Ex-factory drug prices in Ireland have reduced considerably in recent years and are now at average EU price levels, according to a new study.

However, by the time the wholesale and pharmacy mark up is factored in, drug prices under State schemes and for private patients here remain quite high compared to other European countries.

A new study conducted by the body representing major pharmaceutical companies, the IPHA, has found that the prices of branded medicines in Ireland are now at an average of a basket of nine European countries.

The study showed that when the 200 most frequently prescribed on-patent medicines were examined, Irish prices were in line with those in Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands, Spain and the UK.

The IPHA pointed out that the study focused on the ex-factory price, which does not include the wholesaler or pharmacy mark-ups, which influence the final price paid by the patient, which would be higher than the ex-factory price.

The research also showed that generic drug companies' off-patent medicines are 50% more expensive in Ireland than in the other nine EU reference countries.

The IPHA says ex-factory prices have dropped considerably as a result of a recent agreement between the branded pharmaceutical industry and the Government.

An IPHA spokesperson said Health Minister James Reilly's legislation to encourage more generic prescribing must ensure that the price for medicines dispensed under State schemes is set at a rate that will lead to significant savings.

Under the legislation, which is soon to come into operation, the HSE will introduce a set reference price for certain drugs beyond which the State will not fund or reimburse under its own drug schemes.

Only this reference price will be reimbursed by the State, and where the drug prescribed is in excess of the reference rate, the patient will have to pay the difference. To avoid out of pocket payments, patients can, under the new law, opt for a generic medicine at or below the reference price.

IPHA says depending on the reference price set, the State could save up to €70 million in a full year. It was unlikely that savings under this new scheme would kick in until the end of this year, the spokesman added.

Minister Reilly's new scheme also provides for generic substitution on prescriptions.

This means that pharmacists, under State schemes, will for the first time be able to switch to a cheaper equivalent drug to that named on a GP's prescription.

The IPHA says generic medicines, which simply copy medicines already developed by research-based companies once they come off patent, by definition should be much cheaper than they are at present.

However, it says its study shows that in Ireland, generic drugs are 50% above the average of the prices in the other EU countries surveyed.

The Irish Medicines Board is currently drawing up a list of commonly-prescribed drugs that can be used for generic substitution under the new scheme.