Hundreds of pharmacists around the country could no longer have access to lucrative state contracts for community drugs schemes under proposals being considered by the government, the Sunday Tribune has learned.

Despite last week's decision by the Irish Pharmacy Union to call off its protest against cuts in payments made to pharmacists by the HSE, senior health officials are believed to be considering the introduction of a new tendering process for supply of drugs under the state schemes.

While no decision has been made, this could eventually see pharmacists competing with each other to land contracts for a particular area or part of the country, and is likely to lead to significant savings for the government.

However, it would also place huge pressure on the sector, and could lead to the potential closure of hundreds of pharmacies if introduced.

For example, where before seven pharmacists in a town might all have been entitled to apply to join the state drugs schemes, under any tendering process they would have to compete to provide the cheapest and most efficient service to customers.

Crucially, this would mean unsuccessful bidders would have to forego a significant portion of their income and face possible closure in some instances.

During its recent dispute with pharmacists, the HSE repeatedly stressed that until four to five years ago there was a maximum of around 1,100 pharmacists nationally.

This suggests that as many as 500 of the 1,600 currently in existence may be deemed as non-essential to provision of services under the state drugs schemes, although it is understood local considerations would also be a major factor in any tendering process.

The recent An Bord Snip Nua report strongly advocated an increase in competition for the provision of healthcare services.

As a result, it recommended that the HSE should phase out existing contracts with pharmacists "as quickly as possible and achieve a price acceptable and affordable in the changed budgetary situation as well as enabling suppliers to compete to provide these services."

A spokesman for the department confirmed the report's proposals are being considered by the government, but declined to say what form any new arrangements might take.

Similarly, a HSE spokeswoman declined to comment on the details of any new arrangements.

"The recommendations of the [Colm] McCarthy report are before government for consideration. The HSE will await direction from the department in relation to their implementation later this year," she said.