The Irish Pharmacy Union is to recommend that its members continue to operate the community drug scheme.
The recommendation follows what the IPU has described as a number of significant developments during negotiations.
Half of the country's pharmacists had threatened not to dispense drugs under the scheme from tomorrow, following a move by the Health Service Executive to cut their reimbursements.
Pharmacists have had their reimbursement under the scheme cut from nearly 18% to 8%.
A statement by the IPU says that the independent body set up to examine the issue will now look at the financial impact on pharmacists.
It has also pointed to a commitment by the HSE to stay in talks which will examine what are termed 'remuneration models', and a commitment by the HSE to recognise the IPU as the representative body for pharmacists.
It is understood that HSE wholesale rates for drugs under the scheme will stay in place for most products.
Earlier, Minister for Health Mary Harney said she was optimistic that the vast majority of pharmacists would not jeopardise patient safety because of their dispute with the HSE.
The minister said she hoped both sides in the dispute would be responsible and would work with the independent group chaired by Sean Dorgan.
Age Action called on pharmacists and the HSE not to engage in scaremongering older people.
Instead the charity asked both sides to work to ensure that older people are not adversely affected if hundreds of pharmacists follow through on their threat to withdraw from the drugs scheme tomorrow.
Spokesman Eamon Timmins said the threatened escalation of the dispute is causing untold stress to older people who are concerned about the continued supply of their essential medications.
He said that older people should not be used as pawns in this dispute.
Age Action called on the HSE to publicise its contingency plans in order to reassure older people with medical cards that their needs will continue to be met in the event of their pharmacist withdrawing from the scheme.
