children on the Advance Payments case

Thursday, 29 April 2010 15:54

29 April 2010: The Irish Pharmacy Union (IPU), the representative body for 1,800 pharmacists, said that it was disappointed with the outcome of today’s Supreme Court ruling on the Advance Payments case, which ruled that Advance Payments do not form part of the pharmacy contract.

However, the Union welcomes confirmation from the Supreme Court that changes to the pharmacy contract should be brought about through agreement and, if this is not possible, through mediation.

The Union said that it will review the ruling and its impact, if any, on the terms of the contract between pharmacists and the Health Service Executive in consultation with its legal advisors. The IPU will be seeking a meeting with the Department of Health and Children to discuss the implications of the ruling.

Today’s Ruling states:

“There is no question of any State party having a general inherent or residual power to alter or terminate binding contractual terms unless some unilateral power is agreed between the parties to such an arrangement...”

“the Minister is…in a position…to vary the terms of the pharmacy contracts, this does not place the Minister in a position in any way superior to the IPU in terms of such a change”

“I do not find therefore that this clause – which clearly vests power in the Minister to negotiate… with the IPU in respect of any term which may be agreed, and which may, after agreement, become pursuant to Clause 19(3) of the Pharmacy Contract, a future term of that amended pharmacy contract  - adds anything to the respondent’s case, or that by virtue of clause 19(5) “the Minister retained full control over any agreement to vary the terms of the individual contract,” since equally, the IPU retained the same full control, on behalf of its members, over any agreement to vary the terms of the same.

Background

In July 2006, the IPU, along with four co-plaintiffs, lodged a claim in the High Court against the Department of Health and Children over its unilateral decision in 2002 to discontinue the payment of Advance Payments to new pharmacy contractors and to freeze payments to existing contractors. In an affidavit submitted by the IPU, it was estimated that pharmacists had suffered losses of €32 million in Advance Payments as a result of the unilateral decision to discontinue these payments.

The High Court ruled in July 2007 that the Advance Payments Scheme formed part of the contractual relations between individual pharmacists and the HSE and the decision to discontinue Advance Payments amounted to a unilateral variation in the contractual terms, which was not permissible.

This ruling was appealed to the Supreme Court by the Department of Health and Children.

The Advance Payment was introduced in 1971 as part of an agreement of the participation of community pharmacists in the reorganised General Medical Services (GMS) Scheme. The Advance Payment enables pharmacists to stock medicines to meet the requirements of medical card patients. It also compensates pharmacists for the delay in payment by the State for medicines and services provided by pharmacists to medical card patients. Advance Payments were paid to community pharmacy contractors from 1971 until December 2002, when the Minister unilaterally decided to alter their payment arrangements.

 Advance Payments Appeal Judgement