The cost of drugs to combat swine flu is expected to enormously increase health spending this year

GOVERNMENT ministers have been informed in recent days that the HSE faces a projected end-of-year deficit of €200m if it does not further curtail spending.

As the hole in the public finances widens in other areas, the HSE's end-of-year deficit is now projected to be a lot less than the €1bn mooted by chief executive Prof Brendan Drumm earlier this year.

But the Sunday Tribune has learned that the HSE's current legal battle with the country's pharmacists and the cost of the swine flu pandemic will cost the organisation close to an extra €160m that was not factored into the body's 2009 budget.

The much-publicised legal battle between the HSE and pharmacists is a major thorn in the side of the cash-strapped organisation.

The HSE is currently appealing to the Supreme Court a High Court decision to reinstate advance payments to pharmacists for holding stocks of drugs and medicines. Ministers were told last week that the estimated cost – if the case is decided against the HSE – is approximately €70m in 2009 and €10m annually.

Well-placed sources are concerned that the HSE and Department of Health's purchase of a swine flu vaccine from two pharmaceutical companies will cost a total of €88.3m and there is no provision in the HSE budget for this unexpected purchase.

HSE sources told the Sunday Tribune that the current estimated cost of preparing for the swine flu pandemic is €66.3m for this year alone. Around €60m of this will be spent on procuring 5.8 million doses of vaccine this year, of the total 7.7 million doses to be bought by the HSE to fight the disease. The remaining €6.3m will be spent on a stockpile of anti-viral drugs.

In addition to the pressure created by the overrun in the HSE's current spending, it has also emerged that the government's capital spending on health is €11m over budget for 2009.

The cabinet was told last week that the HSE's net deficit for June alone was €240m, so the organisation intends to forge ahead with introducing certain value-for-money measures and employment-control measures, such as terminating the jobs of 1,000 staff on temporary contracts, to plug further the deficit.

Ministers were assured last week that the HSE has indicated its commitment to deal with the current pressure and deliver the service plan in conjunction with the position set out by health minister Mary Harney after the mini-budget in April.

Sources in the health service claim that a number of pressure points are building in areas such as the provision of supplementary welfare allow­ance and medical-card assessment which have serious service and cost implications for the HSE. The supplementary welfare allowance provides a basic allowance to those on little or no income. Increasing unemployment has seen an increase in demand for the allowance and a surge in the number of people seeking assessments to get free medical cards.