Points of Order
Thursday 15th September 2016
(8 years, 2 months ago)
Commons ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text
Andy Slaughter (Hammersmith) (Lab)
On a point of order, Mr Speaker. A consultation document has been published in the last 10 minutes—I am grateful to my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) for going to the Vote Office to get it for me—on the closure of the major court in my constituency along with Camberwell magistrates court, also in London. There has been no written ministerial statement and no other notice. Such things are often published late in the day on the day that the House rises. The court serves 600,000 people in London and was told only in June that extra capacity was needed. There should be an opportunity to raise such important local issues. By the time the House sits again, more than half of the consultation period will be over. Should not Ministers deal with Members on a more courteous basis?
Mr Speaker
The short answer to the hon. Gentleman’s inquiry is yes. It would be courteous if such announcements were made at an earlier point, not shortly before the House ceases to sit with minimal opportunity in parliamentary terms for the hon. Gentleman to explore the matter. I suggest that he uses his remaining time today to look at the options for asking parliamentary questions or for seeking a debate on this important matter. He would have every prospect of securing such a debate, and although it would be at a later point than he would wish, I guess it would be better than nothing.
I hope that Ministers will take account of what the hon. Gentleman said, because this concern can be felt by Members on both sides of the House. It is not clever when Ministers behave in this way. If it is done without malice or forethought, it is simply thoughtless. If it is done on the basis of knowing that it will disadvantage or inconvenience a Member, it is rank, inconsiderate and disrespectful not merely to the Member but, at least as importantly, to his or her constituents.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
On a point of order, Mr Speaker. You will be aware that this House has repeatedly discussed the impact of the Government’s planned cuts to supported housing—most recently during an Opposition day debate called for by my hon. Friend the Member for Easington (Grahame M. Morris) and me on 20 July. The Government pledged to look again at plans to cap local housing allowance and at the 1% housing benefit cut, which would also affect supported housing.
Today, the Government have announced by written statement that they intend to defer the decision on the LHA cap until 2019, but will be going ahead with the cut to supported housing providers from next April. Is it not an affront to this House and to all Members who have expressed concern about the Government’s plans for a Minister not to come to this place with an oral statement? Instead, they yet again sneak out an announcement the day before the start of recess. Is it not also an insult to tens of thousands of vulnerable people? Women who have suffered domestic violence, older people, disabled people, the homeless, former offenders, veterans and young people leaving care are yet again being plunged into uncertainty and insecurity.
I seek your guidance, Mr Speaker, on how Members on both sides of the House can hold the Government and their Executive to account and question Ministers on proposals in person and in detail.
Mr Speaker
I am grateful for the hon. Lady’s point of order. I entirely understand her disappointment and irritation. I hope that it will be possible when we return from the conference recess for the matter to be explored on the Floor of the House—there are a number of possibilities in that regard.
It is of course a matter of judgment for the Government as to whether a ministerial statement should be made orally or in writing. Although I understand her view that the matter merited an oral statement, I will mention en passant that there were two oral statements today as well as business questions. I have no way of knowing what exchanges took place within the Government, but it is by no means unknown for a Minister to want or, at any rate, to be prepared to make an oral statement but to be prevented from doing so because of competing priorities. I have no idea whether that was the case in this instance.
I simply say in response to the hon. Lady’s request for guidance that she can pursue the matter at the next Work and Pensions oral questions on Monday 17 October. I absolutely appreciate that that is a considerable time away, but it is one possibility. There are other forms of questioning that can take place in the course of the day, as she knows, and it is open to the Opposition to choose this matter for a debate on a future Opposition day. I am sure that she will find a way to pursue the matter and, insofar as it is proper, the Chair will be her friend in that process. Meanwhile, she has at least put her concern and extreme dissatisfaction on the record.
John Healey (Wentworth and Dearne) (Lab)
Further to that point of order, Mr Speaker. I am grateful for the remarks you just made to the House. Were you given any indication that Ministers were considering an oral statement on the consequences of their cuts to the housing benefit of many thousands of vulnerable people in supported housing? The written statement raises more questions than it answers. The policy is delayed, but the cuts will go ahead. There is no figure on the new funding pledged, yet the Budget scored the so-called savings at £990 million. The new fund that has been promised is similar to the Supporting People programme, which has been cut almost in half since 2010.
The first announcement was smuggled out in the small print of the autumn statement. Today’s announcement is buried in the small print of a long written ministerial statement. What help can you give the House to ensure that Ministers are properly held to account for their decisions?
Mr Speaker
If there has been no opportunity to explore the matter in the Chamber before the recess, we return in October and there would be an early opportunity at that point. I have already referenced one of those opportunities, which is already provided for in the known timetable of oral questions. But if it is felt strongly by a Member, or possibly by a number of Members, that the matter warrants more thorough scrutiny than a couple of questions at monthly questions would allow, I would certainly be open to that possibility. The right hon. Gentleman asks me whether I had had any indication that Ministers had been planning to make an oral statement on this matter, and I must answer by saying no, I have received no such indication. In fairness, it is not unreasonable for me to observe that absence of evidence does not constitute evidence of absence.
Jim Fitzpatrick
On a point of order, Mr Speaker. Last Wednesday, in a Westminster Hall debate on the proposed cruise terminal at Enderby Wharf on the Thames, I stated that Barratt Homes was the developer and could help—this was in column 197. Mr Tim Collins of Barratt has clarified that although Barratt is the residential developer, Morgan Stanley is responsible for the decision not to provide shoreside fixed electrical power for visiting cruise ships. I apologise to Barratt, I have written to Morgan Stanley and I am grateful for the opportunity to set the record straight, Mr Speaker.
Mr Speaker
I thank the hon. Gentleman. He has set the record straight, doing so pithily and the with the courtesy for which he is renowned in all parts of the House.
Tom Brake
On a point of order, Mr Speaker. You may be aware that in July the person who is now the Secretary of State for Exiting the European Union said that on 9 September—last Friday—the Prime Minister would
“trigger a large round of global trade deals with all our most favoured trade partners.”
Bearing in mind that there was no statement on 9 September, do you think that such a statement should be facilitated, so that he could come to the House to set out what progress has been made on those trade deals—perhaps he could list the countries with which they have been initiated—and say whether he could deliver on the timescale that he had promised? He said that they would be completed within the next 12 to 24 months.
Mr Speaker
I am not sure that there is any mechanism for securing satisfaction for the right hon. Gentleman today. It may be that the right hon. Member for Haltemprice and Howden (Mr Davis), whom he has in mind—the Secretary of State for Exiting the European Union—would be enthusiastic beyond words about the possibility of appearing before the House, and engaging with, hearing from and responding to the right hon. Gentleman. However, I think the Backbench Business Committee, under whose auspices two debates are about to take place, may take a different view. I know that the right hon. Gentleman is an eager and assiduous Member of Parliament, but I think it unlikely that he will spend all of the conference recess reflecting on this matter—it would be a bit sad if he were to do so. If he comes back in October and remains similarly vexed and anxious for clarity, I hope he will use the mechanisms available to him. I think we had better leave it there for now, as we have had a considerable feast of points of order today.
Bill Presented
Health Service Medical Supplies (Costs) Bill
Presentation and First Reading (Standing Order No. 57)
Secretary Jeremy Hunt, supported by the Prime Minister, Mr Chancellor of the Exchequer, Secretary Greg Clark, Mr Philip Dunne and Nicola Blackwood, presented a Bill to make provision in connection with controlling the cost of health service medicines and other medical supplies; to make provision in connection with the provision of pricing and other information by those manufacturing, distributing or supplying those medicines and supplies, and other related products, and the disclosure of that information; and for connected purposes.
Bill read the First time; to be read a Second time on Monday 10 October, and to be printed (Bill 72) with explanatory notes (Bill 72-EN).
Health Service Medical Supplies (Costs) Bill
Monday 24th October 2016
(8 years ago)
Commons ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Health (Mr Jeremy Hunt)
I beg to move, That the Bill be read a Second time.
This is a short and focused Bill which is vitally important not only for the NHS but for patients. NHS spending on medicines is second only to staffing costs. The Health and Social Care Information Centre—now NHS Digital—estimated that the NHS in England spent over £15.2 billion on medicines during 2015-16, a rise of nearly 20% since 2010-2011. With advances in science and our ageing population, those costs can only continue to grow.
Medicines are of course a vital part of patient care in the NHS, both in hospitals and in the community. Thanks to the research and development efforts of the life sciences industry—an industry which contributes £56 billion and tens of thousands of jobs to the UK economy every year—our understanding of diseases and the best way to treat them has improved dramatically over the past 20 years. Who would have thought for instance that UK work pioneering superconducting magnets would result in MRI scanners—scanners which would save hundreds of lives each year through the early detection of breast cancer—or that the remarkable research by our National Institute for Health Research into translational medicine would lead to scientific breakthroughs in areas such as gene therapy being taken from the lab to the clinic? In a six-year period this has led to 340 patents, generating over £80 million from intellectual property.
This Government are committed to ensuring that patients get access to innovative and cost-effective medicines as quickly as possible. I pay tribute to the work carried out by my hon. Friend the Member for Mid Norfolk (George Freeman), who worked tirelessly in government to promote the life sciences industry, and who established the accelerated access review to provide clear recommendations on how the Government, the NHS and the industry can work together to ensure patients benefit from transformative new products much more quickly. That review was published today and is an excellent document which challenges everyone in the medicines system to up their game.
Our mission is to continue our progress in ensuring patients get rapid access to life-changing and cost-effective medicines. However, we also need to ensure that we are getting the best value for the NHS, which is why we have brought this Bill before the House.
The purpose of the Bill is to clarify and modernise provisions to control the cost of health service medicines and to ensure sales and purchase information can be appropriately collected and disclosed. These provisions will align the statutory and voluntary cost control mechanisms currently in existence, allow the Government to control the cost of excessively priced unbranded generic medicines, and ensure we have comprehensive data with which to reimburse people who dispense medicines. Taken together, these measures will enable us to secure better value for money for the NHS from its spend on medicines.
James Cartlidge (South Suffolk) (Con)
I congratulate my right hon. Friend on this effort. I recently received a written answer saying that last year GPs spent £85 million prescribing paracetamol. A packet of 500 mg paracetamol costs 19p in Asda, and I wonder whether this Bill will enable us to look those costs and whether such prescribing is appropriate.
Mr Hunt
I am grateful to my hon. Friend for raising that issue. Although the measures he mentions are not directly covered in this Bill, he reminds the House that the business of getting value for money from our drugs business is everyone’s business throughout the NHS. There is a huge amount of prescribing of medicines that is not strictly necessary. Indeed, we had further evidence of that from the Academy of Medical Royal Colleges this morning. My hon. Friend makes an extremely important point: this Bill is part of the effort to get better value for money from our medicines budget, but initiatives such as the one he talks about are equally important.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Further to that question, I can see how the Bill will deal with the issue of debranding, and that is very welcome, but I understand there are three other areas of concern. There is the question of price delay, which the Competition and Markets Authority has been looking at, and there are the problems of tying and bundling and so-called loyalty schemes, all of which act to inflate the cost of medicines to the NHS artificially. Will the Bill also deal with those areas?
Mr Hunt
It will deal with some of those concerns, and we will listen to all the concerns raised by hon. Members during the progress of the Bill. On the particular issue the hon. Gentleman raises, the CMA is already investigating the behaviour of pharmaceutical companies in certain situations, but it has become clear to us that there is a particularly unethical and unacceptable practice of drugs companies getting control of generic drugs for which they command a monopoly position and then hiking the prices. There was one product whose price increased by 12,000% between 2008 and 2016, and if the price had stayed the same as before the increase, the NHS would have spent £58 million less. The Government’s conclusion is that the simplest and quickest way to sort this out is through new legislation, but I will happily take the hon. Gentleman’s other concerns offline and look into them further.
John Glen (Salisbury) (Con)
I welcome the provisions of the Bill that will close a loophole and deal with terrible examples of where the NHS is in effect exploited, but can my right hon. Friend point to the future in light of the suggestion that the drugs bill will increase to £20 billion by 2020—a much more significant increase than can be afforded under the projected expenditure in the NHS? What bigger measures need to be put in place for us to deal substantively with that bigger problem?
Mr Hunt
My hon. Friend is right in that we see demand for NHS services, which includes treatment and drugs, increasing by a total of around £30 billion over the next five-year period, which is a huge amount and certainly more than we as a country can afford without changing practice. That is why we are implementing a very challenging series of efficiency reforms designed to make sure that we can afford to continue current levels of NHS service on the £10 billion increase this Government are putting in. Part of that is indeed measures such as those in this Bill to control the drugs bill. My hon. Friend is also right that going forward over the next 25, rather than five, years we will be seeing the bigger issue of the accelerating pace of innovation in science. That provides great opportunities for the NHS, but potentially great pressures for the budget, and I am sure we will continue to discuss those issues extensively in this House.
Dr Andrew Murrison (South West Wiltshire) (Con)
What assessment has my right hon. Friend made of the impact this Bill might have on the parallel trade in pharmaceuticals, which he will know has both costs and benefits for the NHS and for patient care?
Mr Hunt
My hon. Friend obviously knows about these matters in a great deal of detail and should be reassured that this Bill should prevent people who are part of the current voluntary pharmaceutical price regulation scheme—PPRS—from parallel-importing through European subsidiaries, which currently under single market rules we are not able to do anything about. That loophole will be closed.
The first element of the Bill relates to controls on the cost of branded medicines. For many years the Government have had both statutory and voluntary arrangements in place with the pharmaceuticals industry to limit the overall cost of medicines to the NHS. Companies can choose to join either the voluntary scheme or the statutory scheme. Each voluntary scheme typically lasts for five years before a new scheme is negotiated.
The current voluntary scheme is the 2014 PPRS. The objectives of that agreement include keeping the branded health service medicines bill within affordable limits while supporting the availability and use of effective and innovative medicines. For industry, the PPRS provides companies with the certainty and backing they need to flourish both in the UK and in the global markets.
The current PPRS operates by requiring participating companies to make a payment to the Department of Health of a percentage of their NHS sales revenue when total sales exceed an agreed amount. So far the PPRS has resulted in £1.24 billion of payments, all of which have been reinvested back into the health service for the benefit of patients.
Rob Marris (Wolverhampton South West) (Lab)
The early part of the Bill appears incredibly tortuous, because it relates to whether something is under the voluntary scheme or the statutory scheme and to switching back and forth between the two. Is that because we have a voluntary scheme which started in 2014 and will run until 2019, and the Government intend not to renew it? If the Government are minded to consider renewal in 2019, why have parallel schemes making the whole thing much more complex than it needed to be?
Mr Hunt
The hon. Gentleman makes an important point. It will be for this House and the Government to reflect prior to 2019 on whether it is worth carrying on with two schemes, which has been the arrangement for many years. Successive PPRS voluntary agreements have covered the vast majority of sales to the NHS and the statutory scheme has been a back-up for people who do not want to participate in the voluntary scheme. Recently, however, there has been an element of gaming the system whereby more and more firms have been moving from the voluntary scheme into the statutory scheme. The Bill will remove the incentives for them to switch between schemes and will make the benefits to the NHS essentially the same whichever scheme people choose. It will be for this House to reflect on and for the Government to consider whether the dual structure is right going forward.
Daniel Zeichner (Cambridge) (Lab)
The Secretary of State tells us that £1.24 billion has come back through the rebate, but many are puzzled about where that money has been spent. Can the Secretary of State tell us?
Mr Hunt
Absolutely. The money comes back to the Department of Health and is invested in the NHS. Indeed, it would be wonderful if it was more than £1.24 billion, because there is an awful lot of need on the NHS frontline right now; the funds are much needed. Our concern is that companies have been exploiting the differences between the voluntary and statutory schemes, particularly the loophole, which the Bill seeks to close, that if companies have drugs in both schemes, we are unable to regulate at all the prices of the drugs that would ordinarily fall under the statutory scheme. That is why the Bill is so important.
Kit Malthouse (North West Hampshire) (Con)
Notwithstanding the Bill’s objectives, which I can see are admirable, does the Secretary of State accept that hundreds of millions of pounds could be saved in the drugs budget if there was better analysis of NHS prescription patterns? I have called before for the appointment of analytical pharmacists to look at the balance between prescription efficacy and cost and at trying to increase the use of biosimilars. Some of that £1.24 billion could be invested in that greater analysis.
Mr Hunt
Yes. My hon. Friend makes an important point. The third part of the Bill will provide for much better data collection to allow that analysis to take place. We are also seeking to break down the barriers between the pharmacy sector and general practice. During this Parliament, we will be financing 2,000 additional pharmacists to work in general practice so that we can learn exactly those sorts of lessons.
Dr Sarah Wollaston (Totnes) (Con)
Further to that important point about biosimilars, and in welcoming this legislation and the opportunity to create savings for the NHS, will the Secretary of State also address the long-standing issues around Lucentis and Avastin? The hon. Member for Mid Norfolk (George Freeman) updated the House about the barriers in both domestic and European legislation that prevent the use of Avastin—it is not licensed for wet age-related macular degeneration—but the scale of savings could be so vast that there is a case for introducing measures in the Bill to allow for such issues to be addressed.
Mr Hunt
I am happy to look into that—some of my own constituents have been affected by that issue. I am not aware that there is scope to consider that important point in the Bill, but we should reflect on what we can do to deal with some of the anomalies in the drug licensing regime that lead to the unintended consequences that my hon. Friend talks about.
We have a statutory scheme for companies that are not in the PPRS that is based on a cut to the list price of products, rather than a payment mechanism on company sales. Since the introduction of the rebate mechanism in the PPRS, the volumes of drugs going through it have been lower than estimated. At the same time, the statutory scheme has delivered lower savings than predicted. The inequity between the two schemes has led to some companies making commercial decisions to divest products from the PPRS to the statutory scheme, further reducing the savings to the NHS.
Last year, the Government consulted on options to reform the statutory medicines pricing scheme by introducing a payment mechanism, in place of the statutory price cut, broadly similar to that which exists in the PPRS. Our clear intention was to put in place voluntary and statutory schemes that were broadly comparable in terms of savings. Of course, companies are free to decide which scheme to join and may move from one to the other depending on the other benefits they offer, but the savings to the NHS offered by both schemes should be broadly the same.
NHS respondents to the consultation supported our position, but the pharmaceutical industry queried whether the Government had the powers to introduce a statutory payment system. Following a review of our legislative powers, we concluded that amendments should be made to clarify the existing powers to make it clear that the Government do have the power to introduce a payment mechanism in the statutory scheme. The Bill does that by clarifying the provisions in the NHS Act 2006 to put it beyond doubt that the Government can introduce a payment mechanism in the statutory scheme. The Bill also amends the 2006 Act so that it contains essential provisions for enforcement action. Payments due under either a future voluntary or statutory scheme would be recoverable through the courts if necessary. That would include the power to recover payments due from any company that leaves one scheme to join the other.
The powers proposed in the Bill to control the cost of medicines are a modest addition to the powers already provided for in the 2006 Act to control the price of and profit associated with medicines used by the health service. The powers are necessary to ensure that the Government have the scope and flexibility to respond to changes in the commercial environment. The intended application of the powers will, of course, be set out in regulations. We will provide illustrative regulations to reassure the House that we will be fair and proportionate in exercising the powers.
Rob Marris
I voted for the 2006 Act, but I have to say to the Secretary of State that profit controls are pretty draconian, particularly for a Conservative Government. The Government appear to be extending them when we have historically dealt with what society refracted through this House as excessive profits through taxation, such as the windfall tax on banks and so on. The Secretary of State now proposes to extend profit controls to a major part of the economy, which would no doubt be loved by the Leader of Her Majesty’s Opposition. To a socialist such as me, a Conservative Secretary of State doing that seems a bit counterintuitive. Could he say a bit more about why he is extending profit controls?
Mr Hunt
Our march on to the centre ground carries on apace. [Laughter.] In response to the hon. Gentleman’s fascinating point, I gently reassure him that our approach will be fair and proportionate. This is not about bringing in wide profit controls. It is important to say that we recognise—our view is shared across the House—the pharmaceutical industry’s incredibly important role in medical advances, and we want Britain to be its European centre of operations post-Brexit. Many Members have campaigned about dementia and we hope that we can get a cure—it could happen in this country—and we recognise that profits are what fund the research that makes such remarkable changes possible.
It is important, however, that we are able to see what profits are being generated from a company’s choice between the PPRS scheme and the statutory scheme as a clue to whether the company is being fair to the NHS, which is funded by taxpayers. That is why the Bill’s measures strike the right balance.
Mark Field (Cities of London and Westminster) (Con)
I hope that not only the Opposition but Government Members are reassured by those comments in response to the hon. Member for Wolverhampton South West (Rob Marris). Will the Secretary of State take this opportunity to emphasise the great contribution that the pharmaceutical industry makes not only in this country but as a global player? As he says, the profit motive is important to ensuring the competition that allows for reform and the new drugs that will transform our lives and the lives of future generations.
Mr Hunt
I am happy to give that reassurance. As I said, this industry contributes £56 billion to the UK economy, with tens of thousands of jobs. When the Prime Minister talks about where she sees our competitive advantage, she talks, first, about financial services, and life sciences is the very next industry she mentions. I completely agree with right my hon. Friend about its incredible importance, not just to this country but to the future of humanity. That is why we seek in this Bill to establish a fair relationship between the NHS, which we have to represent as we are funding it through the tax system, and the pharmaceutical industry. It is also fair to say that there have been times when some pharmaceutical companies’ practices have been disappointing, and because we want to make sure that that does not happen and that we can continue with a harmonious and productive relationship we are proposing this Bill to the House.
Kevin Foster (Torbay) (Con)
We agree that this is not about profit controls—about having a fair return for investment made—but about tackling an emerging business model that could almost be seen as profiteering.
Mr Hunt
My hon. Friend is right about that. The nice way of putting it is that we are closing a loophole. If one were being less polite, one might say that it is a shame we are having to do that. None the less, it is important to do what we are proposing to the House.
We recognise that it has been some time since the Government consulted on the options, and I wish to reassure hon. Members and those companies in the statutory scheme that we will consult further on the implementation of a payment mechanism in the statutory scheme, including the level of the payment mechanism, before the regulations come into force. We estimate that 17 companies would be affected by the introduction of a payment mechanism, with the 166 companies that are currently members of the PPRS not being affected. Our proposals would save health services across the UK an estimated £90 million per year.
The second key element of this Bill amends the 2006 Act to strengthen the Government’s powers to set prices of medicines where companies charge unreasonably high prices for unbranded generic medicines. We rely on competition in the market to keep the prices of these drugs down. That generally works well and has, in combination with high levels of generic prescribing, led to significant savings. However, we are aware of some instances where there is no competition to keep prices down, and companies have raised their prices to what looks like an unreasonable and unjustifiable level. As highlighted by the investigation conducted by The Times earlier this year, there are companies that appear to have made it their business model to purchase off-patent medicines for which there are no competitor products. They then exploit a monopoly position to raise prices. We cannot allow this practice to continue unchallenged. My Department has been working closely with the Competition and Markets Authority to alert it to any cases where there may be market abuse and provide evidence to support this, but we also need to tackle it within our framework for controlling the cost of medicines and close the loophole of de-branding medicines. Although the Government’s existing powers allow us to control the price of any health service medicine, they do not allow controls to be placed on unbranded generic medicines where companies are members of the voluntary PPRS scheme. Today, most companies have a mixed portfolio of branded medicines and unbranded generic medicines. For that reason, all the manufacturers of the unbranded generic medicines mentioned in the investigation by The Times are able to use their PPRS membership to avoid government control of their prices.
It should be said that that practice is not widespread, but a handful of companies appear to be exploiting our freedom of pricing for unbranded generic medicines where there is no competition in the market, leaving the NHS with no choice but to purchase the medicine at grossly inflated prices or to transfer patients to other medicines that are not always suitable. Alongside the Government, many in the industry would also like to see this inappropriate behaviour stamped out.
Norman Lamb (North Norfolk) (LD)
I very much agree with the point that the Secretary of State has just made. He talked about collaboration with the CMA. Can he give any indication as to whether he expects action to be taken on abuse in the marketplace, given that a small number of companies have behaved appallingly?
Mr Hunt
I cannot give the right hon. Gentleman that indication because, as he will know, the CMA operates completely independently, and I therefore do not know what its findings are going to be. Of course, I would support any action that it recommended. I do, however, think that this Bill can give us some security in the House that if the CMA is unable to find evidence in the specific cases it has before it, we will be able to take action as a Government, provided the House is willing to support the Bill.
Mike Wood (Dudley South) (Con)
Has my right hon. Friend made any assessment of how the prices of the drugs quoted in the article in The Times compare with those paid in other health services and by healthcare providers in other western European countries?
Mr Hunt
We have made some assessments of those things, but, in essence, our concern is that, even without comparisons with what is happening in other countries, we are talking about totally unreasonable behaviour. I mentioned one example earlier, but I can give another of a medicine whose price increased by 3,600% between 2011 and 2016. I just do not think we can justify that. Given that we want to have strong, harmonious, positive relationships between the NHS and the pharmaceutical industry, we need to eliminate the possibility of that kind of behaviour happening in the future.
This Bill therefore amends the 2006 Act to allow the Government to control prices of these medicines, even when the manufacturer is a member of the voluntary PPRS scheme. We intend to use the power only where there is no competition in the market and companies are charging the NHS an unreasonably high price. We will engage with the industry representative body, which is also keen to address this practice, on how we will exercise this power.
The final element of the Bill will strengthen the Government’s powers to collect information on the costs of medicines, medical supplies and other related products from across the supply chain, from factory gate to those who supply medicines to patients. We currently collect information on the sale and purchases of medicines from various parts of the supply chain under a range of different arrangements and for a range of specific purposes. Some of these arrangements are voluntary, whereas others are statutory. The Bill will streamline the existing information requirements in the 2006 Act relating to controlling the cost of healthcare products. It will enable the Government to make regulations to require all those involved in the manufacture, distribution or supply of health service medicines, medical supplies or other related products to record, keep and provide on request information on sales and purchases. The use of this information would be for defined purposes: the reimbursement of community pharmacies and GPs, determining the value for money that the supply chain or products provide; and controlling the cost of medicines. This will enable the Government to put the current voluntary arrangements for data provision with manufacturers and wholesalers of unbranded generic medicines and manufactured specials on a statutory footing. As the arrangements are currently voluntary, they do not cover all products and companies, which limits the robustness of the reimbursement price setting mechanism.
A statutory footing for these data collections is important so that the Government can run a robust reimbursement system for community pharmacies. I know that some colleagues have raised concerns about the implications of our funding decisions for community pharmacies, and today I want to reassure the House that this Bill does not impact on those decisions, nor does it remove the requirement for consultation with the representative body of pharmacy contractors on their funding arrangements in the future. However, the information power will give us more data on which to base those discussions and decisions, rather than relying on data only available to us under voluntary schemes and arrangements. The information power would also enable the Government to obtain information from across the supply chain to assure themselves that the supply chain is, or parts of it are, delivering value for money for NHS patients and the taxpayer—we cannot do that with our existing fragmented data.
Mrs Flick Drummond (Portsmouth South) (Con)
In this regard, will my right hon. Friend be giving consideration to asking pharmacies that can prepare their own medicines—aqueous cream and things—as tremendous sums could be saved for the NHS? Will he be considering that in the overall scheme of getting information on the medicines they are providing?
Mr Hunt
The information we collect might make it possible for us more robustly to analyse issues such as the one my hon. Friend rightly brings to the House’s attention. Even if it does not, we should consider the issue, and I am happy to write to her to see whether we can make more progress in that area.
I also wish to reassure the House about the application of the information power to the medical technology industry. More than 99% of the companies supplying medical technologies to the NHS are small and medium-sized enterprises. Their products may be less high profile than the latest cancer medicine, but they are no less innovative or vital for patients. We have no interest in placing additional burdens on those companies.
The 2006 Act already provides powers for the Government to require suppliers of medical technologies to keep and provide information on almost any aspect of their business. This Bill will clarify and modernise those powers, and I am committed to exercising them in a way that is fair and proportionate to companies, to the NHS and to taxpayers who rightly demand value for money from the supply chain. Companies are currently required to hold information on their income and sales for six years for tax purposes. We will work closely with industry to ensure that the requirement to keep and record data does not significantly increase this burden.
My officials have already been in discussion with all parties across the supply chain—for both medicines and medical devices—about these powers to ensure that their implementation is robust but proportionate. We will provide illustrative regulations to aid debate on these provisions. I also want to reassure colleagues that, following Royal Assent, a full and open consultation will take place on the regulations specifying the information requirements.
I thank Ministers and their officials in the devolved Administrations for their constructive input and engagement with my Department on the Bill. Although many of its provisions are reserved in relation to Scotland and Wales, some information requirements that currently apply to England only could also apply in the territories of the devolved Administrations.
We intend to propose amendments to the Bill to reflect the agreement between the Government and the devolved Administrations, so that information from wholesalers and manufacturers can be collected by the Government for the whole of the UK and shared with the devolved Administrations. That avoids the burden created by each country collecting the same information.
The Welsh Government have also asked me to enable them to obtain information from pharmacies and dispensing GPs—a power that the Scottish Government and the Northern Ireland Executive already have. The Government will therefore propose an amendment to the Bill to amend the NHS (Wales) Act 2000 so that Welsh Ministers can obtain information from pharmacies and dispensing GPs.
Medicines are a vital part of the treatment provided by our NHS. Robust cost control and information requirements are key tools to ensuring that NHS spending on medicines across the UK continues to be affordable. They also help to deliver better value for taxpayers and to free up resources, thereby supporting access to services and treatments. This Bill will ensure that there is a more level playing field between our medicines pricing schemes while ensuring that the decisions made by the Government are based on more accurate and robust information about medicines’ costs. It will be fairer for industry, fairer for pharmacies, fairer for the NHS, fairer for patients and fairer for taxpayers, and I commend it to the House.
Justin Madders (Ellesmere Port and Neston) (Lab)
I thank the Secretary of State for outlining the overarching principles of this Bill, which, as we have heard, seek to allow the NHS to better control the cost of medicines and to close some of the loopholes, which have been the subject of blatant abuses in recent years.
I also thank the Minister of State for taking the time to meet me and other hon. Members last week to set out what the Government were seeking to achieve with this Bill. I only hope that this increased appetite for state intervention in the market that we have on display will spread more widely across Government. As my hon. Friend the Member for Wolverhampton South West (Rob Marris) said, this kind of approach used to be called Marxist, anti-business interventionism. I never thought that I would say this, but, having heard what the Secretary of State said today, I believe that he is now a fully fledged Corbynista.
In all seriousness, it is clear that the market is not serving the patient or the taxpayer as well as it could. As we have heard, expenditure on medicines is a significant and growing proportion of the NHS budget, standing at £15.2 billion in England in 2015-16, an increase of more than 20% since 2010-11. One can only imagine where we would be now if the whole of the NHS had seen such an increase during the same period.
The incredible advances in science that we have seen in recent decades, often led by companies here in Britain, mean that people in this country are living longer, healthier lives than ever before. Although we celebrate that, it is also right that we work hard to secure value for money for the NHS to ensure that as many patients as possible can benefit from medical advances.
Keith Vaz (Leicester East) (Lab)
May I declare an interest as a type 2 diabetic and chair of the all-party diabetes group? Ten per cent. of the expenditure of the NHS budget is on dealing with diabetes and complications related to it. Does my hon. Friend agree that there may well be a desire to prescribe more medicines, which will cost more, rather than providing diabetics with a structured education which, if appropriately used, can bring down the cost of diabetes to the health service? It is not just about pills.
Justin Madders
I thank my right hon. Friend for his intervention and pay tribute to him for his great work on diabetes. It is a matter that he consistently raises in the House, and he is right to do so. Of course he is right that there are many ways in which the diabetes bill can be tackled, and some of the shocking statistics that I have seen on the level of take-up of education courses is something on which we can do much better.
We support the broad aims of the Bill and of what the Government are trying to achieve, but we have a number of concerns, which I hope the Minister will address when this debate is drawn to a close, both about what is in the Bill and about the Government’s policies more widely on access to treatments.
Historically, the technical mechanisms used by the NHS to control expenditure on medicine have not set the public’s imagination alight, but in June we were all appalled to read reports that a small number of companies were exploiting loopholes to hike up the cost of medicines. In the past few years, we have also seen headline after headline about one effective treatment or another being denied to patients in desperate need on the basis of cost. I will address each of those issues after briefly touching on the Government’s proposal to harmonise the statutory and voluntary schemes for price control and on the new reporting requirements.
As we have heard, there are currently two schemes for controlling pricing: the voluntary scheme, the pharmaceutical price regulation scheme, which applies to the vast majority of suppliers; and the statutory scheme, which, in 2014 covered around 6% of branded medicine sales in the UK.
The voluntary PPRS scheme is based on companies making payments back to the Department of Health based on their sales of branded medicines to the NHS. By contrast, the statutory scheme operates on the basis of a cut to the published prices of branded medicines. These different approaches appear to have produced different results. Since 2014, the statutory scheme has delivered significantly lower savings than those of the PPRS, partly as a result of companies either switching individual products or switching wholesale into the statutory scheme, which is one reason why we have seen a significant reduction in the level of the rebate. Therefore, we support the rationale behind aligning the two schemes, which will create a more level playing field between companies and also give us a better chance of delivering greater savings to the taxpayer.
However, as we have heard, this Bill extends beyond closely aligning the two schemes and adds a new provision, giving the Secretary of State the power to require all medicines manufacturers and suppliers to provide information relating to prices.
Mark Tami (Alyn and Deeside) (Lab)
My hon. Friend will know—I am sure that we all know this—that there is a difference between the list price that is advertised and the price that the NHS actually pays. That is a very important point, and we have to be very careful that, in gaining all this information, we do actually bring down the cost for the NHS. Those companies may well charge other people higher amounts, and we need to put that in context.
Justin Madders
My hon. Friend is absolutely right. That is one reason why we must tread carefully, and hear what regulations the Government produce for consultation.
Some of the measures did not form part of the initial consultation, and there is a feeling that they have been added to the Bill at the last minute. Given the damaging cuts to the community pharmacy sector that were announced only last week, there is an anxiety about what costs could be created by any additional administrative burden.
Sue Hayman (Workington) (Lab)
Does my hon. Friend agree that pharmacists often know their patients much better than over-stretched GPs do? They can also advise on the prescription of appropriate cheaper drugs. Does he also agree that, instead of putting further pressure on the pharmacy sector, the Minister should be supporting it to reduce the burden on GPs and to help the NHS save money?
Justin Madders
My hon. Friend is absolutely right. There was real concern about the announcement last week. From the surveys that have been taken, we know that approximately one in four people who currently use the pharmacist would go to their GP if they were unable to seek advice from the pharmacy. We know the pressure that GP surgeries, and indeed the NHS, are under. We will have to watch carefully the impact of these proposals, which I hope will not be as serious as a number of Members fear.
The impact assessment does not offer many clues. It states that the additional costs that could be incurred
“have not been quantified, as their magnitude will not be known until after consultation on subsequent regulations.”
We need to tread carefully. The Secretary of State is asking us to give him new powers before setting out exactly how he will use them. That is a far from perfect state of affairs. I hope that we will get some further clarity when the Bill reaches Committee.
Mark Field
The hon. Gentleman has been fair in his broad analysis of the problems that we face between the statutory and voluntary schemes. It is a salutary lesson that whenever a statutory scheme is put in place, it can easily be gamed by anyone in the industry. Is he encouraged by the fact that the Association of the British Pharmaceutical Industry supports the Government’s proposal and wants to work with the Secretary of State so that we can, hopefully, reach an agreement that will work for the future, rather than a draconian recommendation being issued by Richmond House?
Justin Madders
I agree that it is important that we keep the dialogue open with industry. We are proud of what the pharmaceutical industry can deliver for this country. It is a world leader and we certainly do not want to throw the baby out with the bathwater.
The Government will be aware that concern has been expressed by the medical technology sector that medical supplies are to be brought within the scope of a regime designed ostensibly to tackle a problem in the pharmaceutical industry. The medical technology sector has expressed concern that the Bill’s measures will put additional burdens on that sector and could lead to higher costs overall for the NHS. We welcome the assurances given by the Secretary of State today that the 99% of businesses in this industry that are small or medium-sized will not be unduly troubled by onerous additional reporting requirements. We hope to discuss that in further detail.
The former Minister for Life Sciences reported in February 2016 that the estimated income in England from PPRS payments in 2016-17 would be £518 million. That is considerably less than the amount received in 2015, at a time when the overall drugs bill is increasing, so that tells us that the scheme is not going according to plan. The Government have stated that the measures would save the health service around £90 million a year, so let us consider what has been going on and whether this Bill can address the issues that have arisen.
One of the benefits we have heard about is that the Bill will help to close the loophole that I referred to earlier which has led to extortionate prices being charged for a number of generic medicines. This occurs, as we heard, when a small number of companies purchase off-patent drugs for which there are no competitor products or there is a dominant supplier. They then remove the brand name, which takes the drugs out of the current pricing controls, allowing the companies to hike up the costs by many hundreds or even thousands of per cent. It is clear that some of these companies have made this strategy a key part of their business model.
In the past few months we have seen this House expose some of the worst excesses of capitalism, from Mike Ashley and his employment practices at Sports Direct, to Philip Green, but there should be a special category of obloquy for those who make themselves extremely wealthy by using loopholes in the law to prey on the sick and vulnerable and to extract obscene profits from our health service. An investigation in The Times highlighted how a small number of companies including Amdipharm, Mercury, Auden Mckenzie and Atnahs raised the cost of medicines by £262 million a year through this practice.
When a US pharmaceutical company hiked the price of HIV medication, people across the world were united in their condemnation, but it is less well known that at the same time the price of over 200 medicines more than doubled in this country, with 32 rising by more than 1,000% and in one case, as we heard, an unbelievable increase of 12,500%. An indication of how central to the business plan of some companies this practice has become can be found just by looking at their websites. The company Amdipharm boasts that it was sold to a private equity company for £367 million and talks of acquiring and commercialising niche generic medicines. Another of these companies, Concordia International, which now owns both Amdipharm and Mercury, is quite open about the fact that it
“specializes in the acquisition, licensing and development of off-patent prescription medicines, which may be niche, hard-to-make products.”
This may sound like a noble pursuit, but we know that it can in fact be code for establishing and then abusing a dominant market position to the detriment of vulnerable patients and the taxpayer.
Rob Marris
My hon. Friend speaks of the abuse of a dominant market position, and this Bill extends the powers of the Secretary of State effectively to confiscate profits, rather than acting through taxation. Does my hon. Friend agree that the same approach may be worth considering in the case of a company such as Google? It has 85% of the world mobile phone market for Android operating systems, and people use Google for 85% of the searches carried out in the United Kingdom. That is a dominant market position and there are questions about the tax paid by Google. Perhaps profit confiscation might be considered.
Justin Madders
My hon. Friend tempts me a little way outside my brief. I note, though, that our health service is entering into partnerships with Google, so I hope that questions are being asked by Ministers about the taxation arrangements.
We know that the vast majority of the generics sector is well controlled by competition and delivers value for money to the taxpayer, and we welcome the extension of pricing controls where competition has failed. Is the Minister confident, however, that the steps taken in the Bill are adequate? We have seen, as my hon. Friend the Member for Wolverhampton South West mentioned, how adept international companies can be at moving figures around to avoid taxation, and we clearly want to ensure that the system that we develop is not vulnerable to the gaming that we have seen elsewhere. I do not think for a minute that given the vast sums of money at stake, the companies will just shrug their shoulders and take the hit if they can avoid it.
I was more than a little concerned when I read a section about this Bill in a Concordia investor presentation, which said that in the past the Department of Health
“would seek informal negotiations with manufacturers where it believed there were pricing issues. We believe this step will remain.”
The notion of informal talks with officials brings up uncomfortable memories of the sweetheart deals between multinationals and Her Majesty’s Revenue and Customs. Although I am happy for chains of communication to be open with such companies, can the Minister reassure us that in all cases prices will be regulated through a transparent, formal process and not through behind-the-scenes talks?
Steve McCabe
Where the advertising budgets of pharmaceutical companies dwarf their R&D budgets, is there not an argument for the Government to look again at the tax position of those companies, as well as at the price of their products?
Justin Madders
We will not get very far with this Government on corporation tax. They have been going in a direction that we would not have chosen. They have decided on the measures in the Bill as the best way to control prices and we will see how they get on. Will the Minister confirm that if it becomes clear in a few years that we have opened up another set of loopholes, we can expect the Department to take the lead and to be proactive in its investigations, rather than relying on a team of journalists to expose the problem?
We know that in Scotland the rebate that has been generated has been used to create a dedicated fund to give patients access to new medicines. Will the Minister consider investigating similar models and ensuring that the benefits of the scheme are used for the purpose of improving our frankly poor record in allowing patients to benefit from new medicines? We accept that there will always be challenges in matching funding to new drugs, but there is at least a degree of logic in allowing savings made in the drugs bill to be reinvested to enable new products to reach patients more quickly.
We welcome today’s report by the Accelerated Access Review, which sets out an ambitious plan that could see patients accessing new lifesaving treatments up to four years sooner. We hope the Minister will take this opportunity to give financial backing to the aims of the review by committing to using future rebates from the pharmaceutical sector to improve access to treatments. I ask the Government to seriously consider this, as there are growing concerns about access to new drugs and treatments in this country, and particularly about the widening gulf between the UK’s record on developing new drugs and the ability of the NHS to ensure that all patients benefit sufficiently.
The “International Comparisons of Health Technology Assessment” report published in August by Breast Cancer Now and Prostate Cancer UK shows that NHS cancer patients in the UK are missing out on innovative treatments that are being made available in some comparable countries of similar wealth. This is at the same time as a number of medicines have been delisted by the Cancer Drugs Fund after it overspent its budget, and the failure to extend this scheme to innovative treatments as well as medication. There was a report in The BMJ in July entitled “A pill too hard to swallow: how the NHS is limiting access to high priced drugs”. It came to similar conclusions when looking at new antiviral drugs that held out a real prospect of eliminating hepatitis C but which were very expensive.
Justin Madders
My hon. Friend is absolutely right. We must be careful of the law of unintended consequences with this piece of legislation. Commercial decisions will be taken on investment if the return is not sufficiently high, so we have to get the balance right between encouraging investment and getting value for money for the taxpayer.
The BMJ report showed how NHS England, having been unable to budget for broad access to the drugs I mentioned, sought to alter the outcome of the National Institute for Health and Care Excellence process and, when it failed, defied NICE’s authority by rationing access to those drugs. There was also widespread controversy over attempts by NHS England to avoid funding anti-HIV pre-exposure prophylaxis by passing on responsibility to local authorities at the same time as cutting the public health budget allocated to councils. If we are to strive to create a level playing field for drugs companies, we should look to do the same for patients and their ability to access treatments.
Labour established NICE to speed up the introduction of clinically proven and cost-effective new medicines and procedures. An order was made by Parliament in 2001 to mandate the funding of healthcare interventions approved by NICE through its technical appraisal process. They were intended to be available to patients three months after publication of the appraisal. However, subsequent orders have chipped away at that, culminating in the current consultation by NICE and NHS England, which will again potentially delay or deny access to important treatments. Therefore, as well as looking at ring-fencing the payments received under this scheme, will the Minister look more widely at access to medicines? Successive studies have demonstrated that there is relatively low take-up of new medicines by the UK compared with other high-income countries. Not only does that let patients down, but it could impact on the future of the pharmaceutical industry in the UK, particularly given the sector’s concerns about the relatively small value of sales in the UK, compared with other countries, and given the uncertainty surrounding the future of the European Medicines Agency following our decision to leave the European Union.
I am sure Ministers are aware of the concerns that have been raised about that and of the need to ensure that the country is still seen as a leader in the research sector. The Prime Minster has said:
“It is hard to think of an industry of greater strategic importance to Britain than its pharmaceutical industry”,
and the Opposition agree, but we cannot be complacent about the state of UK pharma, particularly as investment decisions are often made by parent companies based in other parts of the world. I hope the Minister will take seriously the interrelationship between decisions about access to treatments and the future of pharmaceutical research and development in the UK, particularly when we know that other countries across Europe are using the current uncertainty as a result of Brexit to eye up opportunities to steal a march on our own industry.
To conclude, the Opposition support the broad aims of the Bill and what the Government seek to achieve in terms of better controlling the cost of medicines. In Committee, we will seek to explore in more detail the new information powers and the details of the impact of those new powers on the supply chain. We will also continue to hold the Government to account and ensure that patients are able to access the best available treatments without any unnecessary delay.
Sir Simon Burns (Chelmsford) (Con)
As any constituency MP will know, the pressures on the NHS grow year in, year out, partly because of our ageing population and partly because of developments in medical procedures—advanced drugs that can help to overcome illness, to continue a patient’s recovery or to stabilise their condition. That is why it is a constant battle for the NHS to root out waste and increase efficiency in the delivery of patient care without compromising that care.
The Nicholson challenge, launched in 2010, sought to save £20 billion over the last Parliament. As my hon. Friend the Minister of State said at Health questions, the NHS managed to achieve £19.4 billion—not £19.4 billion of savings that then went back to the Treasury, but £19.4 billion that was reinvested in front-line services and the NHS.
At the same time, though, we have great pressure, as my right hon. Friend the Secretary of State alluded to during his comments, on the ever-increasing drugs bill. In England, the drugs bill was £15.2 billion in the last financial year—£11.2 billion on branded medicines and £4 billion on unbranded, generic medicines. That represents a 20% increase since 2010 and a 7% year-on-year increase. With an ever-increasing, ageing population, those figures will continue to go upwards in future years.
We also see more and more new drugs being developed to combat illness. How may illnesses that were killers even during our lifetimes can now be cured or stabilised because of research and the work of pharmaceutical companies in developing the drugs that provide those results? Anyone will accept that the research involved in developing the drugs to tackle illness and disease is phenomenally expensive for the companies involved and sometimes takes many years. Therefore, we have to have a balance. The pharmaceutical companies, which have to invest horrendous amounts of money to find a new drug—a new cure or stabilising medicine—for medical conditions, obviously have to benefit from the horrendously large investments they make, but that does not mean that that should be a licence for them to simply charge what they like, for as long as they like, for the largest profits possible. There is a median between the two situations.
That was highlighted by the Times investigation a few months ago, in which one saw some of the price increases made by pharmaceutical companies that had, in effect, a monopoly on a drug because there was no competition. Let me give one or two examples to show the scale of the problem. Between 2008 and 2016, the price per packet of hydrocortisone tablets rose from 70p to £85—a 12,000% increase. With certain antidepressant tablets, one sees a 2,600% increase. With certain tablets for insomnia, there was a 3,000% increase. Frankly, even if this is with a relatively small number of drugs, it is totally unacceptable and extremely difficult to justify.
I accept that the cost of drugs to the NHS is extremely complicated. As hon. Members will know, branded medicines are controlled through the voluntary pharmaceutical price regulation scheme, which was agreed from 2014 to 2019. For those companies that choose not to join the PPRS, the Government operate a statutory scheme for branded medicines. The PPRS is based on a payment mechanism whereby companies make payments back to the Department of Health based on their sales of branded medicines, whereas the statutory scheme operates on the basis of a cut to the published list price of branded medicines. As a result, the statutory scheme has delivered significantly lower savings for the NHS, and that is clearly not satisfactory.
I welcome the Bill as a means for the Government to secure better value for money for the NHS and taxpayers. The first important change it will introduce is to clarify the law to allow, beyond any doubt, for the power of the Secretary of State to require a payment mechanism in the statutory scheme to limit the cost of medicines. That clarification will enable the Secretary of State to combat the current situation, whereby manufacturers and suppliers are allowed to choose the scheme by which they are controlled. That has led to numerous companies being covered by the statutory scheme rather than the voluntary scheme, because the statutory scheme makes less effective savings to the NHS and thus benefits them disproportionately.
In effect, the Bill will allow the Government to require companies to reduce the price of an unbranded generic drug, even if the company is in the voluntary scheme. The Government intend to use that power to limit the price of unbranded generic medicines when competition in the market fails and companies charge the NHS unreasonably high prices for them, as highlighted by the investigation by The Times.
Rob Marris
According to the Library briefing, since the Bill’s publication the share price of Concordia International, which has been playing that game and owns AMCo, has gone down by 28%. That is good news.
Sir Simon Burns
I am grateful to the hon. Gentleman for sharing that information.
Equally important, the Bill will improve and enhance information collection so that we are better informed on a more consistent basis. That will ensure a better basis for assessing whether the supply chain as a whole, or a specific sector, provides value for money for the NHS. We cannot underestimate the importance of having more consistent, viable and useful information gathering, because information is power in so far as it helps to effect decisions and judgments. If one does not have consistent information collection or sufficient ranges of information, that leads to problems in rectifying issues where pharmaceutical companies are behaving not in the best interests of the NHS, but disproportionately in their own interests.
That is why the Bill’s impact and importance far outstrip the fact that it is modest in size, with only a few clauses. I am pleased not only that the Government have decided to take action, but that the Bill, subject to its Committee stage and to the consultation processes about which the Secretary of State has given assurances, commands the widespread support of Members on both sides of the House. I look forward to it reaching the statute book and, as the regulations are developed and the consultations ensure that we get it right, to it stopping some of the abuses that have cost the NHS so much. That needs to be done, however, without unfairly penalising the pharmaceutical companies, because, as I said earlier, they spend a considerable amount of time and a massive amount of money on developing drugs. For instance, in the past 30 years they have made considerable strides for patients with HIV/AIDS and improvements in care for cancer patients. I welcome the Bill.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Like the right hon. Member for Chelmsford (Sir Simon Burns), I pay tribute to some of the research and development that has been done by the pharmaceutical industry. Europe has become the biggest research network in the world, and the biggest beneficiary of that has been the United Kingdom, through Horizon 2020 funding, in collaboration with others, and the European Medicines Agency. As others have said, however, both of those are going to change, so the pharmaceutical industry in this country will be rather nervous and anxious about its future.
Obviously, every new drug that the industry discovers creates an additional cost pressure for the NHS, hence the reason for the pharmaceutical price regulation scheme, which has existed since the 1950s. The current scheme has been in existence since 2014 and has brought significant benefits, as the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), has said. In Scotland it directly funds our new medicines and rare diseases fund. Ours is not a cancer drugs fund, so it gives us greater flexibility to treat very rare diseases. The patient’s condition does not need to be cancer, so we are giving Sofosbuvir for hepatitis C and Everolimus for tuberous sclerosis.
It is necessary, however, to have some form of management over the cost pressure, so the Scottish Government and my colleagues welcome the way in which the Bill tidies up the situation by closing some of the loopholes faced by the NHS. We have heard in particular about those who have a monopoly over generic medicines, whereby companies that are part of the PPRS can charge what they like for them. There needs to be much greater alignment and it needs to apply to all drugs, not just all companies.
The Secretary of State also mentioned the collection of data. As someone who has worked in the NHS, I have to say that it has struggled with that, and I have concerns about how it will work across the entire NHS, the entire pharmaceutical industry and medical technology and other supplies. We need to make sure that data collection is relatively simple and straightforward, and I also hope that we will bring together and use data that have already been collected.
I speak as a representative of one of the devolved nations and it is important that our Government are able to access those data easily. The Bill states clearly that the data gathered will be shared with Scottish Ministers, but on what basis? Will it be down to Scottish and Welsh Ministers to request data when they want them, or will they have to wait for an annual return, which might not happen when they want it to happen?
The Secretary of State said that there had been consultation, but I hope that that will continue, because the devil will be in the detail when it comes to the extension to all medical supplies. Scotland already uses a lot of central procurement to keep costs down, so it is important that the Bill enables, rather than interferes with, that.
Rob Marris
The hon. Lady is making a powerful speech, as ever. May I pick her medical brains, as it were, on the question of medical supplies? They are defined by the National Health Service Act 2006 as
“surgical, dental and optical materials and equipment”.
Would she, as a clinician and a surgeon, include a CAT or an MRI scanner, as a piece of surgical equipment? It is certainly not dental or optical. It seems to me, as a layperson, albeit a lawyer, that it is not surgical equipment, but investigative equipment, and MRI scanners, as she and many other Members will know, start at about 2 million quid.
Dr Whitford
That is an area that needs to be looked at. A narrow definition that covers only blades and swabs and that does not take into account our hugely expensive infrastructure would not make sense. When we buy those kinds of machines in Scotland, we tend to consider central procurement and assessment, which opens up the potential for massive savings. A lot more work will have to be done in Committee and then in regulation to make the process function in the way that everyone wants it to function.
We need something much more radical. That aspiration may not happen with this Bill, so it will have to come later. Patients in the UK face a delay of about five years to access new medicines. If we compare cancer survival rates, we will see that we are often ahead when it comes to patients with early disease. We are one of the earliest nations doing population screening for breast cancer. However, we start to fall behind when it comes to people with more aggressive or advanced disease. I think that that is where our poorer outcomes and survival rates by comparison with European countries come from, because it is palpable on the ground. Part of that is sometimes the eye-watering initial prices of new drugs. Yes, we can set methods to try to control that, but a lot of those drugs do not get through the system introduced by the National Institute for Health and Care Excellence because they are expensive. In my interactions with some of the major pharmaceutical players since I have been in the House, I have discovered an appetite for a different way of doing it. Prices could be much lower but there could be a guaranteed number of patients before a drug became generic. We might need to look at risk sharing, because at the beginning we often do not know whether a drug will really be as good as it is cracked up to be. If the price starts, like some cancer drugs, at £100,000, we will struggle to get it through any of our pricing systems.
Something else we have to deal with is the question of how we expect pharmaceutical companies to make a profit on drugs that we never intend to use. We need new antibiotics, but any brand-new class of antibiotics—we have not had such a class for 30 years—will have to be left on the shelf. The existing system will simply not fund research for such a drug. While the Bill tidies up some of the issues that we face now, we need to do much more blue-skies thinking on equipment, drugs and the way in which we develop different things. Otherwise we will have interminable debates, such as those in which I have participated in Westminster Hall: in one debate, we say that we want more research on, for example, brain tumours, but the next week we have a debate on the fact that we cannot access a brand new drug that has been developed by the pharmaceutical industry in the UK.
Jo Churchill (Bury St Edmunds) (Con)
The hon. Lady is making an informed and impassioned speech. Does she agree that we are entering a new landscape, and some drugs that have been discovered can be used for multiple treatments for different cancers, or even for other diseases? We therefore need an even more flexible approach so that we can benefit from those drugs and optimise patient outcomes.
Dr Whitford
Absolutely. We have entered the realms of using immunotherapies such as Herceptin for cancer. Equally, in the mid-2000s, people went to court to try to access that drug, which halves the risk of metastatic disease—and we end up spending much more on patients with that stage of the disease. We give Sofosbuvir in Scotland for hepatitis C because it is almost curative, so we have fewer new hepatitis C patients. We need a much more rounded way of looking at the costs and benefits of new drugs. The genetic drugs that we are likely to use in future will be even more eye-wateringly expensive, but then again, they may have a bigger impact.
The Bill tidies up loopholes, but I have concerns about the involvement of the devolved Administrations in the design of the schemes, access to data and ensuring that the funding for PPRS, which we use for our new drugs fund, is maintained. There is a call for us to do something much bigger and much more blue skies in future.
Andrew Selous (South West Bedfordshire) (Con)
It is a pleasure to follow the extremely well informed speech given by the hon. Member for Central Ayrshire (Dr Whitford). I hope that Ministers will continue to study what happens in Scotland, as they do elsewhere around the world so that we can share information and copy best practice, whether in Scotland or elsewhere. I am aware of Scotland’s fine medical tradition and what it contributes to the United Kingdom.
I pay tribute to The Times for the investigation that it began on 3 June. We often have cause to complain about the press in Parliament. We are often the subject of their inquiries, which we may find unwelcome, and from time to time the press are irresponsible, and should be more responsible. In this case, we can all thank The Times for shining a spotlight on unacceptable practice in the pharmaceutical industry in the UK, which has huge implications for the NHS, which we all love and have been sent here to protect and improve.
Rob Marris
The hon. Gentleman is extolling the work that The Times did in a series of articles this June. May I remind him and the House that in discussing the earlier adoption of drugs, we should bear in mind the work that The Times did in the 1960s to uncover thalidomide as a terrible drug? It was never licensed in the USA because of concerns that testing was not adequate. Yes, we want things to go to market earlier when that is possible, but we have to be extremely careful.
Andrew Selous
If memory serves, it was a team of investigative journalists from The Sunday Times that focused on that issue. However, the hon. Gentleman is right: we should pause and reflect, and be thankful for the tremendous tradition of British investigative journalism, which helps us and is our ally in Parliament. It is important to put that on the record. What The Times did contributed to the Secretary of State launching the Competition and Markets Authority inquiry. I am pleased that that happened.
A number of speakers have made a valid point, with which I strongly agree, that it is absolutely vital that we continue to have a strong pharmaceutical industry in the UK. In the months before she was appointed, the Prime Minister said:
“It is hard to think of an industry of greater strategic importance to Britain”
than the pharmaceutical industry, and she was absolutely right. The briefing from the House of Commons Library says that the output of the pharmaceutical industry in 2015 was £12.7 billion, which amounts to 8% of the UK’s entire manufacturing output. Let us look at one or two of the larger players.
GlaxoSmithKline is active in more than 150 markets around the world, and has 110,000 employees globally. It has 80 manufacturing sites, and it is the largest vaccines business in the world. Of particular significance is the fact that it conducts all its research in two research hubs: one in Philadelphia and the other in Stevenage in the United Kingdom, where a number of my constituents are proud to work. AstraZeneca is another large pharmaceutical company that is active in the UK. It has 6,700 UK employees, and supports a further 35,000 jobs in the UK. It operates across seven sites, including one in Luton, close to my constituency. Again, a number of my constituents are rightly proud to work there.
As the Secretary of State said, the medicines bill for NHS England, at £15.2 billion in 2015-16, is the second largest cost for the organisation, after staff costs, so it is absolutely vital that we secure value for money in this huge area of spend. It is a concern that the CMA has spoken of “excessive and unfair prices” and has referred to companies that have “abused a dominant position”. There have been incidences of no competition or insufficient competition, so it is right that the Government have stepped in to deal with the issue. That touches on a broader philosophical point. We had a brief exchange on this earlier. In a response to me only a couple of days ago on the morality of business behaviour, the Prime Minister wrote:
“we need to ensure that the free market has an ethical basis”.
I absolutely agree.
The Library briefing for the debate looks at the top 11 medicine price increases, ranging from ascorbic acid, with an eye-watering 1,012% price rise, right up to Doxepin, which had a 5,281% price rise. In some cases—if some of the ingredients and some of the raw material for a particular drug are suddenly in short supply—a price increase such as that may be justified, but the Department knows that, in the majority of cases, there is no valid reason for the huge increases. That is why the Government have, properly, acted. Therefore, I welcome the Bill’s powers to reduce prices, to impose price controls and, importantly, to gather information. However, I have a couple of questions for my hon. Friend the Minister on gathering information.
Getting information is vital, and I am pleased that the Government have included measures in the Bill to obtain complete information. Is the Minister satisfied that there is sufficient analytical ability in his Department to really know what is going on? I ask that for this reason. I have had the huge privilege of working with members of the senior civil service in a different Department in the past two years, but sometimes we expect civil servants to have a range of skills that it is not fair of us to expect them to have. Is there the necessary commercial expertise in his Department to really work out what is going on with the additional information that he and his officials will have at their fingertips? Is there a scheme for secondments between pharmaceutical businesses and the Department of Health, so that his officials really know how the market works and any particular games that might be played? That is important.
I am aware that one permanent secretary in post at the moment had a secondment earlier in his civil service career to Diageo, but it is important that the Minister and the permanent secretary ensure that there is that capability in their Department. If it is not there, I hope that he and the ministerial team will take steps to ensure that it is. I say that because, if we look at some of the emails that came into the public domain as a result of the investigation by The Times—some were brought to light through freedom of information requests—it seems that there was not quite the level of serious analysis, probing and inquiry that we would all, including the Minister, have liked to see.
The Government have introduced the Bill because they care passionately about the future of our NHS. They will do everything necessary to protect it and that very much includes getting value for money from the drugs that the NHS pays for. On the Conservative Benches, we value and care about the role of the free market. We know that it is the greatest economic mechanism in the history of mankind for creating wealth and for relieving poverty. It is because we care about it that we will act to reform where that is necessary, whether that be in the interests of the NHS or any other part of our country.
Norman Lamb (North Norfolk) (LD)
This is an uncontroversial set of measures and I confirm my support for the Bill as it stands. The great strides in medical science over the past decade and beyond are obviously to be celebrated, with cutting-edge new treatments for life-threatening and life-shortening conditions, including a number of rare diseases and cancers, offering many people the hope of improved health, longer life and a quality of life that in the past would not have been possible. As well as the enormous benefits it brings to patients, the life sciences industry makes an incredibly valuable contribution to the UK, and it is only right that we acknowledge that today. However, there is an inevitable cost attached to the triumph of modern medicine, and the challenge is to ensure patient access to new treatments as quickly as possible, while ensuring value for money for the NHS.
The Bill seeks to address some of the shortcomings. It addresses clear abuses of the current system and I think that it will bring greater consistency to the existing arrangements for controlling the cost of medicines new and old. As I have said, I find myself in agreement with the proposals.
It is good that so many companies recognise their responsibility for keeping the branded medicines bill in check by signing up to the pharmaceutical price regulation scheme. Under the scheme, manufacturers pay a rebate to the Department of Health to cover expenditure on branded medicines above agreed limits. It is a responsible approach, helping to ensure that patients can benefit from access to novel drugs in a way that is sustainable for the taxpayer. However, I agree with the Secretary of State on the need to address the current disparity whereby the statutory medicines pricing scheme delivers lower savings than the voluntary scheme. Those differences are expected to widen, which is clearly not in keeping with the spirit of either arrangement, so it makes sense that they should be more closely aligned. As he said, we have to remove the incentive to shift from one scheme to another.
I particularly welcome the proposals to strengthen the authority of the Secretary of State to intervene where unbranded medicines are priced excessively. The NHS and patients benefit immensely from medicines, which were once available only at great public expense, becoming available far more cheaply after the patent expires and generic products come on to the market. We should recognise the great value that the competitive market brings, saving the NHS more than £13 billion every year, according to the British Generic Manufacturers Association, but we also know that the overall cost of generic items is increasing at a faster rate than branded items, and that there have been some outrageous increases, to which other hon. Members have referred, in the price of some individual generic drugs in recent years when there is only a single company producing that drug. It looks like a clear case of profiteering, where the NHS is being ripped off.
Let us be clear what the implications are when a particular company makes an excessive profit from increasing the price of a drug in that way. It means that other NHS patients, particularly those in more marginal areas that do not get the attention that they deserve, lose out. There is less money to spend on, for example, teenagers with mental health problems or learning disabilities. There is a price to be paid for that excessive profiteering. It is utterly unethical behaviour. I hope that the Competition and Markets Authority can find a way to take action against these companies, which appear to have constructed a business model to exploit the loophole.
As hon. Members have said, a number of generic medicines increased in price by more than 2,000% in the last decade. The most horrific example I have come across is a medicine that increased in price from £13.98 in 2005 to £632.96 in 2015, a rise of more than £600 per item dispensed. It is utterly despicable for any private company to think that it can do that. The Government are right to take action to end that outrageous practice.
Generics account for three quarters of prescription items dispensed in the community. In those cases where competition fails to deliver value for money, it is important that there are measures at our disposal to control prices and to tackle abuses that could place intolerable pressure on NHS budgets. It makes little sense that generic medicines can be controlled through the statutory scheme, but that the Government are currently prevented from stepping in when a company’s branded products are regulated through the PPRS. It seems clear that we should remove that anomaly. I should add that, in using these powers to introduce price controls, the Government should of course exercise caution and guard against any unintended consequences that may impact on the viability of smaller companies. I am sure that the Government will be alert to that.
The aims and provisions of the Bill are admirable, but it is only part of a much wider debate about how we can sustain access to groundbreaking new treatments when the NHS is in the middle of the longest financial squeeze in its history. One intervention from a Government Member on the Secretary of State drew attention to the fact that the total bill for drugs is rising at an unsustainable rate. The right hon. Member for Chelmsford (Sir Simon Burns) also raised this question, and we have to address that because the NHS will not be sustainable at the current rate of increase in cost.
It is no secret that the NHS has struggled to adapt to modern medicines, particularly those that carry a large budgetary impact. Both NICE and NHS England have had great difficulty in figuring out which medicines to approve and how those medicines are to be afforded and brought to patients. Recently, NHS England has delayed funding for the new hepatitis C treatment, so I was interested in the points made by the SNP representative, the hon. Member for Central Ayrshire (Dr Whitford).
We also have the ongoing and deeply unsavoury case of the PrEP, or pre-exposure prophylaxis treatment. Not only is NHS England taking its legal challenge to the bitter end to avoid having to pay for the drug, but there have been reports of it pitting patient groups against each other by saying that patients could miss out on vital treatments for cancer or rare diseases for children should PrEP be funded. We do not want to get into comparing the rights and interests of one group of patients against those of another in that way.
Earlier this month, NHS England and NICE launched a consultation on proposals to change the way some drugs are funded when there is a high cost involved. NHS England and clinical commissioning groups are legally required to fund drugs recommended by NICE as being clinically and cost-effective, normally within three months of the guidance being issued, barring unique circumstances. Under the new proposals, if NICE recommends a drug that will bring an estimated cost to the NHS above a certain amount—£20 million is the suggested figure—NHS England can go back to NICE and ask it for longer to roll out the medicine if it is unable to agree a lower price with the manufacturer. Surely that is precisely the opposite of what we ought to be trying to achieve as regards speedier access to new drugs that are coming on stream. Ignoring questions about how that somewhat arbitrary cost threshold was arrived at, there is a concern that this is a creeping step towards the rationing of approved treatments in the NHS. It seems to me to be an admission that the NHS cannot afford to pay even for the drugs that are found to be cost-effective by NICE; similar concerns have been raised by Nicholas Timmins, that highly respected observer who is a senior fellow at the King’s Fund.
The great worry is that opening up the debate on how quickly or slowly approved treatments can be adopted will put us on a slippery slope to a new discussion about whether approved treatments should be adopted at all, and at the very least UK patients will be further disadvantaged—the SNP spokesperson has already made the point that we compare very badly with other countries —and there will be more delays in getting access to new cost-effective treatments.
Dr Philippa Whitford
Does the right hon. Gentleman recognise that we are one of a tiny handful of OECD countries that allow that opening price to be set completely by the pharmaceutical industry and to be set as high as it likes?
Norman Lamb
I note that point. I suppose my overall point is that given the unsustainable increase in the total drugs bill and given the actions that NHS England and NICE appear now to be taking, it seems that we will be in a more difficult position in getting speedy access to new drugs that can be life-saving. The Government need to reflect on that. The hon. Member for Central Ayrshire made the point in her speech that this Bill tidies up things that have to be tidied up, but there is a much bigger debate about how on earth the NHS can afford vital treatments that in other countries patients are getting access to much sooner.
If we are approaching a situation in which we are unable to cope with new treatments that have been judged by an arm’s length expert body, NICE, to be clinically effective for patients and cost-effective for the NHS, it is yet more evidence that the NHS needs more resources, and I repeat again to the Minister—he will be sick of hearing me say it—that at some point the Government must recognise that they are simply drifting towards a crash with the NHS. We face an existential challenge that this evening’s debate has highlighted and that has to be confronted at some point. I urge the Government again to consider a cross-party approach so that we can ultimately achieve, in discussion with the public, a long-term and sustainable settlement for the NHS and care that recognises both this dramatic increase in the cost of drugs and that all our loved ones want to have access to those drugs in their hour of need.
We should also be mindful of the potential impact of Brexit on the life sciences industry and the additional challenges we face in keeping the NHS medicines bill under control. If trade between the UK and other EU countries becomes subject to customs duties, import VAT and border controls, thereby increasing costs to the life sciences industry, that might in turn drive up the costs of new medicines to the NHS, and impact on access for UK patients to the most innovative new treatments.
Finally, we also need to make sure that evaluation processes and methodologies are fit for purpose. Traditional appraisal methods and notions of cost-effectiveness are unsuitable for many modern medicines, especially for drugs of immense scientific innovation that target just a small number of patients, but the NHS has been slow to respond to that. The Cancer Drugs Fund is a case in point—established as a sticking plaster after a cluster of promising drugs were judged not to be cost-effective. While it is almost certainly the case that many of those treatments came with too high a price to be routinely funded, few would deny that they were being evaluated under outdated processes that could not fully capture their value. Many rare disease treatments suffer from the same problem.
Companies have a duty to ensure that their medicines are fairly priced, but NHS England and NICE also have a duty to make sure that their evaluation processes and decision-making criteria are fit for purpose, so that new medicines are given a fair hearing without some of the excessive delays we have seen in the recent past. We owe it to patients to make sure that happens.
I support this tidying-up measure and, in particular, the ending of the outrageous practice of a number of companies profiteering at the expense of NHS patients, but this debate has also raised a much bigger issue about how we in this country afford groundbreaking treatments that keep our loved ones alive.
Dr James Davies (Vale of Clwyd) (Con)
It is a pleasure to speak in support of the Bill, which affects my constituents in north Wales as it applies UK-wide. It is an example of the Government responding reasonably quickly to issues that have been brought to their attention, and they deserve some credit for that.
My principal reason for supporting the Bill relates to the vast increase in the costs of certain off-patent drugs, as we have heard today, and its impact. I first had contact with constituents in June about a loophole in existing regulations resulting in some old generics being hiked up in price by up to 12,000% over the course of eight years. This followed the investigation in The Times in which 50 drugs were identified as costing the NHS about £262 million a year. To put that into perspective, it is equivalent to 7,000 junior doctors. I believe that there have not been similar price increases in mainland Europe, interestingly, which tends to suggest that we have some failures in our regulations. We also discussed this matter in the Health Committee and we saw evidence of correspondence that had highlighted it for at least one year.
We should not refer just to costs, of course. There are also big impacts on patients when their drugs are withdrawn. That issue hit home when I met a constituent, Eira Roche, at one of my constituency surgeries in the summer. She has given me permission to talk about her story. She was diagnosed with hypothyroidism—an underactive thyroid—in 2006. She had the typical symptoms of weight gain, thinning hair and brittle nails. She was tired all the time, she had pain all over and she had a low mood. She was prescribed T4—thyroxine—which is the usual treatment in such circumstances. She was also given a cocktail of other drugs, because the T4 simply did not work. She was on quite strong medication for an extended period.
Eira saw her endocrinologist at Glan Clwyd hospital in my constituency in 2014, and he started her on a drug called T3—liothyronine—which she describes as an absolute revelation. In fact, she said that she was much better than she had been for years: her brain fog lifted and her energy levels soared. When she tried to reduce the dose of the drug, she found that her symptoms began to return and she had to have some time off work. She is now a teaching assistant and caretaker at Ysgol Bodfari.
The drug Eira is taking, liothyronine, was acquired from GlaxoSmithKline in 1992 by Mercury Pharma, which is now part of AMCo. To put the costs into perspective, a packet of the drug cost £34.65 in 2011, but this year the cost is £258.20, which is a 645% increase. Shockingly enough, that increase is relatively insignificant compared with some other examples, but it is still quite significant. I understand that drugs costing £3.4 million a year in 2010 now cost the NHS over £20 million a year.
My local health board, Betsi Cadwaladr University Health Board, is understandably concerned, as are other parts of the NHS in the UK, and it has looked at withdrawing the drug. That makes Eira feel very anxious. She is worried about the impact on her colleagues if she is unable to work, and about the impact on her pupils with special educational needs and other needs. She also has two children of her own. The Department of Health has asked the Competition and Markets Authority to investigate this issue. That may or may not result in a good outcome, but it is not a sustainable way forward: it will not close the loophole or stop the same thing happening again. That is one reason why we need this Bill.
The generics market is generally competitive, with fair prices for all. I believe it accounts for £4 billion of the £15.2 billion spent by the NHS on drugs per annum. However, the £4 billion figure represents a 20% rise during the past five years. There is a statutory system, which can in theory control the prices of both branded and generic drugs, but there is the loophole I have mentioned.
The loophole involves old generics that are usually available via one manufacturer or supplier that also happens to market branded drugs and is a member of the voluntary pharmaceutical price regulation scheme in relation to them. Their membership of the PPRS means that, under existing legislation, they cannot currently be subject to the statutory scheme, even for their generic drugs. There are concerns that this loophole has been actively exploited by some. Indeed, it has been a deliberate business model to purchase off-patent medicines for which there are no competitor manufacturers—in other words, where there is no competition. Hon. Members might ask why other drug companies have not sought to manufacture such drugs if they are sold in such large quantities. Introducing new competition is not always feasible, however, because of the time it takes to obtain a rival licence from the Medicines and Healthcare Products Regulatory Agency, and because the size of the market is often small once such medications are produced and the manufacturing process is often difficult.
I support a change in the primary legislation—the National Health Service Act 2006—to allow the Government to consult on and bring forward the enforcement of statutory controls on all generic drugs to require companies, if necessary, to reduce the price of the drugs or to impose other controls. This amounts to an extension of the existing deterrent powers that the Secretary of State has not yet used to direct the prices of drugs that already fall under the statutory scheme. Assuming the Bill receives Royal Assent early in 2017, we would need investigations and discussions with the companies concerned where issues have been raised. It is important to be fair not only to the taxpayer but to such companies. If not, there remains the ultimate risk that such products are taken off market.
Where does that leave my constituent, Eira? I am sure she is hoping that the Bill will go through. She will be looking to the CMA to come forward with some good news. She may be tempted to purchase the liothyronine from abroad or online. Interim prescriptions to allow patients like her to continue to receive her prescription need to be considered. If the Government feel that the drugs can be acquired at a much better rate—from abroad, for instance—such people would very much appreciate assistance in doing so. For everyone, the routine and systematic monitoring of drug costs will clearly be important.
I will briefly mention the two other principal elements of the Bill. The first is the proposed change to the statutory scheme. In autumn 2015, the Secretary of State issued a statutory consultation on strengthening the statutory scheme. The Bill proposes to bring the statutory scheme in line with the voluntary 2014 PPRS for all manufacturers or suppliers that are not PPRS members. There are 166 companies currently represented in the PPRA, and £8 billion is currently spent through that mechanism. Interestingly, £647 million is brought back to the taxpayer each year when the agreed cap is exceeded. There are just 17 companies in the statutory scheme, through which £l billion is spent. There is evidence of companies switching from the voluntary to the statutory scheme for financial reasons, meaning that there is an £88 million annual loss to the taxpayer. It should be borne in mind that these companies are mostly small and non-UK domiciled ones.
Changes to the statutory scheme will require companies to make payments back to the Department of Health based on their level of sales to the NHS—this can be in addition to other mechanisms—whereas the existing statutory scheme operates via a cut to the published list price, which is currently set at 15%. The existing statutory scheme therefore brings in less money, but also results in inequity to companies, risks to supply and uncertainty of financial outcomes for complex reasons that, fortunately for hon. Members, I will not go into. The Bill also proposes new penalties for non-compliance and for the recovery of payments owed through the courts. Ultimately, the Bill creates a more level playing field between companies in the two schemes. It merely extends what is in place for the vast majority of companies, so it is not in any way unreasonable. I do not believe there should be major concerns with regard to the impact on research and investment.
The other element of the Bill involves information powers. The Bill brings together the information requirements for NHS medicines and other supplies in one place in the 2006 Act. It will enable the Government to make regulations to obtain information on the sales and purchases of medicines and other medical supplies from all parts of the supply chain—from the manufacturer to distribution to the pharmacy—for defined purposes. This will improve the data that inform reimbursement arrangements for community pharmacies and GP practices. We hope that it will help to ensure value for money for the NHS.
These are positive proposals, but it is important that they are not overbearing on the companies concerned. In particular, I want to make the case for medical technology and devices businesses, which have not been subject to such data collection in the past. The Secretary of State has given us some reassurances about that today, but we need to recognise that a large proportion of them—99%, I think—are small or medium-sized enterprises, so we need to work with the industry to develop appropriate regulations. We need to avoid onerous and certainly routine data collection beyond what is already required by Her Majesty’s Revenue and Customs.
In summary, I support the principles of the Bill—in fact, the Association of the British Pharmaceutical Industry largely supports the Bill as well—but the detail will be subject to consultation during 2017. I look forward to scrutinising the progress of the Bill over the coming months.
Kevin Foster (Torbay) (Con)
It is a pleasure to follow my hon. Friend the Member for Vale of Clwyd (Dr Davies) and to hear many of the points he made. He spoke of the NHS spending £262 million a year on 50 drugs; that is actually £262 million extra that we are spending on those drugs courtesy of the greatly increased prices. That really brings home the problems here and why the Bill needs its Second Reading.
As many hon. Members have already focused on a range of issues, I will focus in particular on generic drugs and some of the huge price increases we have seen. It is right to say—and this was perhaps touched on by the Secretary of State in response to the intervention by the hon. Member for Wolverhampton South West (Rob Marris)—that it is not unreasonable for a pharmaceutical company to make a profit in exchange for investment in developing a new drug and bringing it to market. But that is what our patent system is for. The patent is there to protect for a period of time the ability of the company to charge a reasonable price to reflect the risk it took in its investment.
The key point is that the drugs we are considering are now out of patent. The company has had a reasonable period of time to make its investment back. The issue is that there is only a very limited supply of them. It is only right that we deal with what is an emerging business model. There can be no two ways about it. Some of the names on the list of companies, such as AMCo and Atnahs, seem consistently to have unusually high increases in prices, in the thousands of per cent. It is clear that a business model is developing to take advantage of a loophole in the legislation and ultimately not to make a profit but to profiteer, at the expense of the NHS and people who need those treatments. I am sure we can all think of instances where drug company lobbying points to patients who are unable to get treatment; this is exactly the sort of thing that means people cannot get treatment.
It was highlighted earlier that it is slightly ironic that here we are, as Conservatives and under a Conservative Government, arguing for price controls. But this is not about intervening in a market but about intervening to deal with market failure, where the normal procedures of competition are not producing a fair or reasonable outcome either for the NHS or for the patients on whose behalf we are providing products.
I went to see the amazing work being done on brain tumour research at Plymouth University recently—the skills and the groundbreaking research that will bring real benefits. But that is not the business model of the companies the Bill deals with. Their model is to look for a drug that needs to be prescribed and has only one supply, then buy it, get hold of the supply and jack the price up. That is nothing to do with delivering new and innovative products. The Bill is therefore very welcome, as it looks to intervene in that situation.
It is also right that to be able to tackle the problem we need information. Let us be blunt; if a company is looking to put its product price up by 12,000% it is not going to be particularly co-operative with an inquiry into whether that is fair, so it is right that the Secretary of State will have powers to require that more information be supplied.
Rob Marris
I am grateful to my new friend, another socialist, for giving way. May I tempt him to suggest some other areas of the economy where he and what I must now call his Christian Democrat fellows would be prepared to address the issue of profiteering, as we on the Opposition Benches would?
Kevin Foster
The hon. Gentleman tempts me, but I see you are now in the Chair, Mr Deputy Speaker, and you are very tough on any irrelevant points or points off subject, so that could be very dangerous territory.
Kevin Foster
That is good to know.
We have seen work the Government have done in other sectors, for example, on information in the energy sector. The Bill deals with a particularly unique practice, where there is, in effect, only one customer, the NHS, and only one supplier. I am struggling to think of many other industries where that is replicated. That is why these price rises are so disgraceful. This industry is about profiteering from illness and pain. There is nothing else like that.
Rob Marris
May I suggest another industry it might be worth looking at, where this situation obtains, namely the defence supply industry—not all of it, but parts of it?
Kevin Foster
I thank the hon. Gentleman for that intervention. As a member of the Public Accounts Committee I have spent plenty of time looking through examples of defence procurement that went wrong. The Minister might be new to the Department of Health but he certainly is not new to defence procurement. It is noticeable that much of what now makes its way to the PAC for a review of what went wrong concerns legacy issues—for example, the military flying contract—rather than modern procurement. But I am conscious that with Mr Deputy Speaker in the Chair I need to get back to the price of drugs for the NHS.
Looking through the evidence it is clear that the current system of regulation is not effective. Companies can, in effect, put their branded products into the voluntary scheme and use that as a way of jacking up costs for their generic products. That is just not right. As other Members have touched on, we are facing demands and pressures on the NHS. I have no problem with companies that give a good service charging a fair price and making a fair return on their investment.
That is clearly not what is going on with this business model. We can see numerous examples, in particular in the chart put together by the House of Commons Library, which shows increases of thousands of per cent. across a number of products. It is impossible to believe that such increases are going on for any of the input materials for those products. As we have said, this is flagrant racketeering and profiteering at the expense of patients and of people in pain. Even if the drug is still provided, that money should have been spent on other NHS services.
I am therefore pleased at the almost unanimity breaking out in the House on the proposals. They will clearly need to be discussed in more detail in Committee. But it is the right time for the Bill. It is not about tackling fair and legitimate profits but about getting rid of profiteering, which is why it has my full support.
Maggie Throup (Erewash) (Con)
It is a pleasure to be called to speak and to follow my hon. Friend the Member for Torbay (Kevin Foster).
From what I understand, the Bill will close the loopholes and gaps that so obviously exist in the current powers attributed to the Secretary of State; hon. Members who have spoken before me highlighted many of those. The measures are important, to ensure that we have value for the taxpayer across the medicines budget, but I take issue with the inclusion of medical supplies and “other related products” in clause 6. The clause introduces a new information power for the Secretary of State. Although I welcome that in principle, I fear it may prove quite onerous for the many small and medium-sized enterprises that supply on this side of the business and dominate the medical supplies industry.
I am sure that much of the required information is already collated by each company, but it is important that it can be transmitted easily and in a timely fashion. I listened carefully to the Secretary of State. He implied that he does not want these measures to be burdensome, but I seek the Minister’s assurance on that. As my hon. Friend the Member for South West Bedfordshire (Andrew Selous) highlighted, the ability to use the data effectively is also important. There is no point in collecting lots of data and not being able to use them.
Rob Marris
Coupling those two points together, does the hon. Lady agree that it might be advisable for the Government to look at some sort of threshold—say, a turnover threshold for a company—below which the information would not have to be supplied or might instead be supplied to a lesser extent or in a lesser quantity? That would address the issue of how onerous the requirement might be, but could also address the issue of whether the Government have the capacity to crunch the figures thereby generated.
Maggie Throup
The hon. Gentleman makes a very good point. There is already a cut-off for some of the data collection of, I think, a turnover of £5 million. Perhaps we could have clarification on that.
What concerns me more is who will define what is classified as medical supplies and other related products. As the hon. Member for Wolverhampton South West (Rob Marris) alluded to earlier, how long is that piece of string? Proposed new section 264C to the National Health Service Act 2006, which is inserted by clause 6 and supplements proposed new sections 264A and 264B of that Act, requires the Secretary of State—I quote from the explanatory notes to the Bill—
“to consult any body (such as the Association of the British Pharmaceutical Industry) which appears to the Secretary of State to represent manufacturers, distributors and suppliers of health service medicines, medical supplies or other related products required for the purposes of the health service in England or the United Kingdom before making any regulations under section 264A or 264B.”
That is quite a mouthful.
If the definition of “medical supplies” is unclear, how will the Secretary of State know who to consult? He indicated that he has already had discussions with medicine and medical devices suppliers, but I fear that there might be many more product areas out there that have been missed out of the initial discussions. I therefore ask the Secretary of State to provide clear guidance on what he understands as
“medical supplies and other related products”.
For example, do they include in vitro diagnostic products? This is an area of medical supplies with which I am very familiar. If they include IVDs, will he agree to consult the British In Vitro Diagnostics Association, the trade association that represents this industry across the UK? This is an important area of the life sciences industry, with nearly 900 million pathology tests performed every year and approximately 70% of every clinical decision being made using some form of IVD. If they are to be included in the Bill, it needs to be around the table to participate.
I conclude by saying that in general terms I am in favour of the Bill, as it will ensure good value for money for the taxpayer and, ultimately, the patient. At the end of the day, we need to be thinking about the patient. Clarification is required on various parts of the Bill, but I am sure that that will be sorted out in Committee, and I am happy to support it.
Jo Churchill (Bury St Edmunds) (Con)
It is a pleasure to follow my hon. Friend the Member for Erewash (Maggie Throup).
We all know the background and I will not waste everybody’s time by going over it again. We know about the ageing population and about bearing down on the costs, to which my hon. Friend the Member for Salisbury (John Glen) and the right hon. Member for North Norfolk (Norman Lamb) alluded earlier. We know that advances in science are going faster than we can legislate. One of my local clinical commissioning groups, Ipswich and East Suffolk, suffered an exorbitant increase in Epanutin capsules two years ago and had to find another £600,000 in six months. Looking at drugs more widely, as my hon. Friend the Member for South Suffolk (James Cartlidge) mentioned earlier, not prescribing paracetamol in that particular CCG would save £1 million a year.
The measures in the Bill aim to manage the cost of drugs. The measure on efficient data collection, so that we start to have good decision making based on evidence, is also most welcome. Last autumn, the Secretary of State consulted publicly on how to address the problem of excessively priced unbranded generic medicines, and the industry and others fed back. They were glad of the dialogue. As I said, drug costs are unsustainable. A saving of some £90 million per health area was identified. My own CCG area could save £1 million per annum from unused repeat prescriptions. Nationally, it would mean that more than 12,000 more community nurses could be employed. We need to start making these decisions about where we want to be spending our money. With the pressure on social care, something alluded to by the right hon. Member for North Norfolk, these are decisions we are going to have to make as a Government and as patients.
The current system allows for some to be inside and others to be outside the system. That limits its robustness. It is for this reason that I support the Bill wholeheartedly. The system does not target those who do not play fair and we need to stamp down on them. It is better patient outcomes that I am passionate about. We all play a part, including the pharma industry, due in no small part to the unique infrastructure in this country. This industry is important to us. As my right hon. Friend the Member for Chelmsford (Sir Simon Burns), my hon. Friend the Member for South West Bedfordshire (Andrew Selous) and my right hon. Friend the Member for Cities of London and Westminster (Mark Field) have all alluded to, we need to be supportive of those companies that work positively for patients and engage in trying to find solutions. Indeed, the Association of the British Pharmaceutical Industry supports the Government increasing their powers where market failure has occurred. There is a balance to be had to ensure that new drugs are developed.
That brings me to the matter of repurposed and off-label drugs, those that have another use than that for which they were originally formulated, for example Everolimus, Rituximab, Cycloserine, Viagra and Thalidomide. As the hon. Member for Wolverhampton South West (Rob Marris) said, Thalidomide was originally developed for morning sickness. Lately, it has been found to be very beneficial for the treatment of some cancers and skin conditions. We need to understand new uses for approved drugs for the speediest of transitions from bench to bedside. As they have not gone through new trials, we need to be mindful that they are not new drugs; and just because the target is, for example, prostate cancer and not breast cancer, these drugs should still be costed accordingly.
Dr Philippa Whitford
I wonder whether the hon. Lady remembers the time we spent in the House last November debating the Off-patent Drugs Bill. I flagged up the concern that a doctor prescribing a drug with a licence for a use takes precedence over an off-patent drug that may actually be the same. With the sort of gaming we have seen, there is a real concern that drug companies will tweak a drug in the slightest manner and then start selling it to the NHS at hundreds and thousands of pounds, when in actual fact an off-patent drug would do the same job. That has still not been dealt with.
Jo Churchill
I thank the hon. Lady for making the point so succinctly. I am also grateful to the Secretary of State for his clarification and the comments that have been made about the medical technologies industry, which I believe needs looking at. I would be grateful if we could know whether the savings made are likely to be reinvested in patients, particularly given my position as chair of the all-party group on personalised medicine, and in the latest medicines and treatments.
The Bill is designed to stop individuals making vast sums of money and taking advantage of a loophole. I back the Government’s aim of value for money and fair prices for optimum patient outcomes. I am heartened by the cross-party support for the Bill and look forward to it making positive progress.
Barbara Keeley (Worsley and Eccles South) (Lab)
I thank all Members who have made contributions to the debate. We find ourselves in a situation where we have some time available, which is amazing.
Let me refer to the interventions we heard in the early part of the debate, because a range of interesting points have been raised. The hon. Member for Totnes (Dr Wollaston) made the point that the Bill provides the opportunity to look at drugs that have not been licensed, such as Lucentis and Avastin, which is not licensed for age-related macular degeneration but is so needed by that group of people. I was pleased to hear the Secretary of State say that he would look at that.
My hon. Friend the Member for Wolverhampton South West (Rob Marris), in a number of amusing interventions, talked about policy on profit control of the pharma sector and found that the Conservative party is marching on to the centre ground—or has perhaps gone past the centre ground.
My right hon. Friend the Member for Leicester East (Keith Vaz) talked about the proportion of the NHS budget spent on dealing with diabetes. He was concerned about the increase in the drugs bill and suggested the use of structured interventions, not just more drugs, because such a large proportion of the NHS budget is being spent on diabetes.
My hon. Friend the Member for Alyn and Deeside (Mark Tami) made the important point that we need to ensure the measures in the Bill do not act as a disincentive for pharma companies to conduct research into rarer conditions. I think that hon. Members who have contributed know we are walking the line in terms of making savings but making sure there are not disincentives.
The right hon. Member for Chelmsford (Sir Simon Burns) welcomed the Bill. He talked about our ageing population—we returned to that with our last speaker—and the increasing drugs bill. He talked about the importance of new drugs, but also the need to deal with unacceptable profiteering, something referred to by a number of Members.
The hon. Member for Central Ayrshire (Dr Whitford) talked about the UK having the biggest research network in the world. She talked about change and the fact that the pharma companies would be nervous and anxious. She welcomed the tidying up aspect of the Bill and I think the general view of Members in all parts of the House was to welcome that. Like a number of hon. Members, she talked about not just enabling the management of cost pressures but doing something more radical. That has been a real flavour of the debate: using this as an opportunity to do something different. I agree with her concerns about the data collection aspects of the Bill and I will say more about that. I also agree that we need to do something more radical. She talked about tackling the five-year delay to access new medicines and rightly pointed out that that is probably where our poorer survival rates are coming from.
The hon. Member for South West Bedfordshire (Andrew Selous) commended The Times for investigating this issue. He also talked about the information powers and questioned whether the Department of Health had the analytical ability to use the data being gathered. That is an important question. If new data needs to be gathered, what are we going to do with it?
The right hon. Member for North Norfolk (Norman Lamb) acknowledged the value of the competitive market, but talked about the sometimes outrageous increases in the price of generic drugs—and we have heard some staggering examples today. He gave the example of a rise of £600 per item dispensed in one particular case, and he hopes, as other hon. Members do, that the Competition and Markets Authority will take action. That has been a key theme in tonight’s debate.
The right hon. Gentleman also talked about not wanting to pit the needs and interests of some patients who need drugs such as PrEP against those who need other drugs. I agree, and I do not think that we should go there in our debate. He spoke about the slippery slope when we get into debating whether to delay adopting even approved treatments. In his view, that provides more evidence that the NHS needs more resources.
The hon. Member for Vale of Clwyd (Dr Davies) talked about the impact on his constituent of a drug prescribed to her that helps her to work and increases her energy levels, the cost of which has increased by 645%. We must maintain a focus on the impact on individuals of the decisions that we make. She has found a drug that suits her, and it would be dreadful for her if it were withdrawn. The hon. Gentleman also talked about the difficulties of introducing new competition into the market. His constituent is hoping that the Bill goes through, as are many others here tonight, and wants action on competition and markets. Let us all hope this goes through.
The hon. Member for Torbay (Kevin Foster) talked about intervention to deal with market failure. In his view, we need to separate out the companies that are doing good research, such as the brain tumour research that he has recently seen, and those that have nothing to do with producing new and innovative products, but are just making money.
Rob Marris
I would like to cite for my hon. Friend and the House the Library briefing, which shows that it is not exactly as cut and dried as the hon. Member for Torbay (Kevin Foster) seemed to think. It tells us that the Competition and Markets Authority took action against pharmaceutical companies with regards to generic pricing, and that GlaxoSmithKline and a number of other companies were fined £45 million when it was found that payments had been made in order to prevent the antidepressant medication Paroxetine being offered on the generics market. GSK is a great pharma company for coming up with new drugs, but it crossed the line in this case, according to the Library briefing, so it is not always either/or when it comes to these pharma companies.
Barbara Keeley
No, but I think the hon. Member for Torbay was talking about companies that are not doing any research, but just buying up generic products and profiteering from them. There has been general condemnation of those sort of companies on all sides.
Kevin Foster
I want to be clear about this point. I think the shadow Minister would probably agree that certain names keep on popping up, particularly in The Times investigation, of companies that seem to be regularly involved in some of the most eye-watering price increases and involved in the mixed model. This Bill is about tackling anyone else who might be thinking of following that kind of business model as a way of exploiting the NHS for money.
Barbara Keeley
Very much so.
The hon. Member for Bury St Edmunds (Jo Churchill) welcomed the Bill and talked about the fact that individual CCGs could save £1 million on unused repeat prescriptions. A number of different forms of savings could clearly be made. She talked about the pressure on social care, and I join her in my concern about that. The right hon. Member for Chelmsford spoke earlier about an ageing population and the need for drugs, but older people also do not want to be isolated. It is worrying that 16,000 cases of malnutrition were found last year with an average age of 64 among those cases. People need social care, and I hope that the new Chancellor will listen and bring forward funding for social care in the autumn statement, because people need more than drugs.
As my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) made clear earlier, Labour supports the broad aims of the Bill and what the Government are seeking to achieve—better control of the cost of medicines. However, as my hon. Friend also outlined, we have a number of concerns, and I hope that the Minister will address them in his closing speech.
As well as taking the understandable measures to collect pharmaceutical data and manage costs, the Bill also introduces provisions to manage the purchase of other medical supplies. I was glad to hear the Secretary of State raise in his opening speech the issue of the impact on the medical supply sector, but I have heard concerns expressed that the medical technology sector sees the new information measures as “onerous”. The hon. Member for Erewash (Maggie Throup) mentioned that, too. There is a concern that measures in the Bill fail to take into account the unique characteristics of medical devices and the medical device industry. I hope that they will start to be taken into account as the Bill progresses. There is seen to be a danger that the measures will put additional burdens on that sector and the NHS, and lead to higher costs. I hope that that is not the Government’s intention; it would be ludicrous if costs were increased by a Bill that is designed to manage them.
We need to bear it in mind that the medical technology industry employs around 89,000 people in the UK, has an annual turnover of over £17 billion and has seen employment growth of around 11% in recent years. Some 99% of the UK’s 3,310 medical technology firms are SMEs, with 85% of them having a turnover of less than £5 million. The cap levels at which data could be collected were mentioned earlier. We should bear it in mind that we are talking about an awful lot of small companies.
The Bill imposes a regulatory burden on all companies in the supply chain. The reporting requirements will affect all firms producing medical supplies, including the very small organisations. The issues we have extensively discussed on pharmaceutical pricing bear no relation to the price of other medical supplies. The example of a particular type of product was mentioned earlier, but they are or seem to be treated the same way in the Bill.
On the scale of the burden being imposed, the Government’s impact assessment is not much help. It says:
“The main costs will be on manufacturers, wholesalers and dispensers. These costs have not been quantified, as their magnitude will not be known until after consultation on subsequent regulations.”
Measures seem to have been bolted on to this Bill, as Members have mentioned, at the last minute, but because they could have a negative impact on the medical technology sector, we need to be very aware of them. The new information powers proposed by the Government are being put forward at a time when manufacturing firms are going through the uncertainty surrounding this country’s leaving the EU. These measures can only add to that uncertainty. As I said, 99% of the medical technology firms are SMEs, with 85% of them having a turnover of less than £5 million.
Notes on the financial implications of the Bill put forward a curious position that
“no policies will be directly implemented as a result of these changes. Their implementation would require additional future changes to secondary legislation and additional Impact Assessments to assess their cost effectiveness.”
Ministers are asking us to change primary legislation to give the Government new information powers, but the details and impact of those new powers on the supply chain will emerge only in future. That level of uncertainty is unacceptable, and we will seek to amend the relevant clauses in Committee if we feel that this still needs to be resolved.
Importantly, the information powers will also impact on dispensing GPs and pharmacists. I note that the BMA was not represented at the workshop held by the Department of Health on the information powers. We wait to hear, but I would find it unusual if our hard-pressed dispensing GPs would welcome the additional work required of them to provide and disclose information to the Government.
The other part of the supply chain affected by the new information powers will be pharmacists. The Government have just imposed punitive cuts on pharmacists, which we discussed in the House last week. I am still deeply concerned about those cuts. Ministers do not seem to understand what they are doing to the sector. On Friday, an independent community pharmacist in my constituency told me that he estimated that the Government cuts would cost him £86,000 a year, and that he envisaged an average cut of £60,000 for many pharmacies. That will certainly mean staff cuts, but it also means potential bankruptcies for the pharmacies that will be hardest hit.
In relation to that, and the new information powers that the Bill imposes, Pharmacy Voice told me that
“small volume pharmacies are the hardest hit by the proposals and many face a funding cut of around 20% in 2017/18 from the imposition of cuts announced…They do not have teams of administrative staff who can respond to demands for information, and the likelihood is that the NHS would insist on information being provided in a specific format.
It could be information that they do not currently analyse. For example, when a pharmacy buys stock for dispensing, it may also include purchases of medicines for sale over the counter. The overall discount the pharmacy gets on the order is not allocated to each item, and pharmacies could not provide the actual price paid per item.”
On behalf of the pharmacists that it represents, Pharmacy Voice wants to ensure that the cost of meeting the Government’s information requirements is fully funded by the NHS. It feels that the imposition of cuts has already jeopardised the future of the pharmacy sector, and that of small pharmacy businesses in particular. Can the Minister assure me that the cost of the information that must be gathered under the new information powers will not impose an additional burden on pharmacists?
The Labour Opposition support the broad aims of the Bill and the measures to control the costs of medicines, but, as I said earlier, we are concerned about the information powers that the Government want to take, which are considered to be “onerous” by the medical supplies sector. We want to be reassured that they are not. The work and the costs involved could deal yet another blow to the pharmacy sector, which, as I have said, is still counting the costs of the Government’s imposition of funding cuts amounting to 12% for the rest of this year and over 7% next year. We will table amendments in Committee relating to the work and the costs involved in information-gathering.
We also ask Ministers to give serious consideration to using all future rebates from the pharmaceutical sector to improve access to treatments for patients. A number of Members have referred to the need to examine that much bigger issue of access to drugs and treatments, and I hope that Ministers will take the opportunity to do so as the Bill progresses.
The Minister of State, Department of Health (Mr Philip Dunne)
What a great pleasure it is, Mr Deputy Speaker, to stand before you after this important debate, with a little time in which to satisfy as many Members as I can, while recognising that the Committee stage will begin shortly and we shall then have an opportunity to discuss points with which I cannot deal today. I thank everyone who has taken part in the debate. We have heard a number of excellent contributions, some of which showed a surprising knowledge of the intricacies of pharmaceutical pricing but were none the less very welcome.
The Bill deals with a treasured national institution, our national health service, and with the need to secure the best possible value for the taxpayer. Medicines represent the second largest cost to the NHS, after staff, and it is important that we do not pay over the odds. The level of interest and the quality of the contributions that we have heard today have shown how important that is to all Members. I find it refreshing that a debate involving the NHS should feature the degree of consensus that has erupted across the House today. I am led to believe that—as has been pointed out by other Members—this is a relatively unusual occurrence, so I shall enjoy it for as long as I can.
The debate reinforces the principles of securing the best possible value for the NHS, making decisions on the basis of good-quality information, and supporting this country’s innovative pharmaceutical industry, to which several Members have referred. Those are principles on which we can all agree. However, the debate has raised a number of other issues, some of which I hope to clarify for the benefit of Members who have commented on them. In one of her closing comments, the hon. Member for Worsley and Eccles South (Barbara Keeley) sought to link last week’s announcements about community pharmacy funding with the Bill. I can reassure her that there is no link whatsoever between the Bill’s provisions on information collection and the announcement about decisions on community pharmacy funding. The funding changes will come into effect in December and are not reliant on any of the provisions in the Bill, and the provisions in the Bill will not change those decisions.
Barbara Keeley
Perhaps I was not clear enough, but I was not making that point. I was making the point that the cuts imposed by the Government will mean that some community pharmacies—the smaller ones; the independent ones—will not have the necessary staff. If the Government are imposing a new information-gathering requirement, who will carry out that task? As I said, there may be staff cuts amounting to between £60,000 and £80,000, and people will simply not be able to absorb a new requirement.
Mr Dunne
Just to reassure the hon. Lady, I can tell her that the establishment cost for each pharmacy is currently £25,000, and there will be a reduction in that cost rather than a much larger cost. She must be referring to companies that have several establishments, rather than to individual ones. I will touch on the points that she has raised about information gathering in a moment.
We have heard a number of allegations during the debate, starting with those made by the hon. Member for Ellesmere Port and Neston (Justin Madders), who I am sure will be joining us shortly, that the Conservative party appears to have broken out in a rash of Corbynism. I can assure the hon. Gentleman categorically that that is not the case. What we are seeking to do through the Bill is address points, which have been made by hon. Members on both sides of the House, about the potential for exploitative pricing, particularly of unbranded generics that are of low volume, in circumstances where there is no competition from an alternative supplier in the market. I believe that there is considerable agreement on that across the House.
I welcome the support for the Bill from the Labour Front Bench, from the Front Bench of the Scottish National party and from the Liberal Democrat spokesman, the right hon. Member for North Norfolk (Norman Lamb). They all support the principles behind the Bill. I look forward to what I hope will be a rapid conclusion to proceedings on this short Bill in Committee. Doubtless hon. Members will be raising important points in Committee, but I am sure that we will continue to have constructive contributions throughout.
The hon. Member for Ellesmere Port and Neston mentioned difficulties of access and funding for new medicines. These points were also raised by the hon. Member for Central Ayrshire (Dr Whitford). The NHS is investing in innovative medicine and, in the first year of the current voluntary scheme, medicines covered by the innovation scorecard saw an increase of more than 18% compared with growth of about 5% in medicines not on the scorecard. That illustrates that we are prepared to fund patients’ use of innovative medicines under the existing scheme. However, we recognise the need to continue to ensure patient access to new medicines. That is why my right hon. Friend the Secretary of State referred earlier to the accelerated access review, which was announced earlier today. That will accelerate the speed at which 21st-century innovation in medicine and medical technologies can be taken up by patients and their families through the NHS. That will present a real advantage—bringing forward innovations from pharmaceutical companies, not only in this country, and driving them through for use in the NHS.
A number of hon. Members have referred to the investigative work of The Times in helping to highlight the problems with unbranded generics. I would like to add our welcome to the investigation that was undertaken by those journalists, but gently to point out that the Government were already aware of some of the problems. Indeed, we published a consultation in December last year raising that issue, and I think it was partly in the light of that that The Times decided to do its work. I do not wish to decry that work in any way, however. It was clearly helpful.
We have referred cases to the Competitions and Markets Authority, as the hon. Member for Wolverhampton South West (Rob Marris) mentioned. The CMA has imposed fines in one case, as he said, and it is expecting to reach a final decision on another in the coming months. Two more cases were opened in March and April this year. We are looking to refer examples of bad practice to the relevant authorities when we come across them.
The hon. Member for Central Ayrshire asked how the data collection would work. That point was also raised by other hon. Members. We already collect significant data from the supply chain for medicines under the voluntary scheme and the statutory scheme. We collect data from manufacturers and wholesalers of generics, and from pharmacies themselves. As part of developing the regulations, and of the consultation that will take place before we introduce the scheme, we are looking to identify as many automated data collection solutions as possible, in order to minimise the burden to which the hon. Member for Worsley and Eccles South referred. In particular, we recognise that some of the medical products companies are small companies, and we want to make their burden as light as possible.
The hon. Member for Central Ayrshire referred to the devolved Administrations and how we will work with them. Our intention is that they would be able to access data not on a timing of our choosing, but as they require, and that, again, will be undertaken in a manner that we hope to capture in a memorandum of understanding so that there is clarity between each Administration and ourselves as to how that will work.
The right hon. Member for North Norfolk asked in particular about how we intend to control the medicines bill overall, and a number of Members have mentioned that. The cost of medicines across the NHS is rising quite rapidly. That is a concern, and it gets to the heart of why we have sought to introduce this legislation.
We are looking in the first place to align the statutory and the voluntary cost control schemes for the supply of medicine. At present, companies may decide to join either scheme depending on the other benefits they perceive in the schemes, but we believe that the financial benefit to the NHS of each scheme should be the same. Our proposals will put beyond doubt the Government’s powers to amend the statutory scheme to achieve this objective, which the impact assessment has indicated should save the taxpayer some £90 million a year. Draft regulations of these provisions will be available at the Committee stage.
The second element of the Bill strengthens the Government’s powers to set prices of medicines where companies charge unreasonably high prices for unbranded generic medicines. In most cases, competition works well to keep prices down. However, when it does not, and when companies are making excessive profits, the Government should be able to take action. This Bill closes a current loophole in the legislative framework. We are all agreed across the House that we cannot allow profiteering at the expense of the NHS.
Thirdly, the Bill will strengthen the Government’s powers to collect information on the costs of medicines, medical supplies and other related products from across the supply chain. Putting existing voluntary provision of information regarding medicines on a statutory footing will enable the Government to set more accurately and fairly the reimbursement arrangements for community pharmacies and dispensing GPs. In addition, the power will provide vital data to underpin the reformed statutory scheme for controlling medicine pricing, and will give us more evidence about whether companies are making excessive profits at the expense of the NHS.
I want to reiterate what my right hon. Friend the Secretary of State said in his opening remarks to assure the House about the impact of the information powers on the medical technologies industry. It may surprise Members, and in particular Opposition Members, that the powers to require information from suppliers already exists in section 260 of the National Health Service Act 2006—[Interruption.]—which the hon. Member for Wolverhampton South West says from a sedentary position he remembers bringing into effect, but we think that those enforcement powers are draconian and wish to make them more proportionate. The Government have never in fact used the powers under the 2006 Act, and we want to marry powers for information gathering with those we will have for medicines, so that there is no confusion in future about which information regime applies.
Rob Marris
First, may I say in passing that it does not sound very draconian if the powers have never been enforced? Section 260 of the 2006 Act refers to medical supplies and defines them, as I said earlier, as
“surgical, dental and optical materials and equipment”.
Will the Minister look at that definition, because it seems to me that it is not as wide as many people think, and therefore there is a way to get around it if certain technological companies wish to do so, such as the manufacturers of MRI scanners, which I do not think is the intention of the House. Will he look at that definition?
Mr Dunne
I think the hon. Gentleman may be making a pitch to the Committee of Selection and I would be delighted to see him committing his considerable intellect to this topic. I think we will spend much of our discussion refining the definitions of what information is appropriate and how it will be gathered.
The Government intend to table amendments to the Bill to reflect how the information-power provisions will apply in the devolved Administrations. The amendments will ensure that the Government can collect information that relates to devolved purposes and share it—with appropriate safeguards relating to confidentiality—with the devolved Administrations, enabling them to use the information for their own purposes. To avoid duplication, we have agreed with the devolved Administrations that the Government will collect information from manufacturers and wholesalers for the whole of the UK while each country will collect information from the pharmacies and GPs in their territories.
The degree of consensus and the support that we have received from across the House, for which my colleagues and I are extremely appreciative, has made this a remarkable debate. Medicines are a vital part of the treatments provided by our NHS. Robust cost control and data requirements are key tools to ensure that NHS spending on medicines across the UK continues to be affordable while delivering better value for taxpayers and freeing up resources, which supports access to services and treatments. The Bill will ensure a more level playing field for our medicine pricing schemes while ensuring that Government decisions are based on more accurate, robust information on medicine costs. This will be fairer for industry, for pharmacies and for the NHS, patients and the taxpayer. I am pleased to commend this Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Health Service Medical Supplies (COSTS) BILL (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Health Service Medical Supplies (Costs) Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 17 November 2016.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Proceedings on Consideration and up to and including Third Reading
(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.
Other proceedings
(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Andrew Griffiths.)
Question agreed to.
Health Service Medical Supplies (Costs) Bill (First sitting)
Tuesday 8th November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 8 November 2016 - (8 Nov 2016)
The Chair
I have to make a few preliminary administrative remarks. First, please switch off all electronic devices or put them on silent. Secondly, I know hon. Members understand this, but tea and coffee are not permitted during sittings. We will first consider the programme motion, which we discussed yesterday in our informal process. We will then consider the motion to allow us to deliberate in private to discuss our questions before the oral evidence sittings. I have not allowed the witnesses to come in now, to save time on their going in and coming out again. Then there will be a motion for the reporting of the written evidence for publication. I hope that we can take those matters formally, without debate, but that is a matter for the Committee.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 8 November) meet—
(a) at 9.25 am and 2.00 pm on Tuesday 15 November;
(b) at 11.30 am and 2.00 pm on Thursday 17 November;
(2) the Committee shall hear oral evidence in accordance with the following Table:
TABLE
Date | Time | Witness |
|---|---|---|
Tuesday 8 November | Until no later than 10.30 am | NHS England British Generic Manufacturers Association Association of British Healthcare Industries |
Tuesday 8 November | Until no later than 11.25 am | Association of the British Pharmaceutical Industry (ABPI) |
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 17 November. —(Mark Spencer.)
The Chair
The deadline for amendments to be considered at the first line-by-line sittings of the Committee, which will be on 15 November, will be 4.30 pm on Thursday 10 November.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Mark Spencer.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Mark Spencer.)
The Chair
Copies of the written evidence that the Committee receives will be made available in the Committee Room, and we will now sit in private to discuss lines of questioning.
The Chair
Good morning. We will now hear oral evidence from NHS England, the British Generic Manufacturers Association and the Association of British Healthcare Industries. Thank you for coming this morning. Before I call the first Member to ask a question, I remind all Members that questions should be limited to matters in the scope of the Bill and that we must stick to the timings the Committee has agreed to in the programme motion. For this session, we have until 10.30 am. Will the witnesses please introduce themselves for the record?
Warwick Smith: I am Warwick Smith, the director general of the British Generic Manufacturers Association and the British Biosimilars Association, which is a sector group.
Philip Kennedy: I am Philip Kennedy, the chair of the Association of British Healthcare Industries. We represent the medical device technology sector in the UK.
Dr Ridge: I am Keith Ridge, the chief pharmaceutical officer at NHS England.
Justin Madders (Ellesmere Port and Neston) (Lab)
Q This question is to Dr Ridge. The pharmaceutical bill has increased significantly in recent years—up another billion pounds in the last financial year. Could you give us some thoughts on why that has been the case?
Dr Ridge: I am absolutely delighted to do so. Just to emphasise some of the increases, I have brought with me the “Prescribing Costs in Hospitals and the Community” report from the Health and Social Care Information Centre, which is now part of NHS Digital. That organisation routinely publishes information on a range of things, including prescribing and drug expenditure. In the 2014-15 report—the latest one—it says that the overall NHS expenditure on medicine in 2014-15 was £15.5 billion, an increase of 7.8% from £14.4 billion in 2013-14 and nigh on 20% from £13 billion in 2010-11. In 2014-15, hospital use accounted for nearly 43% of the total cost—that is up from 40% in 2013-14 and 32% in 2010-11. From 2013-14 to 2014-15, the cost of medicines rose by 7.8% overall but by 15.4% in hospitals. This is a particularly important fact: the cost of medicines in hospitals has risen by some 59.8% since 2010-11.
I hope that emphasises where we are in terms of expenditure on medicines. There are a number of reasons for that. One is around an ageing population, with people living longer and multi-morbidities—more than one disease. Of course, in many ways we are very grateful to the pharmaceutical industry. I would say this as a pharmacist: medicines are a truly wonderful thing. They are also the highest expenditure in the NHS after staff, but they have delivered some really important therapeutic gains over the years.
When you look to the future in terms of how medicines in the specialised areas will change in nature, particularly at the reasons around ergonomics, personalised medicine and the ability to be able to target medicines, that will affect expenditure, with development costs in among that, but it will also affect how the pharmaceutical industry will price medicines. So there is a raft of reasons, largely clinical but also technological, from the past. Going forward, we are going to see more of that. Of course, that is set in the context of the NHS financial position and the gaps set out in the five year forward view.
Rob Marris (Wolverhampton South West) (Lab)
Q The new proposals suggest a £5 million threshold exemption for small companies. I wonder what your views of the appropriateness of the magnitude of that threshold are. Perhaps Mr Kennedy might lead on that because it is principally your bailiwick.
Philip Kennedy: Yes. Thank you. I would like to welcome the question. From our perspective at the ABHI, 99% of the medical device industry is made up of small to medium-sized enterprises, which are absolutely vital to the lifeline of the industry as well as to the whole country and employ some 90,000 people. There are over 3,000 companies. The definition of SME within that is companies that employ 250 people or fewer or have annual turnover of £50 million.
In the scope of these proposals, we believe that the considerations of the SMEs in the sector are absolutely crucial, not only to the health of the industry, for which you would expect us to be extremely vocal, but to the effectiveness of the NHS being able to benefit from the innovation and the good working relationship it has with SMEs in the sector. We feel that the potential to put in a layer of bureaucracy and cost is not good for the NHS and certainly not good for the SMEs that are largely representative of the sector.
Rob Marris
Q So what threshold would you have?
Philip Kennedy: I would have £50 million, which I think is a European definition of SMEs.
Maggie Throup (Erewash) (Con)
Q I have another question for Mr Kennedy, and anyone else if they want to add to it. Is the definition of medical supplies under the National Health Service Act 2006 sufficient, or do you think it needs to be clarified further?
Philip Kennedy: Again, I welcome the question. The definition envisaged here is extremely broad. It is difficult to define exactly what is a medical device or a medical technology. I think that some of the wording is “or any product”. I understand the desire to give this a wide scope, but it is extremely important that we differentiate between a medical device or a diagnostic product and a pharmaceutical or a generic pharmaceutical. They are quite distinct industries, very different in their structure and scope. We would welcome a much tighter definition and a tighter definition for the companies that produce those defined products of the intent—of what exactly is being asked of them by the legislation.
James Berry (Kingston and Surbiton) (Con)
Q We have had a submission from the British In Vitro Diagnostics Association, which says that if its products are included within the definition, it does not envisage that the new information required under clause 6 would be too burdensome and that much of the information that it would be required to provide is information that companies record anyway. Do you disagree with that analysis?
Philip Kennedy: I do disagree with that. From our members’ perspective, the data, as we understand it—we would greatly seek some clarity on exactly what data are being requested—are not routinely collected, particularly for small companies. Of course we collect data for tax purposes, productivity and all the usual parts of running a business, but data on profitability at a product level would be a huge additional burden for companies that are relatively small in scope. They would not normally do that. Even if the information was available, I am not sure how it would be analysed and reported on effectively, to give the information that is sought. We are happy to collect data to run our businesses, but the definition of what is being asked here is something that we would greatly appreciate clarity on.
Jo Churchill (Bury St Edmunds) (Con)
My question is to Dr Ridge and to Mr Kennedy. I have a concern about how the Bill might have an impact on pharmaceutical companies’ research and development, particularly in the light of medical innovations and how they are moving on. We do not want to stop that innovation with things such as pumps and so on. We know that we are trying to reduce the viscosity of insulin to get the pumps to work more effectively. How does this cover the case? Is it a medicine or an innovation? Can you give me a little more of your thoughts of how we pin things down? On the personalised front, are we future-proofing? Good legislation should be adaptive, I would argue, so that we do not revisit this.
Dr Ridge: In the first instance, I should make it clear that NHS England is very supportive of the proposals in the Bill and, indeed, the £5 million cut-off point around SMEs. We are also very supportive of innovation in the UK. For example, we have recently launched a scheme around innovation acceleration and the like. We want to see a thriving pharmaceutical and medical devices industry—that is, life sciences—more generally. There is no doubt about that.
The Bill will make a contribution to the financial challenge I mentioned. I am sure that in due course, with this pharmaceutical price regulation scheme due to expire at the end of 2018, there will be a negotiation in the normal way. NHS England will want to play its part around that.
The world is changing and personalised medicine is an important development for us all, but it needs to be delivered in a way that is both effective and affordable. This way of filling a bit of a problem between the PPRS voluntary and statutory scheme in the short term will also perhaps give us a basis for a further negotiation, I am sure, in the context of many things, including personalised medicine.
There is a lot more to do around getting best value and outcomes from medicines more generally in a variety of care settings, whether in hospitals, care homes or whatever it might be. We spend a lot of money on medicines and are going to be spending more, but we do not always see best outcomes, in many ways because of the way medicines are used. NHS England is looking carefully at how to optimise medicines and their use, and that will include personalised medicine.
Philip Kennedy: If I can clarify your question, I think it specifically related to insulin and the cost of that. It may be more appropriate that Mr Smith answers around pharmaceutical development by plan.
Jo Churchill
Q I suppose the question was more about how the burden could be minimised, from the comments that you made, referred to earlier. I am concerned that we do not cut off that important pipeline, particularly of personalised medicines. It is about where we are taking ourselves in the future, whether in generic or pharmaceutical industries.
Philip Kennedy: We at the ABHI have worked on a number of initiatives with the Government on the accelerated access review, with the vanguard programmes and also with Lord Carter, in terms of our response to the challenge to reduce costs within the NHS. We believe that a thriving, innovative R and D landscape for SMEs is the way to do that. Indeed, there are plenty of examples already whereby significant savings could be effected by looking at the lifetime costs of ownership of products and also the patient pathway design.
We are actively engaged in a number of areas with the Government to do that. We feel that the proposed legislation is not necessarily helpful, adding another layer of data collection that is not advancing the cause. If anything, the risk is that it thwarts innovation and increases cost, and that would not be an outcome that anyone would welcome, either within the industry or the NHS.
Warwick Smith: It may help if I give a couple of comments on data collection, from the point of view of the generic industry. We have had voluntary arrangements in place for 15 years to provide the Department of Health with data, so it can see the actual price being charged in the market and thus set the pharmacy reimbursement price. That arrangement came around due to past difficulties. We decided, in agreement with the Department and subsequently NHS England, that transparency is the best way to deal with these issues. For the large tranche of generic products that face competition, we submit data quarterly to the Department showing the net cost of each product we sell. That allows the Department to monitor what is happening and set the reimbursement price.
Providing those data is not a big issue for the majority of our members because it is run from their invoicing system. I cannot speak for Mr Kennedy’s members, who I think have a different profile. My members go from global companies to small start-ups, but they all have to run an invoice system, and they can generate the data from that.
Let me make a couple of points about the use of the data. We are not unhappy with the proposals in the Bill. The way in which the data are used is really important, because it is easy to get the wrong end of the stick. For example, if you look at the profitability of one product, it might be subsidising another, so taking an overview of what is going on and understanding the market is important.
Let me add just one more point. We understand why the extension of the statutory scheme’s scope to allow subsequent payments to be made is in place. We understand that it mirrors the arrangement in the PPRS negotiated by colleagues from the Association of the British Pharmaceutical Industry, but we feel that charging a payment for generic and biosimilar products—the price of branded generics that fall within that scheme will already have dropped by 70% or 80%, and it may be 50% for biosimilars—is double jeopardy. The NHS is getting its money through competition and then charging additional costs on that. It has been suggested to us that we should put up our prices, but I do not think that is the way to go.
Dr Ridge: Again, NHS England is very supportive of the proposals in the Bill. We feel that it is important to have end-to-end transparency associated with, in this case, pharmaceuticals. At the end of the day, we want to see a very robust reimbursement system for one of the commissioners of health services. We feel that that will be supported further by the information set out in the Bill. However, I agree with Warwick that it is important to sustain a market around generics, in particular.
The Chair
Thank you. A lot of people wish to ask questions, so I ask the witnesses to try to keep their answers a little shorter.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Q I would like to ask Mr Kennedy a couple of questions. Obviously, the Bill extends the National Health Service Act 2006 to medical supplies. As someone who comes from a surgical background, my concern is that the Medicines and Healthcare Products Regulatory Agency controls the quality of drugs, so there should not be a change in quality with price, but for medical supplies—I am just thinking of the surgical gloves I have interacted with—there is a huge range. If we are just pushing on price, do we have a mechanism that you are confident in to ensure we do not end up pushing down the quality of medical supplies—I mean some of the basic things?
Philip Kennedy: Yes. We get back to the question of what is the point of having a very broad and all-encompassing definition of a medical device with within the scope of what is proposed here. The data collection on all those items—whether specialised gloves that are used in a certain area or a routine glove on a ward—is overly onerous and does not achieve the end, so we are back to the central question. The issue of the safety and quality of devices is very much regulated by a CE mark. If a product has a CE mark, it has gone through the necessary quality and safety checks.
I believe that the addition of medical devices and any other items was relatively late in the consideration. In that regard, I wonder whether there has been a proper assessment of the impact that that would have. We would welcome further work on the potential impact. It is very clear for pharmaceuticals, but extremely unclear for medical devices.
Dr Whitford
Q Products may have passed a CE mark, but I am conscious that, when we tried different surgical gloves, there were some makes where you were going through two or three in an operation, which means your benefit in cost has gone.
The Bill is not just about data collection; it extends the provisions on enforcement of price control to Scotland and Northern Ireland. We already have central procurement, which has helped us control prices. This is one of my anxieties. Do you think both of those moves are reasonable?
Philip Kennedy: Again, we question why the scope is being widened to Scotland and Northern Ireland at this particular juncture, given that, as you said, existing mechanisms are already in place and are effective, in our view. The competitive market for surgical gloves—not to pick on that, but since you raise it, it is always one that is easy to understand—means that competitive tendering can put in a quality matrix, a price matrix and a delivery and service support matrix. None of that is possible by simply asking companies to take six years’ worth of product data and analysing crunch profitability. It does not move the intent forward in any way in terms of having to save costs.
Dr Whitford
Q Do you think there would have to be another body to take quality further, in the way the MHRA does with drugs, if this were going to come in, to avoid people going down to bare-minimum quality?
Philip Kennedy: As I say, we have an extremely productive dialogue with Lord Carter and the Department of Health on the forthcoming review of the procurement landscape. Huge efficiencies can be gained in restructuring that. We would prefer to look at that work in terms of assessing quality versus price, value, lifetime ownership and pathway design, as I mentioned earlier, where more significant savings could be realised for the NHS. Indeed, it would be good for industry to continue to develop products that have a higher quality threshold. Perhaps they cost more, but they would save significantly more than focusing on data that just look at existing product and existing price.
Medical device development is a very iterative process, unlike pharmaceuticals, which perhaps have a 25-year patent that protects something. One of our members has 80% of its revenues in products that only came to market in the last two years. That is where the efficiency, the quality and the cost-saving argument comes through. We surely want to encourage that as an economy.
Julie Cooper (Burnley) (Lab)
Q This question is probably to Mr Smith. Generic supplies to the NHS in the UK provide some of the cheapest medicines in the developed world. Do you think that the approach to control the cost of generics is the right one, given that it is a minority of individual items that have come to the public’s attention because profits have soared significantly?
Warwick Smith: I am on record as saying it is the least worst system in Europe. There is no perfect system. What we have found, comparing what we have in the UK and elsewhere in Europe, is that competition is a much better way of controlling price than intervention. We produce lower prices in the UK than in the rest of Europe. We have had an issue, as you say. I think fewer than 2% of our products have made the front page of The Times. We agree that there should be data available to investigate whether those prices have a justification or not, and intervention perhaps by the Secretary of State or, at the end of the day, by the competition authorities. However, for the majority of products, as the Secretary of State said on Second Reading, the system works extremely well. We have spent time trying to come up with better systems and we cannot.
Andrew Selous (South West Bedfordshire) (Con)
Q This is a question for Dr Ridge about the analytical capacity of the Department to look at the extra data you are going to be collecting. I was a little worried that, in The Times investigation, given some of the emails and responses from officials, they did not really appear to be on top of what was happening in terms of prices. My question is to seek reassurance as to the capability within NHS England sensibly and intelligently to analyse the extra data that will be collected under the Bill to know what is going on.
Dr Ridge: I am glad you make the point that I am from NHS England as opposed to the Department of Health. However, I am aware that the Department of Health has an analytical team in a particular bit of the Department that focuses entirely on issues associated with medicines and reimbursement. Indeed, the reimbursement policy responsibility sits with the Department of Health. Having been associated with that team for a number of years, and having previously been the Department of Health’s chief pharmaceutical officer, I am fully aware of the capability of that team. It is substantial, although I am sure that the head of that team—I can see him in my head now—will be considering whether he needs more resources to deliver what is required.
On the issue of price gouging and the 2% figure quoted by Warwick, it seems to me that at some point someone has to intervene in these things when you are into several thousand per cent. price rises. Although the intention would never be to do that first off—I am sure there would continue to be competition—there has to be a mechanism to do that.
Warwick Smith: To add to that, it is important to realise that the officials who were named in The Times were not part of that team. They were performing a more mechanical function to do with producing lists. The Bill ensures that the team reporting to the Secretary of State has powers of investigation and intervention. As Dr Ridge said, that is necessary and we agree that it is necessary.
Kevin Foster (Torbay) (Con)
Q In looking at any piece of legislation, one must consider whether there is an alternative. My question is directed at Mr Smith in particular. To put a scale on this, although we accept that it concerns a minority of manufacturers, we are talking about 262 million quid a year for 50 drugs that have increased significantly in price. Given the voluntary range and references to past difficulties, do you see any sensible alternative to dealing with the minority of companies that have adopted that type of approach?
Warwick Smith: The focus needs to be first on transparency, so that those officials whose job it is to monitor these prices and set the reimbursement rates can see the data. Not all companies currently submit data. Our requirements do not include all products, and we think they should. We have proposed to the Department that they should include all products and that there should be powers to insist that all manufacturers provide those data. The Bill does that—it gives them those powers. That is the first important step to transparency. Once the officials in the team that Dr Ridge referred to have those data, they can monitor what is happening and put questions. They will have powers to investigate and the Secretary of State will have the power to act. We all thought that the Secretary of State had those powers, but it appeared—through a piece of drafting that none of us had noticed—that he did not. So the Bill will fill the gaps in a system that we think is the right system but had some gaps in it that none of us had spotted, frankly.
Dr James Davies (Vale of Clwyd) (Con)
Q I want to return to the medical supplies issue, if only because this is perhaps the more controversial aspect of the Bill. I met with Coloplast yesterday evening. It is concerned about the potential impact of the control of prices and information disclosure requirements on investors. To what extent do you think that investment is at risk as a result of the provisions of the Bill? Further to that, you have suggested that all medical supplies, or reference to them, should be removed from the Bill. Failing that, what reassurances would you like to see, bearing in mind that there are already information-gathering powers in the 2006 Act?
Philip Kennedy: Yes, of course those have not necessarily been enforced or used in practice. Coloplast is a large US multinational. It is active, but it is not actually a member of the Association of British Healthcare Industries, I believe. I could understand its anxiety that a more bureaucratic system that could cut prices or onerous data collection over a long period would frighten investors off. Anything that does that in our sector would not be welcome. However, I think it is less onerous for the larger companies, which would have more substantial resources to crunch data and produce the type of information that Mr Smith has talked about being readily available. That is not really our concern. Our concern would be for the smaller businesses, which simply do not do this, and about the disproportionate impact on them. However, I take the concern that Coloplast and other US multinationals, which have invested heavily in the UK life industry, the life science sector, over the years, would have in seeing this legislation as not attractive to them as investors.
Martyn Day (Linlithgow and East Falkirk) (SNP)
Q The Scottish Government have used payments from the PPRS towards a specific fund for access to new medicines. Does the panel think that a similar model would be good elsewhere in the UK?
Dr Ridge: From an NHS England point of view, the ring-fencing of moneys to support medicines, which I guess is what you are referring to, is not a position we have previously supported. We largely want to retain the position whereby NHS England and clinical commissioning groups are able to determine their own priorities, in terms of how available funding or savings are used. That is where we are on that. Priorities vary, as you know, from locality to locality and the ability to utilise moneys in a way determined locally strikes me, and strikes NHS England, as being the way to go.
James Berry
Q Dr Ridge, are there any disadvantages with the Scottish system, which is different from the one you run in NHS England?
Dr Ridge: I am not sure that it is particularly for me to comment on that.
James Berry
Q No, but why are we not adopting the Scottish situation? There must be some disadvantages if we are not following it here.
Dr Ridge: I can see that some people would say that ring-fencing funding to support, for example, the uptake of innovative medication is one way to approach this, and some would say that that would have some advantages, but we have taken the view that it is up to NHS England and the CCGs how they utilise their funding.
Maggie Throup
Q Coming back to the information side of the Bill, I have a question for Mr Kennedy and Mr Smith. What information do your members currently provide to the Government? Can you describe how it is used?
Philip Kennedy: Members within the ABHI produce a range of information for competitive tendering through the NHS supply chain, for example, whereby tenders are filled out with a request for information, not only the price of the offer but the credentialing of the offer in terms of adherence to environmental policy, service support or ongoing maintenance of spares and supplies. In that respect, data are provided. Also through drug tariff, a number of products that are prescribed are reimbursed, particularly in the ostomy business. We mentioned Coloplast earlier. There is a huge amount of data exchange for submission to drug tariff and then approval on drug tariff. One of the readings made reference to the fact that some of this information is already provided, for a tax perspective, but of course as somebody who has run an SME for 16 years, I can tell you that, although there is a requirement to put in a level of detail in a company tax return for a small business, you would not put in the level of detail that is perhaps envisaged—it is unclear what exactly is envisaged—in the Bill.
Warwick Smith: In primary care, for the majority of generics, our members provide quarterly data on the volumes and net receipts that they have received for those products, simply filling in a spreadsheet sent to them by the Department of Health, which is then merged together by officials. The Department uses those data to determine the reimbursement price for those medicines. Once that price is fixed, community pharmacies source from generic manufacturers, trying to get the best deal possible because they make a margin on dispensing generics. That is what keeps the price down.
There are a smaller number of products where we do not provide data, where we think we should provide data, so again, the reimbursement price is set according to what is actually happening in the market and not based on what can sometimes be misleading prices lists or something like that.
In secondary care—because, again, my members are essentially producing the same product—there is competition managed by the commercial medicines unit, which is currently part of the Department of Health. It runs regional tenders to set the price that should be charged. Those figures are circulated to hospital trusts, which then use them for procurement.
Maggie Throup
Q So your concern is really more about where this Bill extends to and what data will be required?
Warwick Smith: Absolutely. On the data, the concern is whether it is practical to collect some of the data being sought here. Once a medicine goes to a wholesaler, we do not know where it will go in the marketplace. It is very difficult to put costs against a lot of individual medicines because they are shared costs. You can create formulae, but they are often misleading. We think that it is important to get that level of detail right. We are not saying these powers should not be in the Bill. What we are saying is that, when using those powers, the Secretary of State should take account of those issues, which, frankly, are too far in the weeds to be in the Bill but need to be considered when it comes to implementation.
Justin Madders
Q Mr Kennedy, you have talked about the difficulties your members have in providing this information. Is it the profitability element that your members are unable to strip out at the moment?
Philip Kennedy: Specifically on profitability, I can give an example from my own company that produces capital equipment for operating theatre rooms. We have a UK business and an export business. At any one time, there are large tenders arriving in either the UK or export, on which we would cover our fixed overheads and then perhaps bulk buy more supplies to fulfil a particular tender. So, at any one time, it is extremely difficult to look at a 12-month period for a particular product or market and say that is the profitability of that product, because it does not take into account the overall cost of running the business throughout the year. To be able to do that for a business of our size would be challenging with three accountants—one paying people, one paying suppliers and one doing our books for statutory purposes. To add another person or two to analyse the profitability, to comply with new legislation, even the potential of the new legislation, would be extremely difficult. It is not the profitability per se—transparency is not the issue for us—it is the time it would take to take it down to a product level and make it a meaningful assessment of cost and profitability.
Justin Madders
Q Do you not factor that in when you are putting tenders in in the first place?
Philip Kennedy: No. We work in a competitive market—
Justin Madders
Q So you would tender for something you might make a loss on.
Philip Kennedy: Absolutely we might, because we may feel that to keep the factory running that month, we need to make a loss, or if we see potential revenue for further purchases from that particular trust, either in service contracts or future hospital builds, we may decide to take a lower price point for that tender.
Rob Marris
Q Or the other way round—what the market will bear. That is our concern.
Philip Kennedy: Or what the market will bear. Of course, in recent years, with the funding concerns, the price is only really going in one direction and that is putting a huge squeeze on niche product manufacturers. The other thing about the medical device sector, which goes back to the point about definition, is that there are some very specialised small businesses that work only within a certain sector. It is difficult to ask them to produce swathes of data to the same extent as a larger generic manufacturer or, indeed, large ostomy company that is quite accustomed to producing data for drug tariff.
John Glen (Salisbury) (Con)
Q This question is to Mr Kennedy and to Mr Ridge. With the data on the cost of medicines going up by over 7.5% in the last year—at a time when we have aggressive efficiency savings of £21 billion, or whatever it is, over the next few years—something needs to be done. To Mr Ridge, I am concerned that this is not radical enough. If we are really going to deal with the expected increases in medicine costs, we have got to do something more about innovation and the way that the NHS embraces innovation, so that we do not rely on Mr Kennedy’s members to provide what the NHS needs, which is wholly necessary at the moment, but the NHS could take more ownership of that. I would like you to reflect on that.
Mr Kennedy, in terms of the distribution of sales between what goes into the NHS and what goes into exports, surely one of the big justifications for the Government moving this forward is the fact that the rigour of the challenge, and the regulatory challenge, in the NHS—before medicines and devices that apply to the NHS—validates a considerable volume of export sales. I understand your difficulty in quantifying where your fixed costs are distributed over your NHS sales and exports, but nonetheless there is a massive advantage to supplying the NHS in terms of validating markets outside. How do you respond to that?
Dr Ridge: I am glad you asked that question, because the contribution of a particular component of the Bill is guesstimated at £88 million.
John Glen
Quite modest.
Dr Ridge: Quite. There is a bit more to it than that. Some of the things are worth my referring to. You may be aware that NHS England and the National Institute for Health and Care Excellence are currently consulting on fast-track proposals around access to innovative medicines where the evidence is clear that they are particularly clinically and cost-effective and, in technical language, cost less than £10,000 per quality adjusted life year. Alongside that are budget impact and affordability proposals, in that if the medicine adds an extra £20 million or more in terms of impact on the NHS, then NHS England—which is strengthening its commercial capability, and rightly so, including bringing the commercial medicines unit into NHS England, as well as strengthening staff who have commercial capabilities—will enter into a commercial discussion about access to and payment for that particular medicine.
Clearly, we want access as widely as possible. The fast-track procedure will mean that, for example, NICE will produce final guidance much more quickly—I think that 10 to 11 weeks more quickly is the figure—and that funding for medicine will be made available from NHS England in 30 rather than 90 days. However, there is an affordability issue in all that, so there is a balance to be struck between supporting UK plc and the economy more broadly and guaranteeing access to new and innovative medicines in a way that is as affordable as possible, in the context that I described earlier and that everybody is familiar with.
There are other things that are less high-profile. For example, how do we make the best use of chemotherapy; can we manufacture it? Injectable chemotherapy has to be prepared in hospital pharmacies. Traditionally, it has been prepared in a way where it is a milligram per kilogram dose, so every dose is tailored for individual patients. There are ways to make dose bands of chemotherapy available. That way, we can rationalise manufacturing it at local level and making it more efficient.
On the primary care side, 25% of the current drugs bill is around specialised commissioning and 75% is primary care and medicines that CCGs commission that are used in hospitals. One thing we are in the process of establishing is something called regional medicines optimisation committees. Those regional committees will have two main tasks. One will be around standardisation and optimisation of medicines use and supporting CCGs to do that. They will also be looking at how evaluation of medicines can be lifted from the local level to at least the regional level, so that we can refocus staff who are currently doing evaluation tasks at a local level on to other things, such as optimisation and producing better outcomes. There has been a long-held issue about the duplication of effort at a local level, which can undoubtedly affect access to medicine. So there is a range of things in addition.
The Chair
I was very tolerant, but I would be grateful if questions and answers focused on the Bill, rather than general problems of funding in the NHS. I think you had a second question, John.
John Glen
Q One justification for the Bill and the Government intervening to deal with access costs in the NHS is the understanding that, as a consequence of supplying the NHS, there is a boost to the export potential of some of your members. I wanted you to clarify whether you perceive that to be the case.
Philip Kennedy: It is extremely important that there is a healthy domestic competitive market in the UK, to help SMEs export. I was in the States last week—the largest single export market for medical devices—with colleagues from the Department for International Trade, and the week of conversations and dialogue was around innovation: “What are you doing in the NHS that is effectively adopting innovation?” They were not asking us, “What is your rigour of data collection on current supplies of medical devices?” They want to know how a system that is spending 8% of GDP is getting better outcomes than a system that is extremely fragmented, spending something like 17% of GDP and getting worse outcomes: “What are you guys doing that’s better than what we’re doing? What is so innovative in your sector?” We took 15 companies that were showcasing technologies and products that have been adopted and are working in the NHS. It was not about the rigour of data at all. I do not think that was relevant to the conversation.
The Chair
If you wish to add something very briefly, do, but I am conscious that other people want to come in and we are running out of time.
Philip Kennedy: I am happy to answer your question differently.
John Glen
Q It is quite simple. The Bill will allow us to intervene to reduce the cost to the NHS. The way in which that is justified by the Government is that an export potential is derived from the validation of supplying the NHS. Is that justified, in your opinion?
Philip Kennedy: The validation of supplying the NHS helps companies to export.
Dr Whitford
Q I want to ask Dr Ridge and Mr Smith about a couple of things that I thought would be in the Bill but are not. One is repurposed off-patent drugs, which we have debated in the House before. There is a potential for their price to go up within the generic set-up. My concern is that, because they do not get relicensed, they will then be tweaked and suddenly sold back to the NHS for their new purpose at 10 grand a pop instead of 50p.
The other one is specials. I have been written to by the British Association of Dermatologists. Patients with particular skin conditions, such as some of the pretty distressing forms of psoriasis, require formulations to be made up. Again, there is quite a different system in Scotland, which uses an NHS producer to do that. In England, initially only one quote was required, which could be from a sister company, and the prices have turned pretty eye-watering. It estimates that some products cost eight times the price in England as in Scotland. Do you not think some of those things should be included in the Bill?
Dr Ridge: From an NHS England point of view, we, too, are concerned about specials and what appear to be excessive prices associated with certain specials. They are, of course, unlicensed medicines, which makes it a little bit more difficult in terms of being dealt with in the way I think is envisaged in the Bill. For example, I would have thought that the information-gathering powers will be relevant here, too, to ensure that we continue to get best value for money in this case for specials or for unlicensed medicines generally. I know that a team at the Department of Health are looking at that routinely—and more power to their elbow.
Dr Whitford
Q Is it not the case that, because the price is so ridiculous, the CCGs are not funding it, so the patients are not getting their ointments or cream or whatever?
Dr Ridge: There are CCGs that raise this with us, too, in terms of what appear to be outrageous prices associated with specials. It is something that needs to be addressed and I believe that the information powers will begin to do that in a way that is even more robust than the Department—
Dr Whitford
Q Would the information definitely apply to people who produce specials? That is not mentioned anywhere in the Bill.
Dr Ridge: I think so, but I look to others who might know better than me. It is certainly something that we feel needs to be addressed even more robustly. Whether the Bill is the right place or not is another matter altogether, I guess.
On the repurposed off-patent drugs, from my point of view, speaking in the role I do, I think that somehow we need to provide at least confidence to prescribers to be able to utilise medicines such as tamoxifen and others in a way that supports them in use in what would be an unlicensed purpose. Indeed, one of the things I have asked the regional medicines optimisation committees to do in due course is to give some thoughts about that, to support prescribers in that process. When they are repurposed and then come back at a higher cost, again, that is something I feel does need to be addressed. I agree with you.
Warwick Smith: I cannot help any more than Keith on specials. My instinct is that they would be included in the Bill, but they are not among my membership, so I have not taken any interest in that.
As far as repurposing is concerned, it is a term that sometimes gets used in two different ways. Dr Ridge mentioned tamoxifen, which I think was on Radio 4 this morning. We are working with the Department, NHS England and various charities to find ways to grant new indications on old licenses, so clinicians are comfortable about using medicines that were first licensed for different uses.
Dr Whitford
That was the basis of the Bill we debated last November.
Warwick Smith: And, frankly, that is happening. As we sit here today there are regular meetings going on. The problem is, if you ask a company to do the research work to prove that new use, it bears all the costs.
Dr Whitford
To be fair, it is not usually the company that finds the new use. Repurposes are nearly all academic and clinical discoveries rather than—
Warwick Smith: That is why they are working with charities to find a way to do this.
The Chair
We have got to get back to the Bill. We have got a number of issues that Members have indicated they wish to be called on and we have only got four or five minutes.
Warwick Smith: Very quickly, Chair, to finish Dr Whitford’s point, that is a good thing if we can make it work properly, and progress is being made. I absolutely agree that a change of a drug’s status to find a way of increasing its price with no clinical benefit is not something that should be supported. The Bill gives the powers properly to investigate changes like that and for the Secretary of State to take action. As I said earlier, we thought he had those powers. We signed up to his using those powers. I believe that he has used those powers, which we now discover he does not have.
James Berry
Q I will be very quick. We have had submissions from suppliers and trade associations, and they made the point that there are a number of powers in the 2006 Act that have not been used and that this Bill merely extends those powers. Is the logical conclusion of your argument that you do not agree that the Government should have had the powers in the 2006 Act in the first place because they are too burdensome on your industry?
Philip Kennedy: We support the existing legislation and its current use.
James Berry
It has not been used.
Philip Kennedy: But the certainty and clarity for how it exists is there. Increasing the uncertainty and the scope does not serve the medical device sector. We very much support its application elsewhere, but for the medical device sector, which is different and unique for all the reasons I have expressed, we would seek other mechanisms by which to achieve the end.
Jo Churchill
Q Thank you for that answer on the off-patent or repurposed drugs, Mr Smith. Perhaps putting them in the British National Formulary might help. What is the one thing, gentlemen, that you would do to get better value for the NHS? If costs have gone up by 59% since 2010—I think that is the statistic you threw in at the beginning—we have to do something. What is the one thing you would do to make the NHS provide better value for drugs?
Dr Ridge: The one thing.
Jo Churchill
Yes, you are allowed only one, and you have got only two minutes.
Dr Ridge: The Bill undoubtedly makes an important contribution, but it is only a contribution. From our point of view, we need to focus much more on getting best value out of the considerable expenditure on medicines, and that means adopting an approach around optimising the medicines used and working closely with patients, clinicians and others to get to the point where people take their medicines and we deliver the right outcomes. That needs to be surrounded by a framework, at a national level at least, that is commercial in nature, in terms of the ability to work with industry and secure the best value for the NHS.
Philip Kennedy: From a device technology perspective, I would say that the one thing we would support and encourage is a wider adoption of technology. The accelerated access review, published only a couple of weeks ago, is a good start in that direction, and we support its findings. We feel that significant efficiencies and cost savings are to be had in a wider-scale adoption of technologies, and we would support any effort in that respect.
Warwick Smith: We should ensure that we use new, innovative medicines when they produce the most cost-effective, best clinical outcome for patients. Where that is not the case, and where the generic is still the gold standard, we should ensure through the medicines optimisation programme, which Dr Ridge mentioned, that we use generics. A 1% swing to generics in prescribing and dispensing saves the NHS £172 million per year. It is a very easy thing to do.
The Chair
A final, quick question, Mr Madders. You have got one and a half minutes for the question and answer.
Justin Madders
Q Dr Ridge, where does the rebate currently go, and where would you like it to go in the future?
Dr Ridge: The rebate, as I understand the financial flows, comes into NHS England, and it informs NHS funding more generally. I would say what I said previously: we find ourselves in a health system that is becoming even more devolved in nature in England. I worked in Scotland for five years, and it is rather different there. Therefore, we should give organisations the flexibility to use the rebate in a way that they deem fit for their local priorities.
The Chair
Thank you very much. As there are no further questions, I thank Dr Ridge, Mr Kennedy and Mr Smith for coming this morning. We are now going to move on to the next panel.
Examination of Witness
David Watson gave evidence.
The Chair
We will continue now, Mr Watson, with evidence from the Association of the British Pharmaceutical Industry. Please introduce yourself and then we will go straight to questions.
David Watson: Good morning. My name is David Watson. I am director for pricing at the Association of the British Pharmaceutical Industry.
James Berry
Q Mr Watson, do you think it is right that the Government should take action to stop profiteering from the NHS on drug prices?
David Watson: Specifically on the issues that we were widely covered by the media, yes. We have been very clear. We think the Government should have the powers to step in where there are price hikes, frankly, in unbranded products. We agree with that and with the intention of the Bill to widen the powers to apply to any company.
Rob Marris
Q Do you think there are further steps, besides what is in the Bill, that could be taken to ensure that the NHS gets best value for money?
David Watson: The Bill specifically addresses the point of unbranded generic prices. It also specifically talks about a new mechanism for the statutory scheme. Most branded medicine spend—about 80% of it—is actually in the voluntary scheme. We think that the voluntary scheme has operated very well to help address the issue of affordability and pricing.
Andrew Selous
Q What would be a reasonable return on capital for your industry, so that we have a thriving and competitive pharmaceutical industry in this country, with prices that are fair to the NHS and the taxpayer?
David Watson: I could not honestly give you a specific number.
Andrew Selous
Q Give a range or an indication. Obviously, you are a wide industry and there are different parts to it. We have seen considerable variation in prices and returns from some of the information that has come into the public domain.
David Watson: I think that the question of profitability in the UK is much more complex than just pricing. The pharmaceutical industry, compared with other parts of the life sciences industry, tends to be much more global in its focus. It perhaps tends to have larger organisations. Those organisations would look partly at, frankly, their profits in the UK, but they would also look at the UK in terms of its uptake of medicines and the UK as a setting to do good science and research. I am sorry that I cannot give you a direct number. I do not have a number we could provide on profitability. My point would be that it is more than profitability; it is companies’ perception of operating in the UK.
Andrew Selous
Q What is the general perception about operating within the UK then among the members?
David Watson: I think that we would all say that the UK has had a strong life sciences sector. We have a very strong, productive pharmaceutical sector. Lots of current medicines have been discovered here. It is a challenging market, to put it in those terms, to operate in for companies. It is increasingly challenging for a number of reasons, not just the commercial environment.
Dr Davies
Q We have received correspondence from an individual who takes liothyronine, as does one of my constituents who is affected by the current issues. He has pointed out that the company that manufactures that makes an excess profit of £50,000 a day as a result of the hike in prices. With that in mind, do you think that the proposed maximum fine, the penalty of £100,000 or £10,000 a day, is sufficient?
David Watson: I am not aware of the individual product. We support the Bill in so far as the Government need to be able to have the powers to step in where they spot that there have been price hikes that are not justified. It is entirely appropriate that the Department is able to question companies on why that price has gone up. If it has gone up unreasonably, it is entirely correct that they should reduce it. What I would say, though, is that the majority of branded medicines, for example, covered by the PPRS, have an affordability mechanism underneath them. For example, we repay under the PPRS the difference in NHS spend on medicines; so regardless of the list price, which is often quoted for medicines, very often there are significant deals being made underneath that with the NHS.
Dr Whitford
Q Obviously, one of the problems with the generics was companies that are in the PPRS but also producing generics, and the Bill looks at strengthening the statutory scheme and getting rid of this. Do you think that this is the right way go, to still have two systems, or do you think a single system such as a statutory scheme would have been more helpful?
David Watson: No, we think it is better overall to have a scheme that industry negotiates. So as for generics pricing, we agree that the loopholes should be closed and the Department should have the same powers that apply, regardless of which other scheme companies are in. As for branded medicines, I think we would say that we have had in this country a voluntary PPRS for a number of years. I think that it serves both sides very well. You also need a statutory back-up for companies that for some reason do not choose to be in the PPRS. So, by default, you end up with essentially two schemes on branded medicines, but we think that there are benefits to the taxpayer, to patients, to the industry, in having a voluntary scheme.
Dr Whitford
Q In the previous panel, the different ways PPRS functions in Scotland and in England was mentioned. Do you see advantages or disadvantages on either side of how that is done?
David Watson: The current PPRS is a five-year deal. This one has been very different from most previous deals, so it underwrites the growth in branded medicine spend with payments going back to the Department. The idea with those payments is that they are then apportioned to Scotland, to the health service in England, etc. So that mechanism has worked well. I think that the problem has been that, certainly in Scotland, as you know, it has gone into a specific purpose. In England, it has gone into general funding for the health service, and therefore it has not fundamentally achieved its purpose, which was to allow taking the cost question off the table, almost—being able to find the right use of medicines by essentially capping spend on them. Because that flow of money has not worked, I think that that part of its objective has not succeeded in England.
Dr Whitford
Q So you do not feel it is increasing access to new drugs in the way that was envisaged.
David Watson: That was the plan. I do not think it has achieved that. I think it could do. I agree with some of the comments that Dr Ridge made on this. It is quite complicated, for example, to imagine a big national medicines fund. I think that would have unintended consequences. I am not sure that is what the NHS wants. I think that there are other ways that we could address the real affordability challenge of new medicines, by finding a way to use this money through PPRS for the benefit of finding medicines for patients.
Maggie Throup
Q Currently, over-the-counter medicines are exempt from the proposals. Do you think that that is right, or do you think that if we do not actually include them in the proposals, we shall be sitting around this table again in a few years’ time, amending the legislation yet again? If you feel that they should be excluded, do you think that there are any other medicine groups that should be excluded or included in any other way?
David Watson: No, I think that the over-the-counter medicines exclusion is sensible. It is much easier for companies to report when they are not including over-the-counter sales. On your question about whether other medicines should be excluded, if we look at the intent of the Bill, which is to introduce a new payment mechanism for those companies that are in the statutory scheme, it was suggested in the previous panel that the problem with this is that companies are already agreeing deals with the NHS. I suspect that if we end up with a payment mechanism and deals with the NHS, there may be some reluctance to give the best deal possible to the NHS—if, at the same time, a payment is being made in addition to that. I think that may be one of the consequences of this.
Maggie Throup
Q So you feel that what is included and what is not included is correct in the Bill?
David Watson: Yes. Increasingly, the NHS itself is looking to strike deals with industry on medicines that are launched that have a large budget impact. Quite often, those are sold through contracts with the NHS as well. One of the options here would be that the payment mechanism would exclude those products, which have frankly already been managed elsewhere, rather than there being effectively a double dip.
Justin Madders
Q You mentioned various challenges to the industry. I wonder whether you could expand on that a little and say whether you feel we are close to a tipping point in terms of the potential impact on investment in jobs and research.
David Watson: As I said, the UK has a really strong history here. The EU transition is clearly one of the specific challenges at the moment, which I will not go into, but there are challenges from industry from a commercial point of view. Access to new medicines in the UK is more challenging for UK patients than it is in a lot of other countries, so we do not always have the best clinical practice here, particularly on newer medicines. As Dr Ridge mentioned, a consultation has just been launched on the interaction between the NHS and NICE. That creates a whole lot of uncertainty for industry, at a time when we have a PPRS in place. The accelerated access review is potentially very good, but it is unclear how it is going to work. At the moment, industry sees a number of different initiatives, some of which it is very encouraged by, others of which it feels are slightly piecemeal and working in isolation from each other. From a global company perspective, I think that it leads to the UK being seen as a confusing place to operate.
Rob Marris
Q Following up on that, I understood you to say that other jurisdictions do it better, particularly for new medicines. Forgive me if I misunderstood you there. If I did understand you correctly, can you give some indication of what they are doing that we are not doing, which you and your members think would be desirable for the industry and for patients, were we to do it in the United Kingdom?
David Watson: That was exactly the subject covered by the Government’s accelerated access review, so it has identified some of the reasons. One of the specific things we would say that the NHS could look at is that, where medicines are viewed to be very cost-effective, the implementation of the guidance and quick access for patients to those medicines should be a priority. Quite often, we see medicines that are cost-effective and affordable, but are still not being taken up. I think that is a real concern for everybody.
Rob Marris
Q Is that partly because NICE is slower than you would wish it to be?
David Watson: No, I think that industry recognises that NICE actually does a very good job, given its resourcing and its focus. The question is more about the complexity of the system—the NHS—at different levels and it being able to pick up new medicines. Inevitably, one aspect of that is affordability of new treatments. That is why the benefit of a voluntary scheme such as we have with PPRS is that all these medicine policy issues can be negotiated with the Department of Health and the NHS from an industry perspective. It makes it much clearer for industry to figure out how to navigate the area of uptake of medicines.
Maggie Throup
Q In your written evidence, you said:
“The Department of Health should provide greater clarity on the additional information that will be required by the Department”.
Can you expand on that further and outline what clarification you need as an industry?
David Watson: First, we agree with the intent of the information powers. It is important; if the Department is to address some of the issues of significant price rises, it needs the information to go and do that. Our concern was that, as written, the Bill is extremely broad in this area. For example, it will require companies to provide profit-level data at product level, or even the cost of delivery at the product level. That requirement would be on every company across, potentially, tens of thousands of products a week. So we thought that the Bill was too broad in that area, and we would like to make some written submissions about how it could be tightened—although we recognise that the regulations underpinning the Bill, which we saw yesterday, provide some additional clarity in this area.
Jo Churchill
Q Just as a small supplementary to that, having run businesses—I would imagine pharma is the same—is it not possible that when you drill down to that sort of level, an unintended consequence will be that where you perhaps support a drug to market by using one that has volume-based profit to it, you may unintentionally stop that development? My other worry is about the rare diseases and specialist cancer areas, where it is highly expensive to develop drugs. We all know that we are trying to close this loophole, and that is right—exploitation around that area is not good for the NHS or, ultimately, patients—but can you see any unintended consequences that you would like to flag before you go?
David Watson: Yes, we recognise that it is very difficult to put a specific cap on a price, because the requirements on a company to produce, discover and sometimes cross-subsidise some of their costs across their portfolio are quite complicated. If the UK system, it seems, wants to drive costs of some medicines down to the lowest possible mark then that is, of course, quite possible, but the consequence if we look at areas such as vaccines, though, is that we end up in a situation in which companies do not invest appropriately in the factories or quality, etc., and then there are potential gaps in the supply of those products. So what we would ask for here is that, when the Department is considering the circumstances in which it thinks the price is too high, it has a dialogue with that company to understand the reasons for the price and what may be going on underneath to ensure the continuity of supply of the product.
Dr Whitford
Q I want to ask Mr Watson about the issue that I raised with the previous panel about the repurposing of patent drugs and the concern that we did not pass a Bill to add those purposes to old licences, or to have a new system. What would the ABPI view be on trying to avoid that, for the new purpose, suddenly a pretty similar drug comes back at an eye-watering price?
David Watson: Again, I agree with that, and I understand quite often that medicines are repurposed, not necessarily by pharmaceutical companies, but by other research centres. Quite often, even in that scenario, those companies may expect a reasonable return on their effort to bring that product in, which might mean a price rise. Again, I would say that there has to be a balance between price rises to reward innovation and return on investment and those price rises that are clearly not justified.
Dr Whitford
Q Do you think that the Bill as it stands will deal with that, or do some of these more specialist areas need to be highlighted?
David Watson: I do not think that the Bill will perhaps ever be clear enough about the circumstances in which one price rise is right or wrong, but I think that we agree with the need for the Department to have adequate powers to go after those cases—though of course to do so it needs adequate resources as well. But we agree with the principle that the Department should be able to look at price.
Andrew Selous
Q I am tempted to have another go, because you used the phrase “reasonable return” in your answer to Dr Whitford. You would not give me a figure on that earlier. Are you prepared to say anything further on that?
David Watson: I could make up some figures, but companies, depending on their skill and their pipeline—
Andrew Selous
Q You could not give us a range within which “reasonable” might lie typically within the industry that you think would still lead to a healthy, thriving industry, which is what we want, with an NHS that is not being ripped off.
David Watson: The range would start at zero because I believe there are companies selling products in the UK and making no money from them, and probably losing money. There are companies making a high return of 20% or 30%, so there is a big range in between.
Andrew Selous
Q The actual question I want to ask follows on from Ms Churchill’s question. What is your experience of how reasonable the NHS is when dealing with you on the sort of quality and safety issues you referred to in terms of how the Government will respond on pricing if there are specific reasons in terms of plant safety and quality and so on that might justify a slightly increased price? You have obviously been dealing with the Government for a long time. What is your experience of the NHS’s reasonableness in responding to those valid issues you mentioned?
David Watson: Companies will never launch products that are not of the required quality, and the NHS would never pay for them. The issue is more that if there is essentially a procurement-driven approach to medicines, that can and will drive prices down. The long-term impact is much more about organisational investment in the UK, perceiving the UK as a good place to do business. I suspect that in some classes—biosimilar and vaccines are examples—companies will eventually drop out of the market because they do not see the UK as a viable place to do business.
Jo Churchill
Q Is there a better way of looking at this? If we had more transparency through the pricing mechanism, but enabled tax efficiencies, R and D and so on, would that be a different way of balancing this for the industry?
David Watson: Yes. That is why this sort of industrial policy becomes really important. Again, that is why the industry semi-globally recognises the value of the Government’s continued willingness to have a voluntary pricing arrangement that not just covers pricing and affordability, but touches on some of the other aspects of how industry operates in the UK. We think that is really important.
The Chair
Thank you, Mr Watson, for coming this morning.
Given that we have no more witnesses, I invite the Government Whip to propose the Adjournment.
Ordered, That further consideration be now adjourned. —(Mark Spencer.)
Health Service Medical Supplies (Costs) Bill (Second sitting)
Tuesday 15th November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 November 2016 - (15 Nov 2016)
The Committee divided: - Ayes: 8 / Noes: 9 - Question accordingly negatived.
The Chair
Today we begin line-by-line consideration of the Health Service Medical Supplies (Costs) Bill. Before we begin, if Members wish to remove their jackets, they may do so. Even though it is winter, it is very warm in here, so I have asked for the windows to be opened at some point. I want people to feel comfortable and relaxed. Will Members and, indeed, members of the public make sure that their mobiles are switched to silent, so that we are not disturbed during our proceedings?
On the table to my left, the selection list of today’s amendments—the order of business—is available for colleagues. It shows how the selected amendments have been grouped together for debate. Grouped amendments are generally on the same or a similar issue, as colleagues know, and the Member who puts his or her name to the lead amendment in a group is called first. Other Members are then free to catch my eye—to do so, please will you rise from your chair by more than one inch? That would be helpful. If called, Members may speak on any of the amendments in the group. A Member may speak more than once in a single debate.
I will work on the assumption that the Minister wishes the Committee to reach a decision on all Government amendments. Please note that decisions on amendments do not necessarily take place in the order in which they are debated; they take place in the order in which they appear on the amendment paper. In other words, debate occurs according to the selection and grouping list, but decisions are taken when we come to the clause that the amendment affects. I hope that that explanation is helpful to Members. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debate on the relevant amendments.
Clause 1
Voluntary schemes
Julie Cooper (Burnley) (Lab)
I beg to move amendment 44, in clause 1, page 1, line 14, at end insert—
“for the purpose of investing in access to new and innovative medicines and treatments.”
The Chair
With this it will be convenient to discuss amendment 46, in clause 4, page 3, line 22, at end insert—
“(c) the NHS’s duty to promote innovation.”
This amendment would introduce a requirement for the Secretary of State to take account of the NHS’s legal duty to promote innovation, as set out in the Health and Social Care Act 2012.
Julie Cooper
It is a pleasure to serve under your chairmanship, Mr Pritchard.
I will begin by outlining our overall priority for the Bill and, in particular, this clause. Our priority is to ensure that the Bill effectively controls the cost of medicines and medical supplies to the national health service while ensuring the best possible patient access to existing products and to new and innovative treatments. In that spirit, I would like to make some observations in support of amendments 44 and 46.
The clause will amend section 261 of the National Health Service Act 2006 and it is concerned with the powers related to the control of voluntary schemes. The stated aim of the clause is to give the Government new powers to require manufacturers or suppliers to pay the Secretary of State an amount that will be calculated on the basis of sales or estimated sales. The Opposition support the move to curtail excessive profits, thereby ensuring that the NHS achieves maximum value for money. Having said that we welcome saving vital NHS funds, we also wish to ensure that those funds are retained within the portion of the health budget that relates specifically to the supply of medicines and medical supplies. We do not wish to see the savings lost in an NHS deficit black hole.
On Second Reading, the Secretary of State confirmed that £1.24 billion had been returned to the Department of Health through the rebate scheme. That is a considerable amount of money, and the figure will increase when this Bill is enacted. However, we were not reassured by his vague statement that the money returned to the Department would be reinvested in the NHS.
Also on Second Reading, the Secretary of State mentioned the considerable pressures facing the NHS and he suggested that one consequence of the Bill would be to transfer funding from the drugs bill to the frontline. I hope that the Minister present recognises that medication is often the frontline and that ensuring the timely access of appropriate medication often prevents hospitalisation and thus saves the NHS money. It is very much a case of a stitch in time.
In addition, it is a fact that community pharmacists the length and breadth of the country have offered to work with the Government to eradicate waste and to cut costs. As the experts on all medication matters, they are best placed to work with GPs and patients to achieve maximum efficiency. Sadly, the Government have responded by taking steps that are likely to lead to a reduction in the number of community pharmacies. This is a missed opportunity and that is regrettable.
Amendment 44 would provide assurance by ensuring that rebates reclaimed against purchases of medicines were reinvested specifically in improving patient access to medicines. In Scotland, rebates collected by means of the voluntary prescription pricing regulation scheme are already specifically earmarked to fund new medicines. In essence, the Bill, which we support in principle, is to ensure that the NHS can procure medicines and medical supplies cost-effectively. I am sure that the intention is not to reduce funding to the NHS, so we cannot have a situation in which every pound repaid from the suppliers and manufacturers equates to £1 less of Treasury funding allocated to the NHS. We are concerned that, too often, budget constraints limit access to new and innovative medicines and treatments.
Recently, I have devoted a lot of time to supporting the campaign to achieve treatment for children suffering from the potentially life-threatening genetic condition of tuberous sclerosis. It is extremely distressing for parents to be informed that their child has been diagnosed with that incurable condition; it is even more distressing to learn that an effective pharmaceutical drug has been developed and licensed—Everolimus, marketed as Votubia —but is not available from the NHS for children in England. The drug is able to shrink the multitude of benign tumours that characterise that serious condition, thereby saving lives, improving quality of life for those affected and often removing the necessity for potentially damaging surgery.
That is one example, and there are many others. James Barrow from the Cystic Fibrosis Trust, speaking in support of the new medicine fund in Scotland, has said that using any reclaimed moneys in that way provides improved access and much needed transparency. Labour’s amendment to the clause would introduce a duty to reinvest any rebates to improve access to new and innovative medicines and treatments, as I have outlined.
Further to that, amendment 46 refers specifically to the duty of the NHS to promote innovation under the Health and Social Care Act 2012. The UK is a world leader in the field of life sciences, and the British pharmaceutical industry is at the forefront of global research and development. In 2014, 20% of all the world’s research and development into new medicines was carried out in the UK.
We have hitherto enjoyed significant benefits from European Union research funding. Given the outcome of the referendum, that is now at risk, and it is essential to ensure that we maintain our dominance in the sector, not least because the pharmaceutical industry employs close to 75,000 people. The promotion of innovation in the field is important not only for the health of the British people, but for the health needs of people worldwide. It is extremely important to the British economy, so it is vital that we do not take our eye off the ball. We need to put on record our continued commitment to research and to develop new treatments.
We face competition not only in Europe, but from emerging nations such as Brazil and China. We also need to ensure that the NHS does not trail in the take-up of those new drugs. Worryingly, the Office of Health Economics studied 14 high-income countries and found that the UK ranked ninth out of 14 across all the medicines studied. Successive studies have demonstrated relatively low take-up of new medicines in the UK compared with other countries. That is bad for patients and bad for our pharmaceutical industry.
The Bill therefore needs to achieve a balance. We need to ensure the best possible patient access to medication at the fairest price, and we need to encourage the pharmaceutical industry to continue to invest in research and development. Therefore, it is right that the Bill should outline our commitment to promote innovation. We look forward to hearing the Minister’s comments, but we are minded to press amendment 44 to a Division.
The Minister of State, Department of Health (Mr Philip Dunne)
Mr Pritchard, thank you for calling me and, more particularly, for taking time out of your schedule to chair this important sitting.
On amendment 44, I was interested in the comments of the hon. Lady about the motivation behind it, with which I have some sympathy. I hope that what I say will reassure her that her amendment is unnecessary.
The amendment would require income from the pharmaceutical price regulation scheme and the statutory scheme to be ring-fenced to fund and increase access to new and innovative medicines and treatments. As a Government, we are committed to ensuring that patients have faster access to new and innovative medicines and treatments—I mention briefly the accelerated access scheme that we have introduced.
The hon. Lady touched on the compelling and sometimes tragic cases of individual constituents, friends and relatives seeking to get access to innovative drugs, in particular once those drugs have become authorised. Between 1 March 2000 and 30 June 2016, NICE, the National Institute for Health and Care Excellence, made individual recommendations for 646 separate propositions, 81% of which were recommended or optimised, so there is a steady track record of introducing innovative treatments and, in particular, drugs into our health service. That is done, properly, through the independent NICE structure. I am sure we will talk more about that in Committee.
Rob Marris (Wolverhampton South West) (Lab)
On the number of drugs to which the Minister referred, will he give an indication now or later of how many, if any, of those drugs were repurposed? I am thinking, for example, of a drug that has recently had a lot of publicity; it is primarily used for osteoporosis, but there are indications that it may be very helpful with breast cancer. What about such repurposed drugs, as opposed to brand new drugs?
Mr Dunne
I do not have that figure in my head, as the hon. Gentleman might expect. I hope to get inspiration during the sitting and will try to address that question later.
We know that investing in new and innovative medicines and treatments, where they are proven to work and are a clinical priority, has the potential to transform the care of patients and to improve outcomes, which is what we all want. However, it is a fundamental principle of NHS funding that it should be allocated according to clinical priorities based on the judgment of clinical commissioners. That may include new treatments, but it may include scaling up older effective treatments—through repurposing, as indicated by the hon. Gentleman—or investing in more staff.
We understand the intention behind the amendment, but it is for NHS England and clinical commissioning groups to determine clinical priorities and to spend that money on what is clinically most important. It is also important to point out to the hon. Lady that income from the voluntary and statutory schemes can fluctuate from year to year, so allocating such income by means of a ring fence to a specific area, such as new medicines, brings risk because in some years the income received may go down. The perverse consequence of the amendment’s ring-fencing may therefore mean less money being spent in a subsequent year, in the event of the scheme not generating an increase in income. That would disadvantage patients by making treatment dependent on income from medicine pricing schemes, which we do not think should be the determinant of available medicine.
Rob Marris
The Minister was talking about such decisions being clinically led. Will he therefore assure the Committee that the decision to cut spending on public health in England, to put the money into frontline medical services, was a clinical decision?
Mr Dunne
As the hon. Gentleman knows, decisions to allocate spending across the responsibilities of the Health Department were determined as a result of the spending review last year. The decisions within the NHS that I am talking about, on treatments, rather than preventive public health, are determined by clinicians.
Separate to the Bill, Government are taking action to secure the UK’s future as an attractive place for the life sciences sector and to support faster patient access to medical innovations. For example, the recently published accelerated access review sets out ways to increase the speed at which 21st century innovations in medicines, medical technologies and digital products get to NHS patients and their families. Recommendations included bringing together organisations from across the system in an accelerated access partnership and creating a strategic commercial unit within NHS England that can work with industry to develop commercial access arrangements. We are considering those recommendations with partners and will respond in due course.
NHS England and NICE are jointly consulting on a number of proposed changes to NICE standard technology appraisals and highly specialised technology appraisals, including around speeding up the appraisal process. The Department of Health continues to work closely with NHS England and other stakeholders to improve uptake of new medicines. A key element of that is the innovation scorecard, published quarterly. It is designed to help users—clinicians, patients, commissioning groups, Government and other stakeholders—to understand and monitor the uptake of innovations in the NHS and should ultimately be used to promote an equitable spread of clinically effective, cost-effective innovations.
I hope that having heard in particular what I said about the way in which income from these schemes does not rise in a continuum but fluctuates, the hon. Member for Burnley will recognise that the amendment could have the adverse consequence of leading to a reduction in funding available for medicines.
Julie Cooper
Is the Minister aware of problems with the administration of the scheme in Scotland? Is he aware of what the experience has been in Scotland?
Mr Dunne
Fortunately, the Committee has the benefit of the Scottish National party’s spokesperson on health, the hon. Member for Central Ayrshire, who I am sure would be happy to give us her experience. The fact is that we have had some experience in England of fluctuating income from these schemes, which is the primary basis for our position.
Justin Madders (Ellesmere Port and Neston) (Lab)
I am grateful to the Minister for his explanation. On the money that is received from the rebate from PPRS, responses I have had to written questions suggest that that is considered part of the baseline budget. With respect to the debate we have had recently about the £10 billion extra, or the £4.5 billion extra—whichever version we prefer—could he advise whether the rebate is included within that extra money, or is it part of the baseline funding?
Mr Dunne
The Department of Health receives income from a number of different sources. It mostly deals with expenditure but also receives income from activities conducted through the NHS. One source of income is the rebate through these schemes, which forms part of the funding available to the Department. We have committed that funds available out of the scheme will go into the NHS. The hon. Gentleman raised the issue of the £10 billion. I gently remind him that, in 2014-15, the funds available to the NHS from the Department of Health were £98.1 billion, and by 2021 that figure will be £119.9 billion, which in cash terms is a £20 billion increase and in real terms is a £10 billion increase.
Dr Philippa Whitford (Central Ayrshire) (SNP)
As the hon. Member for Burnley said, the system functions quite differently in Scotland. We have a new medicines and rare diseases fund, rather than a cancer drugs fund, which means that the use of funding to access new medicines is not limited to one cohort of patients. Our fund is £90 million, which, given that we are less than 10% of the UK population, means it is proportionately almost three times the size of the cancer drugs fund. As was mentioned, this is very much funded by the PPRS. It is committed to that. The pharmaceutical industry expects the rebates to be used to enable access to new medicines. One problem here is that the rebate goes into base funding, which means it disappears like water in the sand.
We have so many debates in this House about patients who are struggling to access new treatments. Amendment 46 talks about innovation and research, which we support in Scotland. We are quite a research-oriented country. Our research funding to our universities is 30% higher, in proportion to our population. The NHS in Scotland commissions research, particularly on things like informatics and data management around health and social care, which are the big challenges we face in the future.
The Scottish Medicines Consortium, which makes our decisions in the same way as NICE, was reformed in 2013. Since then, we have had a 40% increase in drugs being passed. What we see in England is that even if a drug is passed at the level of NICE, it sometimes does not come into use in the NHS, because the funding is simply not earmarked to make it available.
The Chair
Before we move on, I have a couple of housekeeping points. First, I thank the Doorkeeper for his tenacity and the engineers for getting the windows open. I think that we are all happier for that. Secondly, because we have Health questions today, we will seek to adjourn at about 11.10 am. I will allow the Government Whip to suggest the appropriate minute at which to do that. I now ask the Opposition whether they want to press the amendment.
The Chair
You can comment on it now. I understand that there will not be a vote on amendment 46, but if there is, it will be later. We will be taking amendment 44, but you can comment on amendment 46 now, Minister.
Mr Dunne
Thank you, Mr Pritchard. Amendment 46 was also raised by the hon. Member for Burnley, for which I thank her.
We agree that the promotion of innovation, as the hon. Member for Central Ayrshire said, is an important part of what we like to do in this country. The role that we see for the Government is in sustaining the UK not just industrially, but by generating innovation to make our population healthier. That is vital in securing the best possible, evidence-based care and treatment for patients. I am talking about the rapid progress that is being made and technological advance through innovation. That is why the duty to promote innovation was placed not only on NHS England but on clinical commissioning groups and NICE through the Health and Social Care Act 2012.
Supporting innovation brings in many factors beyond the scope of the Bill, as is set out in the accelerated access review, which I have touched on. Supporting innovation is much more about better horizon scanning, faster licensing and assessment, and cutting-edge clinical practice than it is about pricing. It is precisely because this is such a broad area that it is not appropriate for the NHS duty to be linked to the provisions in the Bill. As drafted, the provisions in the Bill focus on the specific issue of the cost of medicines and medical supplies, but in doing so, they take account of the need to balance access to a product, which may be supported by lower prices, and the need for companies to support the costs of research and development.
To attempt to link these measures to the much wider duty on the NHS would be to distort the objectives of the cost control scheme. The Bill has an important role to play in securing the best possible care for patients, but I would like to assure the Committee that the Government, together with NHS England and others, place a very high priority on supporting innovation.
The Chair
We have the privilege of having two shadow Ministers. I do not know whether either of them wants to respond on amendment 44 or amendment 46, or whether the hon. Lady wants to press amendment 44.
Julie Cooper
I am grateful to the Minister for his comments, but I am still keen to press amendment 44 to a Division. The lack of transparency in what is currently available is unacceptable, and there is a danger that the Bill will be contrary to what I am sure is its real intention and cut funding to front-line medication. The amendment would prevent that.
I take the Minister’s point about fluctuation in funding, but I am sure he will agree that if this can be made to work in Scotland, it can be made to work here. I do not want us to fall behind on that. We are all aware of the massive deficit within the NHS. It is very important that funding recouped from pharmaceutical profits is not lost for the NHS and for the real purpose of providing new medicines, and that people in England do not lose because of the Bill. I thank the Minister for his comments, but I will press the amendment to a Division.
Question put, That the amendment be made.
Julie Cooper
I beg to move amendment 45, in clause 1, page 1, line 14, at end insert—
“(2A) After subsection (1) insert—
‘(1A) In exercising functions in relation to the controls on the costs of health service medicines, the Secretary of State must ensure that any medicine covered by a voluntary or statutory scheme that requires payments calculated by reference to sales of that medicine shall be made available to all NHS patients if recommended by a qualified NHS clinician.’”
The amendment continues in the vein of amendment 44, given our concern to ensure the best access to medicines. We are very much aware of the barriers that exist and are keen that every piece of legislation takes the opportunity to remove those barriers and make medicines more accessible to patients. It is important that the Bill does not inadvertently become a way of restricting that access. Where a clinician deems medicines necessary and desirable, patients should have access to them.
I was worried on Second Reading to hear the Secretary of State’s comment that the prescribing of some medicines is “not strictly necessary”. That questioning of the clinical judgment of the medical profession is not just inappropriate but could be suggestive of a dangerous precedent. We must never reach a stage where politicians decide which medication is appropriate and when. I assume that that was not the Secretary of State’s intention, but we would like to ensure that drugs approved by the National Institute for Health and Care Excellence are made available to patients if so desired by a qualified NHS practitioner.
There is already an agreed fixed limit on NHS spend on branded medicines, with any additional expenditure above that level paid for by the pharmaceutical companies via the clawback by the Department of Health. Currently, NICE assesses new medicines for cost-effectiveness, which provides a further restraint on pricing. There is therefore no reason for the NHS to deny patients any treatment covered by the scheme. We would like the Minister to look favourably on the amendment. We will not press it to a Division, but we are very concerned about the issues I have outlined.
Mr Dunne
Again, I understand the hon. Lady’s intent. I was a little confused by her interpretation of the Secretary of State’s remarks on Second Reading as meaning that politicians are involved in making decisions on prescribing. I assure her that, although I have been in the Department for a short amount of time, there has been no suggestion at any point that any politician should get involved in making decisions about which drugs should be prescribed.
Julie Cooper
I thought it inappropriate that the Secretary of State for Health expressed an opinion on which medications are necessary and which are not. I question his qualification to make that comment.
Mr Dunne
I do not have complete recollection of what the Secretary of State said, but he may have been referring to things such as the over-prescription of antibiotics, which we know is a problem globally. A great deal of work is being undertaken right across the NHS and with other health bodies around the world to reduce the scale of antibiotic prescription.
Dr Whitford
Is it not the case, however, that we seem to be developing this additional rationing system between NICE and patients of the NHS? I am talking about NICE’s recommendations being accepted but not funded. The hepatitis C drugs are basically being rationed to a certain number of patients per month, even though they have been passed by NICE and trying to eliminate the viral load in the community can be more effective in the long term.
Mr Dunne
Inevitably, some decisions have to be taken when introducing new drugs as to the extent to which they are applicable. Those are clinically-led decisions. There is not a completely bottomless funding pot for the prescription of medicine, so those decisions have to be taken by ordinary clinicians within their practices and within the infrastructure of approvals, which is entirely independent and led by NICE in England.
Dr Whitford
With respect to the Minister, that is not what I am hearing from clinicians who work in the field of HIV and hepatitis C. They are being told, “You can have”—for example—“50 patients a month,” and they are having to pick who gets the drugs and who does not.
Mr Dunne
I will not be drawn into the detail on a specific drug, because the hon. Lady may have access to information that I do not, but in relation to hepatitis C, as she has raised it, there has been a discussion between the trust and NICE. As I understand it, the trust is continuing to work with NHS England collaboratively to discuss the issue of access to the new hepatitis C drugs. We will always have some discussions about applicability when a new treatment is introduced, to see whether it is appropriate for all conditions; it may be that only some benefit from the drug. I think that that is as far as I can go on this issue.
To return to the Government’s view of the amendment, we are concerned that it would in effect circumvent the critical system of checks and balances around clinicians’ prescribing freedoms. That would present a danger to patients and the sustainability of the NHS. It is also not the purpose of the Bill to address matters other than the cost of medicines and medical supplies.
Treatments that do not demonstrate efficacy, safety and value for money should not be routinely available on the NHS. The National Institute for Health and Care Excellence, an internationally respected organisation that provides evidence-based guidance to the NHS, ensures that the treatments recommended for patients deliver value for money and improved patient outcomes. NICE’s recommendations are developed free from political interference and help NHS organisations to design services that are in line with the best available evidence and that meet the needs of their local populations.
Rob Marris
The Minister read out what I understood to be the role of NICE. May I focus for a moment on the words “value for money”? My understanding is that if NICE in England says that a particular medicine—perhaps a new medicine or a repurposed medicine—is value for money, then because that cost-benefit analysis has taken place, the drug should be freely available to clinicians to prescribe in medically appropriate cases. However, we are hearing quite a lot of stories, particularly about the prophylactic HIV drug or hepatitis C drugs, of when that is not the case. In other words, NICE says that a drug is value for money, but clinicians are blocked from prescribing it, even when they think it would be medically efficacious for their patient. Why is that?
Mr Dunne
From time to time, local circumstances may mean that clinicians do not have access to the drugs. They may be newly innovated, and given the scale of the NHS in this country, not all clinicians will get the information they need to provide new drugs as rapidly as some patients may like. It can take time to introduce a new drug, as the hon. Gentleman will understand. I recognise that it is the role of clinicians to prescribe in the best interests of their patients, and I know that local or national commissioning policies or technology assessments by NICE will mean that in some cases patients are unable to access the treatment that their clinician has recommended, but it is important to recognise that local and national scrutiny and the independent assessments of NICE are essential to promote evidence-based prescribing, protect patients and secure value for money. Undermining that system of checks and balances, as I am afraid the amendment tabled by the hon. Member for Burnley would, could endanger patients and result in significant variation in prescribing practices. I ask her to withdraw the amendment, since she has indicated that she does not intend to press it to a vote.
Julie Cooper
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Dunne
Clause 1 will amend the powers relating to voluntary schemes in section 261 of the National Health Service Act 2006. The voluntary scheme referred to in that section is the pharmaceutical price regulation scheme. Although the scheme itself is voluntary, there are statutory powers that can be used in relation to its operation. Other than with respect to the entry and exit mechanisms, the Government do not currently use those powers for the 2014 PPRS, but we wish to retain the option of making regulations or directions with respect to those powers in future. The Government do not intend the amendments to the 2006 Act to affect the operation of the current 2014 voluntary scheme.
The amendments to the 2006 Act will put it beyond doubt that the Secretary of State’s existing powers can apply for the purposes of operating a voluntary scheme that includes only a payment system. They are part of our policy to align the powers relating to voluntary and statutory schemes, which we will come on to when we consider later clauses of the Bill. They will also ensure that when a company leaves the voluntary scheme, it is still able to make payments covering the period in which it was a member. That will clarify the requirements and ensure that there will be no loophole that companies can exploit to avoid making payments that are due after they have left the scheme.
It may also be helpful if I clarify a point that arose on Second Reading. In response to a question from my hon. Friend the Member for South West Wiltshire (Dr Murrison), the Secretary of State inadvertently indicated that the Bill would prevent companies that are part of the current voluntary pharmaceutical price regulation scheme from parallel importing of medicines. I would like to clarify that statement, because it did not completely accurately reflect our intent. Parallel imports made in accordance with the EU single market rules are a legitimate part of the medicines market, and the Government have no intention of taking action to prevent such trade. The Bill does not exclude the possibility of parallel import prices being controlled; they could be covered through regulation at a later date if the evidence warranted action. I hope that helps the Committee in its consideration. I commend the clause to the Committee.
The Chair
I thank the Minister for correcting the record.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Power to control prices
Question proposed, That the clause stand part of the Bill.
Mr Dunne
Clause 2 will amend the power to control prices in section 262 of the National Health Service Act 2006. That section already allows the Secretary of State to limit the price of any health service medicines except when the manufacturer or supplier is in the voluntary scheme, the PPRS. Section 266 of the 2006 Act allows the prices of health service medicines to be controlled by way of regulation or directions. Clause 2’s amendments to the 2006 Act will enable us to address unreasonably high-priced unbranded generic medicines. Most manufacturers of unbranded generic medicines are members of the PPRS for their branded medicines, and we therefore cannot currently limit the prices of their unbranded generic medicines if they charge excessive prices. We rely on competition in the market to keep the prices of those medicines down. It generally works well and, in combination with high levels of generic prescribing, has led to significant savings for the NHS.
I am grateful for the contributions made on Second Reading by almost everyone who spoke. The intent behind the clause was widely recognised across the House as appropriate and desirable. Members were aware from their own experience, and particularly from a Times article in the summer, that in some instances where there has been no competition to keep prices down, a small number of companies have raised their prices to what look like unreasonable and unjustifiable levels.
There are some clear examples of price increases. The most egregious was one product whose price increased by 12,000% between 2008 and 2016. If the price had stayed the same, the NHS would have spent £58 million less on that medicine last year alone. Another medicine increased in price by 3,600% between 2011 and 2016; the NHS would have spent £2.1 million less on that single medicine had the price stayed the same.
Justin Madders
I am grateful for the Minister’s explanation. As he said, we support the broad thrust of the aims behind the clause. Has he engaged in any research or discussions with the developers to understand the reason for those rapid price rises?
Mr Dunne
We have had discussions with the trade association for the generic manufacturers. The trade association, which gave evidence to the Committee on a day when I was, unfortunately, not able to attend, made it clear that the generic medicine producers industry as a whole thinks it appropriate that we take this action. We are grateful for that support. Discussions are under way through other bodies. In particular, the Competition and Markets Authority has indicated that it is in discussions with some companies, one of which voluntarily issued a press release last month to tell the market that the Competition and Markets Authority is investigating it.
Justin Madders
What I was trying to elicit was whether anything had been put forward to explain any specific price increases. We are concerned that the clause will have the unintended consequence of limiting supply.
Mr Dunne
We are anxious to ensure that we do not inadvertently introduce a regime that might cause difficulty when there might be a valid reason for increasing a drug’s price significantly. That was the justification in the past for not addressing the issue, because abuses were seen to be pretty isolated. However, in the past two or three years, the prices of more drugs have risen seemingly unjustifiably. That is the justification for introducing these measures.
I recognise that there may be occasions when a manufacturer incurs some additional costs: for instance, if a production run or line has finished and the manufacturer must start a new line or restart an old one, that would lead to a justifiable price increase. The clause allows us to take action where we suspect a price has risen excessively. The rest of the Bill provides opportunities for the Department to gain information about the cost of supplies, which allows us to get a better handle on when we think an increase has been unjustifiable, and identify that more rapidly. [Interruption.] Does the hon. Member for Wolverhampton South West want to intervene, or is he just poised in an energetic way?
Mr Dunne
Then I will continue.
Certain companies appear to have made it their business model to buy the marketing authorisations for medicines without any patents outstanding. They then de-brand the medicines and abuse the existing freedom of pricing for unbranded generic medicines. Although the practice is not widespread, it must be addressed, which is the reason for the clause.
Currently, our only recourse is to refer such cases to the Competition and Markets Authority, as I mentioned. When the CMA investigates, we must wait for the outcome, and in the meantime the NHS continues to have to pay high prices. The Department consulted on the issue as part of the consultation on the statutory scheme that was launched in December 2015. The Department has been working closely with the Competition and Markets Authority and has referred cases to it. The CMA is about to issue a decision in a case on a high-priced unbranded generic medicine. As I have just said, it has also recently opened another investigation.
The powers under section 262 of the 2006 Act to limit prices of health service medicines can be exercised through directions or regulations. The Government’s intent is to work with directions, which will enable us to limit the price of a specific medicine from a specific manufacturer. The Government are obliged to consult the industry representative body when we want to direct the price of a medicine. In the case of high-priced generics it would be the representative body of the unbranded industry—currently the British Generic Manufacturers Association, which appeared before the Committee last week.
The Government would of course also engage with the company involved before issuing a direction that limited the price of a medicine. As I have indicated, there may be good reasons for a price increase, and it is important that the Government understand the reason behind a price increase before issuing a direction. As I said, the new information powers will help us with that.
My officials have initiated talks with the unbranded generic medicines industry representative body and the CMA to explore how in practice we would determine what should be considered a reasonable price. Any decision by the CMA in the cases that I highlighted earlier could help set a useful precedent. I can reassure the Committee that companies charging unreasonably high prices for unbranded generic medicines is not a common practice. The Government do not intend to use the power where competition in the market for unbranded generic medicines is working. However, the Government need the right legislative tool to be able to address unreasonably high prices of unbranded generic medicines. The clause will give us that tool, and I ask the Committee to agree to it.
Dr Whitford
Basically, we welcome the measures in clause 2 to try to close the specific loophole whereby companies that are part of the PPRS voluntary scheme and that also produce generic medicines are able to increase the prices of generic medicines. However, the Minister talked about the British Generic Manufacturers Association—largely companies that focus on generic medicines—which would be more to do with clause 3. My understanding is that the change will close the specific loophole relating to large pharmaceutical companies that also produce generic medicines, rather than companies that focus only on generic medicines, which we will come on to in clause 3. We welcome the closing of that loophole, but those two things are quite different and we should therefore not conflate them. It is not the competition authority that would tackle them. That is much more related to purely generic companies.
Mr Dunne
We will obviously come on to clause 3 shortly. The primary intent behind clause 3 is to modernise the statutory scheme, rather than to address the difference between one type of company that produces only generics and another that produces generics and branded medicines. I am not sure that I agree with the hon. Lady’s distinction.
Dr Whitford
My point is just that what the Minister has described applies more to clause 3, on companies that produce purely generic medicines, so the attempt would be to strengthen the statutory scheme that they might be part of. It is the production of generics by the group of companies under the PPRS scheme, the big pharmaceutical companies, that is getting under the wire. That is covered by clause 2(2). The Minister was talking about the Competition and Markets Authority and the British Generic Manufacturers Association, and I think clause 3 is more relevant to that. Clause 2 is more of a surgical change, which we absolutely support.
Mr Dunne
I am grateful for your guidance, Mr Pritchard —I will respond now. The current statutory scheme does not capture generics, so amendments to the statutory scheme to allow generics to be brought into it are appropriate. If I am giving the Committee information that covers two clauses, rather than just one, I hope that is helpful.
The Chair
Very good added value from the Minister, I am sure.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
Statutory schemes
Julie Cooper
I beg to move amendment 43, in clause 3, page 2, line 27, at end insert—
‘(2A) An amount calculated under subsection (2) may only be calculated using the same methodology as an amount payable by any member of a scheme made under Section 261 of the National Health Service Act 2006 (voluntary schemes for controlling the cost of health service medicines) is calculated.”
We support clause 3 in principle and the amendment aims to clarify that. Under the current system, following the National Health Service Act 2006, two schemes operate to control prices of medicines: the statutory scheme and the PPRS voluntary scheme. It is important to align those two schemes, because since 2014 there has been a significant movement of companies deciding to shift from the PPRS scheme to the statutory scheme to reduce the level of rebate payable. That has reduced savings to the NHS, so it requires urgent revision.
We agree with the principles of the Bill on ensuring that both schemes achieve the same level of savings and that the system is not open to abuse. We are concerned, however, that the Bill is not specific about how payments would be calculated under the statutory scheme. We agree with the Secretary of State that the purpose of the Bill is to clarify and modernise provisions to control the cost of health service medicines.
The amendment seeks to clarify beyond doubt that the Bill is in line with the stated aim of achieving equivalence between the two price-control schemes, by ensuring that under the statutory scheme members' rebates are calculated using the same methodology as for PPRS members. We commend the amendment, but will not push it to a Division. I am interested to hear the Minister’s comments.
Dr Whitford
One issue arises because the statutory scheme was based on prices in December 2013. The further on in time we are, the less proportional the return. Whether it is the same or a similar mechanism, we should avoid having a price rebate to the NHS stuck in time, which might be five years ago, and does not reflect the actual costs of the drugs.
Mr Dunne
The voluntary schemes are introduced and refreshed every five years. The current scheme was negotiated in 2014, so we are two years into that. One reason for having a time limit on the scheme, from the Government and NHS perspective, is that companies like to find ways during the course of time to adjust their commercial behaviour for their benefit. Having the opportunity to renegotiate the voluntary scheme every few years enables us to try to avoid the circumstances referred to by the hon. Lady.
Dr Whitford
If I could clarify, the voluntary scheme runs for five years but what I was talking about, with regard to clause 3, is the statutory scheme and the price rebate related to a requirement for a percentage reduction from the price in December 2013. That is how the rebate in the statutory scheme is defined. The further one gets away from that date point, the less one gains. It is the statutory scheme I am talking about rather than the voluntary one.
Mr Dunne
My understanding is that under the statutory scheme, the percentage applies based on sales achieved in the previous year. Therefore, the percentage reduction that we seek for the statutory scheme can be adjusted year by year. That is the intent of what we seek to do. I will seek further inspiration to ensure that I have exactly addressed the point that the hon. Lady makes.
Amendment 43 would have the effect of linking the payment mechanisms of the statutory and voluntary schemes. I understand why that might appear a desirable objective, so I understand the intention behind the amendment. We think there is merit in aligning the two schemes in some respects. However, to require them to be the same is inappropriate, because it removes some flexibility that the Government have, and from which the NHS benefits, in being able to negotiate the voluntary scheme on a periodic basis. The voluntary scheme has other aspects beyond pure price. Aligning the two in what will become a statutory scheme would restrict the scope for the two schemes to operate in a complementary manner.
The voluntary scheme is a matter for negotiation with industry on a periodic basis. As such, there is scope to include a range of measures. Those measures may change with each iteration of the scheme, to reflect the priorities of each side at the time of renegotiation. To illustrate that, the current voluntary scheme includes a range of provisions developed through negotiation with industry that sit alongside the payment mechanism. That includes price modulation, which enables companies to put prices up and down as long as the overall effect across their portfolio is neutral. That may have benefits for them, not only for their sales to the NHS but in the pricing references used by selling to the NHS in jurisdictions in other countries. That is of potential commercial value to companies, which may be willing to accept a higher payment percentage as a result—in other words, a higher discount to the NHS.
There are also provisions on the uptake of new medicines by the NHS, such as making NICE-approved medicines available within 90 days of a NICE decision. We are keen to encourage that. By contrast, the statutory scheme is intended to be a more straightforward approach. As such, the payment percentage applied may be slightly different from that applied to any voluntary scheme, in order to achieve a broadly similar level of savings once all elements of the schemes are taken into account.
As we heard in oral evidence last week, the freedom to negotiate the voluntary scheme is greatly valued by both industry and Government. We intend that any future voluntary scheme should be established through such negotiation, but linking the payment mechanisms would inevitably restrict that flexibility and freedom for both sides. In addition, while the Government welcome the collaborative approach of a voluntary scheme, we cannot guarantee that Government will always want two schemes in future. The amendment would constrain the Government’s discretion to run a single scheme if they and the House thought it best to do so. For those reasons, I urge the hon. Member for Burnley to withdraw her amendment.
Julie Cooper
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Dunne
The clause amends the provisions relating to statutory schemes in section 263 of the National Health Service Act 2006, which describes the purposes for which the Secretary of State can make statutory schemes. The amendments make it clear that a statutory scheme may require companies to make payments to the Government, based on their health service sales. For those companies not in the voluntary scheme, the Government operate a statutory scheme. That is currently based on a cut to the list price of products, rather than a payment mechanism on company sales, as in the voluntary scheme. The cut to the list price has delivered fewer savings to date than the payment mechanism under the voluntary scheme.
Dr Whitford
That was the point I was trying to make earlier. One is a percentage return on sales and profits, and the other is a cut in price. The further we are from the time set, which was December 2013, the less value we have from that in proportion to current prices.
Mr Dunne
I am grateful to the hon. Lady for making that clear to the Committee. The different approaches to price control between the voluntary and statutory schemes have led to some companies making commercial decisions to divest products from the voluntary scheme and sell them through the statutory scheme, thereby reducing the effectiveness of the voluntary scheme and savings to the NHS. The introduction of a payment mechanism in the statutory scheme would save the health services across the UK an estimated £90 million a year, as set out in the impact assessment.
In response to the Government’s consultation on introducing a payment mechanism in the statutory scheme, the pharmaceutical industry queried whether the Government had the powers to introduce a statutory payment system. The clause clarifies the existing powers to make it clear that the Government have the power to introduce a payment mechanism in the statutory scheme. The ability to make the statutory scheme by way of regulations rather than setting out the detail in primary legislation provides us with the flexibility to respond to changes in the wider economy, the medicines market and patient needs. We have provided illustrative regulations to support scrutiny of this delegated power.
The clause makes a further amendment to section 263 of the National Health Service Act 2006. Currently, the power to make a statutory scheme cannot be applied to members of a voluntary scheme, which means that if the Government introduced a statutory scheme for unbranded generic medicines—although we have no current plans to do so—we would be unable to apply the scheme to manufacturers of unbranded generic medicines that have a mixed portfolio of branded and unbranded generic medicines, and are members of the voluntary scheme. The clause therefore amends the Act in such a way that the power to make a statutory scheme cannot be applied to products covered by the voluntary scheme rather than member companies of the voluntary schemes.
The Government’s view is that, for the most part, competition works well to keep down the price of unbranded generic medicines. Should that situation change, this amendment would enable the Government to use their clause 2 powers to take action beyond individual products or companies. I hope that is clear to the Committee. If so, I ask the Committee to agree that clause 3 should stand part of the Bill.
Rob Marris
What a pleasure to appear before you for the first time, Mr Pritchard. As you know, my mother is one of your constituents and was quite a frequent correspondent. She is now in quite frail health so I suspect that you have not heard from her recently, but I thank you for your courtesy in your replies to her over the years. It is a particular pleasure to appear opposite a fellow west midlands MP, the Minister, who represents Ludlow, the constituency in which my mother used to live. She is still in the same house, but the constituency boundaries have changed.
Rob Marris
Indeed. I very much welcome clause 3 because it is to do with extending the statutory scheme. The helpful library briefing cites the Department of Health consultation from December 2015, which points out:
“In 2014 the statutory scheme covered around 6% of branded medicines sales in the UK”,
in contrast to the voluntary scheme, which covered about 75%. Those are the relative sizes of the schemes.
The Minister said—forgive me that this is not an exact quote, but I do not write that fast—that one of the effects of the clause 3 changes will be to broaden the statutory scheme to cover companies that have a mixed portfolio of branded and unbranded drugs, and are members of the voluntary scheme. As he pointed out, the clause clarifies the power of the Secretary of State to make the statutory scheme—something that was debated or contested by some companies.
In particular, I welcome the clause philosophically or ideologically because it amends section 263 of the National Health Service Act 2006—a Labour Act for which I voted proudly. Section 263(1) of that Act provides the Secretary of State with the power to make a statutory scheme for the purposes of “limiting the prices” or, as in section 263(1)(b) “limiting the profits”. This is something of a damascene conversion for this Government.
I hope, Mr Pritchard, that you will give me a bit of latitude, as I am about to read a quotation from this morning’s edition of The Times. An article entitled “Energy companies face caps on ‘rip-off’ tariffs” says:
“Measures designed to cap the household energy bills of millions of British families on ‘rip-off’ standard variable tariffs are being considered by ministers.”
I think we heard about that in my party’s manifesto at the general election; there has been a damascene conversion by the Government. That article also says:
“Greg Clark, the business and energy secretary, said: ‘I have made clear to the big firms that they must treat customers properly or be made to do so.’”
Andrew Selous (South West Bedfordshire) (Con)
Many Conservative Members may see the Bill as limiting the ability of drug companies to rip off the Government in a wholly unacceptable way, rather than as introducing price controls in the manner to which the hon. Gentleman refers.
Rob Marris
With respect to the hon. Gentleman, that is precisely what price controls do: they stop rip-offs. If one has price controls for other reasons, that is a separate debate. The price controls discussed in the Bill and in the 2006 Act are, as I understand it, precisely to stop rip offs. It appears that the Secretary of State for Business, Energy and Industrial Strategy is now looking at the same thing, as the newspaper quote suggested. It may be an incorrect quote—I give that caveat—but it is a direct quote from the Secretary of State to say that the Government are looking at these things. That does not necessarily mean that they will do them, but it is an ideological watershed for a Conservative Government to look quite rightly at legislating to stop rip-off Britain with regard to prices, but also with regard to limiting profits.
That is what a statutory scheme has the power to do under section 263(1) of the 2006 Act. As I understand it—the Minister can correct me if I am wrong—clause 3, which is at the heart of this provision, does not say, “There has been a debate about whether we can have a statutory scheme or not”. For the sake of certainty, we are saying in clause 3 that the Government will have the power to make a statutory scheme, but I do not hear the Minister going on to say, “But that statutory scheme will have nothing to do with limiting profits.”
In the absence of the Minister’s saying that, he appears ideologically to encompass the concept that I embrace, which is that, in certain circumstances in capitalism, it is incumbent and right for a Government to intervene in the market to limit not only prices—rip-off Britain and so on—but profits. On certain occasions, the Government should have that power, and I think a pharmaceutical supplier to the NHS is one such example. There is a very narrow range of things I could see this happening in, but in pharmaceuticals it is possible.
I congratulate the Government on coming over to a socialist perspective, not only on pharmaceuticals but apparently, if The Times report is right, coming our way on energy companies. Long may that continue. Perhaps we can look at rail fares next. Will the Minister have a word with his fellow Ministers on that?
The Chair
If the Minister is in Churchillian mode—I do not take a view on that; I am completely neutral as Chair—that is something I have always wanted to see. In fact, we have two Churchills in the debate, as Members will recognise. That is probably a first, which is great.
Mr Dunne
Thank you very much indeed, Mr Pritchard. I hope I am not going to disappoint you, given that build-up.
As ever, I am delighted to see the hon. Member for Wolverhampton South West, who is almost my parliamentary neighbour and with whom I served on countless Finance Bill Committees when he was previously in this place. He always entertained the Committee with his interventions, some of which were occasionally on the subject of the Bill, rather like on this occasion. He has craved your indulgence, Mr Pritchard, and I am glad that you allowed him to point out what I am going to take a stage further, if you will indulge me a little.
The Conservative party is the party of the working man in Britain in 2016. As the hon. Gentleman may have heard, because he is a keen student of these things and because the Conservative party conference was held in Birmingham this year, which is not too far from his constituency, the Home Secretary made it clear that she regards the Conservative party as the party of the consumer in 2016. I will take that one step further.
Mr Dunne
No, I mean the Home Secretary.
We believe that competition is the best way to drive prices of medicines down for the NHS, and generally speaking that works well. In the case of the specific unbranded generics where there is a single supplier, we have seen that there is an opportunity for market abuse, and I agree with my hon. Friend the Member for South West Bedfordshire that the clauses are designed to use the device of price controls to avoid excess profit abuse by individuals in British companies, which we have seen.
I gently remind the hon. Member for Wolverhampton South West that successive Governments since 1957, including the Government whom he proudly supported for many years, had price controls in place for the cost of medicines.
Dr Whitford
The Minister was obviously not happy with the amendment on aligning the two schemes, but he talks about a mechanism of price control under clause 4. Will he give us even the broad principle of what he thinks the price control mechanism in the statutory scheme will be?
Dr Whitford
To clarify, therefore will the situation continue to be that the statutory scheme is based on a price reduction as opposed to a percentage above a mark being returned to the NHS, as in the voluntary scheme? Will it be a similar mechanism to what we have today?
Mr Dunne
I believe that that is the case, but if I have misunderstood the hon. Lady’s question I shall clarify that later in the sitting, if I may. Our intention is to consult on the matter, so the precise mechanism has not yet been finalised; hence there is some uncertainty.
Rob Marris
On the detail, while the Minister is pondering, we talked about the date of December 2013 for the 15% price reduction—the questioning of the hon. Member for Central Ayrshire particularly related to that—but I understand that medicines launched after that date are not in the statutory scheme.
At some point—perhaps later in the sitting—will the Minister clarify whether the Government intend that medicines launched after December 2013 could be in the statutory scheme? Might it be altered in that way to encompass that possibility?
Mr Dunne
Companies are free to join the voluntary scheme. If they choose not to, but they want to sell unbranded generics into the NHS, they will be caught within the statutory scheme. The statutory scheme is the default scheme under which unbranded generics are sold into the NHS. It will pick up new unbranded generics as they come forward, unless their manufacturers are in the voluntary scheme and choose to have them dealt with through it.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Enforcement
Question proposed, That the clause stand part of the Bill.
Mr Dunne
The clause amends sections 265 and 266 of the 2006 Act in relation to enforcement. It ensures that the existing enforcement provisions in the Act apply to the contravention of any of the new powers in clauses 1, 2, 3 and 5. The maximum penalties are a single penalty of £100,000 or £10,000 per day for the duration of the contravention. The Secretary of State has the power under the 2006 Act to increase or further increase, by order, those maximum penalties.
The clause also ensures that provision can be made in regulations for companies to appeal any enforcement decisions under the new information powers in clause 6. That simply extends the possibility of appealing any enforcement decision under the information powers. Furthermore, clause 4 clarifies the fact that payments or penalties can be recovered as a civil debt through the courts.
In light of the Secretary of State’s flexibility to amend the penalty amounts in future, I hope the Committee will recognise that the proposed penalties are appropriate, but in the event they are deemed not to be appropriate, there is sufficient flexibility in the clause to allow the Government of the day to amend the penalties to whatever they deem appropriate.
On that basis, I ask the Committee to agree that the clause stand part of the Bill.
Rob Marris
Will the Minister—if not now, later—give other examples of where a Secretary of State has such apparently wide-ranging powers to set a penalty? In any judicial system there is often discretion among the judiciary as to the penalty imposed on a wrongdoer, but this is not a judicial system. It is a quasi-judicial system, at best. The Government seem to be taking broad powers, and it may be that Governments, including Governments under which I served, have done so in the past, but I cannot think of any examples.
I hope the Minister can provide clarity, because the Secretary of State will be able to exercise the new powers not only by making regulations—such regulations, of course, would come before the House—but by giving directions, which is a much more elastic and broader term. A little clarity on that would be helpful.
Mr Dunne
I can help the hon. Gentleman directly with a specific example. The Secretary of State already has those powers under the 2006 Act, which the hon. Gentleman’s Government enacted.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Control of maximum price of other medical supplies
Dr Whitford
I beg to move amendment 47, in clause 5, page 3, line 39, at end insert—
‘(7) Before making regulations under Clause 5 the Secretary of State must conduct a consultation on the potential effect of this clause on the maintenance of quality of those medical supplies, and seek representations from manufactures, suppliers and distributors of medical supplies as part of the consultation.”.
This is a probing amendment on an issue of concern. The Secretary of State has obviously had powers since 2006, and perhaps earlier, to seek to control the price of medical supplies. That power has not really been utilised, and neither have the informatics of that. When controlling the price of drugs, the quality of those drugs is controlled by the Medicines and Healthcare Products Regulatory Agency so that pushing down the price does not result in loss of quality.
My concern is that, beyond a kitemark or a CE mark, we do not have anything in the United Kingdom that controls quality, particularly of consumables such as swabs and gloves. As a surgeon for 30-odd years, I can tell the Committee that the range in quality of things such as surgical gloves can be immense. A surgeon might use two or three pairs of gloves during an operation. If there is a leak in those gloves that is not visible, it might be only when the surgeon washes their hands afterwards that they see they have blood on their finger, which means that staff are exposed to blood contamination. Poor-quality swabs might result in thread or fluff coming off inside a patient, which can contribute to sepsis. There is no quality controller specific to medical supplies, so if we just drive down the price, we may drive down the quality.
We use a lot of central procurement in Scotland, and NHS National Procurement has helped us to control our prices for everything from consumables through to major machine purchases, which is already saving money for the NHS in Scotland. If there were a reduction in quality, our concern is that it would be UK-wide. It would be something that producers were doing, which would in turn undermine what the devolved Government were trying to do. Procurement remains devolved, but if the quality started to drop overall, that would affect all the devolved health services, as well as NHS England.
The amendment calls for consultation and for consideration of some form of quality regulation or control that would mean those items having to be way above the very basic CE level, at a point considered high enough quality for NHS use.
Justin Madders
I support the hon. Lady’s amendment. She spoke with great personal experience, which we all appreciate, about the importance of maintaining the quality and reliability of products in the NHS. Over the weekend, there were reports of the vast sums paid out by the NHS in clinical negligence costs. I am sure we all agree that that money would be better spent on patient care. Of course, many of those claims are down to human error, or to events that were in some other way avoidable. However, one obvious example of an area where we need to be reassured that the Bill will not have unintended consequences is infection control. About 300,000 people a year—about one in every 16 patients—get an infection while being cared for in the NHS. That causes additional suffering, inconvenience and, sometimes, serious illness or death. It also has a wider impact on the NHS, because patients with hospital-acquired infections spend two and a half times longer in hospital than uninfected patients, on average: they are usually admitted for approximately 11 days.
As well as the devastating impact on the patients affected, there is a significant financial impact on the NHS. I have referred to the costs incurred from clinical negligence claims. The most recent reliable estimate of costs from infections, which appeared in the Plowman report, put the figure at £1 billion a year. According to Professor Briggs’s report “Getting It Right First Time”, if someone gets an infection from an orthopaedic operation, it costs the NHS an extra £100,000 to put it right. We need to be confident that the Bill poses no risk of any reduction in quality, but we would have been more confident about that if there had been a proper consultation on that element in the first place.
Mr Dunne
Rather unusually, I start by thanking the hon. Lady for proposing the amendment. She has raised an issue for which we have considerable sympathy. She touched on the way in which medical products are procured in Scotland. I can confirm that we are looking to introduce more centralised purchasing across the NHS under the efficiency proposals made by Lord Carter in the other place. One of the areas of focus was the variability, in purchasing terms, of standard commodity items. She mentioned surgical gloves—I will not go into detail on those with her, because she has obviously used them considerably more than I can conceive of and is therefore very experienced when it comes to the variability not just in price but in quality of such commodity products. We are looking to introduce closer central purchasing—I think 12 items are currently being trialled or introduced in parts of NHS England.
We recognise that, as currently drafted, the Bill does not explicitly state in relation to section 260 that the Government are obliged to consult industry. I am aware that the 2006 Act, in relation to controlling the cost of medicines, does explicitly state that there is an obligation on the Government to consult. The hon. Lady’s amendment is appropriate in its intent. I invite her to withdraw it at this stage, but I undertake to work with her. My officials will consider how to amend the amendment to give it the effect that she seeks, but in a way that works in the context of the Bill. There are technical drafting issues with the amendment that mean that it would give us some unintended difficulties. That is the Government’s position on the amendment; I hope she is happy with that.
The hon. Lady referred to the effect of any pricing controls for medical supplies on the maintenance of those products’ quality. I can assure the Committee that the Government will take into account all relevant factors, including any concerns raised by industry about the quality of medical supplies, when making and consulting on price controls if they were to apply to medical supplies. The Government would not be in favour of putting any of those many factors in the Bill, because it may unnecessarily constrain the conduct of future Governments or the NHS.
Dr Whitford
If there is a move to more central procurement, will the Minister consider some form of quality control regulation or power at that point, so that central procurement is not just driven to accept the lowest price and there is some safety mechanism, in the same way we have the MHRA for drugs?
Mr Dunne
We will consult with industry on the impact of the Bill on medical supplies. Although I am not going to give the hon. Lady an absolute assurance that we can introduce a threshold for quality, which is quite hard to prescribe given the immense variety of supplies we are talking about, there is a clear intent that, if we are centralising procurement of equipment, that equipment has to meet a quality threshold in order to be acceptable to the clinician. I understand the point she makes. The intent is not to buy substandard equipment to treat patients, but to remove variability in pricing for the same equipment depending on different purchasers, which is inappropriate and means effectively the taxpayer is the funder of all these different entities.
Rob Marris
I urge the Minister to have a greater familiarity with the quality of surgical gloves, which are great for delivering leaflets. They give a bit of weather protection. You don’t have to lick your finger to get the next leaflet, you don’t get letterbox knuckle, and—best of all—the dog gets latex, not flesh.
Mr Dunne
Again the hon. Gentleman strays, but not too far beyond his brief, because surgical gloves have been raised now by three members of the Committee. I am grateful for that tip. With the onset of winter weather, that could be quite useful for those of us who will be going to Sleaford and North Hykeham over the next few weeks to leaflet. I will take it upon myself to bring a box of surgical gloves when I visit.
With your indulgence, Mr Pritchard, I will take this opportunity to pick up the points made by the hon. Member for Central Ayrshire about the way the statutory scheme is intended to operate. To be crystal clear, clause 2 relates to unbranded generics and allows us to make regulations and directions to specific companies, while clause 3 relates currently only to branded medicines but could, if we wanted it to, also relate to unbranded medicines in future. The statutory scheme will be used where a company is not a member of the voluntary scheme, as I indicated to the hon. Member for Wolverhampton South West. The statutory scheme is intended to operate through setting a percentage of sales to be paid to the Government. Details of the scheme’s operation will be set out in regulations. A draft of the illustrative regulations is available to the Committee.
I will revert to the hon. Lady’s amendment 47. The Government do not currently control prices of medical supplies. As was referred to earlier, the MHRA is responsible for the safety, efficacy and quality of medical supplies. That provides some check of quality in relation to not only medicines but medical supplies.
Rob Marris
The Minister has lost me there. It is probably my ignorance, but I thought he just said that the Government do not currently control the cost of medical supplies. If that is what he said, is that because they do not use the power they already have under section 260(1) of a 10-year-old Act?
Mr Dunne
Yes, I think that is the correct answer. We do have those powers under the 2006 Act, but they have not been used, partly because generally speaking medical supplies is a competitive market. We have not seen the kind of abusive price behaviour that we are trying to address elsewhere in the Bill.
Dr Whitford
I would like to clarify the reason for introducing this, if there has not been a problem in the market, as we have seen with the price hikes in generics, and it is much harder to do. Why are the Government extending a power they have had for 10 years but never used?
Mr Dunne
In essence, we are trying to bring the regimes for medical supplies and drugs into the same environment, so that we are able in future to use the powers, which we are introducing for the first time for drugs, for medical supplies on the same basis, so that we do not have to treat one thing under one Act and the other under another. I hope that is clear.
Justin Madders
I am sorry to push this point, but are there any examples? We obviously have clear examples, for example, in the pharmaceutical sector. Is there anything in the supplies sector that would be equivalent?
Mr Dunne
I am not aware of any particular examples of medical supplies that we are concerned about at this point. However, I am sure that, if there are people outside watching who have good examples, they will let the Committee know before we conclude our deliberations.
Reverting to the hon. Lady’s amendment 47, we understand the intent behind it. We are not fully convinced that the current drafting would have precisely the effect that she is hoping. I invite her to work with me and my officials between now and Report. The Government will be happy to consider how we could best introduce the requirement to consult in relation to section 260. On that basis, I invite her to withdraw the amendment.
Dr Whitford
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Dunne
Clause 5 amends section 260 of the 2006 Act, which enables the Secretary of State to control the maximum prices of medical supplies other than health service medicines. As we have just discussed, the Government have powers to control prices of medical supplies and we are not currently using those powers. It is important that we continue to have those powers, should we decide it is necessary to control prices of medical supplies in the event of market abuse.
With an increasing spend on healthcare products, the Government need the tools to be able to control prices, if there is any indication that medical suppliers do not provide value for money to the NHS and the taxpayer. The measures would ensure that the same enforcement and territorial extent provisions apply to controlling the cost of medical supplies and health service medicines.
Existing enforcement provisions in relation to medical supplies are draconian compared with those for medicines. Currently, a contravention or a failure to comply is in fact a criminal offence in relation to medical supplies, whereas it is not in relation to medicines. We are aligning the enforcement provisions to those for medicines and making them much more proportionate. That is done through clause 7, through consequential amendments. On that basis, I ask the Committee to agree that clause 5 stand part of the Bill.
Rob Marris
May I again congratulate the Government? This appears to be the only piece of criminal legislation I have ever heard of that apparently has a 100% deterrence rate. That is, the Government have the power to penalise a course of action and, as far as the Government are aware, no company is pursuing such a course of action, meaning that Government do not have to exercise their powers, criminal or otherwise. What a great piece of legislation passed by the Labour Government in 2006.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Mark Spencer.)
Health Service Medical Supplies (Costs) Bill (Third sitting)
Tuesday 15th November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 November 2016 - (15 Nov 2016)
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Minister of State, Department of Health (Mr Philip Dunne)
I beg to move amendment 1, in clause 6, page 4, line 4, at end insert—
“( ) References in this section to a UK producer are to a person who—
(a) manufacturers, distributes or supplies any UK health service products, and
(b) is not an excepted person.”
This amendment is linked to amendments 2 to 16 and 19 to 35. It provides a definition of the term “UK producer” to be used in sections 264A to 265 of the National Health Service Act 2006.
The Chair
With this it will be convenient to discuss the following:
Government amendments 2 to 19.
Amendment 48, in clause 6, page 5, line 41, at end insert—
“(1A) Information provided by virtue of section 264A must be disclosed by the Secretary of State to any person listed in subsection (1) at that person’s request.”
Government amendments 20 to 36 and 38.
Mr Dunne
I apologise to the Committee for introducing quite so many amendments at this stage of our deliberations. As I explained in our pre-meeting before we went into line-by-line scrutiny, the amendments were tabled entirely to reflect the request from the devolved Administrations, with which we entirely agree, on how they want to apply this power in their territories. As a result of things beyond the control of the Committee, including elections in the devolved Administrations this spring, the European Union referendum and the summer recess, all of which interfered with the normal process of discussion between the Department and the devolved Administrations, we were not able to get instructions from them before the introduction of the Bill, which is why the amendments have only now been tabled.
I recognise that this is a large number of amendments, but they are all driving at the same objective. Some of the information requirements in the Bill that apply to England only could also apply to the territories of the devolved Administrations. The Government amendments therefore reflect the instructions of the devolved Administrations in that area. We have had constructive discussions with each Administration, and we have agreed that the UK Government will collect information from wholesalers and manufacturers for the whole of the UK. It would not make sense for each nation to collect its own information from wholesalers and manufacturers, because that would lead to duplication of effort to no apparent purpose. We have also agreed that each nation will collect information from its own pharmacies and GPs, to the extent that that is requested.
Amendments 1 to 36 and 38 therefore enable the Secretary of State to collect information from UK producers for devolved purposes, with the exception of pharmacies and GPs in the devolved territories. The amendments will enable the Secretary of State to share the information with the devolved Administrations and other bodies in the devolved Administrations, and enable them all to use the information for devolved purposes: reimbursement of pharmacies and GPs; and to assess value for money in relation to the supplies. I hope that the Committee will therefore accept those Government amendments.
While I am on my feet, I take the opportunity to clarify again the comments I made towards the end of our previous sitting, to ensure that they are properly on the record. They related to the distinctions between clauses 2 and 3. The Bill, as everyone in Committee knows, is concerned with the cost of health service medicines. We negotiated a voluntary scheme with industry that controls the cost of branded health service medicines. Any company that has branded medicines in its portfolio and chooses not to be a member of the voluntary scheme will automatically become a member of the statutory scheme.
The existing statutory scheme, which also applies only to branded health service medicines, is based on a price-cut mechanism. The Bill makes it clear that the Secretary of State may make regulations for a statutory scheme that is based on a payment mechanism, whereby a percentage of sales income is paid to the Government. Illustrative regulations, to which I referred this morning, and which include the payment mechanism alongside a price-freeze mechanism, have been provided to Committee members. Even though the Bill would not prevent us from applying the statutory scheme to unbranded generic medicines, that is not the Government’s current intent.
I have some comments to make on Opposition amendment 48. Perhaps you would like me to do that after the amendment has been spoken to, Mr Pritchard.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I want to raise a small, perhaps technical, issue on amendment 11, which it seems would insert the rules and definitions with respect to excepted persons for Scotland, Northern Ireland and Wales under a new subsection defining health service products for England. It seems out of place, and there is no definition of English excepted persons.
The amendment would insert new subsection (8A) into new section 264A, which clause 6 inserts into the National Health Service Act 2006. It seems out of place because the provision would deal with English health service products, then the definition of the excepted persons in the devolved nations, and then Scottish, Irish and Welsh health service products. It may just be a technical issue, but I wanted to raise it.
The Chair
I am sure that the hon. Lady knows, but if she wants to speak to amendment 48 now, she can do so.
Martyn Day (Linlithgow and East Falkirk) (SNP)
It is a pleasure to serve under your chairmanship today, Mr Pritchard. I am somewhat reassured by many of the Minister’s comments, and I thank him for his explanations. Much of this stuff is technical, and I hope he sees amendment 48 in a similar light. I think it would improve and strengthen the measure.
The clause does not currently set out a mechanism for the disclosure of information to devolved Administrations or bodies. For example, how will the information be disclosed, and by what means? Will it be only the Secretary of State who can disclose? In short, will the devolved Administrations be able to get the information when they want and need it, so that it ties in with the figures and statistics they are seeing and they can see patterns? It is about flexibility.
The amendment is fairly straightforward and we think it would help to strengthen and improve the Bill. I hope that the Minister agrees. We would like him to clarify whether the Government intend to leave disclosure to the discretion of the Secretary of State, on an ad hoc basis. Otherwise, what would the terms of disclosure be?
Rob Marris (Wolverhampton South West) (Lab)
To tease out the amendment a little more, proposed new section 264B(1)(h) relates to the provision of information to
“any person who provides services to any person falling within any of paragraphs (a) to (g)”.
Is the hon. Gentleman concerned that under his amendment there might be disclosure to other private providers; or is that covered because only paragraphs (a) to (g) are specified?
Martyn Day
I thank the hon. Gentleman for his intervention, and I hope that I can clarify my clarification. It is about timing—when the information is disclosed, not to whom it is disclosed. The Bill covers that and we are quite comfortable with that.
I was saying that we think our amendment would strengthen the clause. I am reminded that on Second Reading the Secretary of State referred to fact that there would be amendments—we are grateful to see many of them today—
“to reflect the agreement between the Government and the devolved Administrations, so that information from wholesalers and manufacturers can be collected by the Government for the whole of the UK and shared with the devolved Administrations.”——[Official Report, 24 October 2016; Vol. 626, c. 80.]
We think our amendment would enable him to get his wish and provide a mechanism in the Bill.
We feel strongly about the matter and want to push it to a vote if we do not receive the necessary assurances from the Minister. I hope that he can provide them.
Justin Madders (Ellesmere Port and Neston) (Lab)
I want to comment generally on the Minister’s amendments. I agree that it would have been helpful if they had been published earlier, but reasons why that was not possible have been given, and the Committee will be pleased to hear that I do not intend to go through each of them. I take the Minister’s assurances that there has been extensive dialogue with the devolved Administrations. I intend to direct my remarks not so much at those Administrations that have been taking responsibility for their health service for some time, but at those areas in England where they have embarked upon ambitious devolution arrangements that encompass health—Manchester is the most obvious and probably most advanced example. It is not at all clear to me how, if at all, the Bill will impact on them.
The Greater Manchester area has now been given a delegated budget of £6 billion per annum. I am sure that people there have made various representations about how that is short of the figure that they need, and a significant proportion of the annual budget will certainly be spent on pharmaceutical costs. Would it not be reasonable for the relevant proportion of the rebate to be returned to Manchester and such areas in the same manner as the initial funding is devolved down to them? Simon Wootton, who was the chief operating officer at the North Manchester clinical commissioning group, said that we have not had the PPRS money back into the local NHS in North Manchester.
I am not aware of any specific agreements as part of the devolution settlement for Greater Manchester, and nothing is in the Bill, so I would be grateful if the Minister, when he responds, set out whether there have been any discussions with local representatives in Manchester on the issue, and whether his intention is to ensure that, in common with other devolved Administrations, appropriate arrangements are put in place for the relevant proportion of the rebate to be paid directly to them.
Mr Dunne
First, in relation to amendment 11 and what the hon. Member for Central Ayrshire said, I think she made a perfectly reasonable point. As a lay reader of parliamentary drafting, if I may say so, it would be easy to be perplexed by the sequencing that she highlighted and brought to the attention of the Committee. I am advised, however, that the purpose of the amendment is to ensure that the UK Government collect information from English pharmacies and GP practices, but not from pharmacies in the areas of the devolved Administrations. Therefore, the reference to “Excepted person” includes pharmacies and GP practices in the devolved Administrations, but specifically does not include those in England, because their information is already collected by the UK Government. The terminology relates to where the GPs and pharmacies are and who is doing the collecting. I hope that helps.
Dr Whitford
I understand that, but I could not find reference to that in the National Health Service Act 2006, and I thought that the aim was to bring everything together in this Bill, so it seemed odd that there was no mention of English excepted persons. That is fine—that information is already being collected—but the Bill still separates the definition of English health service products from the definition of the health service products of the devolved nations. It seems an odd place to insert the amendment; it seems it is being attached to the definition of English health service products.
I totally accept that I am a complete novice, so there may be something I am not understanding, but to me, reading it logically, it does not seem to make total sense, and I thought that the aim of the Bill was to bring all the powers into one place. It seemed odd for there to be no definition of English excepted persons, even from an old Act, because what is happening here is that different things are being brought from the 2006 Act and from the Scotland Act 1978 into one place.
Mr Dunne
I thank the hon. Lady for that clarification. I hope that inspiration will arrive before I sit down.
To address the specific point made by the hon. Member for Ellesmere Port and Neston on devolution to Manchester, it is an interesting idea, which reflects some of the challenges arising from the increasing use of devolution of powers across our country. I can see why he might seek to secure a carve-out of income for Manchester. I would say, “Nice try”, but at present the funding arrangements for Manchester and other devolved areas in England are agreed via NHS England. That applies to the totality of funding available for health provision within the Manchester area, so the allocation already includes income derived from the voluntary scheme, and it will not be ring-fenced as a subset of the funds, because there chaos would lie.
Justin Madders
I appreciate that the Minister is not going to embark on a new area of debate and dialogue with Greater Manchester on this point, but will he advise whether future allocations intend to deal with the increased income from the rebate that is anticipated as a result of the Bill?
Mr Dunne
Each year, when NHS England agrees its commissioning budgets and tariffs with providers, an allocation is made. That is based on the overall sum received by NHS England. Increases in revenues that derive from the Bill will help to swell that pot relatively modestly, although every penny counts, and that will therefore be taken into account when determining allocations to all CCGs, including those in Manchester.
I will give the Government’s response in relation to amendment 48; I do not have many comments to make. I sincerely hope that, before I reach the end of these remarks, I will be able to address the further point, on English exclusion, made by the hon. Member for Central Ayrshire.
Proposed new section 264B in clause 6 enables the Secretary of State to disclose the information collected to a range of bodies, which includes Government bodies such as NHS England, special health authorities, NHS Digital, other Departments and the devolved Administrations. It also enables the Secretary of State to prescribe representative bodies, or other persons in prescribed regulations, to whom he can disclose information in the future. For example, that might include certain information going to trade associations or other bodies that it might be appropriate to provide information to in future, with respect to the operations of the Bill.
The effect of the amendment tabled by the hon. Members for Central Ayrshire and for Linlithgow and East Falkirk would be that any of those bodies could in future access any information that the Government have collected. We do not believe that it would be right for representative bodies to be able to access information that the Secretary of State collects, primarily for purposes of commercial confidentiality. There are examples in other legislation in which we have taken specific steps to protect commercially sensitive information. I am not suggesting that one company would directly get access to information on another company’s profitability, but third-party advisers, for example, might get access to that information.
We do not want to provide opportunities for risking breaches of commercial confidentiality, because that would undermine confidence in the information gathering for all the companies, which includes major multinational companies. We think that the amendment might open us up to criticism from the major suppliers that there was greater risk of that intervention, which we would not want to see.
Dr Whitford
If the Minister looks at our amendment, which is incredibly short, he will see that all it says is “at that person’s request.” We do not want to widen the list in any way at all; we are not looking to add to the list. All we are saying is that, if it is accepted that a devolved Government should be able to access this information, it should be at the request of that devolved Government. It should not be, “We will tell you every April how you’re doing.” If a devolved country sees a pattern emerging, it should be able to say, “Can we request our data?” The issue is that data are to be collected centrally but not belong to the devolved nations to which they pertain. We are not trying to add anyone; we are just trying to give the devolved countries the power to request.
Mr Dunne
I completely understand that that is the intent of the hon. Lady’s amendment, and I think I have another way of addressing it, which I am now going to come on to. We think it entirely appropriate that at some point the devolved Administration might wish to change their information requirements. They might wish to add requests for information that they are not initially getting, which is a reasonable request.
We think that the right way to address that, rather than putting something in the Bill that might inadvertently allow other representative bodies access to information—I am sure the hon. Lady agrees that that might not be appropriate—is for a memorandum of understanding to be agreed between the Department of Health and each of the devolved Administrations that would allow requests for information to be submitted and dealt with in a manner agreeable to both parties. In the consultation process that will follow, we intend to enter into a memorandum of understanding that will include the procedures for requesting and sharing information.
I assure the Committee that the Government intend to continue to work constructively with the devolved Administrations to ensure that they have access to the relevant information collected in a format convenient to both sides, so that we do not end up with special data sets that are hard for an Administration to create because the data are not readily available from the information provided. Aside from that, we would honour the reasonable requests of any devolved Administration to be able to get access to the data, which I acknowledge the Administration may not own if the information has been gathered by the Department of Health.
On that basis, I hope that the hon. Lady and the hon. Member for Linlithgow and East Falkirk will not press their amendment.
The Chair
If the SNP Front-Bench spokespersons want to press the amendment to a vote, that will happen later, but it would be helpful to the flow of the proceedings if they confirmed now whether they intended to do so.
The Chair
I am grateful to the hon. Gentleman.
Amendment 1 agreed to.
Amendments made: 2, in clause 6, page 4, line 5, leave out from “any” to “to” in line 6 and insert “UK producer”.
This amendment is linked to amendments 1, 3 to 16 and 19 to 35. It allows regulations to require the provision of information by a person who manufactures, distributes or supplies Welsh health service products, Scottish health service products or Northern Ireland health service products.
Amendment 3, in clause 6, page 4, line 19, at end insert—
“(d) the determination of the payments to be made to any persons who provide primary medical services under Part 4 of the National Health Service (Wales) Act 2006;
(e) the determination of the remuneration to be paid to any persons who provide pharmaceutical services under Part 7 of that Act;
(f) the consideration by the Welsh Ministers of whether—
(i) adequate supplies of Welsh health service products are available, and
(ii) the terms on which those products are available represent value for money;
(g) the determination of the payments to be made to any persons who provide primary medical services under section 2C(1) of the National Health Service (Scotland) Act 1978 (“the 1978 Act”);
(h) the determination of the remuneration to be paid to any persons who provide pharmaceutical care services under section 2CA(1) of the 1978 Act;
(i) the consideration by the Scottish Ministers of whether—
(i) adequate supplies of Scottish health service products are available, and
(ii) the terms on which those products are available represent value for money;
(j) the determination of the remuneration to be paid to any persons who provide primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14));
(k) the consideration by a Northern Ireland department of whether—
(i) adequate supplies of Northern Ireland health service products are available, and
(ii) the terms on which those products are available represent value for money;
(l) the exercise by the Secretary of State of any powers under sections 260 to 264 and 265;
(m) the operation of a voluntary scheme.”.
This amendment is linked to amendments 1, 2, 4 to 16 and 19 to 35. It sets out the purposes for which a person may be required to record and provide information to the Secretary of State by virtue of regulations under section 264A(1) of the National Health Service Act 2006.
Amendment 4, in clause 6, page 4, leave out lines 20 to 29.
This amendment is linked to amendments 1 to 3, 5 to 16 and 19 to 35. It removes subsections (3) and (4) of section 264A of the National Health Service Act 2006 because the provision made by those subsections now appears in amendment 3.
Amendment 5, in clause 6, page 4, line 30, leave out
“an English producer or other”
and insert “a”.
This amendment is linked to amendments 1 to 4, 6 to 16 and 19 to 35. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.
Amendment 6, in clause 6, page 4, line 33, leave out from “for” to end of line 35 and insert “UK health service products”.
This amendment is linked to amendments 1 to 5, 7 to 16 and 19 to 35. It is a consequential amendment. A reference to English health service products is no longer needed as those products will fall within the definition of “UK health service products” inserted by amendment 14.
Amendment 7, in clause 6, page 4, line 38, leave out “the” and insert “UK health service”.
This amendment is linked to amendments 1 to 6, 8 to 16 and 19 to 35. It is a consequential amendment.
Amendment 8, in clause 6, page 4, line 41, leave out “the” and insert “UK health service”.
This amendment is linked to amendments 1 to 7, 9 to 16 and 19 to 35. It is a consequential amendment.
Amendment 9, in clause 6, page 4, line 43, leave out second “the” and insert “UK health service”.
This amendment is linked to amendments 1 to 8, 10 to 16 and 19 to 35. It is a consequential amendment.
Amendment 10, in clause 6, page 5, line 1, leave out from “whether” to “health” in line 2 and insert
“they are UK health service products and, if so, which of the following they are—
(i) English health service products;
(ii) Welsh health service products;
(iii) Scottish health service products;
(iv) Northern Ireland”.
This amendment is linked to amendments 1 to 9, 11 to 16 and 19 to 35. It is a consequential amendment. It enables regulations to require a UK producer to provide information about products for verifying whether they are Welsh, Scottish or Northern Ireland health service products.
Amendment 11, in clause 6, page 5, line 14, at end insert—
“(8A) “Excepted person” means any of the following—
(a) a person who provides primary medical services under Part 4 of the National Health Service (Wales) Act 2006;
(b) a person who provides pharmaceutical services under Part 7 of that Act;
(c) a person who provides primary medical services under section 2C(1) of the 1978 Act;
(d) a person who provides pharmaceutical care services under section 2CA(1) of the 1978 Act;
(e) a person who provides primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14)).”.
This amendment is linked to amendments 1 to 10, 12 to 16 and 19 to 35. It lists the persons who are excepted from being a “UK producer” for the purposes of the definition inserted by amendment 1.
Amendment 12, in clause 6, page 5, line 15, at end insert—
“( ) “Northern Ireland health service products” means any medicinal products used to any extent for the purposes of health care provided by virtue of the Health and Social Care (Reform) Act (Northern Ireland) 2009 and any other medical supplies, or other related products, required for the purposes of health care provided by virtue of that Act.”.
This amendment is linked to amendments 1 to 11, 13 to 16 and 19 to 35. It provides a definition of “Northern Ireland health service products” for the purposes of section 264A of the National Health Service Act 2006.
Amendment 13, in clause 6, page 5, line 15, at end insert—
“( ) “Scottish health service products” means any medicinal products used to any extent for the purposes of the health service within the meaning of the 1978 Act and any other medical supplies, or other related products, required for the purposes of that health service.”.
This amendment is linked to amendments 1 to 12, 14 to 16 and 19 to 35. It provides a definition of “Scottish health service products” for the purposes of section 264A of the National Health Service Act 2006.
Amendment 14, in clause 6, page 5, leave out lines 16 to 26 and insert—
“( ) “UK health service products” means any English health service products, Welsh health service products, Scottish health service products or Northern Ireland health service products.”.
This amendment is linked to amendments 1 to 13, 15, 16 and 19 to 35. It provides a definition of “UK health service products” for the purposes of section 264A of the National Health Service Act 2006.
Amendment 15, in clause 6, page 5, line 26, at end insert—
“( ) “Welsh health service products” means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) of the National Health Service (Wales) Act 2006 and any other medical supplies, or other related products, required for the purposes of that health service.”
This amendment is linked to amendments 1 to 14, 16 and 19 to 35. It provides a definition of “Welsh health service products” for the purposes of section 264A of the National Health Service Act 2006.
Amendment 16, in clause 6, page 5, line 26, at end insert—
“( ) Until the coming into force of the repeal of section 27 of the 1978 Act by schedule 3 to the Smoking, Health and Social Care (Scotland) Act 2005 the references in subsections (2)(h) and (8A)(d) to pharmaceutical care services under section 2CA(1) of the 1978 Act are to be read as references to pharmaceutical services under section 27(1) of that Act.”.
This amendment is linked to amendments 1 to 15 and 19 to 35. It makes transitional provision in relation to references to pharmaceutical care services under section 2CA(1) of the National Health Service (Scotland) Act 1978.
Amendment 17, in clause 6, page 5, line 35, at end insert—
“(fa) the Common Services Agency for the Scottish Health Service constituted under section 10 of the 1978 Act;”.
This amendment adds the Common Services Agency for the Scottish Health Service to the persons listed in section 264B(1) of the National Health Service Act 2006. This means that information provided by virtue of section 264A of that Act may be disclosed to that Agency.
Amendment 18, in clause 6, page 5, line 36, at end insert—
“(ga) the Regional Business Services Organisation established under section 14 of the Health and Social Care (Reform) Act (Northern Ireland) 2009;”.
This amendment adds the Regional Business Services Organisation to the persons listed in section 264B(1) of the National Health Service Act 2006. This means that information provided by virtue of section 264A of that Act may be disclosed to that Organisation.
Amendment 19, in clause 6, page 5, line 40, leave out “English producers or other”.
This amendment is linked to amendments 1 to 16 and 20 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.
Amendment 20, in clause 6, page 5, line 46, at end insert “(subject to subsection (4))”.
This amendment is linked to amendments 1 to 16, 19 and 21 to 35. It flags the provision made by amendment 29.
Amendment 21, in clause 6, page 6, line 4, leave out “or (4)” and insert
“(a) to (c), (l) or (m)”.
This amendment is linked to amendments 1 to 16, 19, 20 and 22 to 35. It is consequential on amendments 3 and 4.
Amendment 22, in clause 6, page 6, line 8, leave out “or (4)” and insert
“(a) to (c), (l) or (m)”.
This amendment is linked to amendments 1 to 16, 19 to 21 and 23 to 35. It is consequential on amendments 3 and 4.
Amendment 23, in clause 6, page 6, line 11, leave out “to (g)”.
This amendment is linked to amendments 1 to 16, 19 to 22 and 24 to 35. It is consequential on amendments 25 and 26.
Amendment 24, in clause 6, page 6, line 12, leave out
“either of the matters specified in section 264A(4)”
and insert
“any of the matters specified in section 264A(2)(d) to (f), (l) or (m)”.
This amendment is linked to amendments 1 to 16, 19 to 23 and 25 to 35. It is consequential on amendments 3 and 4.
Amendment 25, in clause 6, page 6, line 13, at end insert—
“(ca) in relation to a person falling within subsection (1)(f) or (fa), the purpose is that of exercising functions connected with any of the matters specified in section 264A(2)(g) to (i), (l) or (m);”.
This amendment is linked to amendments 1 to 17, 19 to 24 and 26 to 35. It is consequential on amendments 3, 4 and 17.
Amendment 26, in clause 6, page 6, line 13, at end insert—
“(cb) in relation to a person falling within subsection (1)(g) or (ga), the purpose is that of exercising functions connected with any of the matters specified in section 264A(2)(j) to (m);”.
This amendment is linked to amendments 1 to 16, 18 to 25 and 27 to 35. It is consequential on amendments 3, 4 and 18.
Amendment 27, in clause 6, page 6, line 17, leave out “(c)” and insert “(cb)”.
This amendment is linked to amendments 1 to 16, 19 to 26 and 28 to 35. It is mainly consequential on amendments 25 and 26.
Amendment 28, in clause 6, page 6, line 20, leave out “or (4)”.
This amendment is linked to amendments 1 to 16, 19 to 27 and 29 to 35. It is consequential on amendments 3 and 4.
Amendment 29, in clause 6, page 6, line 20, at end insert—
“(4) The Welsh Ministers may disclose any confidential or commercially sensitive information disclosed to them under subsection (1) to any of the following persons—
(a) a Local Health Board or other person appointed under section 88(3)(b) of the National Health Service (Wales) Act 2006 to exercise the functions of a determining authority under Part 7 of that Act;
(b) a National Health Service trust established under section 18 of the National Health Service (Wales) Act 2006;
(c) any person who provides services to the Welsh Ministers or to any person falling within paragraph (a) or (b).
(5) A person to whom any confidential or commercially sensitive information is disclosed under subsection (4) may not—
(a) use the information for any purpose other than the purpose of exercising functions connected with any of the matters specified in section 264A(2)(d) to (f), (l) or (m), or
(b) disclose the information to another person.”.
This amendment is linked to amendments 1 to 16, 19 to 28 and 30 to 35. It allows the Welsh Ministers to disclose information to other persons including Local Health Boards, National Health Service trusts and persons providing services to those persons.
Amendment 30, in clause 6, page 6, line 24, leave out “English producers or other”.—(Mr Dunne.)
This amendment is linked to amendments 1 to 16, 19 to 29 and 31 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Dunne
Before I go into the clause as a whole, I would like to respond in further detail to the hon. Member for Central Ayrshire about excepted persons. Clause 6 will add a new section to the National Health Service Act 2006. It brings together information collection practices, both statutory and voluntary. The Secretary of State collects information from a sample group in England from time to time, but not from GPs and pharmacies in the devolved Administrations. Therefore, the definition of “excepted persons” covers those persons whom the Secretary of State does not intend to collect information from directly, because he would be relying on the devolved Administrations to do so. The terminology used in proposed new section 264B is new; it is not based on the 2006 Act, which the hon. Lady has read so diligently. I thank her for bringing the matter to the Committee’s attention and I hope that that explanation meets her concern.
Dr Whitford
To clarify, is there a rational reason for the positioning of the section as between English health service products and the other health service products? I am sorry if, as a novice, I am creating extra work.
Mr Dunne
I think that is to do with parliamentary drafting on which I stand to become an expert; I look forward to seeing whether there is a clear explanation for that, which I can give to the hon. Lady as we debate the clause.
The clause enables the Secretary of State to make regulations that require any person who manufactures, distributes or supplies health service products, which includes health service medicines, medical supplies and other related products, to keep, record and provide on request information on prices and costs.
The clause brings together and consolidates existing information requirements related to controlling the costs of health service medicines, as well as medical supplies, in one place in the Act, as we discussed this morning. It also allows the information to be used for the purposes set out in the clause.
The clause also expands and strengthens our information collection. It enables the Government to make regulations to put current voluntary information provision arrangements on a statutory footing. For example, we collect information from manufacturers and wholesalers of unbranded generic medicines and specials to inform reimbursement arrangements for community pharmacies. The Bill will enable us to make regulations to get information on more products and from more companies. That is necessary to ensure that reimbursement prices for pharmacies reflect market prices of the whole market, rather than just of those companies that currently supply data to us. As in any industry, there are new market entrants and participants leave the market; this is a dynamic market and we need the flexibility to bring in new products from new companies.
The clause will also enable the Government to collect information to assure us that adequate supplies of health service products are available, and that the terms on which they are available represent value for money. If we were to have concerns about the supply chain or parts of it, or about specific products, we could obtain information from companies in the supply chain to assure us that the products, or the supply chain, provided value for money to the NHS and the taxpayer. Although the Government are generally not the purchaser of health service products, they do pay for them and therefore transparency and value for money of the supply chain are important. For example, if we were to consider limiting the price of a high-priced generic, the power to obtain information would be crucial to determine whether excess profits were being made. We could obtain information from a manufacturer, which would help us to determine whether the price it was charging the NHS was unreasonably high. That information would also inform our decision on what the right price should be.
The purposes for which the Government can collect information are limited and involve three areas: cost and pricing schemes, reimbursement of pharmacies and GPs, and assessing value for money. The clause provides the Secretary of State with the power to request any information for the purposes set out in the Bill. It also provides an indicative list of the type of information that the Secretary of State may request. Most of the types of information listed are already collected by the Government under statutory or voluntary arrangements.
The clause will also enable the Government to share information with a range of bodies, including Ministers in the devolved Administrations, the NHS, other Departments and persons providing services to those prescribed bodies.
Rob Marris
In the Minister’s helpful letter to the hon. Member for Vale of Clwyd, sent yesterday, he said:
“At this moment the Government does not foresee any routine collections for those involved in the manufacture, distribution or supply of medical supplies”.
I just understood the Minister to say—he will correct me if I misunderstood—that in certain non-routine circumstances in relation to medical supplies, the Government may wish to have information. I understand that, but I must say to him that that might create a problem for those medical suppliers that are not routinely supplying information, but feel that they still have to keep all the information as outlined in the clause just in case a little way down the road the Government decide that the circumstances are exceptional. Will he clarify that?
Mr Dunne
I am grateful to the hon. Gentleman for raising some of the practical requirements of collecting and retaining data. Particularly in relation to medical supplies, where we have this power already but have not exercised it, I can understand a potential anxiety that we may be changing the basis on which companies are requested to retain information. We will be consulting industry on the regulations, and a draft is available in the pack. Our intent is not to add to the burden, particularly on small companies, of retaining extra data that may never be called upon.
We will use the consultation to try to be as pragmatic as possible but, in the event of information becoming apparent to us within a reasonable period, we may wish to be able to go back and look at the data. The natural place to start the data gathering is the information that companies are obliged to retain for other Government purposes, such as HMRC requirements to retain information for six years. That will be our starting point in identifying the duration, the type of information and the manner of retention. We are not, in the first instance, looking to add an additional burden.
During the consultation, we may decide that there is some information that is routinely kept by companies that supply the NHS that it would be desirable for them to continue retaining for the same period but, as I stand here today, I do not have examples. I am sure an ingenious mind could come up with a devilishly clever example of information that would be useful, but I hope the hon. Gentleman will not be tempted by me to do so.
Maggie Throup (Erewash) (Con)
The Minister says that he will continue to consult industry bodies, and there are some obvious bodies that I am sure he will have around the table. Can he reassure us that it will not just be the large bodies and that he will invite some of the smaller trade organisations to the consultation, too?
Mr Dunne
Yes. I am grateful to my hon. Friend for that intervention. We intend to consult the trade associations that we have already been consulting. As I said to the hon. Member for Wolverhampton South West, we do not intend to add unduly burdensome information requirements. One issue that we have agreed to consider in the consultation is the suggested size of business that should be capable of providing information. We have an SME definition in the regulations that is not precisely the same as other SME definitions elsewhere across Government, and we need to consider that carefully in the consultation so that we are not unduly burdening small companies.
Having said that, there are examples of pharmaceutical providers that may be large companies in other countries but are supplying through a UK subsidiary or a non-UK EU subsidiary that maintains a very small number of employees in this country, that therefore may fall within the more widely used SME definition but that nevertheless is a relatively large supplier of pharmaceutical products to the UK. There is a balance to be struck in ensuring that the universe of companies that we ask to retain data is big enough to capture reasonably large suppliers, even if technically those suppliers may fall within an SME definition.
The Chair
Order. The TV cameras are broadcasting this debate live, and I am sure the public want to see more of the Minister than our colleagues. It would be good if he faced inwards.
Mr Dunne
Mr Pritchard, your alertness to the media never leaves the forefront of your mind. I am grateful to you for drawing to my attention the fact that others are potentially listening to our proceedings.
It will be a public consultation, so companies that feel they have an interest will have every opportunity to participate. We have already engaged with a wide range of industry bodies in both medical supplies and medicines to draft the regulations.
Fortunately, inspiration has arrived to address the persistent comment from the hon. Member for Central Ayrshire about drafting. I hope that what I am about to say will satisfy her. She referred to amendment 11, which we have agreed. The Bill currently refers to purposes that are England-only and those that are reserved. The amendments refer to purposes that are England-only, Welsh-only, Scottish-only, Northern Irish-only and reserved. It is therefore necessary to make a distinction between products supplied to the health services in each of the different nations. If that leads to some disorder in how the measure has been written, I can but apologise to the hon. Lady. She has done a good service to the Committee in pointing that out, but that is as far as I am able to go on the matter today.
Clause 6 enables the Government to share information with representative bodies providing services, in addition to the bodies I have referred to. It restricts the use of information that is confidential or commercially sensitive to the defined purposes in the Bill. That is deliberate. It is important to provide commercial suppliers to the NHS with some confidence that any information they supply which may be commercially sensitive—of course, margin information is commercially sensitive—will not be capable of being disseminated beyond the prescribed bodies. The clause also enables the Government to prescribe in regulations representative bodies with which they may share information. In the illustrative regulations, we have prescribed a number of those bodies. There is also the possibility to prescribe other persons in regulations in due course, should suitable bodies emerge.
The illustrative regulations that the Government have provided to help the Committee scrutinise the clause demonstrate our intentions in this area. The regulations distinguish between routine collection and non-routine collection of information. Routine collections mostly include information that we are already collecting under voluntary arrangements. On a non-routine basis, we would collect information to satisfy ourselves that the supply chain provides value for money. We do that at present through sampling collections from time to time, particularly among the smaller providers and pharmacies. We will consult with stakeholders to determine whether the obligation to keep and record information will be any more burdensome than the existing obligation to keep these data for tax purposes, as I have said.
Committee members will see that we have made provision for SMEs in the illustrative regulations, which I touched on in response to my hon. Friend the Member for Erewash. For the purposes of the illustrative information regulations, SMEs can, where appropriate, provide the Government with the information requested by providing us with invoices. That is how we currently collect information from pharmacies, which we believe places a proportionate and modest burden on them.
The clause covers medical supplies and other related products, streamlines existing provisions for medical supplies and aligns them with those for medicines. Medical supplies and other related products are wide-ranging, and there are tens of thousands of items. In regulations, the Government will prescribe for which medical supplies information is required to be kept, recorded and provided on request.
The illustrative regulations set out the type of products that may be affected. The Government will consult publicly on that. The Government have tabled amendments to the clause to reflect the instructions of the devolved Administrations in this area. The Department already collects a considerable amount of information from across the supply chain. The clause streamlines existing statutory requirements, puts existing voluntary arrangements on a statutory footing and strengthens the collections. It also enables the Department to use the information collected for multiple but defined purposes. If hon. Members are satisfied with my explanation, I ask the Committee to accept that clause 6 stand part of the Bill.
Question put and agreed to.
Clause 6, as amended, accordingly ordered to stand part of the Bill.
Clause 7
Consequential amendments
Amendments made: 31, in clause 7, page 6, line 32, at end insert—
“(A1) Omit the following provisions of the National Health Service (Scotland) Act 1978—
(a) section 49 (control of maximum prices for medical supplies other than health service medicines), and
(b) Schedule 10 (additional provisions as to control of maximum prices for medical supplies other than health service medicines).”
This amendment is linked to amendments 1 to 16, 19 to 30, 32 to 35 and 38. The provision made by section 49 of, and Schedule 10 to, the National Health Service (Scotland) Act 1978 is superseded by the provision made in the amendments.
Amendment 32, in clause 7, page 7, line 7, leave out “English producers and other”.
This amendment is linked to amendments 1 to 16, 19 to 31 and 33 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.
Amendment 33, in clause 7, page 7, line 11, leave out “an English producer or other” and insert “a”.
This amendment is linked to amendments 1 to 16, 19 to 32 and 34 and 35. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.
Amendment 34, in clause 7, page 7, line 17, leave out “English producers or other”.
This amendment is linked to amendments 1 to 16, 19 to 33 and 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.
Amendment 35, in clause 7, page 7, line 20, leave out ““English producer” and “other UK producer” are” and insert ““UK producer” is”.—(Mr Dunne.)
This amendment is linked to amendments 1 to 16 and 19 to 34. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.
Question proposed, That the clause, as amended, stand part of the Bill.
Rob Marris
I hope the Minister does have a bit more to add. Clause 7 is very much the twin, or the other side of the coin, of clause 6. Clause 6 introduces big changes to the information supply regime, which we have just discussed. Clause 7 is getting rid of bits of the hitherto existing supply regime—not all of it, but bits. I want to probe him a little bit on that.
On page 7 of the Bill, clause 7(16) states:
“In Schedule 22 (provisions in relation to section 260) omit paragraphs 2 to 11.”
Schedule 22, paragraphs 2 to 11, of the National Health Service Act 2006 is about enforcement. I am probing the Minister, given our discussion this morning when I said, in relation to some parts of the Bill and this area of human endeavour, that it was the only area I am aware of where a criminal penalty regime appeared to have been 100% successful and there had been no such prosecutions—intimating, although not proving, that that wrongdoing had been dissuaded by the legislation. We then come to clause 7, and the enforcement regulations and regime are altered. I want to be reassured by the Minister that the alterations do not weaken the enforcement regime. I am applying the Marris test to it; I cannot read absolutely every word of the 2006 Act, which I was involved in 10 years ago and runs to 258 pages—I will not do that—but what is being removed is a whole lot longer than what is being substituted in. That may be a welcome shortening, clarification and simplification of the law, or it may be a weakening of enforcement. I hope that the Minister can elucidate to the Committee, in broad terms, whether it is the former or the latter.
Mr Dunne
I am astonished that the hon. Gentleman does not have complete recall of everything that was involved in the 2006 Act, given the assiduous way in which he approaches legislative scrutiny. Accepting that uncharacteristic lapse in his memory, I should perhaps have said that the subsections in clause 7 merely bring forward the relevant consequential amendments, following on from the earlier clauses, to the National Health Service Act.
This morning, we discussed the one material change in enforcement that we are introducing through the Bill: reducing the criminal penalty currently available under the 2006 Act for bad practice uncovered in the supply of medical supplies, so that it is in line with the enforcement regime for medicines. To that extent, if the threat of criminal sanction were—as hinted at by the hon. Gentleman—the primary reason for the lack of convictions of a criminal nature for the supply of medical supplies, he might have a legitimate concern that we are watering down an enforcement regime that had worked so effectively that there had been no prosecutions. I would gently say to him that, as far as I am aware, not only have there been no convictions, but there have been few if any—I hesitate to say none, because I might not be able to prove that—prosecutions under those sections in the 2006 Act against suppliers of medical supplies. That is as much because it has not been brought to the attention of the Department that there is abusive pricing behaviour happening in the medical supplies marketplace. For that reason, there have been no prosecutions and, therefore, no convictions. That is why we think it appropriate to remove the criminal sanction, so we may bring it into conformity with enforcement actions for medicines.
To put it in ideological terms, this is part of reducing the burden on business, because the power has proved to be one that is unnecessary for the Government to have—the power to introduce a criminal enforcement regime has not been used since its introduction by the hon. Gentleman in 2006.
Rob Marris
I understand what the Minister is saying. I am not in any way suggesting that the overwhelming majority of medical suppliers are on the straight and narrow only because they know what the penalties would be for going off the straight and narrow. However, he needs to be a little careful about the direction of his argument, because—I think he would agree, but he can say if he does not—if crime in the United Kingdom fell to zero, I would not suggest getting rid of all police officers. I would say, “They are doing a fantastic job and it’s great that we have all these law-abiding citizens. Let’s just encourage them to carry on being law-abiding by making it clear that there are enforcement mechanisms and penalties for not being so.” That is the philosophical, if not ideological, approach.
Mr Dunne
Well, we do not believe so. What we do believe is that it is more important for us to have a consistent approach to enforcement when it comes to any future breaches or alleged breaches in respect of supply to the NHS. Frankly, it will be easier for the NHS to manage and easier for the industry supplying us to operate if they are all operating within the same enforcement regime. Therefore, I commend the clause to the Committee.
Question put and agreed to.
Clause 7, as amended, accordingly ordered to stand part of the Bill.
Clause 8
Extent
Amendments made: 36, in clause 8, page 7, line 29, at beginning insert “Subject as follows,”.
This amendment is linked to amendments 37 and 38.
Amendment 37, in clause 8, page 7, line 29, at end insert—
“( ) Section (Provision of information to Welsh Ministers) extends to England and Wales only.”
This amendment is linked to amendments 36 and NC1. Its effect is that the provision made by NC1 will extend to England and Wales only.
Amendment 38, in clause 8, page 7, line 29, at end insert—
“( ) Section 7(A1) extends to Scotland only.”—(Mr Dunne.)
This amendment is linked to amendments 31 and 36. Its effect is that the provision made by amendment 31 will extend to Scotland only.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Dunne
This clause is the shortest in the Bill and it confirms the extent of the Bill as covering England and Wales, Scotland and Northern Ireland. I am sure we can all reach common accord in supporting the clause.
Question put and agreed to.
Clause 8, as amended, accordingly ordered to stand part of the Bill.
Clause 9
Commencement
Amendments made: 39, in clause 9, page 7, line 32, at end insert—
“( ) Section (Provision of information to Welsh Ministers) comes into force on such day as the Welsh Ministers may by order appoint.”.
This amendment is linked to amendments 40 to 42 and NC1. It makes provision for the Welsh Ministers to bring clause (Provision of information to Welsh Ministers) into force.
Amendment 40, in clause 9, page 7, line 35, at beginning insert “An order or”.
This amendment is linked to amendments 39, 41, 42 and NC1.
Amendment 41, in clause 9, page 7, line 38, at beginning insert “An order or”.
This amendment is linked to amendments 39, 40, 42 and NC1.
Amendment 42, in clause 9, page 7, line 38, after “section” insert “is or”.—(Mr Dunne.)
This amendment is linked to amendments 39 to 41 and NC1.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Dunne
Briefly, clause 9 deals with the commencement of the Bill and ensures that clauses 1 to 8 come into force as determined by regulations. As I have indicated, there will be a public consultation on the regulations. It is the Government’s intent that that consultation take place over the winter and it will conclude to enable the Bill to receive Royal Assent, following its passage through the House of Lords, by the end of the current Parliament.
Rob Marris
That is half of what I wanted to know—the Bill will have Royal Assent by then. Will the Minister say when it might come into force, pursuant to clause 9(2)?
Mr Dunne
The Department’s intent is for it to come into force as soon as is practicable. The timetable for their lordships’ House in determining legislation is way above my pay grade and, I would suggest, the hon. Gentleman’s. We are therefore in the hands of the parliamentary authorities, but it is certainly our hope and expectation that, with effect from 1 April, the regulations— [Interruption.] I am seeking inspiration from the Department.
Mr Dunne
I have had some extremely expert inspiration. In the event that their lordships choose to amend the Bill during its passage, it would be inappropriate to consult on the regulations finally until the Bill emerged from the other place. The consultation will therefore start as soon as we have Royal Assent, and the implementation of the proposals is therefore expected in the autumn.
Question put and agreed to.
Clause 9, as amended, accordingly ordered to stand part of the Bill.
Clause 10 ordered to stand part of the Bill.
New Clause 1
Provision of information to Welsh Ministers
“After section 201 of the National Health Service (Wales) Act 2006 insert—
“Provision of information about medical supplies etc
201A Provision of information by persons providing primary medical services or pharmaceutical services
(1) Regulations may make provision requiring any Part 4 provider or Part 7 provider to—
(a) record and keep information, or information of a description, specified in the regulations, and
(b) provide that information to the Welsh Ministers.
(2) Information, or a description of information, may not be specified in the regulations by virtue of subsection (1) unless the Welsh Ministers consider that the information may be required for the purpose of enabling or facilitating any of the following—
(a) the determination of the payments to be made to any Part 4 providers;
(b) the determination of the remuneration to be paid to any Part 7 providers;
(c) the consideration by the Welsh Ministers of whether—
(i) adequate supplies of health service products are available, and
(ii) the terms on which those products are available represent value for money.
(3) The information which the Welsh Ministers may require from a Part 4 provider or Part 7 provider by virtue of this section includes the following—
(a) the price charged or paid by the provider for health service products;
(b) the price paid by the provider for delivery or other services in connection with health service products;
(c) the discounts or rebates or other payments given or received by the provider in connection with the supply of health service products;
(d) the revenue or profits accrued to the provider in connection with the supply of health service products;
(e) such information about medicinal products, other medical supplies or other related products as is necessary to verify whether or not they are health service products.
(4) Regulations under this section may require information to be provided in such form and manner, and at such time or within such period, as may be prescribed.
(5) Regulations under this section may provide for a person who contravenes any provision of the regulations to be liable to pay a penalty to the Welsh Ministers.
(6) If regulations under this section make provision by virtue of subsection (5) they must include provision conferring on Part 4 providers and Part 7 providers a right of appeal against a decision of the Welsh Ministers to impose a penalty.
(7) The provision of information by virtue of this section does not breach—
(a) any obligation of confidence owed by the person providing it, or
(b) any other restriction on the provision of information (however imposed).
(8) In this section—
“health service products” means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) and any other medical supplies, or other related products, required for the purposes of that health service;
“medical supplies” includes surgical, dental and optical materials and equipment;
“medicinal product” has the meaning given by section 130 of the Medicines Act 1968;
“Part 4 provider” means a person who provides primary medical services under Part 4;
“Part 7 provider” means a person who provides pharmaceutical services under Part 7.
201B Disclosure of information
(1) Information provided by virtue of section 201A may be disclosed by the Welsh Ministers to any prescribed person or person of a prescribed description.
(2) A person to whom any confidential or commercially sensitive information is disclosed under subsection (1) may not—
(a) use the information for a purpose other than a purpose specified in section 201A(2), or
(b) disclose the information to another person.
201C Sections 201A and 201B: supplementary
(1) Before making regulations under section 201A or 201B the Welsh Ministers must consult any body which appears to the Welsh Ministers appropriate to represent Part 4 providers or Part 7 providers.
(2) Nothing in section 201A or 201B requires information to be provided, or authorises information to be disclosed or used, in contravention of the Data Protection Act 1998.
(3) Nothing in section 201A or 201B affects any duties, obligations or powers to require or authorise information to be provided, disclosed or used which exist apart from that section.””.—(Mr Dunne.)
This new clause is linked to amendments 36, 37 and 39 to 42. Inserted after clause 6, the new clause allows Welsh Ministers to require the provision of information by providers of primary medical or pharmaceutical services under Part 4 or 7 of the National Health Service (Wales) Act 2006.
Brought up, read the First and Second time, and added to the Bill.
New Clause 2
Reporting requirements of the Secretary of State
“(1) Within 12 months of this Act coming into force, the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act and must lay a copy of the report before Parliament.
(2) The report under subsection (1) shall include an assessment of the impact of the use of the Secretary of State’s powers on—
(a) the availability and cost of medicines and other medical supplies to the health service and the terms upon which they are made available;
(b) research and development;
(c) the NHS’s duty to promote innovation.
(3) Subsequent to the publication of the report in subsection (1), as soon as is reasonably practicable after the end of each financial year the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act during the preceding financial year and the impact of the use of those powers on the matters under subsection (2), and must lay a copy of the report before Parliament.”.—(Justin Madders.)
This new clause would place a duty upon the Secretary of State to place a report before Parliament on an annual basis on the impact of the Act on the pricing and availability of medicines and other medical supplies, research and development and the NHS’s legal duty to promote innovation.
Brought up, and read the First time.
Justin Madders
I beg to move, That the clause be read a Second time.
As is explained in the explanatory note, the new clause would put a duty on the Secretary of State to place before Parliament an annual report on the impact of the Act and, in particular, on the pricing and availability of medicines and other medical supplies, research and development, and the NHS’s legal duty to promote innovation. I think we all agree that there are examples of unreasonable behaviour, but there may be occasions when there is a difference of opinion as to what amounts to unreasonable pricing practices, not least between the producers and the NHS.
We would be more assured if the consultation on the regulations had been completed by this stage. We are obviously not going to be in a position to know what that consultation has to say for some considerable time, so we believe the implementation of such a requirement would allow Parliament to scrutinise the impact of the legislation.
There has been some unease in the sector about the impact of the legislation and there is a certain amount of uncertainty, particularly around the future of the European Medicines Agency and the medium-term implications of Brexit not only for that agency, but for the research and development sector and the pharmaceutical industry as a whole.
We are one of the foremost countries in the world for drugs development, and our share of sales of the top 100 prescription medicines is 14%. The UK pharma industry employs 73,000 people, with very high-quality jobs in academia and science, but we cannot be complacent about the state of UK pharma, particularly as investment decisions are often made by parent companies in other parts of the world. That concern is compounded by the small volume of sales in the UK compared with other countries. We face increasing competition from emerging economies for R and D investment, with rapid growth in areas such as Brazil and China. That is not a new problem.
A report for the Secretary of State for Health by Professor Sir Mike Richards in 2010 on the extent and causes of international variations in drug usage explored levels of medicines uptake for 14 categories of drug in 14 high-income countries during 2008-09. The study showed that the UK ranked eighth out of the 14 countries. A follow-up study by the Office of Health Economics updated the quantitative analyses and ranked the UK ninth across all the medicines studied.
Apart from disadvantaging patients, the relatively low take-up of new medicines may put at threat R and D investment in the UK. We need some assurance on that and an ability to monitor and engage with the Government on it. We know many other countries are queuing up to take the European Medicines Agency off our hands, and there are real concerns about the knock-on impact of that.
The impact assessment for the Bill says there will be a reduction in revenue for the pharma sector, unsurprisingly. It also says:
“Reduced pharmaceutical company revenues are also expected to lead to a reduction in investment in research and development… and consequent losses of spill-over benefits for the UK economy, valued at £1.0m pa.”
While we agree that it is vital that those who abuse the system to drive obscene profits for themselves are dealt with, we do not wish to find the UK becoming a less attractive place for research and investment because other countries have made themselves more attractive.
We ask that the report become an annual feature of the Secretary of State’s duties to ensure that we can judge the effectiveness of the Bill. The converse point is that if we continue to see price increases, we want to be assured that the regulations are effective in driving best value for the NHS.
Dr Whitford
I rise to echo some of the points raised. We have discussed a lot of issues around the decision to leave the EU, including the loss of the EMA. As well as possibly losing international and multinational pharmaceutical companies—particularly those from the London area, which have based themselves here because of the EMA—it is clear that drugs may end up going through a licensing process for the UK later than is currently the case. They are likely to go through the American market and then the EU market, which will still have 450 million people, and we are likely to slide down to be more like Canada and some other countries. This is a very unstable time for research, because of the loss of Horizon 2020 and the EMA, and for our pharmaceutical industry, which is a major player in the UK. It is incumbent upon Government to ensure that the Bill has no unintended consequences that exacerbate that.
Mr Dunne
I thank the hon. Member for Ellesmere Port and Neston for raising the issue of reporting requirements, which is very important. I will come on to explain what is currently proposed through regulation. The hon. Gentleman and the hon. Member for Central Ayrshire mentioned the risks to investment in this country for our critical life sciences and pharma industries, which is a legitimate concern that the Government share. Irrespective of the manner in which Brexit takes place, it is important that we maintain the UK as a vibrant centre for such investment. We are aware of concerns from industry about the wider landscape, including Brexit, but the Bill is about getting value for money for the NHS and the taxpayer. It is just one element of the action that the Government are taking in the field of medicine and life sciences. Key industry stakeholders have indicated their support for many of the provisions in the Bill, as we heard in last week’s oral evidence session, and for the broad principles of aligning the voluntary and statutory schemes and taking action against those companies that have made unjustified price hikes.
Separate from the Bill, the Government are taking action to secure the UK’s future as an attractive place for the life sciences sector. We are clear in our commitment to life sciences, and to building a long-term partnership with industry. As an example, I draw Members’ attention to the accelerated access review, which made recommendations on reforms to accelerate access to innovative medicines and medical technologies for NHS patients. The Government and our partners are considering those recommendations, and we will respond in due course. We want to make the UK the best place in the world to design, develop and deploy life sciences products. We do not believe that the Bill will have any material impact on that effort, other than the minor impact noted in the impact assessment, which was referred to by the hon. Gentleman.
I point Committee members to the illustrative regulations for both the statutory scheme and the information provisions. First, the final regulation—regulation 32 on page 16 of the draft regulations—refers to the publishing of an annual report on the impact of the regulations. I think that is what the new clause is calling for, but it is already intended in the regulations. Secondly, the final regulation of the information provisions—regulation 14 on page 8—refers to the publication of a review of the information requirements we are proposing.
I accept that reporting is an important principle, but we believe that setting out the requirement to do so in primary legislation is too restrictive. It is expected that, over time, both the statutory scheme and the information requirements will be amended through their respective regulations to reflect changing circumstances. It is essential that the review and reporting arrangements can be similarly flexible so that they remain appropriate to the schemes in operation. Were the new clause introduced as the hon. Gentleman proposes, there would be a lot of prescription in primary legislation. Given the pressures on legislative time, we do not believe that that is the right way to do it.
I reassure Opposition Members that our illustrative regulations require an annual review to set out the scheme’s objectives, and to assess the extent to which our objectives have been achieved and whether they remain appropriate. Those requirements will be tested through the consultation on the regulations. We will of course take account of the views expressed. Much of the information provided to the Secretary of State will be commercially confidential. I am sure that suppliers have every confidence that the Government will maintain that confidentiality in anything they publish, but I want to take this opportunity to reinforce that principle.
Rob Marris
If the draft regulations are to pass into legislation as currently drafted, I congratulate the Government on the annual review in draft regulation 32 and its Doppelgänger in draft regulation 14. They are excellent, because they actually talk about assessing the effectiveness, or otherwise, of a particular piece of legislation. That is often sorely lacking in this place, so I offer my congratulations.
Mr Dunne
Rare praise indeed from the hon. Gentleman. That is definitely going to go down in the annals of the Wolverhampton Echo, which I am sure will attribute an appropriate front page to that praise for the Government from the Member of Parliament.
To revert to where I had got to, I am sure hon. Members appreciate that there is clearly a limit to the level of detail we are able to publish, and I am sure that hon. Members appreciate that. Any information that we publish will be at a consolidated level, protecting suppliers’ confidentiality, which I have touched on several times, but will allow the Secretary of State to be clear on the basis of the conclusions to his review. We will, of course, be able to use supporting information to evidence our conclusions.
Turning for a moment to the detail of the proposed new clause, while the requirements set out in it reflect the duties placed on the Secretary of State in the Bill, I must be clear that the content of such a report should not be restricted. It must be able to address key issues arising during the course of the year, in the case of the annual report, and during the seven-year duration of the information regulations, in the event that such implications might have an impact on the operation of the schemes. Flexibility is at the heart of our proposals to address the issue through regulations. It would not be appropriate for such a report to address matters relating to the NHS duty to promote innovation. That is the one point of more substantive difference that we have with the drafting proposed by the hon. Member for Ellesmere Port and Neston.
We have already discussed the Government’s position on innovation. We are very clear that we are for it, as is the hon. Gentleman. However, we do not think it is appropriate to link measures in the Bill to that issue, which is a wholly different and much more wide-ranging issue than the narrower one of pricing and the cost of the medicines and medical supplies.
Julie Cooper (Burnley) (Lab)
Does the Minister agree that there is a direct connection between control of the price of medicines and innovation, and that, if we do not achieve the correct balance, pharmaceutical companies will lack the motivation to invest in the extensive research and development that we all want to see?
Mr Dunne
I do not actually agree that there is a direct link. There is no question but that, in order to stimulate continued investment in R and D, it is appropriate for the industry to see a stable marketplace in a country as significant and important as the UK, and throughout the nations of the UK, for medicines and medical supplies. We are a large market. We spend more than £15 billion a year on pharmaceutical products, and we are also acknowledged by those companies to be a reference market for many other countries that do not have such a large or well-organised supply chain as we do. I accept that, in principle, it might be rather different if this were an emergent market.
Individual drugs are emerging through R and D programmes, but I do not think that is the same as the measures we are introducing, which are primarily designed to limit excessive abuses of pricing position, in which a company may be a monopoly supplier, in the case of the unbranded generics. For the branded products, we have a long-established procedure for recognising the recovery of R and D costs through the pricing mechanisms, and while we may not like paying for some of those branded products at the rate that we have to, we recognise that it is a competitive marketplace and, because of the cost of innovation—the cost of conducting clinical trials and so on—it is necessary to stimulate that innovation to ensure that those companies make a reasonable profit.
Promoting innovation is a high priority, not only for the Government and the NHS but for many other stakeholders in the industry. In our view, it would not be possible to quantify the contribution of the schemes in the Bill to that endeavour, for the reasons I have discussed. Trying to assess the impact on innovation is a much wider endeavour that does not just rely on price. For those reasons, I urge members of the Committee to reject the new clause.
Justin Madders
I hear the Minister, but I have to say that I respectfully disagree with some of what he said. I think there is a direct connection between the effects of the Bill and the impact on research and innovation. That is what the impact assessment clearly states. I feel that having draft regulations that have not yet been consulted on is not an adequate substitute for the assurances that we are seeking.
Mr Dunne
I am grateful to the hon. Gentleman for letting me intervene. We are not saying ourselves that there is no such direct relationship between innovation and the cost of drugs; we are taking evidence from a report on “Key Factors in Attracting Internationally Mobile Investments by the Research-Based Pharmaceutical Industry”, which was undertaken by NERA Economic Consulting, and from a publication specifically on the voluntary scheme by the Office of Fair Trading. Both those documents date from 2007, when the hon. Gentleman’s party was in office. The impact assessment, as he pointed out, refers to an impact of £1 million, which needs to be set against the benefit of close to £90 million that the high-value generic clauses impact. We therefore think, relatively speaking, that it is not significant.
Justin Madders
We will have to see whether those figures and estimates become reality, in particular in the light of the fact that the industry has not yet seen the regulations proposed. The approach is a wider one, based not only on the impact on research and development but on the continued duty of the NHS to promote innovation and the way in which the powers will affect the availability and cost of medicines and medical supplies. I will press this to a vote.
Question put, That the clause be read a Second time.
Dr Whitford
I beg to move, That the clause be read a Second time.
The point of the new clause is to explore a particular problem with what the Minister referred to earlier as “specials”. They are unlicensed preparations, often topical medicines, often used for severe skin conditions such as hard-to-control psoriasis. The British Association of Dermatologists reports that patients in England, Wales and Northern Ireland are struggling to get them prescribed, because the costs have spiralled out of control.
In Scotland, until last September, three quotes had to be obtained and one of them had to be from an NHS manufacturer. That has been streamlined, and a single quote, provided it is from an NHS manufacturer, is now acceptable. The British Association of Dermatologists looked at the 12 top specials that its members prescribe and estimated that if an NHS manufacturer had been used, instead of £845,000, the cost would have been £162,000. The association also reported that several private manufacturers are keeping two price lists—one for Scotland and one for England—and some of the dermatology items in England are eight times the price in Scotland.
That is literally holding people to ransom, and the result, because CCGs are hard pressed for cash, is that they are not comfortable funding specials and GPs are not allowed to prescribe them. Anyone who has ever had a dermatological condition of any kind, or knows someone who has, knows how unpleasant and utterly dominating of one’s life it can be. It is awful that patients, in particular in England, are not able to access such medicines. The new clause is looking at whether specials will be covered and whether enough attention is to be paid to them. The number of patients is small—hence the top 12 still come to less than £1 million—but for those patients this is a major issue.
Mr Dunne
Again, I am grateful to the hon. Lady for drawing the Committee’s attention to the issue. I confirm, for the benefit of the Committee, what the specials are—she has characterised them well.
From our perspective, unlicensed medicines or specials can be manufactured or imported to meet a patient’s individual needs when no licensed product is available. By their nature, specials are bespoke, and costs need to be balanced against the availability of treatment for an individual. I am aware of concerns that some specials, especially those not listed in the drug tariff, are not being prescribed because of their cost—the hon. Lady highlighted those for dermatological treatment. It must be recognised, however, that with specials, because of their bespoke nature, there are few if any economies of scale and they can be expensive to manufacture.
Under section 262 of the 2006 Act, the Government have the power to limit the price of any health service medicine, as long as the manufacturer is not in the voluntary scheme. Manufacturers or importers of specials are generally not in the voluntary scheme. Specials are health service medicines and we can therefore limit their prices. At the moment, the Government do not use their power to control the prices of specials. The hon. Lady gave an example, without naming the product, of a significant price differential between Scotland and England; if she is willing to write me a note after the Committee, I am interested in exploring why we have chosen not to take advantage of the power that we already have in that case, because on the face of it, it would appear to be an example of where the power perhaps ought to be used.
Dr Whitford
While there are not major economies of scale, if national health manufacturers are used, it is possible at least on a regional basis to pool some together. As things are at the moment, a pharmacy can simply approach its sister or mother company and ask for a price, which creates a vested interest in making the price high. I think that things can be done, which seem to be working in Scotland, so they are worth trying.
The Chair
Order. We have a Division in the House, so I will suspend the sitting. If there is one vote, may I ask Members not to take longer than 15 minutes to return and, for every subsequent vote, no more than 10 minutes? The Committee will sit after 15 minutes.
Mr Dunne
As we broke—literally, I was saved by the bell—I was describing how setting prices as suggested by the new clause could have unintended consequences. We are concerned that it may lead to manufacturers stopping the production of some specials if they are no longer profitable and patients facing adverse consequences.
By setting reimbursement prices in the drug tariff in primary care, the Government encourage pharmacy contractors to source specials as cheaply as possibly, which in turn creates competition in the market and, as a result, reimbursement prices decrease. For those specials not listed in the drug tariff, pharmacy contractors have no incentive to lower the list price. Currently, less than 1% of the total expenditure on medicines in primary care is on specials. Nevertheless, I believe those products, like all other products destined for the health service, should provide value for money to the NHS and the taxpayer. The information power in the Bill will help the Government to determine whether the products provide value for money and the illustrative regulations include an obligation to review those provisions.
The new clause would require the Secretary of State to commission a review of the adequacy of existing powers to control prices of specials, including the enactment and enforcement of those powers. The Government keep their power to control prices under review all the time; it was a review of those powers that led to the Bill in the first place. The Government believe that we have sufficient powers to limit the prices of specials if need be. The hon. Member for Central Ayrshire appears to have evidence of specials being priced to Scotland materially more advantageously than to England. If she would be willing to make that information available to us, we would be delighted to consider it.
Dr Whitford
I wonder whether the Government have given any consideration to having NHS manufacturers provide these products or to including some of the topical specials in the drug tariff, so that the price is kept down. Otherwise, despite the Bill, these drugs will be left outside its provisions. They are going to be too expensive and patients will suffer from that.
Mr Dunne
For the reasons that I have said, we have the power to look at the pricing of the specials already and we have not had evidence that the pricing has been abusive. We already have that power. We will keep prices and specific drugs under review. The best way to take that forward is to leave the powers as they are and not to proceed with the new clause, but to invite hon. Members to highlight specific examples that they are aware of.
Rob Marris
The Minister says that the Government have the power. He may well be right, but for us lay people these are quite complex issues. The power to which he adverted is section 262 of the 2006 Act, which, as far as I can see, is not amended by clause 7 of the Bill. As I understand it, section 262 continues unamended. Section 262(2) says:
“The powers conferred by this section are not exercisable at any time in relation to a manufacturer or supplier to whom at that time a voluntary scheme applies.”
This may well be my ignorance when it comes to topical medicines, specials and so on. Perhaps all specials are produced by manufacturers or suppliers that are not in the voluntary scheme. I can see the possibility. If the Minister can confirm that, I will see that section 262 does not apply.
Mr Dunne
The hon. Gentleman has again surprised me by apparently not being as attentive as usual to the comments that I made earlier. I said while introducing the new clause that manufacturers or importers of specials are generally not in the voluntary scheme. There may be some exceptions, but by and large, they are not. Therefore, we are in a position to limit the price of specials, but as a rule we have not adopted that power.
Rob Marris
That is helpful of the Minister, but it still confuses me a bit, and I hope that he can help to elucidate. He said that manufacturers and suppliers are not generally in the scheme; that is the adverb that he used a moment ago. That suggests to me that some of them might be, and would therefore not be subject to the section 262 price controls, which he prays in aid when he says, as I understood him to say to the hon. Member for Central Ayrshire, “Nice try, but no cigar. We’re not going to accept this.” One reason that he gave—not the only reason—was that we already have the power. The adverb “generally” suggests to me that in relation to some companies, we do not.
Mr Dunne
But this applies to all companies in the voluntary scheme. There is no particular difference between a special and a non-special. If a company is supplying products in the voluntary scheme, it is in the voluntary scheme. Therefore, it is at the negotiating table when it comes to considering the circumstances in which it supplies those products. If the company is in the scheme, that includes the specials.
Rob Marris
I thank the Minister; that is helpful. He is on top of his brief, as ever, and needed no inspiration to tell me that. It is helpful. The power does exist. I would like to ask the hon. Member for Central Ayrshire, because she has considerable expertise in the field. My expertise, such as it is, is as a lawyer. I see in her new clause the words
“ unlicensed medicinal products for human use”.
She may be able to tell me, because it is her new clause and she may have been looking at this issue. Where in the 2006 Act, or indeed in the Bill, although I think not, can we find what that phrase means? It may well be understood by medics—the topicals, the specials and so on—but it may not be understood by judges, for example. Can she help me on that when she winds up this debate? Otherwise, it seems to me as a layperson that the phrase
“ unlicensed medicinal products for human use”
could cover homeopathic so-called remedies. I do not think that the Secretary of State should be reviewing the pricing of homeopathic remedies.
To make my position clear, I think that homeopathy is bad science and a load of nonsense except for the placebo effect, but I use it as an example of unlicensed products that claim to be medicinal. I suspect that the hon. Member for Central Ayrshire would agree with my broad characterisation of homeopathic so-called medicines, apart from the placebo effect. What does that phrase in her new clause mean, and is it defined anywhere in law, or is it so obvious to medics that they and everybody in the pharmaceuticals business know what it means?
Dr Whitford
The phrase is the standard definition of specials. I cannot remember off the top of my head where exactly it comes from, but it is the recognised definition. It would not usually mean things such as homeopathic medicines. It is often things that are quite old and that have been around a long time that are not worth licensing, because they are not new and nobody will make any money out of them. We have a lot of products like that, but they are recognised within the practice of medicine. They are particularly common within dermatology, because of different topicals and the need to make different strengths of topical depending on the condition being treated.
I wanted to try to draw attention to this matter. The Minister has said that the Government have had the power all of this time and not used it. In part it is about bringing powers into line and creating consistency. I call on him to use those powers. Even though only a relatively small percentage of drugs are affected, the impact on patients from not being able to access them is significant. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 4
Review of extending provisions to repurposed off-patent drugs
‘(1) Within six months of the passing of this Act, the Secretary of State shall commission a review on whether the provisions of this Act shall extend to the regulation of the prices of repurposed off-patent drugs and shall lay the report of the review before the House of Commons.’—(Dr Whitford.)
Brought up, and read the First time.
Dr Whitford
I beg to move, That the clause be read a Second time.
The new clause seeks to explore one of the other anomalies that was challenged through a private Member’s Bill last November but unfortunately was talked out by the Minister at that time: repurposed off-patent drugs. Those are drugs designed for a particular use that, often during their use for that condition, contribute in relation to another condition.
Today, we have had considerable talk about the need to support pharmaceutical industries and encourage research and development, but the finding of a new purpose for a drug rarely comes from the pharmaceutical industry; it is usually done at a clinical or academic level through noticing patterns in clinical practice and following those up with trials. It is therefore not really something for which the pharmaceutical industry should receive a major award financially, although naturally if more of a company’s drugs sell and it is still producing them, it will see a benefit, which is totally fair enough.
One of the concerns is that, for a medic under the General Medical Council, there is a hierarchy of what we can prescribe, and at the top of that is licensed drugs for the purpose of the licence. Below that come repurposed drugs, which are therefore not licensed for that purpose. It is specifically stated that “they do the same” is not a sufficient excuse for using an off-patent generic drug.
With some of the drugs we have, new purposes are being discovered. Some statins can reduce brain atrophy in progressive multiple sclerosis. We have, as was referred to earlier, the use of bisphosphonates to prevent metastatic breast cancer and the use of tamoxifen to try to prevent breast cancer. That Bill was partly about trying to promote the use of those drugs, because they are off-patent and cheap, but one of the concerns among the medical profession is about a drug company buying a drug, tweaking it ever so slightly and then suddenly re-releasing it as a drug for multiple sclerosis at 10 grand a day instead of sixpence. What I do not see in this Bill is a recognition of the ability of people to come back and license a drug and totally change the price or to manufacture that drug simply as a generic with a massive price.
There was a case with the drug Lyrica, which is also known as pregabalin. The commonest use of that is for neuropathic pain: people who have had nerve damage from surgery or trauma and have difficult-to-control pain. The drug was originally designed for epilepsy, and Pfizer, which makes it, managed to get a court order saying that the patent on its use for neuropathic pain would continue to 2017 and that it would sue general practitioners who prescribed it as generic. That case has run for quite a long time, and I am proud to say that GPs basically ignored that order and have used the generic, but the advice of NHS England, which still sits on the website, says that GPs must prescribe Lyrica as Lyrica, which is obviously much more expensive. Therefore, over the last year GPs have had to be sitting out there exposed, open to the threat of litigation.
That is a real concern with repurposed drugs. That profit has been earned not by pharma’s research but by the research of other people usually in the public sphere: academics and in the NHS. Again, the new clause is to raise an issue that is not covered in the Bill and to see whether it has been considered at all by the Government.
Mr Dunne
I am grateful to the hon. Lady for raising this issue by tabling her new clause, because it gives us an opportunity to discuss an issue of considerable interest across the House. I am delighted to be able to inform the Committee that we do not believe we need to review whether the Bill’s provisions should be extended to repurposed off-patent drugs, because they will apply to those drugs whether they are licensed branded medicines or generic medicines. The new clause is therefore not necessary, because those drugs are already included.
Any licensed branded medicines that are developed may be included in either the voluntary or statutory scheme and be subject to all the provisions of those schemes. Unbranded generic medicines are subject to competition in the market, which keeps prices competitive and secures value for money. As we know, and have already debated today, there are examples of unscrupulous companies making unjustified price hikes for unbranded generic medicines when there is no competition in the market. As we have said, both today and on Second Reading, the Bill provides the Secretary of State with powers to intervene in such cases, in addition to the powers that the Competition and Markets Authority can exercise.
Having once again explained the specifics of how repurposed medicines will be affected by the Bill’s provisions, it might be helpful if I outline for the Committee some of the progress that has recently been made in supporting repurposing. For the reasons the hon. Lady identified, repurposing has benefits for patients in allowing drugs to be introduced as quickly as possible to provide alternative treatments to those originally intended by their manufacturers, where there is robust clinical evidence for new uses of existing medicines. Since November last year, a range of organisations have come together to work collaboratively to examine the issues at play in drug repurposing and to develop positive ways of handling those issues to ensure that patients benefit from robust research outcomes.
Officials in the Department have been working on the issue with the Association of Medical Research Charities and many of its members, as well as with NHS England, NICE, the publishers of the “British National Formulary” and the Medicines and Healthcare Products Regulatory Agency. All are committed to taking non-legislative measures to make sure that there is a clear and accessible pathway to ensuring that robust evidence showing new uses for existing drugs can be brought more systematically into clinical practice to benefit patients. That working group has made significant progress, and I would like to thank the organisations that have come together in a true spirit of co-operation to achieve rapid progress.
The General Medical Council has provided better advice for doctors about prescribing drugs outside their licensed indications, when that is clinically indicated. The “British National Formulary” has introduced new processes to ensure that information about repurposed drugs is captured more systematically and is therefore much more readily available for the clinical prescribers whom the hon. Lady referred to as the people at the forefront of this innovation. The Committee has heard from Dr Keith Ridge about the role that regional medicines optimisation committees will be asked to take in supporting prescribers to take up and use new evidence, particularly about unlicensed medicine use. Significant work has also been done on the development of a pathway that maps the routes from research result into clinical practice, which will help researchers and clinicians ensure safe and timely implementation.
NICE has published more than 50 evidence summaries for unlicensed and off-label uses of medicines. Although I said I did not want to go into detail, there are a couple of examples that the hon. Lady will be familiar with but other members of the Committee might be less so. NICE has made recommendations and guidelines on the use of tamoxifen to prevent familial breast cancer, and on the use of antidepressants—selective serotonin reuptake inhibitors—to treat irritable bowel syndrome.
I hope that with that explanation, hon. Members will agree not only that repurposed medicines are included within the Bill’s provisions, but that robust action is being taken by the Department and across the medical establishment to support repurposing for the benefit of patients. I ask the hon. Lady to withdraw her new clause.
Dr Whitford
I welcome the Minister’s explanation of what has been happening behind the scenes since the Off-patent Drugs Bill last year. The Bill Committee, of which I was a member, had a lot of discussion about the need to have a system for recognising the drugs, giving doctors and other prescribers the reassurance they needed to use them, and using the “British National Formulary” as a tool. We have heard nothing for a long time, so I really welcome the update that the issue is being taken forward. Prescribers are not all doctors now, and it is important that everyone who prescribes has the reassurance of knowing that they can safely prescribe and not be open either to making an error or to litigation. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 5
Extending price control to other medical supplies
‘In section 260(5) of the National Health Service Act 2006, after first “includes” insert “, but is not limited to, investigative,”’—(Rob Marris.)
This new clause is to ensure that the Bill’s provisions on price control apply to other capital equipment such as MRI scanners by including such items within the definition of “medical supplies”.
Brought up, and read the First time.
Rob Marris
I beg to move, That the clause be read a Second time.
I am glad that the Committee has generously left me sufficient time to deal with the new clause, which involves a tweak in the wording of the Bill. Clause 6 inserts section 264A into the 2006 Act, and section 264A(9) states:
“‘Medical supplies’ is to be read in accordance with section 260(5)”
of that Act. There is a synopsis of the subsection in paragraph 66 on page 14 of the explanatory notes, which hon. Members may have in front of them.
Page 162 of the 2006 Act states, in section 260(5):
“In this section and Schedule 22—
‘medical supplies’ includes surgical, dental and optical materials and equipment…and ‘equipment’ includes any machinery, apparatus or appliance whether fixed or not, and any vehicle.”
That definition is fairly clear but not sufficiently wide, hence my new clause, which would clarify it. Regarding medical supplies, there are, to my mind, three adjectives there qualifying two nouns, the three adjectives being “surgical”, “dental” and “optical”, and the two nouns being “materials” and “equipment”. There is considerable NHS expenditure on equipment—and materials, but particularly on equipment—that is not, as I understand it, surgical, dental or optical. A particularly expensive form of such equipment, as I outline in the explanatory note, which is helpfully on the amendment paper, is MRI scanners. They vary, obviously, but in round terms they cost about £2 million a throw and the NHS, understandably, has an awful lot of them—they are a magnificent diagnostic tool. There may well be other pieces of equipment that are perhaps not quite as expensive but which would not come under the rubric of surgical, dental or optical.
It seems, therefore, that there is a gap in the 2006 Act, and the new clause, which I am sure the Government will accept, is intended to plug that gap by indicating that those three adjectives are descriptive of the two nouns, but other adjectives could also be applied. For example, “investigative” is included in the new clause. The new clause would therefore simply ensure that there is no misunderstanding of the intent of section 260(5) of the 2006 Act. It is a helpful clarification to the Government.
Mr Dunne
I am sure that you share, Mr Pritchard, my pleasure that the Committee has had the benefit of the hon. Gentleman’s forensic scrutiny and his particular facility for not only the English language but its parliamentary use. If we had not had a new clause tabled by him we would have all gone away deeply disappointed. I am grateful to him for taking such trouble to table the new clause and to explain its intent.
I can assure the hon. Gentleman and the Committee that MRI scanners, by way of example, and all other investigative medical supplies are covered by the current definition of “medical supplies” in the 2006 Act. When looking at the definitions in the first draft of the Bill, I had a concern that we were describing products too widely. My concern was not that we would exclude specialist medical equipment but that we might include other materials used in the construction of buildings used by the health service—for example, bricks—as an object for price control, which clearly is not the intent. We looked carefully at the definitions, which is why I can say with some confidence that the hon. Gentleman’s new clause is unnecessary.
I will explain that more specifically. Section 260 of the 2006 Act makes it clear that “medical supplies” should be read in the context of medical supplies required for the purposes of the health service. That excludes all medical supplies not destined for the health service. MRI scanners clearly are destined for and used in the health service. Secondly, section 260 provides examples of products that would be included by the term “medical supplies” and does not limit it to those products.
The Government consider that the current definition of “medical supplies” already includes the examples given by the hon. Gentleman and other investigative products and that there is no need to make the proposed amendment. We are concerned that by including further examples and trying to provide a definition that meets the hon. Gentleman’s intent, we might inadvertently find ourselves excluding other things that are in fact included within the more general description of medical supplies. The current definition is sufficiently broad to cover all medical supplies required for the purpose of the health service. Notwithstanding the hon. Gentleman’s enthusiasm, I encourage him to withdraw the new clause.
Rob Marris
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Question proposed, That the Chair do report the Bill, as amended, to the House.
Mr Dunne
We are now at the conclusion of our deliberations. Thank you very much indeed, Mr Pritchard, for using your new-found experience in chairing Bill Committees to such good effect. You have conducted our affairs in a characteristically skilful way, and I am grateful to you, the Clerks and the Doorkeepers for managing the Divisions. I am grateful to the Front-Bench spokesmen from both the official Opposition and the SNP, as well as to all Back Benchers who have contributed to our deliberations. We have given this short Bill adequate and appropriate scrutiny, and I hope it will proceed to consideration on Report, where it will get continued consensual support across the House, which is, frankly, a joy to participate in.
Justin Madders
I echo the Minister’s words of thanks, including to you, Mr Pritchard, for the sensitive way you have handled our discussions. We have made good time today, while enabling everyone to contribute who wished to. I am grateful to the Minister for his clarification on a number of points. There are issues we will have to continue to discuss, but in the main he has been able to put our mind at rest on a number of issues. I also thank the SNP Members for their contributions, as well as all Back Benchers.
The Chair
I thank the Clerks, officials, Doorkeepers, the Minister of State, shadow Ministers and all colleagues.
Question put and agreed to.
Bill, as amended, accordingly to be reported.
Health Service Medical Supplies (Costs) Bill
Tuesday 6th December 2016
(7 years, 11 months ago)
Commons ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 6 December 2016 - (6 Dec 2016)
Justin Madders (Ellesmere Port and Neston) (Lab)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to consider:
Amendment 8, in clause 1, page 1, line 14, at end insert—
“(2A) In exercising functions in relation to the controls on the costs of health service medicines, the Secretary of State must ensure that any payments made by manufacturers or suppliers to whom the scheme relates calculated by reference to sales or estimated sales of medicines are utilised solely for the purpose of reimbursing the NHS for expenditure on medicines and medical supplies.”
This amendment would confirm that the Secretary of State has a duty to reinvest rebates in improving access to new and innovative medicines and treatments.
Amendment 9, in clause 5, page 4, line 5, at end insert—
“(7) Before making regulations under Clause 5 the Secretary of State must conduct a consultation on the potential effect of this clause on the maintenance of quality of those medical supplies, and seek representations from manufacturers, suppliers and distributors of medical supplies as part of the consultation.”
Government amendments 1 to 6.
Amendment 10, in clause 6, page 7, line 11, at end insert—
“(1A) Information provided by virtue of section 264A must be disclosed by the Secretary of State to persons listed in subsection (1)(a) to (i) at that person’s request.”
Government amendment 7.
Justin Madders
I rise to speak to new clause 1, which stands in my name; to amendment 8, which is in the name of my hon. Friend the Member for Burnley (Julie Cooper); and to the other amendments in the group. The Opposition do not oppose the Bill. Our proposals are a constructive attempt to help the Government to achieve their stated aims, and to close the growing gap between the UK’s record on developing new drugs and the ability of NHS patients to access them.
New clause 1 would put a duty on the Secretary of State to commission a review within six months of the Act coming into force, focusing on its impact on the pricing and availability of drugs and medical supplies; on research and development; and on the NHS’s legal duty to promote innovation. The pharmaceutical industry in this country employs more than 70,000 people, in predominantly high-skilled and well-paid jobs—just the sort of jobs Members on both sides of the House would want to encourage and see more of.
This country’s record in the pharmaceutical sector has been one of our great success stories, but we cannot take that success for granted, particularly because investment decisions are often taken by parent companies in other parts of the world. There is considerable unease in the sector about the relatively low take-up of new and innovative medicines by the NHS compared with that in comparable nations, and about the ongoing uncertainty surrounding the future of the European Medicines Agency. A number of major companies have based themselves here because of the EMA, and the worry is that they might wish to follow it if it relocates following Brexit.
The impact assessment for the Bill states, as we might expect, that there will be an impact on the revenue of the pharmaceutical sector, and that it could lead to a reduction in investment in research and development and consequent losses for the UK economy estimated at £l million per annum.
While we fully agree with what the Government seek to achieve with the Bill, we are mindful of the storm clouds on the horizon. We therefore believe that prudence requires that such a review takes place within a reasonable timeframe to ensure there are no unintended consequences and that we can remain confident that the pharmaceutical sector in this country will continue to be at the forefront. We face competition not only in Europe but from emerging nations such as Brazil and China. We also need to ensure that the NHS does not trail in the take-up of the new drugs. Worryingly, the Office of Health Economics studied 14 high-income countries and found that the UK ranked ninth out of those14 across all medicines studied.
Successive studies have demonstrated relatively low take-up of new medicines in the UK compared with other countries. That is bad for patients and bad for our pharmaceutical industry. The Bill therefore needs to achieve a balance. We need to ensure the best possible patient access to medication at the fairest price, but we also need to encourage the pharmaceutical industry to invest in research and development.
Keith Vaz (Leicester East) (Lab)
I am intervening in my capacity as chair of the all-party group on diabetes. The diabetes drugs bill is enormous: it runs into hundreds of millions of pounds. I accept what my hon. Friend says—that we need to ensure that pharmaceutical companies are able to invest in the provision of new drugs for diabetes—but there are other choices, such as those relating to lifestyle. Does he agree that they need to be investigated while we look for new drugs?
Justin Madders
I thank my right hon. Friend for his question. Indeed, if I had known he was in the Chamber, I would probably have anticipated it. He is absolutely right to raise the issue of diabetes drugs and the need for more measures to improve prevention. I attended the launch of the all-party group’s report last week, at which there were a number of interesting initiatives. The “diabetes village” is an interesting concept, which in the long term will hopefully reduce the cost of diabetes treatment for the NHS.
The review would look at the impact of the Bill on the pricing and availability of medicines and other medical supplies. We would gently point out to the Minister that two years ago, when the previous voluntary agreement was introduced, the Government said that it would
“provide an unprecedented level of certainty on almost all the NHS branded medicines bill.”
Evidently that has not come to pass. The review would enable us to identify any issues at an early stage and take the appropriate action. I know that the Government were not willing to commit to such a review in Committee. The Minister referred us to a clause in the draft regulations, referring to a review one year on from the introduction of the regulations. However, that is simply not the same thing as looking at the impact of the legislation in its totality. The way the regulations are currently drafted means that there is more than a little of the Minister being able to mark his own homework, so to speak. The draft regulations talk about the review in a much narrower sense: enabling the Minister to set out the objectives intended to be achieved by the regulations in the report itself rather than at this point, and only specifically mentioning whether those objectives could be achieved with less regulation.
Rob Marris (Wolverhampton South West) (Lab)
Does my hon. Friend find it strange that the regulations that might be made pursuant to the Act—the Government have helpfully given us a draft—talk about a review being carried out? Paragraph 14(2) states that the report must in particular
“set out the objectives intended to be achieved by these Regulations”.
Would one not expect those objectives to be set out before the regulations were made? Are the Government not putting the cart before the horse?
Justin Madders
My hon. Friend is absolutely right. That is why there is anxiety that we may end up with a self-fulfilling prophecy with these reviews. No doubt the Minister can address that when he replies.
There is nothing to assess the potential impact of the Bill and the regulations on research and development investment, nothing on the potential impact on innovation, and nothing on the availability of medicines and other medical supplies. We believe our anxieties in these areas are well founded, so I hope the Minister will reconsider his stance on this proposal, or at least provide us with some reassurance that these areas of concern will be carefully monitored.
Amendment 8 would to compel the Government to reinvest the rebate from the pharmaceutical sector for the purpose of improving access to new and innovative medicines and treatments. On Second Reading, the Secretary of State confirmed that £1.24 billion had so far been returned to the Department of Health through and it is anticipated that the sum to be received annually will increase when the Bill is enacted.
Although numerous questions have been asked throughout the passage of the Bill, we have still not been able to pin down the Government on exactly where this money has gone, other than into the general pot. It is our fear that this new money, which could have delivered a step-change in access to treatments to the benefit of patients and the life sciences sector, will instead be simply added to the baseline, with every £1 from the pharmaceutical sector meaning £1 less coming from the Treasury. Given the often heated exchanges across the Dispatch Box about the true sums being put into the NHS, it would aid transparency if it were made clear that this money was being put in over and above Government funding and was ring-fenced for a specific use. In Scotland, rebates are already ring-fenced and reinvested to provide new treatments and medicines. Nothing that the Minister has said has dissuaded us from believing that that is the correct approach.
According to James Barrow from the Cystic Fibrosis Trust, using the rebate in this way provides both the access and transparency that are lacking in the rest of the UK. He cites the example of the medicine Kalydeco, which increases the lung capacity of people with cystic fibrosis by up to 10%. It has meant that some patients who were previously housebound are now able to run up to 5 km. Patients in England are unable to access this drug, whereas patients across comparable nations in Europe and in Scotland can benefit from its transformative effect. He points out:
“There is no comparable fund in England. Having the new medicines fund in Scotland provides a much greater chance for patients to be able to access these medicines. We just don’t see a clear pathway in England for how patients can access these medicines.”
There are many other similar examples.
The NHS is our proudest national achievement, but it is to our shame that people in England are deprived of vital drugs and treatments on the basis of financial, rather than clinical, judgments. In Committee, the Minister suggested that the fluctuations in income could have adverse consequences, but we understood the purpose of the Bill was to deliver certainty. In any event, ring-fencing does not preclude additional resourcing if required. For all those reasons, I hope the Government will give serious consideration to this proposal.
Turning finally to the remaining amendments, we welcome the further improvements tabled by the Secretary of State in relation to the devolved Administrations. However, questions perhaps have to be asked about the consultation process if such changes are being introduced by the Government at such a late stage. Perhaps this will be reflected on when it comes to future legislation.
We welcome the amendments to clauses 5 and 6 tabled by the Scottish National party. In particular, we welcome the call for a consultation on the potential impact of controls on other medical supplies. Those provisions were notably lacking from the initial consultation, so there is still considerable anxiety within the sector about how the controls will be used. I understand that this is a matter for future regulations, but it is less than satisfactory for the Government to ask us for powers before telling us how they will be used. We would say this is another reason for us to seriously consider setting out now the kind of review envisaged by new clause 1.
Keith Vaz
I will not detain the House for long. I know that that normally means the start of a very long speech, but I will be very brief. I declare an interest as the chair of the all-party group on diabetes and as a type 2 diabetic.
I welcome the proposals put forward by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) from the Labour Front Bench. I hope the Government accept them. They are reasonable proposals that are designed to look at the impact of the Act and ensure it achieves what it hopes to achieve. That is not always the case with legislation.
There is a lot of agreement on the Bill, and the Minister should be commended for how he has introduced it. The reason for the Bill is the ever-rising cost of drugs to the national health service. We know of the work done by The Times in particular. It is always a battle for diabetics, especially when we meet in informal circumstances, as happened last week when the new report of the all-party group was launched by the Secretary of State for Health. I think the Minister was due to come—I may have gone before he arrived. [Interruption.] He is nodding. [Interruption.] No, he didn’t come. I am sorry, Madam Deputy Speaker. I know you do not like Members tempting sedentary interventions. But certainly the presence of the Secretary of State and departmental officials was very helpful to the all-party group.
Mark Tami (Alyn and Deeside) (Lab)
Does my right hon. Friend agree that we have to educate people and make them aware of what can happen, particularly given the rising obesity levels?
Keith Vaz
My hon. Friend is absolutely right. We both serve on the Administration Committee, and whenever banqueting is raised, we all highlight the need to make sure that the food MPs get, especially in the Tea Room, is compatible with decreasing obesity and calorie levels. You will know, Madam Deputy Speaker, when you have your cup of tea, that on offer are Club biscuits and Victoria sponges and all these other things. I am not saying that all this comes within subsection (1)(c) or that it could be regarded as a question of innovation; I am simply saying that innovation is not just about new technology.
None the less, there is incredible new technology around as far as diabetes is concerned, as I saw for myself last week. People no longer need to do the finger prick test. The HbA1C test can be bought at the local chemist. It costs slightly more than a finger prick test, which is obviously free for diabetics, but it allows us to test our diabetes without having to fast, and it gives a three-month reading. Moreover, there are now machines that clamp to the side of one’s arm and which, when a mobile phone is put to them, will give a glucose reading. These incredible innovations show why the new clause is worth accepting. It has been carefully thought out by my hon. Friend the Member for Ellesmere Port and Neston, who is doing an amazingly important job on the Front Bench on these matters.
The new clause would benefit the taxpayer. Innovation is very important as far as an illness such as diabetes is concerned, but, as I said, the solution is not just about the technological revolution; it is also about lifestyle changes. I notice that the SNP spokesperson, the hon. Member for Central Ayrshire (Dr Whitford), is here. Scotland is highly advanced in terms of diabetes monitoring. One can get diabetes statistics centrally in Scotland, whereas here we cannot get them even if we write to our local clinical commissioning groups. That is why new legislation of this kind, designed to bring down the cost of drugs to the taxpayer, is very important, and why I support subsection (1)(c) and the review.
Finally, in respect of research and development, as mentioned in subsection (1)(b) of the new clause, pharmaceutical companies make an enormous amount of money—they are some of the biggest companies in the world—and we need to encourage them to plough back a good proportion of their profits into research and development. The Steno centre in Denmark only exists because of money from Novo Nordisk, one of the biggest diabetes drugs companies in the world. A person can go to the Steno centre, and in the first room they can have their blood taken by a diabetes nurse; in the next room, they can have their feet looked at by a podiatrist who is an expert in diabetes; in the next room, they can have their eyes tested—those of us with diabetes have eye problems; in the next, they can have their consultation with a GP; and if necessary, they can see a consultant. That is what I meant when I talked about the diabetes village. It comes from the concept of the Steno centre. At the moment, as a diabetic I have to go to different centres and hospitals to see my GP and others. In one case, I had to carry my own blood—
Keith Vaz
In a little test tube! I carried my own blood to the laboratory, because it was the quickest way I could get a reading. Incidentally, from the look of him, my hon. Friend carries his blood very well. We want this innovation and research and development. The drugs companies should be able to plough back profits within the industry, and in the long run this innovation will make a great deal of difference.
When I went to New York for a meeting on Yemen, I stopped in at the diabetes centre of the Mount Sinai Hospital, and was told about the incredible innovation in diabetes in the US. I also went to see Mayor Bill de Blasio’s diabetes team. As Members will know, New York cut the level of sugar in soft drinks, as we are doing now, but the centre of its diabetes initiative is the lifestyle coach, not the GP.
As we look at these provisions, we see every opportunity for a cogent and coherent review that will particularly help—this is my main argument today—those with diabetes, but also others with similar problems connected with their illnesses. I urge the Minister, who I know has been extremely reasonable on this Bill, to look seriously at the new clause. If he cannot accept new clause 1 itself, will he at the very least give an undertaking from the Dispatch Box that the points embodied in it will be reported back to Parliament in a few months’ time?
Dr Philippa Whitford (Central Ayrshire) (SNP)
Like the shadow Health Minister, we will not obstruct the Bill, because we support the basic aim to control prices in order to achieve a good return to the NHS from the drugs that it uses.
We also support in principle new clause 1. Six months might be a little early technically to bring things together, and there should not be just a single report because we will only see change over time. To look at the success of these actions, we need to see a price being controlled, and to spot when prices are sliding out of control. I would therefore suggest looking at the data and information on an annual basis and perhaps laying it before Parliament to show that the Bill’s aim is being achieved and that the concerns of the official Opposition are being allayed.
We support amendment 8 because it advocates the same approach that we have in Scotland. While the Cancer Drugs Fund in England is welcome and has clearly helped many patients, it is limited in the sense that if people do not have cancer they cannot access the medicines fund. That means that people with rare diseases are left somewhat abandoned. Frankly, if it were left solely to NHS England, those people would be left in the desert. It is important that significant money will be released, and the provision could gain support from the pharmaceutical industry if it sees that the money it is returning is enabling innovative medicines to come to the NHS earlier. Sometimes when we compare certain illnesses such as cancer, we find that the gap is in relation to people with more advanced diseases struggling to access the newest medicines. If the amendment helps to address that, we would support it.
The Scottish Medicines Consortium was reformed in 2014, and Scotland has now moved up from passing 53% of all applications to 77%, with a further review going ahead at the moment to see how to improve this further. The aim is not to avoid using drugs; the aim is to access them at a decent price. If the pharmaceutical industry is returning money to the NHS, it should enable earlier access.
Amendment 9 was tabled by SNP Members and we put it before the Public Bill Committee. It deals with clause 5, which extends a power that in fact already existed but was never used—to control the price of medical services and medical supplies as well as drugs. I am slightly disappointed that we did not manage to get this amendment adopted, so I raise again the issue of quality control and ask the Government to consult on it.
I know I spoke extensively in Committee about surgical gloves, but they provide a good example in that the range of quality is vast, and if poor quality gloves are used, there is likely to be extra cost to the NHS either when gloves have to be changed two or three times within one operation or more subtly if a surgeon is exposed to blood at the end of an operation from a tiny pinhole that was not visible. The same point applies to gowns and drapes. Taking off a gown that is meant to be protective and discovering that you are soaked to the skin in blood is a pretty unpleasant experience, and it obviously increases the risk to staff. The idea that surgeons are not exposed to diseases such as HIV or hepatitis B and C is naive. I knew colleagues over my career who suffered from those conditions, which they caught from patients. There is clearly a responsibility to staff and to patients to avoid any possibility of cross-contamination. I mentioned in Committee, too, some fairly cheap items such as gauze swabs, because if they are shedding threads, it can lead to intra-abdominal infection—something that we do not want. This amendment is about consultation and looking further at the mechanism.
Rob Marris
As hon. Members know, overall I welcome the Bill, which is broadly a socialist Bill. It reinforces price controls and profit controls on big pharma, when appropriate. I always like to encourage the Conservative party, sadly now in government, to come a little further down the socialist road. They claim to be the workers’ party, and that is good.
New clause 1, tabled and moved by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), is central to what we should be talking about in many spheres of public life—namely, evidence-based policy. All too often in this House—this applies to Governments of both colours—policy appears to be made on a political whim.
I remember in, I think, 2008 the then Leader of the House, the right hon. Member for Blackburn, Jack Straw, writing certainly to Labour MPs asking what we wanted in the Queen’s Speech that year—[Interruption.] We were in government, but perhaps he should have written to the right hon. Member for Chelmsford (Sir Simon Burns). I replied, because I believe in evidence-based policy, that in that year’s Queen Speech I wanted not a single piece of legislation. I said that after 10 years of a Labour Government, I wanted Parliament to spend a year on scrutiny, looking at the legislation that we had introduced over that period to see what had worked and what had not worked.
To my astonishment, the Leader of the House did not accept that proposal, as those who were Members then will recall, and we had another full legislative programme. Let me add, as an aside—if you will grant me a small bit of latitude, Madam Deputy Speaker—that by the end of the Labour Government I had stopped voting on crime Bills because we had had so many. Some of them—this may have happened under the previous Conservative Government—repealed parts of earlier crime Bills introduced by a Labour Government which had never been brought into force. That was extraordinary.
I urge the Minister to recognise that evidence-based policy making is encouraged by new clause 1. I hope that, in the context of innovation, which was so eloquently addressed by my right hon. Friend the Member for Leicester East (Keith Vaz), he will say a little about the way in which the National Institute for Health and Care Excellence operates.
As the Minister may know, there is an issue involving cystic fibrosis and the drug Orkambi, which NICE turned down owing to a lack of sufficient data. I understand that, because it is NICE’s job to weigh the evidence, such as it may be. The drug is registered for use in this country, but it is not available on the NHS. Since NICE decided that the cost-benefit analysis did not stack up, some long-term data from the United States, which I understand to be robust, has been made available. I gather, although I may be wrong, that NICE has not yet reviewed its decision on Orkamb, although the evidence from the United States suggests that in certain cases it can be extremely effective in treating cystic fibrosis. I hope that when we are discussing processes, innovation, efficiency and policy-based decision making, the Minister will say a little, not necessarily about Orkambi itself, but about the process whereby NICE might, in the light of new evidence, promptly—I stress the word “promptly”—review its decisions.
Dr Philippa Whitford
There is an additional issue. Drugs or treatments are being passed by NICE but not actually introduced. Either they are rationed and limited to a certain number of patients a month, as is the case with hepatitis C drugs, or the decisions are being left to clinical commissioning groups, which means that we are enshrining postcode prescribing instead of getting rid of it.
Rob Marris
I entirely agree with the hon. Lady, who, as ever, speaks with authority on these issues. I am a bit of a centraliser, because I do not like postcode lotteries. We will already have that in a cross-border sense—between England and Wales, Scotland and Northern Ireland—but it is a great deal worse when just some CCGs in England are making a drug available when it has been signed off by NICE as safe for use but it is not mandatorily available, and not every patient for whom it is medically appropriate can obtain it from every CCG. That sort of postcode lottery undermines the “national” part of the national health service, which is regrettable.
Amendment 8, tabled by my hon. Friend the Member for Burnley (Julie Cooper), would ring-fence savings made through the provisions of this Bill and earlier legislation so that the money thereby saved, or paid into the pot by a pharmaceutical company, can be retained for expenditure on medicines and medical supplies. I hope the Government will support that. All too often we hear that Governments do not like ring-fencing, and I understand why: it fetters their discretion. Earlier this afternoon, however, I asked the Secretary of State for Justice whether the education budgets devolved to prison governors would be ring-fenced, because I feared that a prison governor who was under other budgetary pressures might not spend the money on education and prison education would not improve as it needs to. I was greeted with a very welcome one-word answer, which was “Yes.” I hope that, in a slightly different context, the Minister can give the same assurance this afternoon, because this is an excellent amendment which clarifies a slight gap in the Bill.
As for amendment 9, about which the hon. Member for Central Ayrshire (Dr Whitford) spoke so eloquently, efficiency is of course important, but so is quality. I do not know whether the old saying “Penny wise and pound foolish” is used in Scotland—she is nodding—but it certainly is in my part of the west midlands. We have seen that time and time again with privatisations. When services are privatised they go to the lowest bidder, and what do we find? Either the service is not up to scratch, or, all too often—I think this happened when Circle ran Hinchinbrooke hospital—the companies go bust because they find that it is not as easy as they thought it would be to make a profit out of, in this case, the health service. That may happen to other suppliers as well. Quality matters, and the national health service is not a commercial organisation.
Sir Simon Burns (Chelmsford) (Con)
I am listening carefully to what the hon. Gentleman is saying about Hinchinbrooke hospital. Might I suggest, tactfully, that he go and look at that hospital? Patients in Huntingdon would say that the hospital had vastly improved, but because of the conditions, it was not possible to make a financial success of it. The company did not go bust; it decided to withdraw. However, in the view of the patients who used it, the quality of the care provided by what had been a failing hospital had vastly improved. Moreover, the trade unions agreed to the deal that was done to put Circle there.
Rob Marris
I am grateful to the right hon. Gentleman for making my point for me. This is about quality; it is not just about price. That company got its price wrong. It said that it could provide a quality for a certain price, and it did provide the quality but not for that price, and it jacked the contract in.
Sir Simon Burns
I think that what the hon. Gentleman said at the beginning of his comments on Hinchinbrooke —we will know for certain when we see the Official Report tomorrow—showed that he was using that example inaccurately to make a point about privatisation. He said that privatisation caused quality to go down, but that in this case the company had gone bust. He was wrong on both counts.
Rob Marris
The right hon. Gentleman may well be correct on that specific point, and I fully accept that. There is in privatisations, however, a nexus between quality and price, and very often—although not always—the companies that promise a quality at a certain price are unable to deliver it. They cannot deliver the quality of service, and/or they cannot do so at the price at which they promised to do so. He can correct me on this if he wishes, but we see that time and again when rail franchisees come back to the Government and say, “We promised a certain level of service for a certain price. We cannot do it: we need a bigger bung.”
Mr Stewart Jackson (Peterborough) (Con)
I think that the hon. Gentleman may have stumbled into a quagmire in referring to Hinchinbrooke. The Public Accounts Committee, of which, as he may know, I was a member for four and a half years, found that pricing was not the significant issue that led to the end of the franchise of the private provider Circle. The significant issues involved the wider healthcare economy, and the failure of the strategic health authority to discharge its duties in respect of clinical business for the hospital.
Rob Marris
The hon. Gentleman has considerably more knowledge than I have. I have talked about evidence-based policy making, and I am entirely prepared to accept the evidence that he presents. However, the company could not make a go of it, although I accept that that may not have been the company’s fault,
Amendments 1 to 5 come as a package. Amendment 3, which is a substantive amendment, refers to a
“person who provides primary medical services”.
I hope that the Minister can talk us through that, in the light of a trend that is starting in some parts of England and is most advanced—if I may make a value judgment—in Salford, where the GPs who provide primary services are directly employed by the hospital trust. So the hospital trust is no longer just secondary or even tertiary; it is primary. I just wanted to unpick the wording to make sure that that development of service delivery in England has been taken into account and that the amendments do not assume that the existing silos between primary and secondary continue, because that development has now arisen in Wolverhampton, which I represent. There are three GP practices in Wolverhampton that are piloting their staff being employed by the excellent Royal Wolverhampton NHS Trust. I say it is excellent because it is one of the 15% of hospital trusts in England that does not have a deficit, and I think part of that is related to the fact that it has only £15 million of private finance initiative. But that is another debate that I will not get into now.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend’s analysis of medical supplies is very interesting. I would have thought that pharmaceuticals, for example, would be classified as medical supplies, given that they have always been a contentious area of negotiations over costs. I am surprised that they are not included in the definition.
Rob Marris
Medical supplies in this part of the Bill seem to be to do with physical equipment. But, again, what is equipment? We can refer to the definitions, which state:
‘medical supplies’ includes surgical, dental and optical materials and equipment”.
Drugs are dealt with elsewhere in the legislation.
I think the Minister has got the point, but I will repeat it very briefly. He is seeking clarification for the Wales legislation through amendment 7 when I understood him to say that he did not think such clarification was needed for the same definition contained in the legislation pertaining to England. I would like him to explain that apparent anomaly. If it is not an anomaly, perhaps he could tell the House that he is going to clarify the definition as it relates to England in the later stages of this Bill.
The Minister of State, Department of Health (Mr Philip Dunne)
I rise to speak to the new clause, the Government amendments and all other amendments tabled on Report. I want to start by expressing my gratitude to the Opposition Front-Bench spokesmen, who both confirmed their intent to continue in the spirit of constructive dialogue we have had thus far in our consideration of the Bill. I am pleased that they support the Bill’s objectives, and I will seek to respond to their amendments.
Hon. Members will recall that we debated at length in Committee the issue raised in new clause 1. I want to take this opportunity to provide some additional reassurance that this is an important issue for the Government. We have already included in the illustrative regulations for both the statutory scheme, in regulation 32, and the information regulations, in regulation 14, an annual review of the regulations and a requirement to publish our report of each review. These annual reviews go further than the specific single review proposed by the hon. Member for Ellesmere Port and Neston (Justin Madders) in new clause 1, the effect of which would require the Government to only undertake a single review within six months of the Act coming into force.
We accept that reporting is an important principle. However, setting out the requirements in primary legislation is too restrictive. We believe that the proposed single review within the first six months of the Act coming into force would provide an insufficient timeframe in which to assess the impact of the provisions, whereas the annual reviews we have set out in the illustrative regulations in effect place a duty on the Government to review both the statutory scheme and the information regulations to ensure their effectiveness, and to do so every year. Of course these provisions will be subject to consultation as part of the wider consultation on the regulations.
Over time we expect that both the statutory scheme and the information requirements will be amended through their respective regulations to reflect changing circumstances. It is essential that the review and reporting arrangements are able to be similarly flexible so that they remain appropriate to the schemes in operation.
The hon. Member for Ellesmere Port and Neston asked whether objectives should be set out before the regulations come into force. As I have said, the Government will consult on regulations before they come into force. The objectives of the regulations will be explored in the consultation and set out in the Government response to that consultation. I hope that addresses his point.
The illustrative regulations require an annual review to set out the objectives of the scheme, assess the extent to which they have been achieved, and assess whether they remain appropriate. These requirements will be tested through the consultation on the regulations, and we will of course take account of those views.
Rob Marris
First, I say again that I am very grateful to the Government for publishing the illustrative draft regulations to help us debate the Bill. Let us consider the provision of information in connection with the draft health service products regulations 2017. Regulation 14(2)(a) states that the report must in particular
“set out the objectives intended to be achieved by these Regulations”,
and then regulation 14(2)(b) says it must
“assess the extent to which these objectives are achieved.”
It seems a bit odd to say that in one review we are going to set out the objective and then decide whether the objective has been achieved or not. That seems, temporally, to be a bit wrong.
Mr Dunne
As I have indicated, we intend to undertake these reviews every year. It will probably be impossible to assess in the first review whether the objectives have been achieved—there might be some ability to assess it—but in subsequent iterations we will be able to look back and see how well they have been achieved.
I notice that the right hon. Member for Leicester East (Keith Vaz) is heading for the exit—[Interruption.] He has now resumed his seat. This is not specifically the right point in my speech to pick up on the points he has raised, but I would like to respond to his characteristically constructive contribution on the subject of diabetes. He is the chair of the all-party group on diabetes, and he might recall that I used to be the vice-chair of that group, as I have family members with type 1 and type 2 diabetes. I have considerable sympathy with the points that he made about the importance of adequate advice for individuals who might be unaware that they have diabetes. He also talked about the importance of adopting innovation through NHS treatment of the condition. We share that objective, and nothing in the Bill will do anything other than to continue to encourage innovation. I will be making further remarks, perhaps when the right hon. Gentleman is not with us, on the subject of innovation, but I just wanted him to be aware that I had taken his points on board. He might be disappointed by my conclusion on the specific amendment, but I shall go on to explain how his point is being addressed in other ways.
Returning to new clause 1 and the question of regulations, I wish to make a further point. Much of the information provided to the Secretary of State will be commercially confidential. We touched on this in Committee. I am sure that suppliers have every confidence that the Government will maintain that confidentiality in anything we publish, but it is important to reinforce the principle. This means that there is a limit to the level of detail we are able to publish, and I am sure that the hon. Member for Ellesmere Port and Neston will appreciate the commercial sensitivity reasons involved. Any information we do publish will be at a consolidated level, protecting suppliers’ confidentiality but allowing the Secretary of State to be clear on the basis of the conclusions of his review. We will of course be able to use supporting information to evidence our conclusions.
Turning to the detail of the new clause, its requirements reflect the duties placed on the Secretary of State in the Bill, but I must be clear that the content of such a report should not be restricted and must be able to address the key issues arising during the year that may affect the operation of the schemes. The other significant element of the new clause, which I have touched on in response to the right hon. Member for Leicester East, was discussed at length in Committee. This was the question of whether it would be appropriate for such a report to address matters relating to the NHS duty to promote innovation.
The Government’s position is clear that it is not appropriate to link the measures in the Bill, which relate purely to the cost of medicines and medical supplies, to the NHS duty to promote innovation. Promoting innovation is a high priority not only for the Government and the NHS but for many other stakeholders. Promotion of innovation quite properly requires action across many different fronts, and it would not be possible to quantify the contribution of the schemes in the Bill to that endeavour in any meaningful way. The NHS is already doing great work to promote innovation, and I would like to draw hon. Members’ attention to the latest data from the innovation scorecard, a quarterly data publication showing the uptake of innovative drugs and medical technologies following NICE approval in England. This is now a nationally published statistic.
The hon. Member for Wolverhampton South West (Rob Marris) asked specifically about this in his remarks. I can tell him that the latest publication, on 12 October this year, shows that the rate of uptake for 85 medicines recommended by NICE is increasing, that 77% of those medicines had positive growth uptake between March 2015 and March 2016, and that 54% of the 85 medicines had a growth uptake greater than 10%. These data are made available on a quarterly basis, and hon. Members can follow their progress through the official national statistics.
The Government are taking broader action to secure the UK’s future as an attractive place for the life sciences sector, particularly in the light of the EU referendum and the consequent Brexit. We are clear in our commitment to the life sciences, and to building a long-term partnership with industry. The hon. Member for Wolverhampton South West also asked me to address the question of the NICE process and whether this takes evidence into account. He also asked about the process for the subsequent review of previous decisions. This is a continuous process. It does not happen for every drug all the time, but there is a routine procedure under which, on the basis of new evidence, NICE will look again at a decision and decide whether to uphold or amend it. That procedure could allow drugs that had previously not been approved to become approved on the basis of new evidence, and NICE will look at evidence from wherever it comes. I hope that that reassures the hon. Gentleman.
Dr Whitford
It is a new medicines and rare diseases fund, and it includes orphan, ultra-orphan and end of life, but it is not only about end of life.
Mr Dunne
No, it is not only for end of life, but also for rare diseases. That was my understanding, but I stand corrected. However, my main point is that it should be for clinicians to decide what is spent across the range of activity. If money is ring-fenced into a specific fund for new medicines, that might not always be the right clinical decision.
Dr Whitford
Does the Minister accept that it is a slightly bizarre public relations thing to have a medicines fund that is only for cancer, ruling out people with other life-threatening illnesses? That is the case here in England.
Mr Dunne
The new cancer drugs fund was set up specifically to provide funds to deal with one of the most common causes of mortality in the country, and was a priority of the previous Government; I will not go into the reasons for that.
Returning to amendment 8, it was suggested that what happens to the receipts is not clear, but all income generated by the voluntary and statutory schemes is reinvested in the NHS. Estimates of income from the pharmaceutical payment regulation scheme are part of the baseline used in the Department’s spending review model. The model was used to calculate the funding increase that the NHS sought at the time of the 2015 spending review, and it helped to secure the £10 billion of real-terms funding over the course of this Parliament. The income from the voluntary and statutory schemes can and does fluctuate; that is the biggest problem with ring-fencing, which could bring risks in this area. For example, the annual income from the PPRS has varied between £310 million and £839 million in a full financial year in England, so there is the potential for the income that it generates to vary widely, which could disadvantage patients by making treatment dependent on income from a pricing scheme with unsteady income generation.
Rob Marris
I understand where the Minister is going with that, but I want to caution him. He spoke earlier about flexibility—my word, not his—and his example was that a clinical commissioning group or a medical body might want to spend some of this money on staffing. Owing to the fluctuation to which he refers, however, spending funds on staffing is probably not a good idea.
Mr Dunne
I am grateful to the hon. Gentleman for his advice, but I am afraid that I do not think it is relevant to my point about the fluctuation in income coming from the scheme. It is relevant in relation to whether NICE or politicians make such decisions. They need to be made by clinicians.
Dr Whitford
I thank the Minister for kindly giving way. The cancer drugs fund has a budget of some £350 million, so if he is saying that the money that can be retrieved varies from £300 million to over £800 million, that would allow for the expansion of a new medicines fund.
Mr Dunne
It might if the move was always in the same direction. My concern is that the amount could decline between one year and the next; it may not always go up—certainly not up in a straight line.
Separately from the Bill, the Government are taking action to secure the UK’s future as an attractive place for the life sciences sector and to support faster patient access to medical innovations. I have already touched on the recently published accelerated access review, which sets out ways to increase the speed at which 21st-century innovations in medicines, medical technologies and digital products get to NHS patients and their families. The review’s recommendations included bringing together organisations from across the system in an accelerated access partnership, and creating a strategic commercial unit within NHS England that can work with industry to develop commercial access arrangements. We are considering those recommendations with partners and will respond in due course.
NHS England and NICE are jointly consulting on several proposed changes to NICE standard technology appraisals and highly specialised technology appraisals, including around speeding up the appraisal process. The Department of Health continues to work closely with NHS England and other stakeholders to improve uptake of new medicines. A key element of that is the innovation scorecard that I have already referenced. With those comments about our concerns about what is proposed in amendment 8, I ask the hon. Member for Burnley (Julie Cooper) not to press her amendment.
Turning to amendment 9, tabled by the hon. Member for Central Ayrshire, the Government recognise that section 260 of the National Health Service Act 2006 does not explicitly state that the Government are obliged to consult industry. However, I am aware that the Act does explicitly state that there is an obligation on the Government to consult when it comes to controlling the cost of medicines. A similar amendment was tabled by the hon. Lady in Committee. I want to reiterate that I am happy to consider with her how we could best introduce a general requirement to consult industry in section 260. Indeed, my officials have been in discussions with her, and I am grateful for her time and constructive comments.
I note the hon. Lady’s reference to the effect of any pricing controls for medical supplies on maintaining the quality of those supplies. I assure her that the Government would take into account all relevant factors, including any concerns raised by industry about the quality of medical supplies, when making and consulting on any price controls for medical supplies. The Government would not however be in favour of putting one of those many factors in the Bill.
The Medicines and Healthcare Products Regulatory Agency is responsible for the safety, efficacy and quality of medical supplies, and the Bill will not change that. The MHRA has assured me that any use of the price control powers in the Bill would not affect any of the quality or safety requirements that must be met before medical supplies can be placed on the market.
The hon. Lady referred to the procurement system in Scotland; I assure her that the Government are committed to improving procurement across the NHS. She will be well aware of the Carter report, which concluded that there is considerable variation in the value that trusts extract from their expenditure on goods and medical supplies. NHS Supply Chain is working hard to deliver procurement efficiencies, to meet recommendations to increase price transparency, to lower costs, and to reduce the number of products and suppliers used across the NHS to deliver economies of scale. The hon. Lady referred to 600,000 products, but it has had success in reducing the range in the catalogue down to 315,000 to help NHS organisations purchase products more efficiently. It continues to work to reduce that number. I am aware of similar work in Scotland. In England, we are using the Carter review to deliver that.
While I understand the intent behind the hon. Lady’s amendment, I am not fully convinced that, as drafted, it would have the desired effect. If she will continue to work with me and my officials, the Government would be happy to consider, while the Bill is in the other place, how we could best introduce the requirement to consult into section 260. On that basis, I invite her not to press her amendment for now.
Mr Dunne
I am afraid that I must press on to cover the Government amendments.
Government amendments 1 to 5 address a possible loophole in the Bill. Clause 6 amends the National Health Service Act 2006 to give the Secretary of State the power to make regulations to obtain information from any UK producer that is not an excepted person. A “UK producer” is defined in the Bill as anyone involved in the manufacture, distribution or supply of health service medicines, medical supplies and other related products required for the purposes of the health services in the United Kingdom. An “excepted person” is defined in the Bill as any person providing pharmacy or GP services for the health services in Scotland, Wales and Northern Ireland. The purpose of these provisions was to reflect the agreement with the devolved Administrations that, for devolved purposes, they would collect information from pharmacies and GP practices in their nation. However, there may be circumstances in which a company supplies products in the devolved Administrations and also in England, and could claim that the provision, as drafted, would allow it to become an excepted person, because it was operating in the devolved Administrations. That is clearly not the intent of the Bill, so we have proposed these amendments to address this loophole.
Government amendment 6 is a minor consequential amendment that was unintentionally omitted when the Government tabled amendments in Committee. The amendment relates to clause 6, which provides the Secretary of State with the power to disclose information to the list of bodies set out in proposed new section 264B. The amendment clarifies that the list of people to whom the Secretary of State can disclose information includes those persons providing services to the Regional Business Services Organisation in Northern Ireland; it had previously been omitted. I hope that hon. Members will accept these amendments.
Mr Dunne
I would like to conclude this point for the hon. Lady, as I hope it will satisfy her. Her concern is about how the Government will behave in response to requests from devolved Administrations; we recognise that we need to give reassurance to the devolved Administrations that, in the light of the constructive conversations we have already had with them, they will have full access to all relevant data that the Government collect. We are quite happy to do that. We have indicated that we will enter into a memorandum of understanding, which will be discussed and agreed with the devolved Administrations. Those discussions will cover whether they have automatic access to this information—in real time, or in some other format—and whether that is done through giving them direct access to the systems, or by forwarding the data that we collect, immediately on request. We need to get into the detail of that in discussion on the memorandum of understanding, rather than committing that to the Bill at this stage. On that basis, I hope that the hon. Lady will not press her amendment to a vote.
Dr Whitford
I welcome the Minister’s comments, and I am happy not to press the amendment if we can reach the point of a clear memorandum of understanding. I just point out that all my amendment does is to say that the groups listed by the Bill should be able to ask for data on request; it does not add anyone else. I understand that my attempt at the amendment in Committee included groups that it should not have, but that has been corrected. This amendment does not spread confidential information any more widely.
Mr Dunne
I am grateful to the hon. Lady for that clarification. I think this is best addressed through a memorandum of understanding, rather than in primary legislation, in case we need to adjust the memorandum in subsequent years.
Finally, I wish to address Government amendment 7, which provides a definition of “equipment”. The hon. Member for Wolverhampton South West took us through the drafting on the definition of “medical supplies”. The amendment gives a definition of “equipment” in the National Health Service (Wales) Act 2006 to ensure consistency with the National Health Service Act 2006. “Equipment” is defined as including
“any machinery, apparatus or appliance, whether fixed or not, and any vehicle”.
When taken in tandem with the common definition of “medical supplies”, the definition is broad enough to capture any medical supplies on the market, from bandages to MRI scanners. The point of distinction was not so much the definition of “medical supplies” as the definition of “equipment”, which is a subset of the medical supplies definition. I hope, therefore, that hon. Members will accept the amendment.
I have spoken at length on these amendments. I hope I have made my position clear, that Opposition Members will not press their amendments to a vote, and that the House will accept the Government amendments.
Justin Madders
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Clause 6
Provision of information to Secretary of State and disclosure
Amendments made: 1, page 4, line 12, leave out from “products,” to end of line 13.
This amendment is linked to amendments 2 to 5. It is directly consequential on amendment 4.
Amendment 2, page 4, line 17, at end insert—
“(subject to subsection (6A)).”
This amendment is linked to amendments 1 and 3 to 5. It flags that the provision made by section 264A(2)(a) and (b) of the National Health Service Act 2006 is subject to the provision made by amendment 3.
Amendment 3, page 5, line 47, at end insert—
“(6A) Regulations under this section may not do any of the following—
(a) require any person who provides primary medical services under Part 4 of the National Health Service (Wales) Act 2006, or any person who provides pharmaceutical services under Part 7 of that Act, to record, keep or provide information relating to any Welsh health service products which are supplied by the person in providing the services in question;
(b) require any person who provides primary medical services under section 2C(1) of the 1978 Act, or any person who provides pharmaceutical care services under section 2CA(1) of that Act, to record, keep or provide information relating to any Scottish health service products which are supplied by the person in providing the services in question;
(c) require any person who provides primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14)) to record, keep or provide information relating to Northern Ireland health service products which are supplied by the person in providing the services in question.”
This amendment is linked to amendments 1, 2, 4 and 5. It ensures that regulations under section 264A of the National Health Service Act 2006 may not require the persons specified to record, keep or provide the information specified.
Amendment 4, page 6, leave out lines 3 to 15.
This amendment is linked to amendments 1 to 3 and 5. It is consequential on the new provision made by amendment 3.
Amendment 5, page 6, line 36, leave out “(8)(d)” and insert “(6A)(b)”.
This amendment is linked to amendments 1 to 4. It is a consequential amendment.
Amendment 6, page 7, line 8, leave out “(h)” and insert “(i)”.—(Mr Dunne.)
This amendment makes a change which is consequential on the amendments made in Committee. The effect is to allow the Secretary of State to disclose information to a person who provides services to the Regional Business Services Organisation in Northern Ireland.
Clause 7
Provision of information to Welsh Ministers and disclosure
Amendment made: 7, page 9, line 38, at end insert—
“(and for this purpose ‘equipment’ includes any machinery, apparatus or appliance, whether fixed or not, and any vehicle).”— (Mr Dunne.)
This amendment provides a definition of “equipment“ for the purposes of the definition of “medical supplies” in section 201A(8) of the National Health Service (Wales) Act 2006.
Third Reading
Mr Dunne
I beg to move, That the Bill be now read a Third time.
As we have already discussed today, it has been a pleasure to take this short, albeit technical, Bill through the House with such a wide degree of consensus from all participating parties.
We have had a very constructive debate. Points have been raised by hon. Members from both sides of the House through amendments and in debate, and we have sought to take them on board. We will look to take some of them forward as the Bill moves to the other place.
I thank Opposition Members for their contributions. They include the hon. Members for Ellesmere Port and Neston (Justin Madders), for Burnley (Julie Cooper), who is just about in her place, and for Central Ayrshire (Dr Whitford), who leads for the Scottish National party. We have had some strong contributions from Back Benchers, including the hon. Member for Wolverhampton South West (Rob Marris), who served on the Committee in his usual diligent fashion, and the right hon. Member for Leicester East (Keith Vaz). We have also had contributions from Government Members. In particular, I thank my hon. Friends the Members for Peterborough (Mr Jackson) and for Torbay (Kevin Foster), who was active in Committee. I also thank my Parliamentary Private Secretary, my hon. Friend the Member for Halesowen and Rowley Regis (James Morris), and the Whips on both sides of the House.
More than £15.2 billion has been spent on medicines in the most recent full year—an increase of nearly 20% since 2010-11 and of over 7% since last year. The purpose of the Bill is to close loopholes to ensure that the NHS secures as much value for money as it can from this very significant spending on pharmaceutical and medical products. We are looking to clarify and modernise provisions to control the cost of national health service medicines and to ensure that sales and purchase information can be appropriately collected and disclosed.
Briefly, the Bill puts it beyond doubt that the Secretary of State can require companies in the statutory scheme to make payments to control the cost of NHS medicines. That is expected to save the health service across the UK some £90 million a year.
Secondly, the Bill would enable the Secretary of State to require companies to reduce the price of an unbranded generic medicine, or to impose other controls on that company’s unbranded generic medicine, even if the company is in the voluntary scheme—currently the 2014 pharmaceutical price regulation scheme—for its branded medicines.
Members will recall the examples raised on Second Reading and in Committee of companies charging the NHS unreasonably high prices for unbranded generic medicines. Without competition, companies have raised prices totally unreasonably—in the most extreme case by as much as 12,000%. Companies can do that because we rely on competition to keep prices of unbranded generic medicines down. Although that generally works well, the Government need the tools to be able to address the situation in which a small number of companies are exploiting the NHS, patients and the taxpayer by raising prices when there is no competition.
Thirdly, the Bill enables the Secretary of State to make regulations to obtain information on sales and purchases of health service products from all parts of the supply chain, from manufacturer to pharmacy, for defined purposes. These purposes are reimbursement of community pharmacies and GPs, determining the value for money that the supply chain or products provide, and schemes to control the costs or prices of medicines. By bringing these requirements together, the Bill streamlines and clarifies all the relevant requirements currently in place, providing a statutory footing for them all. This includes the existing statutory requirements already in the NHS Act 2006, and those agreements that currently have a voluntary basis only.
In Committee, the Government tabled a number of important amendments to reflect the views and requests of the devolved Administrations on how they want to apply the information power in their territories. We tabled the amendments following constructive discussions that resulted in agreement that the UK Government will collect information from wholesalers and manufacturers for the whole of the UK. It would not make sense for each nation to collect its own information from wholesalers and manufacturers, which would lead to duplication of effort and unnecessarily increase costs across the system.
We have also agreed that each nation will collect information from its own pharmacies and GPs. The devolved Administrations will have full access to all the information that the Government collect. I have committed to develop a memorandum of understanding to underpin these arrangements, and my officials are working closely on that with officials in the devolved Administrations.
To ensure that the Bill makes the Government’s intentions absolutely clear, we tabled a small number of minor and technical amendments on Report to close a potential loophole that would have enabled some companies not to provide us with any information if they also provided pharmacy or GP services to the devolved health services.
This is a relatively small Bill, technical in nature, which has received considerable support from across the House, for which I am extremely grateful. The Bill will help to secure better value for money for the NHS from its spending on medicines, while ensuring that the decisions made by the Government are based on more accurate and robust information.
I thank you, Madam Deputy Speaker, for presiding over today’s debates. I also thank the members of the Panel of Chairs, especially my hon. Friend and neighbour, the Member for Telford—
Mr Dunne
I stand corrected—my hon. Friend the Member for The Wrekin (Mark Pritchard), under whose chairmanship I served for the first time. Finally, I thank the parliamentary Clerks and counsel, Hansard and the Doorkeepers for helping us to bring the Bill to its conclusion today.
Justin Madders
As the Minister said, the Bill is designed to enable the NHS better to control the cost of medicines and medical supplies and to close some of the loopholes in the system that have been the subject of blatant abuses in recent years. In seeking to achieve those aims, the Government have our support.
I wish to place on the record our appreciation for the amiable way the Minister dealt with our probing of the Bill. Although he has not accepted our amendments, he has explained why not in a reasonable and constructive manner. I would also like to record my appreciation of the work of the members of the Bill Committee, including my hon. Friend the Member for Burnley (Julie Cooper), who ably assisted me in tabling and speaking to Opposition amendments, and the hon. Member for Central Ayrshire (Dr Whitford), who spoke on behalf of the Scottish National party. Particular thanks go to my hon. Friend the Member for Wolverhampton South West (Rob Marris), who has been engaged and informed in equal measure throughout the Bill’s passage through this House.
Expenditure on medicines accounts for a significant and growing proportion of the NHS budget, standing at £15.2 billion in England in 2015-16, which is an increase of more than 20% since 2010-11. That reflects the incredible advances that continue to be made in the development of new and innovative medicines, often by our own life sciences industry here in the UK. Although we welcome and celebrate those developments, it is clear that taxpayers and patients have not always been well served by the market. It is important that we do all we can to secure value for money for the NHS, especially in the current financial context following six years of historic underinvestment by normal standards.
When the most recent five-year pharmaceutical price regulation scheme was agreed in early 2014, the Government said it would provide unprecedented certainty, but as we know and as was reported in February by the then Life Sciences Minister, the hon. Member for Mid Norfolk (George Freeman), estimated incomes in the UK from PPRS payments for 2016-17 were £647 million—a considerable reduction on the £800 million received in 2015, particularly at a time when the overall drugs bill has been increasing apace. Those figures and the fact that we are debating this Bill show that the original scheme has not gone entirely to plan.
There is much in the Bill to be welcomed. We certainly want an end to the playing of the system that has been going on. We hope that the Bill will finally put an end to such antics and deliver a mechanism that ensures consistency in appropriate circumstances. We support the rationale behind aligning the statutory and voluntary schemes, which will create a more level playing field between companies and offer a much better chance of delivering greater savings and value for money to the taxpayer.
We support measures to tackle the small number of cases where we have seen companies disgracefully exploiting loopholes in the regulations to hike the price of medicines, sometimes by more than 10,000%. As we know, the investigation undertaken by The Times in the summer found that the price of medicines was inflated by £262 million a year as a result of this practice. That continues to impact on patients, often those with rarer conditions.
An example is Keveyis, a drug that has been found to be extremely effective in treating some of the symptoms of muscular dystrophy. Until 2012 it was relatively inexpensive, costing around £100 a box per patient. Unfortunately, it was discontinued by its previous manufacturer. Recently Taro Pharmaceuticals obtained the rights under orphan drug status and is now manufacturing it once again. However, its forecast price in the EU is approximately £35,000 per patient per year, despite the fact that no new research and development costs have been incurred by the company. It is therefore very difficult to see what justification there can be for such a significant price increase. Because of the rise in price, the NHS in England is refusing to provide reimbursement for the drug, which means that patients lose out. It is this deliberate manipulation of the system that we want to see dealt with and we hope that this Bill will once and for all put an end to such scandalous practices.
Although we support the broad aims of the Bill, we have had a number of concerns, some of which we have touched on already, about what is perhaps missing from the Bill and about the Government’s policies more widely on access to medicines and treatments. Despite this country’s world-leading pharmaceutical sector, which we are all rightly proud of, successive studies have demonstrated how there is a relatively low take-up of new medicines by the UK compared with other high-income countries. Members across the House will no doubt have received many pieces of correspondence from constituents concerned about the lack of availability of medicines that they or their relatives are trying to obtain. We also see clinical commissioning groups rationing medicines and treatments in ways that would previously have seemed unthinkable.
If we are to create a level playing field for drugs companies, we should be trying to do the same for patients as well. One measure that we have proposed to tackle this issue is to ring-fence future rebates from the sector and invest them in improving access to medicines and treatments. We know that £1.24 billion of new money has been returned through the rebate since it was established. Surely there can be no more logical use for this money than to tackle the gulf between the UK’s record on developing new drugs and patients’ ability to access them.
We know that the Government were not willing to back our amendments, but I urge the Minister to look again at how a similar measure has worked in Scotland. As we heard in the debate today, there seems to be some difference of opinion about that. The hon. Member for Central Ayrshire spoke strongly in support of it.
We note that a number of amendments tabled by the Government during the passage of the Bill mean that the devolved Administrations are subject to the same arrangements, although it was pointed out in Committee that there appear to be no equivalent arrangements for the devolution of health in Greater Manchester. I recall that when the Minister responded to my questions on this point, he suggested that ring-fencing the appropriate amount of the rebate for Greater Manchester might lead to chaos, as its allocation from NHS England already includes an element of income from the rebate. I think the Minister underestimates his ability to resolve the issue and overestimates the difficulty that would ensue.
The annual health budget negotiated for Greater Manchester is about £6 billion, around half the Scottish budget and around a billion pounds less than the Welsh budget, so the size of the budget is not the issue. What is an issue, though, is transparency and consistency. I do not expect any late change of heart from the Minister, but we will be watching future developments in English devolution and the accompanying budgets with interest.
The other aspect about which we have concerns is how these proposals will impact upon the future of the pharmaceutical industry in the UK, in a climate where there is already considerable anxiety in the sector about the future of the European Medicines Agency as a result of Brexit. Clearly, we will be keeping a close eye on both the operation of the scheme and the general health of the sector, particularly in terms of future investment in research and development.
To conclude, we support the broad aims of this Bill and the Government’s aim of better controlling the costs of medicines. However, we should be doing more to tackle the present situation to prevent patients from missing out on innovative treatments, particularly when we compare our record to that of countries with similar wealth. We hope that the scope of the annual review envisaged in the draft regulations is sufficiently broad to enable us to judge the Bill’s effectiveness on this issue and on the others that we have raised, and we look forward to considering the Government’s response once the consultation on the draft regulations has been completed.
As the Minister said, this is a small Bill, but the sums at stake are large. We hope to see a positive outcome for the NHS as a whole. Thank you, Madam Deputy Speaker, for chairing our proceedings today. I thank the Members who served on the Bill Committee, the Chairs and all the staff and civil servants who successfully led the Bill’s passage through the House.
Dr Philippa Whitford
I will open my remarks with thanks, because this is the first Bill that I have helped to take through the House, and I am therefore very grateful to you, Madam Deputy Speaker, the Chairs of the Public Bill Committee and all the staff who have worked on this, particularly those in the procedural hub; as a newbie, being able to go and ask them what happens next has been immensely helpful.
Obviously, we welcome the basic premise of the Bill, particularly clauses 1 to 4, which give the Secretary of State the power to control the price of drugs and avoid the excesses we have seen recently, as was highlighted in the article in The Times, particularly by those companies that are in the voluntary scheme but also produce generics, and therefore the price of those generics is not controlled. There are also those companies that have picked up drugs that have orphan status—they are no longer produced by anyone else—and basically robbed the NHS by increasing the price by many thousand per cent. That is just unacceptable.
When we accept relatively high prices for new drugs, we often excuse that on the basis of research and development. We need to realise that not all research and development is done by big pharmaceutical companies; they often collect drugs by buying small, spin-out companies from universities. With regard to generic or repurposed off-patent drugs, the R and D is usually done by clinicians within the NHS, or by academics in university departments. Companies have admitted in the past that they do not always price drugs in relation to their R and D costs; they sometimes do so simply by what they think the market will bear. We must not always allow them the excuse that they are spending huge amounts on R and D, because that is simply not always the case.
I tabled two new clauses in Committee. Now that the Secretary of State will have this power, I hope that the two issues raised by my new clauses will be dealt with. One is the issue of specials, which are simply hand-made preparations, usually an ointment for dermatological use. I arranged for the briefing from the British Association of Dermatologists, which highlighted companies that had a Scottish price list and an English price list, to be sent to the Minister. I therefore hope that those powers will be used. In Scotland it is done by using an NHS producer who makes the drug and therefore keeps the price down, rather than simply paying a pharmaceutical company or a pharmacy company, because the pharmacy with which the patient is dealing might have a mother or sister company and they are simply taking a very high price from them.
The other issue, which was raised last November, is that of repurposed off-patent drugs. As the shadow Minister explained at the time, an off-patent drug may be picked up by a new company and used for its new purpose, such as simvastatin for multiple sclerosis, but with the merest tweak it could be put out as if it is a new drug, and suddenly at a price that people cannot access. That also touches on the hierarchy whereby doctors must prescribe a licensed version before an unlicensed one. If a licensed drug came on the market that was actually just a version of an off-patent drug, doctors would be under pressure to prescribe it.
I understand that work has gone ahead since last year’s Bill, but I exhort the Minister, and through him the Secretary of State, to ensure that the powers given by this Bill are used in all these circumstances to ensure that prices are controlled. Otherwise, what happens is not a matter of expenditure to the NHS on its own, but usually that CCGs will not allow these drugs to be accessed, which is what is happening in the case of specials. We now have the powers. We welcome that, but hope that they will be used.
Rob Marris
I propose, Madam Deputy Speaker, not to take the remaining three hours. Earlier, when the Minister would not take an intervention, he seemed to think there was a rush on time. My reading of the Order Paper is that we have another three hours for the Bill, but I will not take that long.
I want to put the Bill in context, because this is a socialist Bill. It builds on the Labour Government’s National Health Service Act 2006, which applied to England. Looking around, Madam Deputy Speaker, I think you and I may be the only Members present who voted for the 2006 Act—that was obviously before you were in your esteemed position. In putting the current Bill in context, it is worth reviewing what it is building on.
The 2006 Act made reference to the voluntary schemes for price control that existed then. The current voluntary scheme, of course, is the 2014 pharmaceutical price regulation scheme—the PPRS. Those voluntary schemes were to do with limiting the profits of pharmaceutical companies. Now, I stress to the House that the Labour party and I are not opposed to pharmaceutical companies per se; they do fantastic research, and there are probably millions of people alive now who would not otherwise have been alive, because of the research and development done by pharmaceutical companies—many of them, happily, based, or having major operations, in the United Kingdom. The companies are very welcome here, but they have to play by the rules, and so do those that buy up off-patent drugs, horse around with them and put up their prices by hundreds and hundreds of per cent. Sometimes, it is a minority of private equity companies that are doing that, and they are not welcome here.
Pharmaceutical companies must act responsibly, and they may need statutory encouragement to do so. The 2006 Act started the process of statutory encouragement with a statutory scheme, which enabled Her Majesty’s Government, in appropriate cases, to limit prices and the profits of pharmaceutical companies—that is why I say this is a socialist scheme. Before those on the Government Benches get all aerated about this, let me say that the Labour party and I do not wish to nationalise or control the prices in every corner store in the country—not at all—but there are certain big operations where market intervention is helpful and is needed when there is market failure. It was perceived—rightly—by the Labour Government that there was some market failure, and they needed some stern measures to sort it out.
The Bill builds on that work from 10 years ago because, as adverted to by the Labour Front-Bench spokesperson, my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), some medicine supply companies—again, a minority—were, frankly, taking the mickey. They were leaving the voluntary scheme in favour of the statutory scheme because that was more advantageous to them. I understand why they would do that—they wished to maximise their profits—but they must act in a responsible way, and if they will not do so as a result of being urged to show corporate social responsibility, which some of them will not, we need statutory measures, and that is what the Bill puts in place. One of the things the Bill does is to address the issue of companies leaving the voluntary scheme to go into the statutory scheme because it is a better deal. The Bill resets the schemes, as it were, to make sure that a company is not encouraged to do that, because there is not that comparative advantage.
The Bill also makes provision for a new power to enable the Secretary of State for Health to require a company in the voluntary scheme to pay sums due under that scheme. Even though it is a voluntary scheme, the Bill will give the Secretary of State the power to pursue non-payers through the courts. I regard that as progressive legislation. For those companies that are not acting responsibly—that are taking the mickey, as I characterised it—that is a good thing. This Government have come down the socialist path to agree with such market intervention.
The Government have also come down the Labour party path in wanting to marshal information so that we can treat these companies equally and fairly, and so that they treat the society in which they operate—refracted principally through their supply of medicines to the NHS—equitably and fairly. Under the Bill, the Secretary of State will have the power to make regulations for the marshalling of information, building on the work done in the NHS Act 10 years ago.
That is important, but on the context of the Bill, I would like to tempt Health Ministers a little further down the socialist path. The Minister described it in his opening remarks as a technical Bill, which it broadly is. However, it also has an ideological or philosophical aspect, which I have tried to set it out, because it is broadly a socialist Bill. One of the things it seeks to do is to save money for the NHS and to raise money for the NHS through clawbacks on overpriced medicines or medical supplies because the NHS—this is the context of the Bill, which is not purely technical—is in serious financial difficulty. The Minister referred to the extra £10 billion of funding for the NHS over the lifetime of this Parliament, but even the Health Committee does not accept that calculation. It is a sleight of hand.
Part of that sleight of hand relates to what is being done on social care, which is leading to a growing problem of delayed discharges. Social care is not being properly funded in this country, and the precept that councils in England are allowed to charge is in effect a mandatory charge because the Government calculate the revenue support grant and all such local government things on the assumption that councils will raise the precept. That is having an effect on the NHS because of delayed discharges.
In the context of the crisis in social care, although the extra funding it will provide for the NHS is welcome, the Bill comes nowhere near addressing the underfunding of the NHS. In the financial terms of what it will raise or save for the NHS, the Bill—in relation to what the NHS needs and, coupled to that, what councils in England need for social care—is a drop in the ocean. The Bill will encourage a certain level of efficiency in the production, purchase and procurement of medicines and medical supplies. All of us in the House would sign up to the concept of efficient procurement. We might sometimes have different definitions of what does and does not constitute efficient procurement, but procurement is central to the Bill.
Although the NHS can, like any massive organisation, almost always act more efficiently—I hope the Bill will encourage the NHS to do so—we must bear it in mind that, in international comparisons, the NHS is one of the most efficient organisations in healthcare delivery in the world. If we look at healthcare delivery in the United States of America, for example, we can see that it spends, as a proportion of GDP, as much on public health as the United Kingdom. However, because its public health system is not run efficiently, as it is all fragmented, the USA spends the same proportion of GDP again on private health—
Madam Deputy Speaker (Natascha Engel)
Order. May I remind the hon. Gentleman that the Bill is quite specific and that this is a Third Reading debate? He is venturing into areas that are not specifically in the Bill, and he may wish to come back to what is in the Bill.
Rob Marris
I am grateful to you for your guidance, Madam Deputy Speaker. As I have said, I am putting the Bill in the context of the NHS and its effect in addressing the much deeper problems of the NHS. I was simply adverting to some of those deeper problems, but I take your guidance.
I repeat to Ministers that the Government have come some way, as the Bill demonstrates, down a socialist path for the delivery of healthcare, and I encourage them to come back with another Bill, building on this one, to abandon privatisations and let us have a public NHS.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Health Service Medical Supplies (Costs) Bill
Wednesday 7th December 2016
(7 years, 11 months ago)
Lords ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 6 December 2016 - (6 Dec 2016)
Health Service Medical Supplies (Costs) Bill
Wednesday 21st December 2016
(7 years, 11 months ago)
Lords ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 81(a) Amendments for Grand Committee (PDF, 61KB) - (21 Dec 2016)
The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con)
My Lords, this is a short and focused Bill, which is vital not only for the NHS but for patients. The Bill’s provisions have received robust debate and scrutiny in the other place, but also, I am pleased to report, broad support for their aims, objectives and measures from all sides of the House.
NHS spending on medicines is second only to staffing costs. The Health and Social Care Information Centre estimated that the NHS in England spent more than £15.2 billion on medicines in 2015-16—a rise of nearly 20% since 2010-11. With advances in science and our ageing population, these costs can only continue to grow. This is true across the world.
Of course, medicines are a vital part of patient care in the NHS, both in hospitals and the community. Thanks to the research and development efforts of the life sciences industry—an industry which contributes £56 billion and tens of thousands of jobs to the UK economy every year—our understanding of diseases and the best way to treat them has improved dramatically over the past 20 years. I have got to know many businesses in the life sciences industry over the past six months. They include some of the finest companies in the world—from Japan, the USA, Europe, Israel and other countries, as well as the UK. My message to them is clear: “You are part of the solution, not part of the problem. Your new innovative products can both provide better care and help the NHS deliver care at an affordable, sustainable cost”.
We recognise that we have a diffusion problem in the NHS—diffusion more than innovation. I would characterise this as a treacle problem. For a whole host of reasons—not just financial, by any means—we in the NHS are slow at uptake. This problem has been addressed in the Accelerated Access Review, chaired by Sir Hugh Taylor and Professor Sir John Bell, and it will be a key part of our life science strategy as we move forward. Our ambition is for the UK to be the best place in the world for life sciences: for research, development, innovation and manufacture and for use by our patients. Nothing in the Bill stands in the way of that. I would argue that the structure of the NHS—the biggest single-payer health system in the world—our access to patient outcome data and our exceptional discovery and translational research base should mean that we are well placed to have our cake and eat it, with new innovative medicines and devices at an affordable cost. To pursue that rather weak culinary metaphor, the treacle can become the icing on the cake.
The purpose of the Bill is to clarify and modernise provisions to control the cost of health service medicines and to ensure that necessary sales and purchase information can be appropriately collected and disclosed. These provisions will align the statutory and voluntary cost-control mechanisms currently in existence, allow the Government to control the cost of excessively priced unbranded generic medicines and ensure that we have comprehensive and accurate data with which to reimburse people who dispense medicines. Taken together, these measures will secure better value for money for the NHS from its spend on medicines.
The first element of the Bill relates to controls on the cost of branded medicines. For many years, the Government have had both statutory and voluntary arrangements in place with the pharmaceutical industry to limit the overall cost of medicines to the NHS. Companies can choose to join either the voluntary scheme or the statutory scheme. The current voluntary scheme is the 2014 pharmaceutical price regulation scheme, known as the PPRS. The objectives of the 2014 PPRS include keeping the branded health service medicines bill within affordable limits, while supporting the availability and use of effective and innovative medicines. For industry, the PPRS provides companies with the certainty and backing they need to flourish in the UK and in global markets. The current PPRS operates by requiring participating companies to make a payment to the Department of Health of a percentage of their NHS sales revenue when total sales exceed an agreed amount. So far, the PPRS has resulted in £1.45 billion of payments, all of which have been reinvested into the health service for the benefit of patients.
For those companies not in the PPRS, the Government operate a statutory scheme, which—until the current PPRS—was broadly financially aligned with previous voluntary schemes. The current statutory scheme is based on a cut to the published list price of products, rather than a payment mechanism on company sales. The difference between the two schemes has led to some companies making commercial decisions to divest products from the PPRS to the statutory scheme. This pricing misalignment of the two schemes makes no sense.
Last year, the Government consulted on options to reform the statutory medicines pricing scheme by introducing a payment mechanism broadly similar to that which exists in the PPRS. Our intentions were to put in place both a voluntary and a statutory scheme which were broadly comparable in the savings they achieve. Companies have freedom to decide which scheme to join and may move from one to the other, depending on the other benefits they offer, but it is the Government’s position that the savings to the NHS offered by each scheme should be broadly the same. In response, while NHS respondents supported our position, the pharmaceutical industry queried whether the Government had the powers to introduce a statutory payment scheme.
The Bill will clarify the existing provisions in the National Health Service Act 2006 to put beyond doubt that the Government can introduce a payment mechanism in the statutory scheme. The Bill would also amend the NHS Act 2006 so that the existing provisions for enforcement action would apply to the new powers. Payments due under either a future voluntary or statutory scheme would be recoverable through the courts, if necessary.
The powers to control the cost of medicines proposed in the Bill are a modest addition to the powers already provided for in the 2006 Act to control the price of, and profit associated with, medicines used by the health service. However, these additions are necessary to ensure that government has the scope and flexibility to respond to changes in the commercial environment. The intended application of the powers will be set out in regulations, on which we intend to consult as soon as we are able to do so. The Government have already published illustrative regulations to demonstrate how the powers will be exercised in a fair and proportionate way.
I would also like to reassure noble Lords and those companies in the statutory scheme that we will consult further on the implementation of a payment mechanism in the statutory scheme, including the level of the payment mechanism, before any regulations come into force. We estimate that 17 companies will be affected by the introduction of a payment mechanism, with the 166 companies that are currently members of the PPRS not affected. Small companies will continue to be exempt from payments. Our proposals will save the health services across the UK an estimated £90 million per annum.
I now turn to the second key element of this Bill, which amends the National Health Service Act 2006 to strengthen the Government’s powers to set prices of medicines where companies charge unreasonably high prices for unbranded generic medicines. We rely on competition in the market to keep the prices of these drugs down. This generally works well and has, in combination with high levels of generic prescribing, led to very significant savings. However, we are aware of some instances where there is no competition to keep prices down and companies have raised their prices to what look like unreasonable and unjustifiable levels. This was also highlighted by the Times earlier this year.
We cannot allow this practice to continue unchallenged. My department has been working closely with the Competition and Markets Authority to alert it to any cases where there may be market abuse and to provide evidence to support this. Earlier this month, the Competition and Markets Authority issued its highest fine ever of £90 million against Pfizer and Flynn Pharma after finding that each broke competition law by charging excessive and unfair prices for anti-epilepsy drugs in the UK, and only last week the CMA issued a statement of objections alleging that Actavis UK has breached UK and EU competition law by charging excessive and unfair prices in relation to the supply of hydrocortisone in the UK. Those CMA findings are provisional, and no conclusion should be drawn at this stage that there has in fact been any breach of competition law. We also know that Concordia International, one of the companies that featured in the Times investigation, is under investigation by the CMA. It announced this itself.
We also need to be able tackle this practice within our own framework for controlling the cost of medicines. While the Government’s existing powers allow us to control the price of any health service medicine, the current powers do not allow controls to be placed when companies are members of the voluntary PPRS scheme. Today, most companies have a mixed portfolio of branded medicines and unbranded generic medicines, and therefore we are currently unable to act. I have to stress that this is not a widespread practice in the industry. This Bill amends the National Health Service Act 2006 to allow the Government to control prices of these medicines, even when the manufacturer is a member of the voluntary PPRS scheme. We intend to use the power where there is no competition in the market and companies are charging the NHS an unreasonably high price. We will engage with the industry representative body, which is also keen to address this practice, on how we will exercise this power.
The final element of the Bill will strengthen the Government’s powers to collect information on the costs of medicines, medical supplies and other related products from across the supply chain from factory gate to those who supply medicines to patients. We currently collect information on the sale and purchases of medicines from various parts of the supply chain under a range of different arrangements and for a range of specific purposes. Some of these arrangements are voluntary while others are statutory.
The Bill will streamline and expand the existing information requirements in the National Health Service Act 2006. The Bill will enable the Government to make regulations requiring all those involved in the manufacture, distribution or supply of health service medicines, medical supplies or other related products to record, keep and provide at request information on sales and purchases. The requirement to provide this information would be for defined purposes: reimbursement of community pharmacies and GPs; determining whether value-for-money is being achieved from the supply chain or products; and controlling the cost of medicines. This will put the current voluntary arrangements for data provision with manufacturers and wholesalers of unbranded generic medicines and manufactured specials on a statutory footing.
Because the arrangements are voluntary, they do not cover all products and companies, limiting the robustness of the reimbursement mechanism. The information power would also enable the Government to obtain information from across the supply chain to assure themselves that the supply chain is delivering value for money, something that we cannot do with our existing, fragmented data. The new power will provide insight into where profit is made and how much. This is important because, although the Government are generally not the buyer of these products, they pay for all products used in the health service.
The 2006 Act already provides powers for government to control the prices of medical supplies. We are not using those powers at the moment, nor do we currently see any reason to start using them, but we want to keep open the possibility, and in the Bill we are updating the powers in line with those for medicines. The term medical supplies, as defined in the 2006 Act, is capable of covering a wide range of medical supplies from bandages to MRI scanners. Many of these products are bought following competitive tendering, and a scheme that controls prices would therefore not bring any benefits.
I also reassure the House about the application of this information power to the medical technology industry. Over 99% of the companies supplying medical technologies to the NHS are SMEs. We have no interest in placing large additional burdens on these companies. The 2006 Act also already requires suppliers of medical technologies to provide information on almost any aspect of their business. We are not putting any new requirements on them but merely streamlining existing requirements.
I thank the devolved Administrations for their constructive input and engagement with my department with respect to the Bill provisions. The Bill reflects the agreement between the Government and the devolved Administrations that information from wholesalers and manufacturers will be collected by the Government for the whole of the UK and shared with the devolved Administrations, while information from pharmacies and GP practices will be collected by each nation. This avoids the burden created by each country collecting the same information.
The Bill will ensure there is a more level playing field between our medicine pricing schemes, while ensuring the decisions made by the Government are based on more accurate and robust information about medicine costs. I believe this legislation will establish a framework that is fairer for industry, pharmacies and the NHS, while also being fairer for patients and taxpayers. I beg to move.
Lord Warner (CB)
My Lords, I am sure we are all grateful to the Minister for taking us through the provisions of the Bill and explaining the Government’s approach to the pharmaceutical and devices sectors. I am not altogether sure I followed his metaphor on treacle and icing, but we will let that pass.
I support the main purpose of the Bill, which is to control the cost of unbranded generic medicines if the competitive market is not working properly in respect of particular products. We have all seen what happened when Pfizer and Flynn Pharma hiked the price of an anti-epilepsy drug used by the NHS by over 2,000% when a branded drug came off patent. The proposed £90 million fine from the Competition and Markets Authority should be a salutary warning to others contemplating such action, but I understand why the Government are taking preventive legislative measures, and I fully support that.
However, as the Minister indicated, the Bill goes a good deal wider than stopping the NHS being ripped off when branded drugs go off patent, and that is where we need to probe a little further. Here, I should make it clear that, like the Minister, I have been a Pharmaceuticals Minister negotiating a PPRS deal with big pharma and curbing the excessive profits of generic companies—all areas which such a Minister has to take account of—and I have no illusions about the difficulties of his brief in this area. But it is also part of that brief to ensure flourishing UK pharmaceutical, biotech and devices sectors as part of a buoyant life sciences industry in this country, which provides many high-value jobs. It is not just about getting the cheapest deal on drugs for the NHS.
The Bill includes medical devices and technologies which have nothing whatever to do with the Pfizer-Flynn case. The information provided to me suggests that there has been little consultation with the sector before devices provisions were included in the Bill. The ABHI, the sector trade body, wrote to me to express its concern that the Bill will impose onerous regulation on its members across the country. It points out that SMEs make up 98% of the medical technology industry—I think the Minister accepted that—and that some of those SMEs are already leaving the UK market in favour of more flexible markets. As it says, in the longer run, this will have an adverse effect on the UK’s supply chain and the quality and competitiveness of the products available to the NHS. Given that the Minister has accepted the existing powers to intervene in the devices market if things are going wrong, why are the Government taking these new powers? I have never been very convinced by words such as “streamlining” and “modernising”, and I do not think the sector has been either. Why do they seem to be going in for a heavy-handed way that is bound to alienate many small businesses? Can the Minister explain in more detail what discussion there has been with the ABHI and the sector itself on the Bill’s provisions on devices and technologies, and why the sector was included in the Bill at all? What is the mischief that is being addressed by that inclusion?
Turning to the pharmaceutical industry, it is clear that the Government have not totally taken the sector with them, although the ABPI accepts the Government’s right to act in cases such as Pfizer-Flynn. Companies are clearly uncertain how the Government are going to set the price mechanism in the statutory scheme. I think the Minister was promising consultation, but he will have to do quite a lot of work to convince them that there is not some secret agenda. Can the Minister throw more light on the Government’s current thinking on the issue? How will the provisions ensure that payment levels that seem fair to large multinationals are not punitive to SMEs? I would like to know a bit more about at what level SMEs are excluded from the provisions. Will payment levels in the statutory scheme vary—this is critical to the sector—according to the circumstances of particular producers, some of whom are producing drugs for a very niche market with particular patient interests and concerns?
There are clearly concerns about the drafting of Clause 3 and whether it will penalise innovation. It has been suggested to me that the clause will not achieve the Government’s stated objective of delivering equivalence between the statutory and voluntary schemes. This is because the PPRS excludes sales of branded medicines launched after 1 December 2013 but, so far as I and the industry can see, there seems to be no similar exclusion for such products in the proposed arrangements for the statutory scheme, which would in effect be a penalty on innovative drugs. Does the Minister agree that there is an inconsistency? Is there not a risk that the UK’s already poor record, which he acknowledged, on speedy uptake of new medicines will get worse? Linked to this is the question of what consideration has been given to the impact of the new payment scheme on patient access to medicines where there is little competition. What risk assessment has been made of companies withdrawing supplies from the NHS market? Have there been any discussions with patient interest groups about these issues?
Another issue surfaced by the ABPI is the new power to obtain payments from pharmaceutical companies through the PPRS scheme. They accept that this makes sense if a company leaves the PPRS with a payment outstanding, but the Bill seems to be more widely drawn than that. The ABPI is clearly concerned that the Government may be considering making the voluntary PPRS somewhat less voluntary after the current one has run its course in 2018. What assurances can the Minister give the industry on that?
There are clearly significant industry concerns about the Bill’s provisions on the collection of information at a product level, especially in the international companies. For many of these companies, the UK market is a very small part of their business. What happens if they decline to co-operate over the information provisions in the Bill? It also looks a somewhat cumbersome information collection system that could impose quite rigorous burdens on many smaller companies. How much discussion has there been with the industry on the detail of the information requirements in the Bill and what scope is there for further modification?
Lastly, can the Minister clarify how this new system fits in with the current arrangements for using competitive tendering to purchase innovative drugs which NHS England, for example, does from time to time? Will companies give competitive prices in those tendering arrangements if there is a real risk that the Department of Health will take another cut a bit later on? Indeed, will the Department of Health snaffle money through this statutory levy which will not find its way back to the NHS to purchase innovative drugs more speedily? Can the Minister reassure us that the Department of Health is not creating a more bureaucratic edifice in this Bill that could damage NHS finances rather than confining itself to closing the loophole that Pfizer-Flynn exposed? We may need to probe some of these issues a little further in Committee.
Lord Lansley (Con)
My Lords, I am very pleased to follow the noble Lord and pay tribute to the fact that he has clearly identified some of the issues to which I will refer briefly here at Second Reading but which we will need to look at in Committee. The noble Lord did so very ably and helpfully. I thought that my noble friend the Minister set out the Bill very clearly, which is very helpful to the House. I understand that he is moving on to new ministerial responsibilities, so perhaps I may be the first to say that I know—having had the privilege of knowing my noble friend over many years since we first entered another place together—that his knowledge, experience, expertise and wise judgment on health matters is highly respected and much esteemed throughout the sector. His guiding hand will be much missed but we extend enormous thanks to him for all that he has done not only at the Department of Health but prior to that at the Care Quality Commission.
I draw attention to my interests in the register, and in particular as an adviser to MAP BioPharma—although the company is not directly affected by the provisions of the Bill.
In another place this Bill was referred to as a technical Bill. That is probably not an accurate description. It extends the powers of Ministers and gives them the ability to secure a payment under the statutory scheme which they did not feel they were able to do. It gives Ministers greater powers to control the prices of unbranded generic medicines which they did not have and it gives them a greater power to require information from suppliers. So there is a significant threefold extension of the powers of Ministers.
I completely understand and accept the reasons for the Bill. Ministers were right to bring it forward. There has clearly been a transfer that one might uncharitably describe as gaming between the voluntary and the statutory scheme—more politely it would be called arbitrage between the two—since there are suppliers of medicines, particularly in the hospital sector, that discount their list prices to those purchasers. Therefore, a statutory scheme that simply consists of a cut to the list price does not necessarily have any effect on their prices. So it does not have the intention that the voluntary scheme has. The Bill, quite rightly, closes a potential gap in control of the supply of generics by those companies that are also members of the voluntary scheme.
The Bill also extends information supplied by companies for dispensing and it might be useful in all of those to have a little bit of history, if I may detain your Lordships on that. I remember that before 2010, when I was shadow Secretary of State for Health, we were very clear that what we wanted to do as a potential incoming Government was to give stability to the industry and to that effect we said that we would not change the then PPRS before the renewal in 2014. But we were equally clear that when we got to the new PPRS in 2014, it needed to change and that, as it stood, its objectives were no longer being satisfactorily met. It gave businesses freedom for pricing medicines at introduction—and we should be well aware of the relative importance of this. The noble Lord, Lord Warner, referred to the relatively small size of the UK pharmaceuticals market, with about 3% of the international marketplace for pharmaceuticals, but the UK list price plays a much larger part in reference pricing internationally, with something like 25% of the total pricing effect. So it is very important to the industry to have that freedom of pricing.
However, the effect of the ability to price at the list price is that one has a NICE health technology assessment and evaluation with a threshold applied, which still leads frequently to NICE saying no to medicines. The net effect is that we have a licensed and effective medicine available to patients—but at the list price NICE says no and patients lose out. In our view, back then, this was an entirely unsatisfactory position. It seemed to us that, when an effective medicine is available to patients, it should be available to clinicians and patients through the NHS, and between the Government and the industry a mechanism should be established to ensure that a fair price is paid for the medicine. The patient should get the drug, the industry should get a fair price and the NHS should pay only what is necessary to achieve that.
The lack of access in the short run, as your Lordships will recall, is why we established the Cancer Drugs Fund, after Mike Richards’ report on the relative access in different countries in Europe to medicines demonstrated a significant shortfall in access in this country to cancer medicines in particular. But the intention always was—and I reiterate this, because it is frequently misrepresented—for the Cancer Drugs Fund to end at the beginning of 2014, because the new pharmaceutical price regulation scheme was intended to achieve the access benefit that the Cancer Drugs Fund was achieving in the short run. The fund did not overspend up to 2014; it was retained beyond 2014 and it then overspent, but that was not its original intention. So I do not accept the criticism of the Cancer Drugs Fund.
However, the PPRS negotiation for 2014 did not deliver the changes that were intended. It delivered budget control to the Treasury, freedom of pricing and introduction for the industry and a degree of rate of return reassurance to the industry. So to that extent, the taxpayer was well represented, the NHS may say that it was quite well represented and the industry was well represented—but I am not sure that patients were. What we need is a PPRS that serves patients at least as well as it serves the NHS.
Lord Hunt of Kings Heath (Lab)
This is a very interesting exposition, but could the noble Lord clarify that there is a difference between the notional list price, which is used as a marker for many other countries, and the actual price paid by the NHS? Secondly, does he agree that, if the Treasury had not purloined the rebate, we would have had the money and patients would have had access to new drugs?
Lord Lansley
The noble Lord makes interesting points, which point to where we were always intending to go—to a point where there was in effect a negotiated price between the industry and the NHS so that there was a proper discount. Now we have a rebate system. There was a lot of debate in the other place about where the rebate money went. It goes back into the NHS through the mechanism of the overall Consolidated Fund, so it is less transparent than is the case in Scotland, for example. However, that does not mean that it is lost to the NHS.
I will anticipate something that I was going to say later. A consultation is taking place involving NHS England and the National Institute for Health and Care Excellence, looking at how they can work together to introduce budgetary impact considerations alongside NICE evaluations to establish what prices the NHS should pay for medicines. That is taking us in the direction we have to go—namely, what is in effect negotiated pricing through the NHS to ensure access to medicines for patients. That is the positive construction of the present consultation. The negative construction is that it will create in effect double jeopardy. In the first instance NICE may say no on the basis of the list price. Then NHS England may add a second reason to say no because of the budgetary impact of new medicines—so there is an inherent problem with that.
I will finish the history for a moment. Where dispensing is concerned, there is a history under the last Labour Government of the pharmacy sector significantly exceeding the planned margin between the wholesale price and the reimbursement price because of a lack of good information. Therefore, we can be absolutely clear that an important purpose of the Bill is to get the margin survey right and provide more comprehensive data on the prices being achieved in the purchasing of medicines so as to make the reimbursement price deliver the agreed gross margin as part of the global sum to pharmacies.
Therefore, I support the Bill and its intended purposes. It will be important that it is used properly. The noble Lord, Lord Warner, made some very good points, including on equivalence between the two schemes. Gilead, a firm in my former constituency when I was in another place, continues to tell me what it thinks about these things and points precisely to the potential disparity between the statutory and voluntary schemes in relation to medicines introduced since 1 December 2013. If equivalence is the intention, we need to ensure that the Bill specifies that.
We are looking for a competitive environment in relation to unbranded generic medicines. The Competition and Markets Authority is pushing for that and the measures in the Bill can help Ministers to achieve that prospectively, as it were, rather than just dealing with abuse. But it is wrong for Ministers to take powers which would allow them to behave non-competitively. There is monopsony in this—monopoly purchasing by Ministers. Where a competitive environment is created—for example, where the price is determined in a competitive tender process—it would be completely wrong in my view for them suddenly to find that a price agreed through a competitive process is overridden by ministerial diktat—as the noble Lord said, Lord Warner, said.
I hope that we will also discuss two other issues. A very important one is to build back into the thinking on the future PPRS, through this legislation, what a future PPRS should have at its heart. Ministers making decisions about pricing structures should have specific reference to affordability. They should also have reference to the ability for patients to access the medicines they need through the NHS; the extent to which the pricing system enables unmet need to be met; and the extent to which medicines deliver relative therapeutic benefit, so that we literally pay for innovation and for therapeutic advance, but do not pay a lot of money for me-too drugs with brandings attached to them. However, we should pay for societal benefit. One can imagine the considerable benefit to society that would be derived from a new drug to treat early onset Alzheimer’s. We should also give explicit support to innovation. As the Bill proceeds, I hope that we will see more detail on not only the regulations but how the consultation between NHS England and NICE is proceeding. Perhaps the Government could also say more about their formal response to the accelerated access review and the life sciences strategy.
I support the Bill and I hope all the issues that I have referenced will be brought forward and discussed, including the structure of the information powers. At the moment, they are too wide-ranging and lacking in safeguards. Strictly speaking, there may be circumstances in which it is necessary for Ministers, if they ask for information, to provide a notice saying for what purposes it will be used and with whom it will be shared. Under those circumstances there should also be the potential for an appeal to the General Regulatory Chamber—but we can look at that in more detail in Committee.
As I say, I support the Bill and I hope we can look in Committee at giving more clarity on some of those issues and perhaps even building in one or two safeguards.
Baroness Walmsley (LD)
My Lords, I thank the Minister for his explanation of the Bill. However, while I have no problem with the Government’s intention of closing the loopholes identified in the statutory scheme for medicine cost regulation, aligning schemes and ensuring that medicines are reasonably priced and affordable to the NHS, I do have quite a lot of questions. I also share the concerns raised by the noble Lords, Lord Warner and Lord Lansley.
My first question is whether this is the right time to make these changes, with Brexit on the horizon. Some of the Bill’s provisions add further uncertainty to what is already a very uncertain time for the businesses affected by them. If trade between the UK and other EU countries becomes subject to customs duties, import VAT and border controls, it will increase costs to the life sciences industry and drive up costs to the NHS. This will certainly impact on patients. As the Minister has acknowledged, the life sciences industry is very important to our economy, and these changes could impact upon it very adversely.
There is no doubt that the medicines bill has risen over the past five years, but what evidence is there that this is just because of unreasonable price rises in the pharmaceutical sectors that are not currently controlled, such as generic medicines? We have heard a lot about increased demand in all areas of medicine and care, and this is usually attributed to greater longevity and a general increase in medical advances to treat more conditions better. So why do the Government think that the rise in the medicines bill is any different? Yes, of course, like other noble Lords I have heard of one or two particularly outrageous cases of enormous unexplained price rises in generic medicines, and this is suspiciously like profiteering. But is it really necessary to go as far as this Bill does in order to deal with just a few very unethical cases? I am a little surprised that the Government are acting before we see whether the current cases under competition law are actually going to deliver the right result. As I said, I accept there is a loophole for generic medicines sold by companies in the voluntary scheme, but what is the extent of the use of that loophole? How much is the NHS losing, and how much are patients suffering because of profiteering?
Clause 1 provides the Government with a much stronger enforcement mechanism for obtaining the payments rightly owed, but does this constitute an amendment to the current PPRS, and if so, does it require the agreement of all those involved in a future scheme? Will there be any discussion with companies that propose price rises? There are many reasons why prices sometimes rise, apart from a desire to make more profit. There should be some mechanism for finding out whether the price rise is justified and reasonable, rather than someone in the DoH just making an arbitrary judgment.
We have concerns that the traditional appraisal methods and notions of cost-effectiveness are no longer suitable for some modern medicines, especially for very innovative new drugs which will be suitable for only a very small population of patients. The NHS has been slow to respond to these changes and I would not want to think that the Bill could make things worse.
There is a need for much more clarity about Clause 3. The payment mechanism, which really amounts to a tax on net sales, will, we understand, be set somewhere between 10% and 17%, so it seems reasonable to ask how the Government will assess the impact of their chosen level on the availability of the medicine concerned. Will we know what percentage the Government plan to choose before the Bill completes its passage through your Lordships’ House? We would not want its unintended consequence to be shortages of certain useful medicines.
As we have heard, Clause 5 brings medical devices within the scope of price regulation. Is there really any evidence that there has been price abuse among suppliers of medical devices, as we have heard there is in relation to pharmaceutical items? With these items it is vital that there is a range of products for patients to choose from, as something that suits and works for one patient may be very uncomfortable for another. That is why driving down the cost of products will not necessarily save money in the long term. If a patient cannot get on with his or her life and contribute to society, an unsuitable but cheaper product could cost the economy more money in the long run.
Companies have told us that this section of the Bill is vague and does not make the Government’s policy intentions clear, so they need more reassurance. Nor are those intentions adequately covered in the Explanatory Notes or the impact assessment accompanying the Bill. That has prevented companies fully understanding how the provisions will affect their business. It is not very reassuring for the Government to say that they do not intend to implement all sections of the Bill immediately, because this uncertainty makes it impossible for businesses to plan when their main customer might be able to hold them over a barrel on price at some unknown time in the future. I certainly could not run a business in that sort of climate. Unsurprisingly, businesses are very concerned about this. Some clarity was offered during the Bill’s passage through another place, including, as I have just mentioned, the fact that the Government have no immediate plans to use the powers, but they could decide to use them at short notice at any time in the future. That provides the very uncertainty that investors hate and it is very bad for business.
Clauses 6 and 7 concern data collection. It seems very strange to me that the National Health Service Act 2006 already contains the power for the Government to require medical technology suppliers to provide them with information, and the Government have said that the Bill will clarify and modernise those powers. We have heard from officials that the penalty for non-compliance will be changed from a criminal to a civil one, which will be more proportionate to the offence. However, as these powers have not been used to date, the fact that the Government are making these changes suggests to some that their use may be planned in the not-too-distant future, and that brings more uncertainty.
One can understand the Government wanting and needing information in order to ensure that the reimbursement system works effectively, but the new provisions go a lot further than the current requirements and may put a very heavy administrative burden on companies. We have been told by officials that the intention is to make this burden as light as possible, and that is good, but how will this be done when, I understand, separate information will be required for every product throughout the whole supply chain, even for those outside this country? Companies tell me that currently they do not collect all the information the Bill requires and they would find it very difficult to do so. Is all this information really necessary to achieve the Government’s intentions in the Bill?
There is an issue about consultation. Some suppliers are claiming that the Government’s statement in another place that there has been extensive consultation is simply not true. They were not consulted. Only a few large trade organisations were consulted. We really need from the Government a clear commitment to proper consultation before these regulations are finalised and implemented. It is essential that the Government proactively engage with the entire industry before bringing forward legislation such as this.
I believe in evidence-based policy and that the Government should always be transparent in their intentions when they make changes, as mentioned by a previous speaker. However, at the moment that is not the case. If the powers are to be used, they should say so, and then there should be proper engagement and consultation with the businesses affected. It is in the interests of the companies affected that they work with government to support consumers and the NHS. After all, that is what they do; that is their business. The Government are asking for clarity from NHS suppliers about costs throughout the supply chain, so should not suppliers be able to expect clarity from the Government in return?
My primary concern is that any increase in payments by manufacturers and suppliers to the Department of Health should be put to use in improving access to new medicines and ensuring that existing medicines are provided in a timely way to all patients who need them. So far, I have not been assured by the Minister that this is what will happen to any increased payments. I wonder whether he is willing to do that today—after all, it is Christmas.
We need to see this Bill in the wider context of the struggle of the NHS and social care to provide services in the light of rising demand and costs. Apart from their efforts in this Bill to control costs, the Government have ignored that. The recent Statement announcing a small amount of additional money for social care, and the allowance of a raised local authority precept, will not bring money into the deprived areas that need it most. Until this is dealt with, measures such as those in the Bill are only scratching the surface of the problem.
Finally, I join the noble Lord, Lord Lansley, in paying tribute to the noble Lord, Lord Prior. It has been a great pleasure to work with him. He has always been very patient and courteous with us in this House in answering our questions. I also thank the noble Baroness, Lady Chisholm of Owlpen, who I understand is also moving on. I wish them both a very peaceful and restful Christmas and extend that to other noble Lords and to the Bill team. I look forward to working with whoever it will be in the new year as we move on to the Committee stage of the Bill.
Lord Hunt of Kings Heath
My Lords, as the Bill involves the supply of medicines and other goods to the NHS, I should like to start by declaring an interest as president of the Health Care Supply Association and of GS1, the barcoding organisation. I too congratulate the noble Lord, Lord Prior, on his move to the business department. We have very much enjoyed working with him and debating the issues. He has been unfailingly courteous to your Lordships’ House, and I am sure that we have all appreciated the work he has done on behalf of the Department of Health. Like the noble Baroness, Lady Walmsley, I too congratulate the noble Baroness, Lady Chisholm of Owlpen, on her retirement from government and thank her warmly for the work she has done as a Whip. She has taken part in many Dispatch Box debates and we are very grateful to her. I also, of course, welcome the noble Lord, Lord O’Shaughnessy, to his new post. He will enjoy taking the Bill through its remaining stages—perhaps.
As noble Lords have said, the recent fines imposed by the Competition and Markets Authority on Pfizer and Flynn Pharma for charging the NHS excessive prices is a salutary warning to the pharmaceutical industry. We certainly welcome the provisions in the Bill that deal with the small number of companies that have exploited loopholes in current legislation by controlling the price of unbranded generic medicines. However, the Bill misses an opportunity to counter the growing lack of access to new innovative drugs, which is putting the health of NHS patients at risk. I have listened to what the Minister has said, but it seems to me that the cumulative impact of decisions made by his department, and particularly by NHS England, is that there is less and less access. This is a very serious problem, both for the NHS and patients and for the industry and the life sciences sector.
My other concern is that this is a burdensome regulatory Bill. In fact, I am sure that in his new post the Minister will be shocked by the number of regulations that this Bill brings in, without any justification whatever, it seems to me. I hope that as we go through the passage of the Bill, we might look at making some of those regulatory requirements more focused, as the noble Lord, Lord Lansley, suggested.
The powers under the NHS Act currently allow the Secretary of State to make a statutory scheme for limiting the prices or profits of companies that choose not to be members of the voluntary scheme. The Minister has explained that the statutory scheme is less effective in terms of the level of saving that it makes than the mechanism in the voluntary scheme, thus leading to some companies leaving the voluntary scheme in favour of the statutory scheme. I well understand the argument that he put forward. On the other hand, I would argue that the voluntary scheme has served both health service patients and the industry well over the years. It is important that in bringing these measures forward we do not in effect remove the voluntary nature of the PPRS. It would be helpful if the Minister would set out the circumstances under which the powers in Clause 2 would be exercised. Is it intended that the power could be used to change the current voluntary PPRS scheme? Could these provisions be used in the future to restrict the voluntary nature of the PPRS agreement?
I also raise a point referred to by the noble Lord, Lord Warner. Are any perverse incentives likely if companies in the statutory scheme move to the rebate system applying in the voluntary scheme? At the moment, I am informed that companies in the statutory scheme are able to lower their prices directly to the NHS because they are not part of the rebate scheme. In terms of those companies, if the NHS gets the benefit of the lower prices, the department that gets the benefit of the rebate is the Treasury. Is there a risk in switching from the statutory sector to the voluntary sector in terms of the outcome for the National Health Service?
Also, has the Minister assessed the risk that small companies currently in the statutory sector, which may be less able to absorb rebate payments, may leave the market altogether? The noble Lord, Lord Warner, referred to that. I also want to ask about something that the noble Lord, Lord Lansley, mentioned. I understand that the aim is to permit broad equivalence to be achieved between the voluntary and the statutory schemes. Does the Minister think that, to reassure the sector, that should be explicitly stated in the Bill?
Clause 5 extends the power to control the maximum price to other medical suppliers and not just medicines. I listened carefully to what the Minister said, but I am not yet convinced that there is any reason at all for the Government to propose this. The impact assessment, as far as I can see, is silent on the matter. The Minister will know that both the BHTA and the ABHI expressed concerns about the burdens that will be put on the devices and technology sectors. There is also the issue of consultation. It is clear that the major trade associations were consulted, but the industry has a whole host of organisations representing bits of it, such as the continence and stoma industry, for example, which is an important, significant player but was not consulted, despite the implications for it. It comes to the point when the Minister essentially says, “We are going to have these powers, but we do not expect ever to use them”, and they have not been used since 2006. My advice to the Government is to forget it because we seriously question whether Clause 5 should stand part of the Bill.
On regulation in general, I had thought that one benefit of Brexit would be that no longer would we have regulations that the Government consider too burdensome but which they had to agree to, effectively, through the compromises that negotiations in Europe always lead to. I find it curious. This seems to be an example of gold-plating legislation. Clearly, the Government had to deal with a generic problem and introduced this, which is like a Home Office Bill, as the noble Lord, Lord Warner, described it. It is like a Christmas tree. The department found lots of other nice things to put in it, but cannot actually come forward with any strong evidence as to why they should be included. In my naivety I thought that in this Brexit world we would be going for light-touch regulation, but I have to say that this does not look like light-touch regulation to me.
A further example of this is found in Clauses 6 and 7 relating to the provision and disclosure of information. The ABPI has pointed out that the information requirement is onerous and goes well beyond what is necessary, but what is striking is that the provisions are drawn so widely. My reading of the Bill suggests that it applies to any,
“person who manufactures, distributes or supplies any UK health service products”.
The Bill goes on to explain that, so far as England is concerned, it applies to any medical product used to any extent for the purposes of the health service under new Section 264A(1) and any other medical supplies or related products required for the purposes of the health service. We are talking about millions of products. The impact assessment states that the costs have not been quantified for manufacturers, wholesalers and dispensers. Why have the costs not been quantified for these businesses, which number in the tens of thousands? I thought that that was what impact assessments were all about and I thought that the Government had a policy in relation to reducing the regulatory burden on industry. It is very difficult to understand why the department has gone for such a broad-based power and I will certainly be interested in seeing whether it is possible to hone down these clauses and focus on the information that the Government can prove they actually need.
I want to pick up on the issue about access to medicines. What is so striking about the Bill, which is concerned with medicines, is the glaring absence of provisions to increase the uptake of new medicines by NHS patients. Any number of reports, in particular over the past two years, show that we have taken an increasingly restrictive approach to the adoption of new medicines in this country. This goes alongside the current consultation by NICE referred to by the noble Lord, Lord Lansley, with the proposal that if a NICE-approved treatment is expected to exceed £20 million in any of the first three years of its use on the NHS, NHS England can ask NICE to allow a longer period of phased introduction. I think that the noble Lord, Lord Lansley, suggested that this could be okay, but there is a risk of double jeopardy. We need to hear from the Government in this Bill how it is not going to be double jeopardy. The industry goes through all the processes it needs to in order to ensure that a treatment gets through the NICE process. The medicine then has, if you like, an affordability test which is in addition to a cost-effectiveness test, and thirdly, the Minister is taking draconian powers to reduce the amount of money going to the industry generally. That is triple jeopardy. The question I put to the Minister is this: what is the cumulative impact of all these proposals, not only in relation to the actual price but in relation to access to innovative new drugs?
The noble Lord, Lord Lansley, referred to the 2014 PPRS agreement and said that it could have been ground-breaking in relation to access for patients. I agree because it was a very good agreement and one that could have finally opened the door to the NHS giving access to treatments that every other country has access to before we have here. I know that the noble Lord and I seem to disagree about where this rebated money goes, but he will know that the industry agreed to hold drug costs for a five-year period with the bill staying flat for two years and then growing only slowly after that. There have been one or two modifications since then, but that is the broad principle. If drug expenditure by the NHS goes over the agreed level, the industry will pay a rebate at every quarter, and so far it has paid £1.5 billion back. The noble Lord’s argument is that I should not worry about that figure because the NHS gets it. As I see it, what clearly happens is that the Treasury forecasts in advance what the rebate will be. It is also well advertised in advance what the allocation to the NHS will be. In essence, the Treasury gets the benefit because it reduces the contribution it makes to a given figure.
If it had been agreed that the rebate could have been used—perhaps as in Scotland or in another way—to fund much greater access to new drugs, we would have achieved what the noble Lord, Lord Lansley, set out to do. It is a hugely missed opportunity. None the less, I hope the Government, when looking for the next PPRS agreement, will look at the lessons to be learned. I agree with him and my noble friend that clearly we need value for money and certainty but, unless we can deal with this pervading problem of lack of access to new medicines, NHS patients will get no benefit whatever.
We have to link that to the health of the life sciences sectors and the industry. In his new role, the Minister will be as concerned about this as he probably is at the moment. The UK has been one of the foremost countries in the world for drug development. We know that our life sciences was one of the reasons why. The noble Lord, Lord Lansley, suggested that flexibility on pricing on first introduction is also a reason because it acts as a benchmark for other countries, but I have no doubt whatever that the NHS’s failure to adopt new medicines is putting future investment at risk. I do not think we can be complacent. A long time ago, when I was responsible for it, the UK developed about 30% of the top 100 new drugs. That, as I understand it, is now down to 14%. The risk is we can go lower.
We very much look forward to debating the Bill. It clearly has very useful measures on drug costs, but no case has been made to extend its provisions to medical devices and technologies. It looks like gold-plating regulation, which we would like to try to improve, but overriding this is the sense that, until the Bill provides for increasing NHS patients’ access to ground-breaking new treatments, it remains defective.
Lord Prior of Brampton
My Lords, I thank the noble Baroness, Lady Walmsley, and the noble Lord, Lord Hunt, for their kind comments about me. I have very much enjoyed this role for the past 18 months. Going over to BEIS, which is the rather horrible acronym we have, I will still have a keen interest in many of the issues that lie behind the debate we have had today. I welcome my noble friend Lord O’Shaughnessy, who is sitting behind me, to his role.
I think my noble friend Lord Lansley, or maybe the noble Lord, Lord Warner, said that in another place this was called a technical Bill. At one level it is, because the issues are quite difficult and technical, but there is substance in it as well. It is not a technical Bill in that sense of the word.
I will start by addressing the wider issues around life sciences and access. We are all agreed that access to new drugs and devices for the NHS is a huge issue. We are falling behind. I do not think there is any doubt about that. That is what lay behind the Accelerated Access Review; that is why we had it. The work led by Sir Hugh Taylor and Professor Sir John Bell absolutely nailed that in its report. I assure the House that the principles behind the Accelerated Access Review will be incorporated into our strategy for life sciences that we are developing over the next few months with industry.
We have to reconcile access and affordability. That is the issue behind the NICE and NHS England consultation: if the impact is more than £20 million per annum—that is our suggestion—it has to be looked at. There will always be a tension between access and affordability. As I said in my opening speech, that circle can often be squared because many such new developments, particularly in medical devices, will save costs. A lot of the work that has been done around digital health, adult hospital healthcare, health analytics, machine learning and the like has the potential to help us solve the productivity problem which has bedevilled not just our own health system but every health system in the world.
I think it is pretty much universally agreed that we need to take more powers around isolated cases of huge price increases for certain generic medicines where there is no competition. I think there is no question about that and we are all as at one.
The purpose of putting a payment mechanism into the statutory scheme, which is in the first part of the Bill, is only to align the two schemes. I assure the noble Lord, Lord Hunt, that we are not doing away with the voluntary scheme—on the contrary. It is just that we want to avoid the temptation, to which my noble friend Lord Lansley alluded, for companies, quite legitimately, to arbitrage between the two schemes. Historically, the two schemes have been broadly aligned from a financial point of view. It was only when the payment scheme was introduced into the voluntary scheme in 2014 that the two schemes became unaligned. The department’s view at the time was that we had the powers under existing legislation to put a payment scheme into the statutory scheme. It was only when, as part of the consultation, the industry queried whether we had that power that the department decided that we should introduce the power, which we are doing through this Bill, to put the two schemes roughly on a par. That is not to say that there will not be other benefits in the voluntary scheme which will still be very attractive to industry. I hope that that is the case and that we will be able to build on the voluntary scheme.
It is also worth mentioning that we will become much more sophisticated over time in the way that we price medicines. As a relative layman and objective viewer, it seems to me extraordinary that we have not already developed outcomes-based pricing for many of these drugs. When a drug is going to have an effect on 60% of the people who use it, why would we want to pay for the other 40%? Given that we in the UK are a single system and have access to data in a way that many other, more disaggregated systems do not, we are in a very strong position to have well-informed, data-rich, outcome-based pricing. The hep C drug is a classic case of our being able to move towards more annuity-based pricing. If we cannot afford the up-front cost of some medicines all in one go but can spread the cost of them over a number of years, that would seem an eminently sensible reimbursement process. I think we will see some much more sophisticated pricing arrangements coming into the mix as we move forward. That is the purpose of aligning those two schemes.
The aspect of the Bill about which the noble Lord, Lord Warner, and others have expressed the most concern is the information requirements and powers to extract information, particularly from small companies supplying medical devices. The noble Lord asked what the cut-off was for an SME. It is sales of £5 million, which omits quite a few supplies into the NHS from companies below that level. Again, the purpose of this part of the Bill is to ensure that we get our reimbursement rates right, particularly for integrated wholesale pharmacies. There is a feeling that some of the very big wholesalers—I will not name any names—make pretty hefty margins on some of these products. We need to know what price they buy at so that we can try to manage those margins and be sure that the NHS gets a reasonable deal.
Many of the issues raised are quite detailed and I am delighted to leave them to my successor to address in Committee. However, the last thing in the world we want to do is to build a bureaucratic edifice here, or to gold-plate regulations, information requirements and the like. I assure noble Lords that we are absolutely open to all ideas and suggestions on how we can reduce the regulatory and bureaucratic requirement on companies that supply the NHS.
The noble Lord, Lord Warner, heard that certain companies look to go overseas to less bureaucratic and regulated systems. I think that that is down to not so much the regulation as the uptake issues. I am sure the noble Lord and others have met, as I have, many small companies that tear their hair out about trying to supply to the NHS. They find it easier to supply the US, Australian or other world markets than our own. That is not to do with the information requirements that already exist or will exist under the Bill. It is still the case that the NHS is a very treacly organisation. It is hard to get your product into it. Even when it has been approved by NICE, it is difficult to get it diffused throughout the NHS.
Not many noble Lords participated in the debate but, as always in this House, the quality of contributions has been extremely high. I thank all those who contributed and ask the House to give the Bill a Second Reading.
Health Service Medical Supplies (Costs) Bill
Monday 23rd January 2017
(7 years, 10 months ago)
Grand CommitteeRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-II Second marshalled list for Grand Committee (PDF, 70KB) - (23 Jan 2017)
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, in the event of a Division in the Chamber, the Committee will adjourn for 10 minutes from the sound of the Division Bell.
Amendment 1
Lord Warner
“Duty to have regard to the life sciences sector and access to new medicines and treatments
In discharging, through the provisions established or amended by this Act, its responsibility to secure best value for the National Health Service in purchasing medicines and medical supplies, the Government must have regard to the need to—(a) support a flourishing life sciences sector within the United Kingdom economy; and(b) to ensure patients have speedy access to new medicines and treatments approved by the National Institute for Health and Care Excellence.”
Lord Warner (CB)
My Lords, Amendment 1 is in my name and those of the noble Lord, Lord Hunt of Kings Heath, and the noble Baroness, Lady Walmsley. First, I welcome the Minister to his first health Bill as a Minister. I am sure that the noble Lord, Lord Hunt, will have a great deal of sympathy with his position of having copped the Committee stage of a Bill in which he had had no previous involvement, because I did exactly the same to him when I left office and left him with the Mental Health Bill—having made, of course, an extremely brilliant speech at Second Reading to introduce the Bill.
I sympathise with the Minister’s position, but that does not mean that we will not probe forcefully on a Bill that is definitely a curate’s egg which does not seem to have left the Commons in as improved a state as it might have done. I am afraid that earlier this morning I separated Amendment 1 from Amendments 2 and 4. I hope that that has not caused too much trouble. I wanted to focus in this amendment on life sciences and the PPRS scheme and on their importance.
Amendment 1 is very straightforward. At the start, the Bill lays a clear duty on the Secretary of State, in discharging the Bill’s provisions, to have regard to supporting a flourishing UK life sciences sector and ensuring that patients have speedy access to NICE-approved new medicines and treatments—a subject to which I think we will come back on a number of occasions. As I made clear at Second Reading, the Department of Health Minister with responsibility for the pharmaceutical industry does have to balance a number of factors, and not just get the cheapest drugs for the NHS. This is what I had to do when I had those responsibilities, and the position is the same today, as I understand it. These factors involve the safety and value for NHS money of medicines, but they also involve helping the UK life sciences industry to grow and flourish and securing speedy access for patients to new drugs that have been approved by NICE.
It is clear that the Government have not done a spectacularly good job with their consultation on the Bill in showing that they understand this balancing act. They certainly have not convinced the pharmaceutical industry—hence this amendment at the start of the Bill. Suspicions have understandably been raised by the inclusion of elements in the Bill that were not in the 2015 consultation on the Bill, including enforcement powers for future voluntary pricing schemes that operate outside the statutory scheme. There is also the issue that the range of products covered by the Bill seems to have been extended, along with the disproportionately bureaucratic information requirements that have now found their way into the Bill.
We will come to many of these issues later, but I will focus here on safeguarding life sciences and the PPRS. Why is this so important? I will start with the life sciences issue. The pharmaceutical industry invests more than £4 billion a year in R&D—more than any other sector. It employs 62,000 people, with a geographical spread that is well outside London and the south-east. Pharmaceutical manufacturing employees have the highest gross value added of any high technology industry, at more than £330,000 per employee. One in four of the world’s top prescription medicines was discovered and developed in the UK. It is a very important and powerful industry for this country.
All this will be put at serious risk by Brexit, as the Prime Minister seems to recognise in the new industrial strategy that she announced today. We know the UK will lose the EMEA through Brexit, but Brexit also poses many other risks to the UK life sciences industry, which could lose market access for its products and see a flight of researchers and research. At such a time the last thing the sector needs is a piece of ill-considered legislation imposing unnecessary regulatory burdens—again, something the Prime Minister said in her industrial strategy that she wants to reduce.
As I made clear at Second Reading, I am not saying that the Government should not act to prevent the NHS being blatantly ripped off under the statutory scheme when a branded good comes off patent, as happened with Flynn Pharma and a Pfizer anti-epilepsy drug. The ABPI has never challenged action in cases of this kind. However, the broad wording of the Bill goes well beyond closing this loophole. It gives the Government the power in the statutory scheme to replace a list-price discount system with one in which a company repays the Government a percentage of net sales, with as yet no clear indication of what this level will be. The industry’s concern is that this will create a precedent that could be easily applied to the voluntary PPRS scheme. Ministerial assurances that this will not happen are simply not the same as legislative safeguards. My reading of the Bill is the same as the ABPI’s, namely that this legal precedent could enable a future Government to unilaterally apply the same approach to the voluntary scheme when a PPRS period ends. This would end a negotiated way of setting prices and encouraging research and innovation that has worked well for industry and successive Governments for more than 50 years.
The second leg of Amendment 1 covers the issue of speedy patient access to new drugs. We will come to this matter later on other amendments so I will say little now, except to remind the Committee that we already have a poor record on the take-up of new approved medicines. For every 100 European patients who can access new medicines in the first year they are available, just 15 UK patients have the same access. Even when NICE has approved drugs and treatments, NHS take-up still lags behind. The first page of Friday’s Times showed the sector’s concerns, with one-fifth of new drugs being rationed and drug companies now openly saying they will no longer launch new drugs early in the UK. Whatever we do with other parts of this Bill when we come to them, I urge the Government at this time of great uncertainty for UK life sciences to put at the beginning of this Bill a statement of intent and reassurance of the kind embodied in Amendment 1. I beg to move.
Baroness Walmsley (LD)
My Lords, I support this amendment and compliment the noble Lord, Lord Warner, on his comprehensive introduction of it. I have no intention of repeating everything he said. However, I have a few points. I, of course, support the Government’s intention to try to make sure that the health service is not ripped off, but point out that a very large fine has just been imposed on Pfizer by the competition law regulations in relation to the case mentioned by the noble Lord, Lord Warner—so even without this Bill, that is working and we must bear that in mind.
What I am particularly concerned about is the potential effect on the life sciences sector, particularly—as the noble Lord, Lord Warner, said—in the light of Brexit. There are dangers to our markets and to our researchers. Our research is going elsewhere and researchers from other EU countries coming to us are all in danger because of the Prime Minister’s determination to take us out of the single market and the customs union, which I do not believe is what the public voted for.
The particular issue that concerns me is that although we were told in some of the meetings we had that there had been consultation and there will be more consultation before elements of the Bill are implemented, parts of the industry tell us that they are very concerned that they were not consulted. They do not feel that the level of consultation before the Bill is implemented is anything like good enough. We have to support our life sciences industry. We are very good at life sciences. It is one of the things that we can lead—and have led—the world on, but we must make sure that it is not in danger.
The other point is on access to treatments—not just drugs but other treatments. I am told by GPs that rationing is already in place, either by these referral management companies—private companies—that are being placed between the GP and his or her recommendation and the consultant, or by the consultants having pressure put on them to refuse consultation over certain patients referred to them by GPs. We already have rationing and we need to make quite sure that we are not affecting our pharmaceutical industry. We must ensure that our industries involved in research, medical implements, treatments, machines and devices and all those things that we are so good at inventing are not damaged by the Bill. It is really important that we have a statement of intent in the Bill. It will place on the Government the responsibility to make sure that they consider this terribly important sector. I have not had a chance to read the industrial strategy yet, but I would be surprised if the money follows the intent. I do not think that we will be able to look to that for any comfort, so we need this amendment.
Lord Young of Norwood Green (Lab)
My Lords, I hesitate before speaking about this amendment because I do not profess any particular knowledge of this area. I have not participated before on the Bill because I have been ensconced in dealing with the delights of HS2, but I have a couple of points to make. I am certainly sympathetic to the amendment, but something the noble Baroness, Lady Walmsley, said worried me. She said that even without the Bill, action is being taken. That does not mean that we do not need the Bill.
My first point is that it took quite a while for this to be exposed. It took the campaign from the Times to bring this to the forefront. Surely one of the questions we ought to be asking is why this was not exposed through the audit processes of the NHS in the first place. These were not small increases: they were staggering. One epilepsy drug that started off for a few pounds went up to something like £67. They were staggering increases—so that is one question for the Minister.
There are clearly differences of opinion about how effective the Bill is at getting the balance right, and that will be tricky. I can understand that listening to the arguments today. Nobody wants to stop the innovative, essential approach of successful British drug companies. That is on one side. But on the other, we have to ensure that the health service and the cost of drugs are protected.
A letter to the Times on Saturday caught my attention. It talked about the importance of clinical pharmacology and focused on the safe, effective and economic use of medicines. A recent report by PricewaterhouseCoopers stated:
“Each £1 spent to hire additional clinical pharmacologists has the potential to reduce NHS costs by almost £6”.
Apparently, there are only 72 clinical pharmacologist consultants working in the NHS. The British Pharmacological Society recommends that it needs a total of 150 by 2025. Without urgent action, therefore, the impact of waste is set to increase, and that surely ought to give us cause for alarm. Again, I am only giving notice to the Minister; he might not be able to give me all the answers to these questions.
Baroness Finlay of Llandaff (CB)
My Lords, I support this amendment. I have a real concern that the whole process of pricing and costing of drugs is very poorly understood. I was lucky enough to hear a lecture at the weekend by Jack Scannell, an economist who understands quite a lot about drug pricing. He pointed out that there are four reasons why drugs are expensive: one is cost; one is perceived value; another is power; and the fourth is the prize that they can deliver. It is all in a paper that he wrote about the four reasons why drugs are expensive, two of which he labelled as false: the cost and the so-called value. The reason is that a company will start to explore different chemical substances that might have an effect; 90% of these never progress but remain in various test tubes and are stored. One day they might be of use.
The problem then is that, even if they develop something and take it through the different trials, there are fairly arbitrary examples of where the benchmark is set in different sectors. A clear example of this came up with the drug Campath, which came from Cambridge. It was developed for leukaemia, but was found to be remarkably effective for multiple sclerosis. The drug company then withdrew the drug because it was being prescribed off-licence: it was not licensed for multiple sclerosis. It took the trials through, licensed it for multiple sclerosis under a new name—Lemtrada—and the price was much higher because the benchmark of prices for multiple sclerosis was much higher than that for drugs for leukaemia. The chemical was the same. Actually, when a drug goes out and is priced, it really is, in a way, a guess on behalf of the pharmaceutical industry at the outset.
Another problem arises that relates to the importance of having trials in this country. Trials have to be done on the population to which the drugs are going to apply. It is quite interesting that with different healthcare systems, clinicians see patients at different stages of disease, so with a late diagnosis, you might have a much larger disease burden requiring treatment than you would have had if there had been an earlier diagnosis.
If the trials are conducted in this country, therefore, within the NHS and the real care system—the real world in which these drugs are going to be used—and as near as possible on the very population on which they are going to be used, you get the most accurate results. They can guide NICE in determining how effective a drug really is.
If you have a study on a population with a very early diagnosis, and therefore a relatively low disease burden, you might get a false impression of efficacy, which could lead NICE to believe that the drug was being actually more effective than it will turn out to be in our population. The converse is also true.
That leads me to stress the importance of supporting a flourishing life sciences sector, because we need to be developing drugs in this country, within the care setting in which they will be prescribed and for the population to whom they will be supplied. Any attempt at pricing must, importantly, not disincentivise the pharmaceutical industry to develop the 90% of drugs that go nowhere to find the 10% that will go somewhere.
I hope that the Government will take the new clause very seriously, because it signals an important intention up front in the Bill.
Baroness Redfern (Con)
My Lords, I declare my interests as recorded in the register and formally welcome my noble friend Lord O’Shaughnessy as the Minister this afternoon. Although the Bill is modest in size and has few clauses, it will deliver an important role in securing better value for money not only for the NHS but for patients.
Pressures on the NHS increase year on year because of our ageing population, new technology, and development of new procedures with advanced drugs, resulting in an increase in spending over the past five years of 20%. We spend more than £15 billion a year on pharmaceutical products, and we are acknowledged by those companies to be a reference market for many other countries that do not have such a large or well-organised supply chain as we do.
Patients request access to innovative and cost-effective medicines, so the Bill delivers value for money and does not support the drug companies, which have a commanding monopoly position, to push up their prices. I am pleased to see a strengthening of the ability to collect data on the cost of medicines, medical supplies and other related products from across the supply chain, which the Bill would amend by extending the provisions of the 2016 Act.
The statutory scheme has delivered significantly lower than expected savings for the NHS, with concern as to whether competition in the market is sufficient to control prices, so with new powers to be established under the Bill, there will be opportunities for more competition for unbranded generic medicines and to apply price controls for companies that are members of the PPRS. Particularly when companies can charge unreasonably high prices for unbranded generic medicines when competition does not keep the prices down, the Bill closes a current loophole in the legislative framework.
Clause 6 requires information from more producers and companies but, importantly, any information that they supply which may be commercially sensitive cannot be disseminated beyond the prescribed bodies. We may therefore be better informed on a more consistent basis, particularly to assess whether the supply chain as a whole or a specific sector provides value for money for the NHS. The world is changing, and personalised medicine is an important development for us all—but, again, it needs to be delivered both effectively and affordably.
At all times, we must make sure that the UK is seen as an attractive place for the life science sector—research being seen as a vital component in the sustainability of the NHS, as we have heard from previous speakers. To balance the control of the price of medicines and innovation for pharmaceutical companies, there should not be a lack of motivation to invest in the extensive R&D that we all want. In order to stimulate continued investment, it is appropriate for the industry to see a stable marketplace here as significant and important.
If we are to create a level playing field for drug companies, should we not be trying to do the same for patients? I therefore ask my noble friend whether one measure to tackle the issue could be ring-fencing possible rebates or a percentage from the sector to invest in improving access to medicines and treatments—particularly when we read that a fifth of new drugs face rationing under tighter NHS cost-cutting plans. With a budget impact threshold, that has the potential to slam the brakes on the most effective new treatments and technologies just before they get to patients.
Finally, although we promote innovation, that is not only a priority in the NHS for the Government but for many other stakeholders in the industry. As I said, the Bill is modest in size but it carries the opportunity to ensure that this country is not left behind in access to the newest and best treatments, and that it delivers best value for money.
Lord Lansley (Con)
My Lords, I am pleased to have the opportunity to contribute in Committee. I join in welcoming our noble friend the Minister to his new responsibilities on the Bill. I also draw attention to my interests as recorded in the register. I think only one of them might be regarded as specifically relevant to the Bill, although it is a company which would not benefit directly from it.
As the noble Lord, Lord Warner, said, Amendment 1 raises quite a number of issues, which we will have the opportunity to return to on further amendments. If I may be so bold, the structure of Amendment 1 would insert a clause which is really designed to express hope and intention, rather than to provide a statutory provision having any effect. Some of the other amendments would have the necessary statutory effect to back up some of the intentions encapsulated in Amendment 1, but it does no harm to realise what we are trying to do.
On the amendment’s first limb of supporting,
“a flourishing life sciences sector”,
it is a very apposite day as that is one of the clear intentions of the consultation on an industrial strategy. Listening to the reports this morning, it was clear that in so far as there is a focus on sectors where this country has a comparative advantage—I think we were discussing comparative advantage in the Chamber only last week—pharmaceuticals and life sciences is clearly one of those areas.
A number of noble Lords talked about the strength of our research base in this country and, as the noble Lord, Lord Warner, said, the proportion of new discoveries that have emanated from our research base is striking. It is considerably in excess of our relative importance as a market. We are only about 3% of the global market in pharmaceuticals but we have more than 10% of the new chemical entities—and as my noble friend Lady Redfern said, we often represent up to 25% of the international reference pricing. That is one of the reasons why there is a noted sensitivity on the part of the industry about its strength in the UK.
Where the life sciences sector is concerned, from my experience around Cambridge—in my former constituency and where I live—we probably have the strongest cluster of life sciences in Europe. As was raised by the noble Baroness, Lady Walmsley, when you talk to the industry at the moment its principal concern is simply its capacity to recruit and retain some of the very best researchers and staff. It is often specifically about retaining them and is all to do with the current situation relating to our future relationship with the European Union.
The sector recruits staff from all over the world, way beyond the European Union, but is only too aware of the reaction there has been among its staff—something like 15% of whom are on average from elsewhere in the European Union—to the prospect of our leaving the EU. It is one of those classic situations: if Britain had never been in the European Union, staff attracted from elsewhere within it would have come here understanding under what circumstances they came. Having had the expectation of being EU citizens enjoying access to all the British circumstances, they find the prospect that those might be taken away from them very difficult. It is very important for us to be clear about not only accrued rights but the circumstances in which people come here.
Lord Warner
Will the noble Lord clarify something for me? The point of my amendment was, in a sense, not any particular PPR scheme but the principle of a PPR scheme, which is a negotiation between government and the industry. No one is arguing that the PPR scheme should be set in stone for ever and a day. What the industry is concerned about is that Government are getting ready to impose a system as an alternative to a negotiated system. The amendment is not meant to enshrine a particular PPRS but to encourage the idea of a negotiated deal with the sector. Does the noble Lord accept that that is a good principle?
Lord Lansley
The short answer is yes. We should aim for what is a price paid by the NHS to the industry for the medicines that it uses that is reflective of value and is designed to promote innovative medicines—that is, as we will discuss in a later amendment, those that meet unmet need or add substantially to therapeutic benefit and are not the “me-too” drugs that are very similar to existing medicines but have a slightly different method of operation or delivery. Paying for what innovation gives by way of therapeutic benefit is where we want to be.
However, the amendment is right in the sense that one has to do that alongside supporting the life sciences sector. That is where freedom of pricing at introduction is important. I have accepted the principle of a PPRS which delivers a budget to the NHS and delivers freedom of pricing to the industry. We are not legislating precisely for the structure of the PPRS, but let us assume that those are continuing features. However, through the operation of the rebate or some other means, it seems perfectly possible to incorporate some of the criteria that will be the subject of our discussions on a number of amendments, as is reflected in the second limb of the amendment.
Baroness Finlay of Llandaff
The noble Lord referred to me-too drugs. I hope that he agrees that it is important to recognise that such drugs have often been developed in parallel. They do not take a molecule and just copy it; they develop a new molecule or delivery system, often to minimise side-effects and to maximise efficacy. But they also have a production cost behind them. They are not just copies of something previously produced and marketed differently; they have innovation behind them as well.
Lord Lansley
I understand that. There is a perfectly good argument for the benefits that are derived from incremental innovation. Not every innovation is a step change compared to what has gone before, so that is a perfectly valid point. One objective that we should arrive at, as I hope my own Amendment 10 will later reflect, is that the structure of value has to understand what those benefits might look like. New medicines will come through that are similar but are significantly better, for example in terms of compliance for patient populations, because they are administered differently. One might say, “Well, it’s a very similar drug”, but one has to look at what the overall benefit might be, which is part of the value.
Baroness Masham of Ilton (CB)
My Lords, cost-effective medicines which work for patients are vital, but some orphan drugs will cost more. Why are there differences in the pricing of drugs in Scotland and England? Someone must be making a lot of money.
Lord Hunt of Kings Heath (Lab)
My Lords, that is a very interesting question. The exchange between the noble Lords, Lord Lansley and Lord Warner, has been very helpful in focusing on the full intent of the amendment. As it is the first day of Committee, I remind noble Lords of my presidency of the Health Care Supply Association and GS1, the barcoding association.
The amendment is essentially about the life sciences sector and the relationship to it of the pharmaceutical and medical devices and technology industry. However, inevitably, as the noble Lord, Lord Lansley, has shown, it is very difficult not to talk also about issues to do with PPRS and access, and I suspect that those other issues will be dipped into in a number of debates.
First, let me say that the Opposition are strongly in favour of closing the loophole that the core part of the Bill attempts to do. We clearly want to see the NHS get value for money and a good deal out of price negotiations with the different parts of industry it deals with in relation to the matters covered by the Bill. My noble friend Lord Young asked some very pertinent questions. The Minister in passing raised the issue of clinical pharmacology. This is a clinical profession that most clearly enables the health services and, indeed, Ministers to understand the true cost effectiveness and value of new medicines.
The UK is a world leader in clinical pharmacology but, because decisions about the appointment of clinical pharmacologists are made by the NHS, we are at risk of losing the whole profession. I was very disappointed that Health Education England proposed to reduce the number of training posts in its most recent consultation. We were very pleased to have a meeting with the Minister’s predecessor, the noble Lord, Lord Prior, on this, and I very much hope that the Government will be prepared to have a look at it.
This debate is about the contribution of the life sciences sector to this country. Briefly reading the consultation passed today on the industrial strategy I noticed that the introduction talks about the UK benefitting from an,
“open economy: pro-competition rules, flexible labour markets, less intrusive regulation”.
The question that one really wants to put, particularly as this is a sort of declaratory amendment is, if that is so, if—as the noble Lord, Lord Lansley, has suggested—the issue of life sciences post Brexit deserves a great deal of consideration, why have the Government brought what is clearly an overbearing regulatory Bill to your Lordships’ House? If ever I have seen an example of gold plating, this is it. We understand the need to close the loophole but I do not understand and I do not think we really saw a case made at Second Reading for why the Department of Health is determined to intervene in this sector in such a wide-ranging way. It is interesting that your Lordships’ Delegated Powers Committee has already pointed out the open-ended nature of the Government’s approach.
It is impossible to look at the health of the life sciences and the health of the pharmaceutical, medical devices and medical technology industries in this country without looking at the crucial issue of access. I know the Minister’s department is in denial about this and feels that access can be constantly reduced and will have no effect on investment in these sectors. I simply do not believe that that is so. The noble Lord, Lord Lansley, rightly said that this is one of the sectors that we want to protect and enhance—but I believe we are at real risk of losing its pre-eminence in this country.
I understand that the Secretary of State is shortly to go to North America to sweet talk the boardrooms of US pharma. I know the noble Lord, Lord Warner, has been there. I have been there, too. I am sure that the noble Lord, Lord Lansley, has, too. The idea that the Secretary of State will not talk about access is naive. Access is a crucial part of investment decisions by these companies in the UK. The noble Lord, Lord Lansley, referred to the proportion of new chemical entities and top 100 medicines globally that have been developed in this country. I understand that it is now down to 14%. That is healthy compared to 3% turnover, but when I was the Minister responsible we were in the 20% to 25% range. So we have a horrendous decline in the influence of the UK sector. My fear is it is going to decline even further in the years ahead.
We will come back to the 2014 PPRS agreement. Potentially, the industry would have funded the widespread use of innovative medicines in the NHS. Between them, however, the Treasury, the Department of Health and NHS England have completely messed this up. We have ended up with the worst of all worlds, in which rationing in the NHS has reached appalling levels: CCGs are making some of the crudest rationing decisions that I have ever seen.
The Parliamentary Under-Secretary of State, Department of Health (Lord O'Shaughnessy) (Con)
My Lords, I thank the noble Lord, Lord Warner, for his amendment and for the opportunity it has provided to have this discussion. I had a feeling that this one might lead to a wide-ranging debate that would probably go well beyond the remit of the Bill. Indeed, I had that sense when I had meetings with him and other noble Lords. I am grateful to the welcome that has been extended to me and I have been looking forward—if that is the right phrase—to having this opportunity to discuss the Bill.
It is worth stepping back for a moment as we start. I do not know whether the noble Lord, Lord Warner, will agree with the characterisation of this amendment by my noble friend Lord Lansley that it is more of a statement of intent than a concrete desire to change legislation. But, given that that is a decent characterisation, it is worth reprising what the Bill is trying to achieve. There is widespread support for many elements of the Bill.
We need to ensure that we have the right level of information to provide for three things: first, an accurate reimbursement of community pharmacies; secondly, information for price control schemes—and there are a variety of them, as we discussed—and, thirdly, the ability to get value for money and to ensure that, in relation to those instances that end up in the CMA, we are able to do something about them beforehand, because it takes a long time to get to that point. While it is important that that sort of back-stop provision is there—the big stick at the end of the road—ultimately, we do not want to get to that point, as it is an admission that we do not have the system right and have not controlled prices earlier on.
If those are the shared aims of the Bill, it is also important that we will the means. We cannot just say that we do not like these things and then not do anything about them. The question in regard to willing the means—and that is the main question about the Bill, and was so at Second Reading, when I listened as a Back-Bencher—is whether the provisions of the Bill are proportionate. That is the right question; “proportionate” can mean all sorts of things in different contexts, but it can mean proportionate in terms of the burden on firms, proportionate in terms of what it delivers in savings to the NHS, and so on. That is what sits behind many of the amendments that have been tabled by noble Lords, and we will have lots of opportunities to discuss them.
I think it is worth pointing out that the Bill does not introduce any new information requirements to the medical supplies industry, but rather clarifies the requirements and offers reassurances that provisions will be enacted only through regulation, which is a consultative process. Section 260 of the NHS Act 2006 already provides the Secretary of State with the power to make the medical supplies industry keep and provide information —the conception is that this has been extended to that industry. This power has not been used but, as we will discuss later, the instances where unjustified price rises have come about have happened in unbranded generics. That is one reason we are now acting as we are—because we did not have the power in advance. Of course, one can never anticipate all circumstances and instances in which that might happen.
I mention that only by way of a mini Second Reading debate and to reprise the purposes of the Bill and give background. It will also, I hope, give noble Lords an understanding that I know what the pressure points are and understand the balance that we have to draw between the two. As several noble Lords have pointed out, and following historical precedent, my particular policy brief does hold both the responsibility for a flourishing life sciences sector and for medicine pricing and regulation. I am acutely aware that those are two sides of the same coin and can be in tension with one another. The goal is to have a win-win situation in which the NHS gets good prices, new drugs come through the system and the life sciences industry feels that the United Kingdom is a place where it wants to do business. Pricing is one part of that, but there are lots of other factors, such as the ability to carry out clinical trials, R&D, the environment and so on.
While the Government agree with the underlying principles behind the amendment and the two arms of the legal duty, we are not convinced that a legal duty is the right approach. We recognise the vital role that the life sciences sector has in our economy. Thanks to the research and development efforts of the life sciences industry, which contributes £56 billion and tens of thousands of jobs to the UK economy every year, our understanding of diseases and the best way to treat them has improved dramatically over the past 20 years.
As several noble Lords have referenced, the Government launched today a UK-wide industrial strategy, which is a critical part of the Prime Minister’s ambition to build an economy that works for everyone. It is not about picking winners but about making sure that we play to our strengths and build on the comparative advantages that we have. I am therefore grateful for the opportunity to talk about the commitment to the life sciences industry, which I know was one of the intentions of the noble Lord, Lord Warner, in tabling the amendment, and to re-emphasise the Government’s commitment.
The UK has one of the strongest and most productive life sciences industries in the world. Technology and commercial pressures are transforming the field of healthcare technology and the Government’s ambition, as set out in the life sciences strategy of 2011, is to anticipate and react to these changes while building on existing strengths. Innovation, funding for scientific research, aligned regulatory systems and access to the best people and talent all have a role in supporting a flourishing life sciences sector that goes beyond the prices paid for medicines and medical supplies.
In the context of the industrial strategy that was launched today, there will be a sector-specific life sciences industrial strategy to follow in due course. That will be an opportunity to make sure that we are able to address the concerns that exists in the life sciences industry, which are not peculiar to the Bill but are around, for example, the pricing environment and Brexit, which is a continuing concern. It may not always be popular to say so but it is the view of the Government that Brexit offers a number of opportunities as well as challenges. We will be seeking to make the most of those in our own regulatory system and in how we can provide exactly the kind of fertile ground that the life sciences industry needs to flourish in this country. There is a deep commitment to making that work.
I turn now to the second arm of the duty: making sure that the Secretary of State has regard to ensuring that patients have speedy access to NICE-approved medicines. We believe that this duty is also unnecessary. As noble Lords will know, NICE technology appraisals provides robust, evidence-based guidance for the NHS on whether drugs and other treatments represent a clinically effective and cost-effective use of NHS resources. NHS commissioners are legally required to fund treatments recommended in NICE guidance, usually within three months of the final guidance. This legal requirement is also reinforced in the NHS constitution as a right to NICE-recommended drugs and treatments.
We recognise that there is a remaining challenge in encouraging practitioners to use NICE-recommended treatments. The latest data from the innovation scorecard shows that the rate of uptake and utility of new medicines recommended by NICE are increasing. I acknowledge the picture indicating that we are lagging behind where we should be, so there is no complacency on that point. We are working to improve the scorecard to make it a more effective, accessible and useful tool to identify unjustifiable variation in the uptake of innovative new products.
The Government and their arm’s-length bodies are also taking forward a number of actions to improve access to, and uptake of, new medicines. The Medicines and Healthcare Products Regulatory Agency—the MHRA—has initiated an early access to medicines scheme, providing a platform to bring drugs that do not yet have a licence to patients at a much faster rate than before. The scheme is making a real difference, as 25 promising innovative medicine designations and 10 positive scientific opinions have been awarded by the MHRA since the launch of the scheme in 2014. We also have the NHS test beds programme, which is supporting the testing and uptake of innovations across the NHS, and the accelerated access review, which has been published and which the Government will respond to as part of their industrial strategy.
I would also like to take the opportunity to address a number of points raised by noble Lords during this very informative and useful discussion. We will no doubt come back to these things on other amendments. We have talked about CMA fines and what we might do further upstream. There was a question mark over changes to the statutory scheme and whether there had been proper consultation. There will be further consultation on the implementation of the statutory scheme later this year, in addition to the consultations that have taken place. I should also point out that I intend to meet all the relevant industry groups, which I have not had the opportunity to do yet, to make sure that I hear first-hand about their concerns. I am endeavouring to do that in between Committee and Report so that we have the opportunity to have that personal dialogue—one that will reflect on the decisions we make today and on Wednesday about what the right approach is.
As the noble Lord, Lord Young, said, there is a case for action here. The question is always whether what we are doing is proportionate, so I thank him for that support. I was not aware of the issue about clinical pharmacology and will certainly look into it. If he and the noble Lord, Lord Hunt, would like a meeting about this to help me understand that better, I would be delighted. It is clearly an important part of having the right approach.
The work on antimicrobial resistance is being taken forward with great gusto by my colleague the Chief Medical Officer, Dame Sally Davies. She generously gave me a copy of her own book to read about that the other day—which I dutifully did, quickly, so that I could answer questions on it. We are putting forward a candidate to run the World Health Organization, Dr David Nabarro, who is deeply committed to this. We obviously hope that his candidature will be successful. I reassure the Committee that that work very much goes on.
The noble Baroness, Lady Finlay, asked about the nature of the pricing and control scheme. I am grateful to her for sharing her knowledge in a personal meeting. There is a tension between getting the right deal and disincentivising investment in the life sciences. It is always a fraught point—as my noble friend Lord Lansley said, every time we have one of these negotiations the balance is slightly different—but I am aware that it is an important balance to strike throughout.
I am grateful to my noble friend Lady Redfern for her support for the Bill and for the importance of driving value. We will have an opportunity to discuss ring-fencing shortly. I do not want to get ahead of myself on that, but we will address it. I had the great pleasure of working for my noble friend Lord Lansley when the Conservative Party was in opposition and I know that he has been very committed for a long time to value-based pricing and getting a good deal. I am grateful for his knowledge on that. Again, we will have the opportunity to talk about those things in a group of his amendments, so I do not want to spend any more time on that.
The noble Baroness, Lady Masham, asked particularly about pricing differences in England and Scotland. I think that we will address that at a later point. There are differences in how drugs are priced according to packs versus units, the starting point and so on. The picture is quite good when you look at it in the round for particular products, but I would be delighted to discuss that with her further, if she wants.
Finally, on the questions raised by the noble Lord, Lord Hunt, I have tried to express again why we think that the Bill is necessary. The noble Lord talked about the open-ended nature of the Bill, which we will look at in amendments at the end of the process. Clearly, we do not want a declining UK sector or rationing. That involves, first, a proper life sciences industrial strategy, which we will have. I would like to think that that is not just the preserve of the governing party but something to which all parties would want to contribute. I look forward to working with noble Lords, who have tremendous experience in this area, to gain their ideas to help us with that.
We also need to drive access through the system. That is one part of an industrial strategy. It cannot be done just by diktat. We rightly put clinical decision-making at the centre of our system, but there are things that we can do beyond what we are currently doing to improve access, which I would be delighted to talk about and work on further with noble Lords as we draw out that life sciences strategy.
I apologise for the slightly long contribution, but I wanted to take the opportunity to respond to noble Lords and to set the scene. While we support the principles of the amendment on the duty, I do not believe that the aim is best achieved through having a legal duty. I ask the noble Lord to withdraw the amendment.
Baroness Finlay of Llandaff
Let me thank the Minister for that comprehensive reply and for his openness in discussing things with us all. He talks about having discussions with the industry. I hope that he is aware that there is a move by the industry to consolidate into three major hubs, or potentially four. The fourth would be the Oxford-Cambridge-London axis, the other three being those in Boston, in California and in Basle in Switzerland. We are at a critical time, because a lot of change is going on—hence the motivation for so many of us to support the amendment, as we are aware that things are potentially fragile.
Lord O'Shaughnessy
I thank the noble Baroness for that point, with which I completely concur. This is obviously a big moment in time, for several reasons. Our current price regulation systems for pharmaceuticals run until the end of 2018 and, in 2019, we will leave the European Union. These things are bundled together and co-dependent; making the right decisions on each of the factors will have a knock-on effect on the rest. I very much understand the point. As I said, my job has the tension of both responsibilities, including health, and the trick is to square the circle.
Lord Warner
My Lords, I am grateful to the Minister for his response but I was not convinced and I am not sure that the industry will be convinced. Over time, the industry is seeing the legal requirement to implement NICE being watered down by NHS England in effect introducing a cost-control system on top of the legal requirement. It is seeing the Government fixated with cost rather than innovation and patient interest. Companies are seeing their investment drop and their involvement in this country being called much more into question by their boards. That is the issue. It is not about whether the Minister can convince me or this Committee; it is whether he can convince the outside world in this sector. At the moment, I am inclined to pursue this on Report, but in the meantime I beg leave to withdraw the amendment.
Lord Hunt of Kings Heath
“( ) After subsection (1) insert—“( ) In exercising functions in relation to the controls on the cost of health service medicines established under this section, the Secretary of State must ensure that any payments made by manufacturers or suppliers to whom the scheme relates which fall under subsection (1)(b) are utilised solely for the purpose of reimbursing the National Health Service for expenditure on medicines and medical supplies.””
Lord Hunt of Kings Heath
My Lords, in moving Amendment 2 and speaking to Amendment 4, I will inevitably go over some of the same ground, but I will try to make my remarks briefer than I would have done. I just want to pick up what the noble Lord, Lord Warner, said. The Government have a hell of a job to do to convince these boardrooms, which are no longer much based here. Even the two British companies essentially take global decisions. A lot of work has to be done to convince them that, in the current situation, continued and improved investment will be worth their while.
The Minister may not know this, but there has been great reluctance on the part of his department to talk properly to the industry on these issues, because of this absurd idea that access is a matter that it will not discuss. He may also not know that NHS England is being obdurate about being prepared to discuss these matters in an open way with the industry. I have been astonished by the difficulty that these huge companies have had in getting through the door of NHS England to discuss these matters. This is a serious issue. We would not pursue it unless we thought that we were reaching a critical point in the future of a hugely important sector. I have a sense that because the funding of the NHS so dominates everything that the department does, it then cannot talk about access because it is seen as a cost pressure. I understand that, but it is such a short-term view. We are at risk of making the wrong decisions.
My two amendments are the nearest I can come to the creation of a ring-fenced fund, as suggested by the noble Baroness, Lady Redfern, given the constraints on drafting amendments. That is essentially what I aimed to do: to say that the rebates are for investing in new medicines, devices and technologies. That is the heart of what we seek to do because I still believe that the 2014 PPRS agreement was a golden opportunity to get the best of all worlds—a brilliant life sciences sector, industries investing in R&D and NHS patients getting speedy access to these new developments. But we have not got there yet and that is why this debate is so important.
The Minister mentioned a number of encouraging developments, including the rapid access review, but he must know that there is a general cynicism among anyone involved in earlier discussions about the outcome being a pale shadow of what it could have been. We know that it will really cover only a limited number of medicines and treatments. Equally, the Minister mentioned NICE. It is true that there is an order, which I introduced way back, because of concern that primary care trusts were not implementing technology appraisals effectively enough. But we are seeing a chipping away at even that rather imperfect approach to try to get the NHS to do what legally it should have done, which is enthusiastically to embrace NICE’s technology appraisals.
The department has allowed NHS England to ride roughshod over it in relation to NICE. The latest consultation by NICE, imposed on it by NHS England, to put an arbitrary cap on NICE decisions, coupled with the introduction of a threshold for rare diseases of the £100,000 figure, is putting a triple jeopardy into the system. When it is investing billions of pounds in a new drug, the industry has the NICE process to face; it then has to face the arbitrary imposition by NHS England of these further restrictions; it then gets down to clinical commissioning groups, which in recent months have made some extraordinary decisions in relation to rationing in general and specifically on some of these new medicines. It is very worrying indeed.
I think that the noble Lord, Lord Lansley, hopes the Government might give an outline of their strategy for future voluntary agreements with industry—if there are to be such agreements in future—that embrace the issues of investment, access and value. I am sure that that is very sensible. In the meantime, I am convinced that the only way in which the NHS will start to invest properly, so that its patients come at least somewhere near to the kind of access that we see in other European countries, is by some ring-fenced money being found to finance it. There is no chance of access being improved on the current funding arrangements. NHS England, whose approach is simply to look to control budgets, seems to have no interest whatever in the issue of access. My amendments suggest one way in which we might do that. Ultimately, what I think we all want to hear from the Government is whether they will take a new approach to negotiations which would be about cost-effectiveness and value for money, of course, but takes access almost as its No. 1 aim. I beg to move.
Lord Warner
My Lords, I support these amendments, to which I have added my name. I do not want to go over again what has just been said, but the issue of access is critical. It is why companies have invested in this country. They criticised NICE when it was first set up; they were highly hostile but have been wooed over, have stayed with the game, played in it and continued to make products which are of great benefit to NHS patients. However, having jumped that hurdle they now see a new one, which is driven not by cost-effectiveness but by cost—a straightforward capping of expenditure at an arbitrary figure of £20 million. The noble Lord, Lord Hunt, was a little critical of NHS England. I would be if I thought that it was only NHS England but I do not believe that the Government are not behind this, putting pressure on it. We already have a massive difference of view between the Conservative chairman of the Health Select Committee and the Prime Minister over how much extra money has actually been put into the NHS. The noble Lord, Lord Lansley, winces, but such measures are being introduced basically to stop the NHS carrying out a legal obligation to implement NICE recommendations. I totally support the amendments in the name of the noble Lord, Lord Hunt, because they are a way of trying to ensure that, where repayments are made, they go back to where they should be, which is in the NHS and helping patients to access new drugs.
Baroness Finlay of Llandaff
I have added my name to the first of the amendments. I would have added it to the second, but there was not room—there were already four names there. I strongly support them. The debate so far has related to the pharmaceutical industry, to pharmacies—that is, chemists in the community—and to the NHS but these amendments go to the heart of it, which is access for patients.
One problem with what will feel to a patient like almost arbitrary rationing is that they will know that they have a disease or condition and that there is a drug which, if they lived in other parts of the world or had more money, they would be able to access and which, for one reason or another, they cannot. We must recognise that any costing system for medicines is relatively arbitrary and does not cost in all the social costs of disease progression, or of more severe versus less severe forms. Nor does it factor in the cost to the whole family of the distress somebody feels when they need medication and cannot access a drug which has gone through an appraisal process and whose criteria they can see they fit.
I hope that the Minister will look sympathetically at the principles behind this amendment. If you save money but do not put it back into access to medicines, you are effectively bleeding that area to plug other gaps or deficits in the NHS. As for the patient with the condition who knows that there is medication that probably would help them, although they are well aware that they could be a non-responder, no one should underestimate the anguish to them and their families, or the knock-on effect on society in the long term of failing to ensure access to effective medications.
Lord Lansley
May I say a quick word on these two amendments, which would have the same effect in relation to the voluntary and statutory scheme? I understand the debate that we have just had, but it seems to me that we are likely to have a more productive discussion to this effect on the next group. The purpose of these amendments is simply to say that the money that is generated through the rebate must travel back to pay for medicines. The consequence of any such scheme would be that, whereas at present the Treasury together with NHS England and the Department of Health agree a budget based on the Treasury’s assumption that there will be a drugs bill and that bill will be controlled at that level by virtue of the rebate, the Treasury would be obliged to say that the drugs bill could not be controlled. We know that the rebate does not necessarily correspond to the prior assumption of the level, so the amount of money available to fund medicines would be variable, particularly if it was applied to new medicines, as in Scotland. There would therefore be, from the industry’s point of view, nothing in principle to prevent it from pricing up products that fall within the scheme to which the rebate is applied, with the impact that that would increase the money available to supply additional medicines, knowing perfectly well that there would be no overall budgetary control. At the end of the day, there has to be budgetary control. It is only by virtue of the fact that the rebate is not automatically recycled into additional NHS expenditure that the budget can be controlled. In the absence of any such control, I cannot see how the amendments would work.
Lord Hunt of Kings Heath
Surely it is the other way round. The NHS could up its intake of new medicines willy-nilly, knowing that the industry would have to pay a rebate to the department. In essence, industry would be paying for the uptake of new medicines. The problem is that the Treasury discounts the figure. It makes an estimate of what the rebate is likely to be in the next financial year and builds it into the baseline budget, which is based on minimal growth.
Lord Lansley
The position is that the PPRS is a deal based on a budget. If you want to construct something that does not have a budget limit, you could certainly do so, but I do not think that the amendments would have the effect that was looked for. As for another way of doing it, this is where we get on to what in my view is the real debate. I am not sure that I have ever believed that there should be a fixed drugs budget in the NHS. We have a health budget and we should aim for the NHS to derive the greatest possible benefit to patients from the budget that it deploys—not the drugs budget but the total health budget.
Lord Hunt of Kings Heath
That is very interesting. It has always struck me that when you chair a board of an NHS foundation trust, for instance, there is a philosophy that says that spending on doctors and nurses is a good thing but spending on drugs is a bad thing. It is a ludicrous position. I agree with the noble Lord, Lord Lansley, that there is a big problem. Spending on drugs is seen as a cost pressure, so automatically everyone’s emphasis is on keeping that spending down, whereas a rather more sophisticated approach would take the view that, if you have spent your money on drugs that have had a hugely positive impact on the throughput of patients, cost-effectiveness and efficiency, that might be a good investment. The question when we come to the next group is whether our current arrangements have come to the end of the road and whether we need to move on to something rather more sophisticated.
Lord Warner
What we set up a long time ago was, effectively, NICE to be the arbitrator, and we controlled the flow of technology appraisals into it. I used to sign off a limited number of drugs that would go into the NICE process. We have that system, which has now been legally enshrined. It is also open to NICE to withdraw drugs from use, as it has from time to time, or to change procedures. We have a system enshrined in our law in which the NHS is required to commit to introducing NICE-approved technology appraisals, so the idea that we should let the Treasury arbitrarily reduce and control the small bit of that total NHS budget on those grounds seems bizarre. I agree with the noble Lord, Lord Lansley: we have ended up obsessing about this relatively small part of the NHS budget when we have set up a system to ensure that the NHS gets value for money through the NICE appraisal process. We are getting into a strange situation, which is why we are scrabbling around to make amendments to try to make a pretty crazy system slightly less crazy.
Lord Lansley
There is a risk of going on about this, but the structure of the amendment in the context of the PPRS as presently constructed is illogical, because the PPRS is constructed around budget control. The point, however—we will no doubt come back to this, not least on the next group—is that we should be thinking about how we can arrive at a negotiated price for the NHS to buy medicines which may well be marketed initially or globally at a given price, but the amount that the NHS should pay should reflect value. I have said it before and I will keep coming back to it.
I would not be as disparaging of the current consultation between NHS England and NICE at the noble Lord, Lord Hunt. It could have the effect that he describes: adding additional jeopardy because one has to meet not only all the normal criteria for an effective medicine but the NICE threshold, and NHS England might step in with hobnailed boots and say, “But we are not going to make it available and you must change the funding direction”. But it might recognise reality. The consultation, in my view, may have the effect of avoiding arbitrary post hoc rationing of medicines, because the NHS should be up front, negotiating price discounts on medicines, regardless of the rebate. That means engaging with the industry at an early point.
If the industry understands the consultation properly, it will understand that the budgetary impact for the NHS under current circumstances cannot be ignored. The best way to deal with that is not to go through all these processes and then find, at the end of the day, that the NHS cannot afford it, or that NICE has to say no through the application of the threshold. Rather, it is to use the pharmaco-economic evaluation and the health technology assessment properly alongside NHS England and say: “Here is something that is valuable and we want to be able to use it, but we must recognise the budgetary impacts”. There may well therefore be some risk-sharing processes or discounting processes to enable the product to be available to the NHS at an early stage and to give industry and the NHS all the information they need subsequently to be able to make sure that they have got the pricing right.
Lord O'Shaughnessy
I thank noble Lords for these amendments and for the discussion that has followed. I will come back to the issue of budgetary control raised by my noble friend Lord Lansley. I do not think it is enough simply to say that it should not be a factor. It is a factor and I will talk about how that interacts with the current system in my response.
Our concerns with these amendments are twofold—one is a matter of principle and the second is a matter of practice. In my short period in the office I have already had an opportunity to talk about ring-fencing on at least one occasion. Noble Lords understand that the Government’s policy is not to ring-fence with budgets set by politicians but rather to give money to the NHS and its constituent parts and to trust clinical judgment on commissioning health services in response to the regulatory regime that is set up to hold them accountable. I have not yet heard from anybody who disagrees with that fundamental principle.
Amendments 2 and 4 are unnecessary, therefore, because all the income and savings from the PPRS and the statutory scheme are already invested in NHS services. As the noble Lord, Lord Hunt, said, the anticipated income from the PPRS and the statutory scheme are put into the NHS baseline. That baseline is the figure above which we will be spending the additional £10 billion by 2020-21. That money is already in the baseline and it is there to be used with the discretion of clinicians within the system.
The Health and Social Care Act 2012 requires the Secretary of State to promote the autonomy of NHS England and clinical commissioning groups. This includes their decisions as commissioners about priorities for funding. That is because it is a fundamental principle of the NHS that funding should be allocated according to clinical priorities based on the judgment of clinical commissioners. That might include new treatments but it might include scaling up older, effective treatments or investing in staff. The proposed amendments would result in the income received from a voluntary or statutory scheme being used solely for the purposes of reimbursing the NHS for medicines and medical supplies. It is perhaps worth highlighting to noble Lords that the NHS spent over £15.2 billion on medicines in 2015-16—far in excess of the cumulative income received from both schemes.
I come to a couple of points raised by the noble Lord, Lord Hunt. The first, as I mentioned, is on budgetary control. The second is that if additional money were spent, it could be recycled back into funding for innovative drugs. I am not sure. I have not had the opportunity yet to consult with the boards of life sciences companies, but I am not sure that there is an open-ended commitment there either to continue spending money in the NHS. There is a need for budgetary control on both sides. I appreciate—and it is a strong theme in this debate and was in the previous debate—the need to do something about access. The ability to access drugs and to access them quickly is both good for patients—because clearly those drugs are being approved because they are an improvement largely on what has gone before—and also good for life sciences. If we are in the game, as it were, of trying to find a win-win out of the changes we make now or in future, clearly access will be a clear part of that.
My noble friend Lord Lansley touched on a practical objection. It is the potential unintended consequence of ring-fencing the income from schemes specifically for certain types or categories of medicines. The income from the PPRS and the statutory scheme can fluctuate, so allocating the income to a specific area, such as new medicines, brings risk. This could potentially disadvantage patients by making treatment dependent on income from medicines pricing schemes, thereby producing inequities. At the moment the Department of Health manages that risk. The proposed changes would move that risk on to the NHS—which, as we know, is already under a great deal of pressure.
I understand the intention behind the amendments, but I am not convinced that the Government predetermining clinical decisions and clinical priorities for spending on medicines and medical supplies is the right way to go. We believe that the current PPRS is designed to incentivise companies to bring new medicines to market. Companies with mainly new medicines in their portfolios pay less than companies with mainly old medicines, and as part of the PPRS, the Government have made a number of commitments around NICE decisions and the funding of NICE-approved products in order to support access to new medicines.
Lord Hunt of Kings Heath
My Lords, I am grateful to the Minister and other noble Lords who have spoken. We have had a very good debate. Obviously, as I made clear at the beginning, I am not wedded to the words of the amendment. It was not the amendment that I wished to bring to your Lordships’ Committee. Clearly, the issue is access and the use of the rebates. I understand the issue about risk and, of course, any considered system in which there clearly needs to be budgetary certainty.
Equally, we need to see much faster uptake of new medicines and, indeed, new technology and devices. A similar argument could be made about new technology as well because, again, we are terribly bad at investing in our own companies even though we have highly successful medical technology and devices industries. They have the same issue of the NHS being incredibly reluctant to invest in their new developments. This has been a long-term problem: the noble Lord, Lord Warner, and I dealt with it 15 or 20 years ago and it has been a problem with the NHS right from the start. The problem is that we are now seeing this connected to the success of the UK’s economy as well, which is why—one way or another—we have to find a solution to this problem.
Turning to CCGs, it is reported on a regular basis that they are making rather bizarre decisions: arbitrary decisions about restricting access to certain treatments that clearly are entirely budget-based and seem to have no value as clinical decisions. I am very worried about the fact that we are now starting to see the legitimisation of very crude rationing of access to services by patients.
This has been a useful debate. Access is crucial and it is clearly not happening at the moment. I hope that between now and Report we can have further discussions and an understanding of what the Government are trying to do to seek to increase access. Having said that, I beg leave to withdraw the amendment.
Lord Hunt of Kings Heath
“(3) In exercising functions in relation to the controls on the costs of health service medicines, the Secretary of State must ensure that any medicine covered by a voluntary or statutory scheme that requires payments calculated by reference to sales of that medicine shall be made available to all NHS patients if recommended by a qualified NHS clinician.(4) An amount calculated under subsection (1)(b) may only be calculated using the same methodology as an amount payable by any member of a scheme made under section 261 of the National Health Service Act 2006 (voluntary schemes for controlling the cost of health service medicines) is calculated.”
Lord Hunt of Kings Heath
My Lords, I will speak to the second part of Amendment 3, as I think we have comprehensively covered the first part in our debates on the first two groups. I am not looking to the Minister to respond to the first part. The second part of my amendment seeks clarification on the relationship and equivalence between the voluntary and statutory schemes. It provides a further opportunity to debate the future of a voluntary PPR scheme, because, clearly, it might be argued that the Bill is setting a precedent for determining in legislation the nature of a voluntary scheme. It would be helpful if the Minister set out in very broad terms the kind of approach he wishes to be taken in the future—in either a statutory or voluntary scheme—looking at the issues we have talked about in relation to pricing, access and value for money.
In many ways, the voluntary PPRS approach has served government, patients and the industry pretty well over the years. There is no doubt, as the noble Lord, Lord Lansley, referred to, that it has provided certainty to government, alongside giving the industry flexibility on the prices it sets, because it acts as a marker to many other countries. However, the actual price paid is very different from the notional price set. What comes to my mind is that this is not very transparent and very few people understand the system. One does begin to wonder whether it is still serving its purpose and whether we need to think about a new approach that is neither the voluntary PPRS approach we have at the moment nor the statutory approach we have in mind for companies that have not signed up to the voluntary system. If anything, there is the issue of equivalence, which companies wish to know about in terms of the two schemes, but it would be helpful to know where we are going in relation to future negotiations, and the amendments from the noble Lords, Lord Warner and Lord Lansley, will address this. I beg to move.
Lord Lansley
The purpose of Amendment 5, in my name, is to recognise that the Government have brought forward legislation to do a necessary thing, which is to address the discontinuity between the voluntary scheme and the powers available under the statutory scheme. As such, where companies were operating under the statutory scheme with a pre-existing discounted price, often in the hospital sector, the effect of the statutory scheme imposing a given price cut did not impact on their effective price to their customers. Therefore, they did not make a contribution, in that sense, to the budgetary control that was being looked for. The purpose of the legislation is to bring equivalence to the voluntary and statutory schemes. But if we are creating equivalence between the voluntary and statutory schemes, we should be clear that the legislation does precisely that. The noble Lord, Lord Warner, quite accurately referred to this issue at Second Reading, if I recall. There are companies under the statutory scheme—Gilead is a particular example—with products that would, under the voluntary scheme, not have a PPRS control applied to their pricing because they would not contribute to the rebate as they have been introduced after December 2013. Under the statutory scheme, however, they are required to contribute.
As I understand it, the objection to bringing the two schemes to an equivalent place is that under the statutory scheme, as things stand, there are relatively few products and a significant proportion of them have been introduced since December 2013. Therefore, under the statutory scheme, the effect on the rebate of the rest of the companies would be excessive. That can be dealt with. The powers are available. If we legislate in the form that I propose, the Government can modulate the rebate between the two schemes in order to arrive at a similar result for those companies that have to contribute to the rebate and apply a common percentage. As a matter of principle, if we are legislating for the two to be equivalent, it is desirable to do so.
I am slightly worried about Amendment 3 because it assumes that there is a voluntary scheme. We do not know. There may or may not be a voluntary scheme. But a voluntary scheme will not always be in place at the point at which the Government, in order to protect the NHS, may require there to be one. I do not think that we should be in that position. There would be a flaw in the powers available to set a methodology for a rebate under a statutory scheme. In Amendment 6, which the noble Lord, Lord Warner, has not yet had a chance to speak to, he clearly understands that there needs to be a relationship between these two, but I fear there is a risk of gaming on that amendment because the industry may say that if it does not agree a voluntary scheme there cannot be a statutory scheme. Therefore, there is no scheme, and I do not think that that we want to get ourselves into that position. It will not surprise the Committee that I can see reason for my own amendment even if I am not necessarily in favour of everyone else’s.
Lord Warner
My Lords, I reassure the noble Lord, Lord Lansley, that I see excellent reasons for his amendment. If the purpose of the Bill is to achieve equivalence between the two schemes, the Bill should secure that. At the moment, it does not. The industry does not think that it does. I am not sure, technically, whether the noble Lord’s amendment secures it, but I think it does. If it is not quite right, no doubt the Government can amend it. I tabled Amendment 6 to push the Government a little more on their commitment to a voluntary scheme. That is its purpose. We have had a good canter over that particular area. As I said when we discussed Amendment 1, I was not totally convinced by the Government’s position, but I want to set out briefly why this is important.
The scheme has stood the test of time as a basis for a relationship between an industry and government where that industry has a much bigger set of customers and a much bigger presence outside the UK. We have actually punched above our weight in securing the presence of that industry in this country, partly through the NHS, but partly because a system was imposed on the industry in terms of the research-based drugs industry. There was a negotiation. Amendment 6 is not meant to say in any way that a particular type of PPRS should be enshrined in legislation for all time. It is trying to get the Government to say, clearly and unequivocally, that for the foreseeable future, there will be some form of voluntary scheme in which a negotiation takes place in an open and transparent way with this particular sector in order to keep this sector being attracted to setting up, doing research and developing pharmaceuticals for the population at large and for the NHS in particular.
Amendment 6 is trying to get out of the Government rip-roaring support for the foreseeable future, a little stronger than the Minister said earlier on, for a voluntary scheme that presents an opportunity for government and the sector to agree the basis on which they operate in a life sciences industry producing drugs that can be made available quickly and speedily, when proven, to the NHS and its patients.
Lord O'Shaughnessy
My Lords, I thank noble Lords for their amendments. The noble Lord, Lord Hunt, skipped over the first part of Amendment 3. For the sake of completeness, I shall dwell on it briefly. The amendment would circumvent an important part of the checks and balances around prescribing systems. It would basically do away with the NICE process by going straight from licence to availability with clinicians, which we do not think is the right approach.
The second part of Amendment 3 would link the payment mechanisms for the statutory and voluntary schemes, and Amendment 5 would require us to secure equivalent terms for both schemes. The Government’s intention is for the two schemes to deliver a broadly equivalent—I emphasise “broadly”—level of savings as a proportion of the total sales covered by each scheme. However, to require the terms of each scheme to be the same, which is what the amendments denote, would be inappropriate and would severely restrict the scope for the two schemes to operate in a complementary manner. The idea of equivalence is too strong and would involve there being similar processes, whereas the alignment approach outlined in the Bill would allow for similar outcomes, which is ultimately what we are driving at and would not undermine the complementarity of the two approaches.
The voluntary scheme is a matter for negotiation with industry. As such, there is scope to include a range of measures that reflect the priorities of both sides. To give an example, the current voluntary scheme, the PPRS, includes a range of provisions developed through negotiation with industry that sit alongside the payment mechanism. They include price modulation, which enables companies to put prices up and down as long as the overall effect across their portfolio is neutral. This has commercial value to companies, who may be willing to accept a higher payment percentage as a result.
To give another example, while new medicines in the PPRS are excluded from the PPRS payments, the PPRS payment percentage level is set to achieve the agreed level of savings across both old and new medicines. This means that each company’s share of the income due to the Government will vary depending on the balance of new and old products in their portfolio, with companies which have mainly new products paying less than companies with mainly old products—there is obviously value in that for encouraging innovation.
However, it would be very challenging to replicate this model in the statutory scheme, as many fewer companies are affected by the statutory scheme regulations than are members of the PPRS. As a result, there is a smaller pool of companies with older products. To achieve the same level of savings overall from the statutory scheme as from the PPRS while exempting new products would require an extremely high payment percentage—I think that my noble friend Lord Lansley conceded that point. This provides an example of where minor differences in terms may be required to deliver an equivalent level of savings across the two schemes overall. The detail of how a future statutory scheme would work will be subject to further consultation that will take place this year.
The freedom to be able to negotiate the voluntary scheme has been valued greatly by both industry and government. We would intend that any future voluntary scheme is established through negotiation in this way, but linking the payment mechanisms as described in the amendments would inevitably place a restriction on that freedom.
Amendment 6 would mean that the Secretary of State’s powers to operate a statutory scheme would be permitted only while a voluntary scheme was in operation—a point that has already been raised. It is clear that the noble Lord, Lord Warner, is keen to retain a voluntary scheme in future and we know that industry values the agreement, which began 60 years ago in 1957 and has been of benefit to both government and the life sciences sector over that time.
The current scheme, the 2014 PPRS, and its predecessors show how government and industry can work together to develop solutions on a voluntary basis for the benefit of patients. Like the noble Lord, I am keen to continue the collaborative and productive relationship that the Government currently have with the pharmaceutical and life sciences industries. With the life sciences industrial strategy coming up, and reflecting on the debates that we have had, it is clear that there is a lot more we can do to enhance that relationship.
However, the amendment would have the effect of giving industry no incentive to agree a voluntary scheme, as there would be no fallback to a statutory scheme in the event of failing to agree a voluntary scheme. Without a voluntary scheme in operation, there would be no scheme to control the cost of medicines—so it would in effect tie one hand behind our back in any negotiations.
The statutory scheme and the PPRS both include provisions for controlling the maximum price of medicines, and these prices are the starting point for negotiation of supply contracts between the NHS and suppliers of medicines. As I think all noble Lords would recognise, removal of both schemes would risk significant price rises.
I am sympathetic to the noble Lord’s intention in tabling this amendment and welcome the opportunity to reassure him and other noble Lords that the Government are committed to continuing a collaborative approach to future medicines pricing arrangements. We firmly believe that it is beneficial to collaborate with industry to develop the successor arrangements to the 2014 PPRS. This legislation should provide the widest possible range of options in order that the best arrangements, whether voluntary or statutory, can be put in place for the benefit of NHS patients.
However, the amendment would have the opposite effect by removing a key incentive for industry to collaborate, and would bring significant risks to the control of the cost of medicines. I ask noble Lords not to press their amendments.
Lord Hunt of Kings Heath
My Lords, one of the benefits of Committee is that one can draft imperfect amendments, have them corrected by Members of the Committee and then, if necessary, come back with better amendments on Report. I have never worried about the absolute wording of amendments, because whatever happens, in the end, the Government have to come back at Third Reading to correct everything. So we can relax about that.
It has been a helpful debate, with a helpful response from the Minister. He has used the term “broadly equivalent”; he has also said that the Government are committed to a voluntary scheme in future and, I think, recognises the flexibility that it gives. However, we still have much to discuss about the nature of the future relationship and potential agreements.
I also worry about most people’s current lack of understanding of what the negotiations mean and of the actual prices paid. I wonder whether we have reached a point where we need to move to something that is more understandable and transparent. I think that what the Minister said about the future of the voluntary scheme will be welcomed, I am sure that it has been a helpful debate, and I beg leave to withdraw the amendment.
Baroness Wheeler
“( ) The Secretary of State must make or maintain legal exemptions for low cost presentations of health service medicines covered by a statutory scheme.( ) “Low cost presentation” means any health service medicine with a reimbursement price of less than £2 per unit or with sales to NHS England totalling less than £450,000 per annum.”
Baroness Wheeler (Lab)
My Lords, we tabled Amendment 7 to probe the Government on why, in their new draft regulations, with 25 pages just on the branded medicines proposals, they seek to alter the current arrangements for exempting low-cost presentations from the price-reduction requirements of the statutory scheme. As the Minister will know, the existing regulations specify as an exemption a low reimbursement price of either under £2 an item or low primary care sales to NHS England of less than £450,000 a year. The provision has been there to protect the commercial viability of low-revenue or very low-cost medicines. It therefore seems somewhat counterintuitive to remove this safeguard at a time of such significant uncertainty for the pharmaceutical industry, particularly in the face of what could be a highly disruptive withdrawal from the EU.
Under paragraph 11, the proposed revised regulations give the Secretary of State the power to exempt a manufacturer or supplier where he considers that an exemption is necessary to ensure adequate supplies of medicines for health services purposes. This changes the current arrangements to give the Secretary of State a discretionary power that he may use in certain circumstances, rather than the automatic exemption that currently operates for £2 per item or a £450,000 annual sum. The current provision is important in maintaining adequate supplies to the health service of the medicines in question.
We are concerned about the significant impact that the removal of the current arrangements will have on manufacturers producing the common, low-cost generic branded medicines in question, such as those for hypertension. Although it is not always the case, the producers of such low-cost medicines are often small businesses operating on small margins. If they are not exempted from paying a rebate on those medicines, many will struggle to maintain current low costs, resulting in a consequent rise in costs for those medicines.
It is also important that the regulations accompanying the Bill maintain a specific exemption from the statutory scheme in the case of supply shortages, as currently. Amendment 8 would therefore formally place this duty on the Secretary of State. This is particularly important given the concerns of GPs and other health professionals, who have voiced frustration about having to prescribe “second choice” medicines because their preferred drug is out of stock. Representative bodies have also expressed their concern about the removal of the current exemption.
The amendments do not call for anything new but for some of the current regulations to be maintained and—where the Secretary of State believes that there is a case for it—strengthened. I look forward to hearing from the Minister the Government’s reasons for seeking to change the current regulations. Has any work been undertaken to assess the potential impact on the future availability and cost of the medicines that will be affected, and on future supplies? Is this designed to save costs—and, if so, what is the expected level of savings to the NHS?
Noble Lords may feel that there is a case for debating the long-term place of such exemptions in the regulations, but now is clearly not the time to pull the rug from beneath the producers of low-cost medicines, or medicines at risk of supply shortages. Instead, it is important that the status quo is maintained until such time as the Government can be clear about the consequences and the benefits of any change. I beg to move.
Lord O'Shaughnessy
My Lords, I thank the noble Baroness, Lady Wheeler, for raising important issues through these amendments, both of which relate to the operation of the statutory scheme. I will turn to each separately.
Amendment 7 would set an exemption for low-cost presentations, defined in primary legislation as those presentations,
“of less than £2 per unit or with sales to NHS England totalling less than £450,000 per annum”.
This is similar to the exemption that exists in the current statutory scheme for presentations with a reimbursement price of less than £2.
Officials have continued to have constructive discussions with industry representatives and stakeholders throughout the consultation and since publishing the illustrative regulations. Through these discussions, my officials have been listening to views on the illustrative regulations and refining the policy approach for a future statutory scheme. I am sympathetic to the arguments that companies make in relation to these types of low-cost presentations, which could not only lead to direct savings to the NHS when compared to more expensive treatments but incentivise companies to lower prices further to meet the threshold. I reassure the noble Baroness, Lady Wheeler, that as a result of the discussions with industry, my officials are already considering a policy approach for low-price presentations.
However, the Government are not convinced that it is appropriate or desirable to have such an exemption set out in primary legislation. Setting out specific thresholds in primary legislation would be inflexible and would limit the Government’s ability to adjust them to account for the economic circumstances at the time. I can, however, commit that an exemption for low-price presentations will be included as part of the forthcoming consultation on the operation of the scheme, which will take place this year. I hope that this provides the noble Baroness and other noble Lords with the reassurance that the Government will fully consider this and take it forward.
Turning to the second amendment, Amendment 8 would place a legal duty on the Secretary of State to make provisions which “ensure adequate supplies” of those medicines in the statutory scheme. The production and supply of medicines is complex and highly regulated, involving materials and processes that must, rightly, meet rigorous safety and quality standards. These complex factors stretch far beyond those that relate specifically to medicine costs. Difficulties in ensuring supply can arise for a number of reasons including manufacturing problems, supply and demand imbalance and issues related to raw materials and regulatory action as a result of, for example, manufacturing site inspections. It is also important to remember the impact of a globalised pharmaceutical industry, which can mean that factors around the world can directly impact supplies of medicines to the UK.
However, I reassure the Committee that the Government recognise the vital importance of ensuring adequate supplies and actively manage and respond to supply issues on a daily basis. The Government have also carefully considered the supply issues in developing policy and regulation. We consider that in most cases, the ability to increase prices, as provided in the illustrative regulations, is the right way to address short or long-term supply problems, where these circumstances are dependent on UK pricing. We also recognise that there may be exceptions to this approach, which is why we included in the illustrative regulations a provision in Regulation 11 allowing the Secretary of State to exempt companies from price controls in the statutory scheme,
“where he considers that an exemption is necessary to ensure adequate supplies of that presentation for health service purposes”.
I understand and am sympathetic to the intention behind the amendment and concerns relating to the supply of medicines in the statutory scheme. However, given the complexities in the provision and supply of medicines, we believe that exemptions for supply issues are best dealt with by exemption, rather than a comprehensive and broad duty. In responding to both amendments, I hope that I have provided the Committee with the assurance that we recognise the concerns and will address them in both primary legislation and the illustrative regulations. I ask that the noble Baroness withdraw her amendment.
Baroness Wheeler
My Lords, I thank the Minister for his response and for the focus that he says that he will give in future to constructive consultation with the industry. There was a feeling that it was not being consulted on these issues, and his reassurances about that are welcome. Obviously, supply in the industry is complex and I will look at what the Minister said. We are concerned about the industry’s fears about the cost of deleting these provisions and we were certainly not advocating putting them into statutory requirements but making sure that the regulations dealt with this issue adequately. For the most part, I thank the Minister for the response, and I beg leave to withdraw the amendment.
Lord Hunt of Kings Heath
“Report on use of payments made under schemes
The Secretary of State must prepare and lay before each House of Parliament a report covering each financial year during which this Act is in force, detailing how the payments made by manufacturers or suppliers under the schemes established or amended by sections 1 and 3 have been used to re-imburse the National Health Service for expenditure on medicines and medical supplies.”
Lord Hunt of Kings Heath
My Lords, I shall speak also to Amendment 10A, which was inserted at a late stage, and Amendment 14. This comes back to the theme of transparency. My amendments cover the use of payments made under the reimbursement scheme. They cover the pricing and availability of medicines and other medical supplies, research and development and the duty on the NHS to promote innovation. Given that we have already had an interesting debate and that these matters are very important to both patients and the life sciences sector, is the Minister sympathetic to the idea of regular reporting on how this is going—the impact on patient access, payments and reimbursement in a way that would allow parliamentarians in particular and the public to be kept up to date?
I am not wedded to the wording of any of the amendments, but it would be helpful to know whether the Minister is sympathetic to regular reports, which would be helpful to noble Lords and Members of the other place. We could get to grips with what is happening and see the impact in terms of access, reimbursement and investment in life sciences. I hope that the Minister will give a positive answer on this. I beg to move.
Baroness Walmsley
My Lords, I am in favour of this group of amendments. The Government plan to introduce new regulations and duties on the industry at a very difficult time, so the Minister cannot be surprised that the industry is concerned and that parliamentarians would like to take the opportunity to hold the Government to account based on what happens after the Bill becomes an Act.
For some of the things that we have been talking about, I have been told that the Government already have powers but have not used them—they are just refining and clarifying them and making them more proportionate. Of course, that makes the industry worry that they are planning to use them, even though they are not saying so. We need to know what will happen to all these issues of availability, access, proper supply and cost to the NHS once the Bill has passed. In the interests of transparency and post-legislative scrutiny, will the Minister accept that the Government should report back to Parliament?
Lord Warner
My Lords, I have added my name to Amendment 14, but I also support in principle Amendments 9 and 10A in this group. Each of these amendments does something slightly different and they need some consolidation. They are, however, a reflection of a deep sense of unease over where the Bill is taking us and a strong wish to monitor its consequences. The Government are imposing a lot of requirements on the industry for information. The quid-pro-quo is that we would like a lot more information from the Government on how this has worked in practice.
There seem to be three features that that kind of reporting back should cover. The first is the scale of payments made; the second is the use to which the money has been put; and the third is the impact of the Bill on the access to new medicines of NHS patients. It would not be right to try to draft this off the tops of our heads, but it would be helpful if the Government would accept that there should be some kind of monitoring of key issues around the Bill that are then reported back to Parliament and the public on a regular basis—let us say annually—and if we could get together with the Government to help draft something for Report in this kind of territory.
Lord O'Shaughnessy
My Lords, I am grateful to noble Lords for raising the issue of reporting requirements. We will address at the end the issue of access and my sympathy to reporting requirements, but I first want to deal with the amendments as they stand.
Under the current PPRS, the Government regularly publish information relating to the operation of the voluntary scheme. Of course, for a future statutory scheme I draw attention to the regulations that we have already discussed, in which there are annual reviews of the regulations and a requirement to publish a report on each review. The illustrative regulations require an annual review that will: set out the objectives of the scheme; assess the extent that our objectives have been achieved; and assess whether those objectives remain appropriate. These requirements will be tested through the consultation on the regulations and we will, of course, take account of those views. I totally accept that reporting is a critical principle, but believe that setting out the requirements in primary legislation is too restrictive because of the potential to change from year to year what the priorities are within a sector and within the NHS.
Turning to the specifics of Amendment 9, I reassure noble Lords that the content of annual reviews would not be restricted to reviewing objectives. They must also be able to address key issues arising during the year that might affect the operation of the scheme, so there is flexibility there. We also intend for the annual review to be published and put before Parliament, so there is the opportunity for that to be seen and discussed. On the details of what it is proposed to report—in particular, how the payments are used—to achieve the specific aims of the amendment, the department would need to ring-fence the funds and monitor where the payments are used. I do not want to rehash our discussion about ring-fencing. I take seriously the point that noble Lords make about driving access to innovative drugs but we do not think this is the right way of doing it.
Nor do I believe that, through these means, it is right to address matters relating to the NHS duty to promote innovation. This Bill is ultimately about controlling the cost of medicines and medical supplies. The NHS Act 2006 puts duties on the Secretary of State to take into account both the need for medicinal products to be available for the health service on reasonable terms and the costs of research and development, which is a big factor in innovation. By taking into account these factors, the Secretary of State is looking at the needs of the industry to support the R&D base as is necessary to support the development of innovative medicines and technologies.
The NHS duty to promote innovation is different. It is about promoting innovation in the provision of health services and there is an extremely broad agenda that goes well beyond medicines. We have already said that we all want to make the UK the best place in the world to design, develop and deploy life sciences products. We do not believe that the Bill will have a negative impact on our doing so. We have also talked about the accelerated access review, so I will not go over that.
Turning to the specifics of Amendment 10A, the supply of medicines is highly complex, and pricing is one part of it. Other issues of course include rigorous safety and quality standards. Difficulties faced in the take-up or availability of medicines can be influenced by a number of reasons which are nothing to do with pricing. There can be manufacturing problems, such as batch failures; changes in guidelines, such as antibiotic switches; and raw material problems, as well as regulatory changes.
For example, in 2015, there was worldwide withdrawal of a branded antipsychotic injection, Piportil, due to a global shortage of the active pharmaceutical ingredient. Sanofi was unable to find an alternative source of this ingredient and had to discontinue the product. I set that out to illustrate the point that it is not always easy to link changes in pricing to issues of availability or access: there are other things to take into account. That is why we do not believe that we should set out, either in primary legislation or beyond the commitments made in the illustrative regulations, specifically to assess the impact on availability, access and so on.
Leaving all that aside and returning to the recurring theme of the debate, I understand the desire for greater transparency, which is undoubtedly the right approach to access. We must think about how we can improve access to innovative medicines for NHS patients and, in doing so, improve the operating conditions, if you like, for the life sciences industry—the win-win situation to which we keep returning. I would be happy to meet noble Lords either individually or collectively to think about what more we could do, whether through the Bill or looking ahead to the life sciences strategy, to ensure that we deliver on this promise. I take very seriously the warnings that many noble Lords have issued; the Government absolutely want to address this. On that basis, I ask noble Lords not to press their amendments.
Lord Hunt of Kings Heath
My Lords, I am grateful to the Minister. On the two arguments he put forward against the amendments, he said, first, that primary legislation would be too restrictive and what one might need to report on one year, one would not in another. The three amendments cover payment, supply, R&D and innovation. I do not think that there would be any year in which it would not be appropriate to report on them. He also said that duties in existing legislation cover some of these areas, and that where they do, such as the duty on innovation—presumably in the 2012 Act—they go wider than the intent in the amendments. I fully accept that. None the less, there is a strong argument for progress being monitored and for Parliament to be involved in that. However, I am grateful to the Minister for agreeing to have further discussion about the core issue of access, and I hope that we may take this forward. In the meantime, I beg leave to withdraw the amendment.
Lord Lansley
“Price control: criteria
After section 264 of the National Health Service Act 2006 (statutory schemes: supplementary) insert—“264ZZA Price control: criteria(1) In determining the prices of medicines under sections 261 and 263 of this Act, the Secretary of State must have regard to the criteria listed in subsection (2), insofar as the prices concerned relate to a new chemical entity, or a new indication for the use of an existing medicine.(2) The criteria are—(a) the prospective therapeutic benefit to patients;(b) the extent to which the therapy meets an as yet unmet need;(c) any wider social benefits which would accrue from the medicine’s use;(d) the desirability of making licensed medicines available to clinicians and their patients, for use where they are the most clinically appropriate treatment; (e) the desirability of promoting innovation in new therapies; and(f) affordability for the National Health Service, including any evaluation of the relative benefit of the medicine compared to other treatments available.””
Lord Lansley
Amendment 10 is intended to insert into the Bill some of the criteria that I hope would form part of a value assessment for pricing of medicines. The difficulty is that, as things stand, the structure of the two schemes is not designed to take account of those criteria. It is not a value assessment but a budgetary control process. We are, to that extent, looking at an amendment the purpose of which is to put into the legislation criteria applicable to the design of a future PPRS.
I have in the past—in a debate in my name in another place, back in December 2014—expressed the view that we could redesign the existing PPRS to reflect the value of medicines. That would be done by modulating the extent of the rebate payable, such that medicines that were relatively costly in relation to their determined value under such a system would pay a higher proportion of the rebate than those that appeared, on the basis of this assessment, to be charged at something more relevant to the implied value. That is in the existing scheme and I see no prospect of it being revised during its present life through to the end of 2018. An amendment of this character would clearly be designed in relation to a future PPRS.
Lord O'Shaughnessy
My Lords, I am very grateful to my noble friend Lord Lansley for this amendment and I pay tribute to his considerable expertise in this area. We had the opportunity to discuss some of this when we met. I also recognise that the amendment’s purpose is to start thinking ahead to what comes next. It is not so much to define right here and now what is required but to do something which I think he has been trying to do for a long time: to broaden the discussion about how we price value into medicines and bring that broader discussion to bear. I recognise the intention. It clearly is important that we think of these things in the broadest possible sense for the benefit of the most people possible.
Amendment 10 would require the Secretary of State to have regard to factors such as therapeutic benefit to patients, meeting unmet need, wider societal benefits, the promotion of innovation in new therapies and NHS affordability. I would like to draw noble Lords’ attention to the legal duties that already exist, which the Government believe currently achieve the intention behind the amendment. Section 266(4) of the NHS Act 2006 already requires the Government to bear in mind,
“the need for medicinal products to be available to the health service on reasonable terms”,
and,
“the costs of research and development”,
when limiting the price of medicines—something we discussed in the last group. Section 233 of the Health and Social Care Act 2012 requires NICE to have regard to,
“the broad balance between the benefits and costs of provision … the degree of need … and … the desirability of promoting innovation”.
In reading out these sections, I am beginning to understand that these Acts are often very, very long. I am thankful for small mercies that our Bill is not, yet.
As part of the NICE clinical and cost-effectiveness assessments, NICE already considers factors such as therapeutic benefit to patients, unmet clinical need and the promotion of innovation, and has recently consulted on new affordability considerations. The point here is that some of the factors that my noble friend is concerned about are already taking place but within the NICE process as part of that assessment.
The Government’s priority is to make sure we get the best possible results for all NHS patients with the resources we have. We will continue to look at how to promote better access to effective medicines through NICE recommendations and guidance to the NHS. In developing that guidance, NICE takes account of all health-related costs and benefits, including the benefits to carers. As I am sure my noble friend will recall, in 2014, NICE considered changes to its methods to better capture the wider costs and benefits to society of new drugs and treatments, sometimes known as value-based pricing. It is only responsible to report that, during the consultation, some significant concerns were raised; for example, about the potential implications for products that offer limited life extension without associated gains in quality of life for those with terminal illnesses. The consultation highlighted a significant diversity of responses, demonstrating that this is a complex issue. The point here is to say that there may be a way through, but we do not yet know what the right way forward is. It is critical that stakeholders continue to have confidence in NICE’s work, and we agree with NICE that these issues require very careful consideration before making changes to the way that we assess medicines.
My final point is on freedom of pricing, an issue that has been raised and which this amendment would have an impact on. Noble Lords will be aware that the Government, when setting prices for new medicines, currently operate a system of freedom of pricing for medicines that are a new active substance. This means that the maximum NHS price approved and published by the Secretary of State is that proposed by companies. NICE will then assess the product and consider whether it is clinically and cost effective. The PPRS allows a company to propose a discount to the maximum price.
We know that this system of freedom of pricing for new active substances is of great value to the life sciences industry, providing commercial flexibility, which is important in a context where other countries may reference the maximum NHS price in their own pricing arrangements—something we know to be of huge value. It does not prevent the NHS securing substantial discounts, which indeed it does, and these form part of the overall assessment of value undertaken by NICE. The amendment could, however, have the effect of removing the principle of freedom of pricing, which has been an important pillar of medicines pricing agreements for years. It would require the introduction of assessments akin to clinical and cost effectiveness when determining price, as opposed to determining through NICE whether it should be used. Such an approach would largely replicate the factors that NICE considers as part of its clinical and cost-effectiveness assessments.
I want to make one final point on the current scheme and looking ahead. The PPRS commits the Government to maintaining the basic NICE threshold and take-up periods until the end of 2018. It is my belief that the right time to look at whether the sorts of factors that my noble friend has raised should be taken into account in medicines funding and pricing arrangements is as part of discussions on a new medicines pricing system, where it can then be looked at in the round. That opportunity will arise when considering what should happen when the current PPRS expires. I would be very happy to explore with him proposals on what any new scheme could look like. I look forward to productive dialogue and to benefiting from his wisdom in the months ahead. On that basis, we believe that the amendment is unnecessary, although we sympathise with its intention. I therefore ask my noble friend to withdraw it.
Lord Lansley
I am grateful to my noble friend for that thoughtful and helpful response. I will say three things. First, thank you for the opportunity to be consulted as the future PPRS structure is developed. I very much appreciate that.
Secondly, on freedom of pricing and introduction, it does not necessarily follow that putting into the legislation the criteria that Ministers should take into account in so far as they exercise their powers has a direct impact. That might be done, as I described, through the mechanism of modulating the rebate, which would not impact on the freedom of pricing and introduction.
My third point is that I did not invent value-based pricing. I may have advocated it for some considerable time—probably 10 years now—but it was advocated before I took it up by the OECD in a wide-ranging report on pharmaceutical pricing internationally and by the Office of Fair Trading in its review of the previous PPRS.
Lord Hunt of Kings Heath
My Lords, I think it goes back even further, to an Oxera report on value-based pricing.
Lord Lansley
The noble Lord is absolutely right about that. There is a history to this. The reason why there is a history is, first, that this is an eminently desirable place to arrive at, in that it would give us tremendous transparency in pricing. At the moment, it is extremely difficult to discern the pricing structures in the industry from the point of view of the payers. Secondly, it would enable us—and this is the objective—to arrive at the point where we could give patients the access to the medicines that are most appropriate to them.
Lord Hunt of Kings Heath
This is very interesting and rows back to a point that the noble Lord made earlier. One issue is the capacity to negotiate with industry. My understanding is that the pharmaceutical industry has made some approaches to NHS England to look at elements of what the noble Lord is suggesting. There is a sense that, at the moment, there simply is not the capacity to negotiate the kind of sophisticated agreement that he seeks.
Lord Lansley
Without repeating what I said earlier about the consultation being conducted jointly by NHS England and NICE, I think that that is precisely the point. These two organisations need to be brought together. There is a degree of sophistication in the NICE processes that needs to be allied to the affordability and therapeutic benefit considerations as seen by NHS England. I freely admit that NHS England is still developing its role.
In relation to specialised health commissioning, I think that it is tremendously positive for it to be able to see the needs and advantages of commissioning all these specialised services on a national basis, as opposed to the patchwork and inconsistencies that we used to see. In that sense, it is only discovering what the commissioning pressures and costs look like—but that will enable it to move on to understanding what that means in terms of the relative benefit and, by implication, affordability of getting into negotiations with companies.
We need to arrive at the point where NHS England can engage up front with industry about the potential cost and pricing of medicines and obviate the need for NICE to go through the long process of the introduction of additional thresholds. As we discussed, there is an issue about the introduction of an additional threshold for highly specialised technologies. We do not want to go to that place with additional thresholds and a variety of arbitrary figures. We should be able to arrive at a point where industry can engage up front with an expectation of understanding what kind of discounting or price it is likely to be able to attract from the NHS because it is able to have a serious discussion about relative value.
I have been dragged back into another, longer conversation. I entirely take my noble friend’s point that there are references to these criteria for Ministers to take account of elsewhere, but there is a risk that the PPRS can be constructed as a budgetary control mechanism without regard to those criteria—notwithstanding that Ministers have a responsibility for them in other places. Even if it were constructed in terms of cross-reference to ministerial duties elsewhere, we could still continue to look at whether this part of the legislation—the statutory basis for the scheme—should cross-refer to the criteria that should be brought to apply. But I take my noble friend’s comments in good part and I am happy on that basis to withdraw the amendment.
Baroness Finlay of Llandaff
In light of the noble Lord’s remarks, I wonder how he sees there being flexibility. The problem with establishing a value-based price, however one works it out, is that we do not have a crystal ball. A product may be used for a whole lot of different indications. One example is Rituximab, which was developed for lymphoma but is now widely used for at least seven other indications. Some of those are chronic conditions, so there is long-term use.
Obviously, the company produced a product and a price was fixed estimated on a certain amount of use, but then its sales went up hugely. That represents an enormous profit. In the system that the noble Lord envisages, how much flexibility would be built in to allow for volume sales and a dramatic lowering of the production costs? That has happened with a lot of things that were initially expensive to produce, but where production costs dropped dramatically over time. We must not inadvertently get locked into pricings that over time become inappropriate.
Lord Lansley
There is a risk of making this debate too extended, but the amendment is not about the whole structure of pricing but about what criteria should be taken into account. In the context of a PPRS scheme such as the present one, the point I made previously was that it would be possible, for example—and this is only an example—to modulate the rebate by reference to any gap between the price charged to the NHS by a company and the value as disclosed by a comparative assessment.
Of course, if there are a number of different indications, the value may vary according to those indications, but that is no problem in itself because all you are doing is trying to understand to what extent a company would be required to contribute a lot to the rebate because there was a big gap between the price charged and its relative value. Some companies may contribute virtually nothing to the rebate because there is no disclosed gap between the price charged to the NHS for a product and its relative value. That is merely an example of how a scheme could be adapted using this sort of value assessment. I beg leave to withdraw the amendment.
Lord O'Shaughnessy
“( ) Section 260 (control of maximum price of medical supplies other than health service medicines) is amended in accordance with subsections (2) and (2A).”
Lord O'Shaughnessy
My Lords, this group of government amendments would ensure that, as is the case with the power to control the cost of health service medicines in the NHS Act 2006, the Secretary of State would be required to consult representative bodies before making legislation to control prices of medical supplies.
The NHS Act 2006 contains provision for the Secretary of State to control the cost of both health service medicines and medical supplies. It also contains a requirement on the Secretary of State to consult with the industry body before any cost control scheme for health service medicines is made. There is, however, no requirement to consult before making price controls on medical supplies. The amendment would introduce this requirement.
An amendment was tabled in Committee and on Report in the House of Commons, with support from Labour and the SNP. It would have had a similar effect, but it was not consistent with the existing provisions for health service medicines in the NHS Act 2006. Representative bodies in the medical devices sector have expressed their support for the amendment. I believe that it would improve the Bill by ensuring that appropriate consultation takes place before the introduction of any scheme to control the price of medical supplies. Therefore, I hope noble Lords will be prepared to accept this amendment.
Lord O'Shaughnessy
“(2A) After subsection (1) insert—“(1A) Before making an order under subsection (1) the Secretary of State must consult any body which appears to the Secretary of State appropriate to represent persons who manufacture, distribute or supply medical supplies falling within subsection (1).””
Lord Hunt of Kings Heath
My Lords, we discussed at Second Reading the general concern that the Bill extends amendments aimed at the provision of health service medicines to provisions relating to medical supplies. Subsequently, the Minister has written to us to explain that,
“section 260 of the NHS Act 2006 already provides the Secretary of State with powers to control prices of medical supplies and to require companies to provide information on any aspect of their business. Clause 5 of the Bill ensures that the enforcement and territorial provisions for any scheme concerning medical supplies are aligned with those for health service medicines, including changing non-compliance from a criminal to a civil offence … While the Government is currently not using its powers to control prices of medical supplies … it is important that we continue to have these powers”.
I have to say that, so far, I am not convinced. Will the Minister confirm that the section of the NHS Act 2006 to which he referred is essentially a consolidation measure, which merely restates the provision introduced some years before? Indeed, with the help of the Library, I can say it seems that the measure was first introduced in 1977. There seems to be no reference in Hansard as to the reasons that it was then introduced, although it is thought that it was part of the debates on the Bill on the status of private patients in the NHS. Looking back to those happy days, one can only imagine the debates that we had. The point is that the power has never been used: it was legislated for 40 years ago and it has never been used.
I start from the premise that, if a provision introduced 40 years ago has never been used, the first question is: should it be needed at all? So far, I have heard no convincing argument that it should. With this provision having never been used, even though on the statute book for 40 years, the Minister should not be surprised that the companies concerned are suspicious of the Government’s motives for doing what they are doing. This is particularly the case because there was so little consultation with the medical technology industry, as an example, prior to the publication of this Bill.
As just one example of this, at Second Reading in the Commons, the Health Secretary said that his officials had consulted stakeholders across the supply chain, including those from the medical devices sector. My understanding, however, is that the continence-stoma industry, and its relevant trade associations, was not consulted about the potential impact of the Bill. It is unclear why the Government want to do this in relation to medical supplies. If ever there was an example of gold-plating of legislation, this is it. I hope that the Government will be prepared to modify those provisions.
If the Government really want to extend this beyond medicines to medical supplies, surely they can find a way to remove the open-ended provisions and set a threshold to trigger them. At the moment, we have no information. There was none in the impact assessment. Given that the Government are supposedly interested in light-touch regulation, it is difficult to understand why Ministers have not removed this clause from the Bill and the section from the 2006 Act. It is very difficult to see what they are getting at here.
Lord Warner
My Lords, I am very interested in this part and added my name to that of the noble Lord, Lord Hunt, in opposition to the clause. He sparked my interest by accusing me of taking through the 2006 Act. Only on further reflection with my ageing brain did I find that I had not taken it through the House when I was a Minister because it was a consolidation Act. As far as I can recall, it went through both Houses of Parliament without any direct consideration, because there were no amendments to any of the legislation covered by the Act.
The noble Lord, Lord Hunt, in a very Sherlock Holmes manner, has been pursuing where this all came from. As far as I can see, it came from 1977, after a period in the Callaghan Government when there was great excitement about the relationship between the NHS, private practice and the private sector, following my period as private secretary to Barbara Castle. It comes from that generation. As the Minister and his officials indicated in a helpful meeting that we had, it has never been used. We are talking about a provision that comes not just from a long time ago but from a totally different context. We have Whitehall picking up a piece of legislation which it thinks may be useful and slotting it into the Bill with an amended purpose.
As the noble Lord, Lord Hunt, said, the medical devices sector does not think that there has been adequate consultation. It cannot understand what the Government are up to on this. The only justification it seems to have been given is that the department is modernising—whatever that means—a particular piece of old legislation. Modernisation is one of the words that one treats with a certain amount of caution, particularly when it affects public services. We are very unclear why the devices sector has attracted the attention of the Department of Health.
We are clear what the mischief is on the medicines side that the Government are trying to address. We are not clear what the mischief is on the devices side—medical supplies—that has caused the Government to go rootling around in the archives to find a bit of legislation that enables them to place a considerable requirement on the devices sector, which has been quietly minding its own business with a kitemarking system and the usual tendering processes for selling its products to the NHS.
I think we need to be a lot clearer than we are now as to why the Government need this modernising legislation. I remember that when I was a Minister one of the things I was trying to do was reduce the regulatory burden on the NHS and the health sector. I confess to having slipped up a bit in that I totally missed this 1977 regulatory burden. I wish I had spotted it, because we could have struck it out of the legislation while we were tidying up other things. Having got that off my chest and owned up to it, I would really like to know why the Government want this gold-plated provision on regulating a sector which, as far as I can see, has not caused any great problems. Perhaps the Minister can tell us why they have suddenly gone in for this attention and whether they have actually been neglectful of the sector. Has it been ripping off people a great deal for the past seven or eight years? Should we have acted sooner?
Baroness Walmsley
My Lords, I think you only want to modernise something when you are planning to use it. Therefore, I hope the Minister can understand the level of suspicion and worry that we have been hearing from the sector. I understand that the Government want to make the penalty for not complying with the information requirements more proportionate—that is fair enough. But if the Government are not planning to use those powers then why do they want to make that small but fairly significant change?
I am not aware of any competition law action against companies providing medical supplies to say they have abused the system or overcharged. I am aware that an awful lot of the companies producing medical supplies are fairly small and would fall below the £5 million level and therefore not be affected by this. However, some companies that provide a lot of equipment and supplies do come within the scope of what the Government are trying to do, but they are, in fact, very competitive. It is a very competitive market already and, as far as I know, the prices charged are affected by competition. Therefore, to my knowledge, the NHS is not being ripped off. I have asked the Minister whether he has any evidence to the contrary. I have not heard anything yet, but perhaps he will be able to give us something this evening.
Lord O'Shaughnessy
I thank noble Lords for the debate on Clause 5. I am also grateful for the tour d’horizon or history lesson on how this has all come about. It feels as though it has slipped through many nets, for which there are multiple responsibilities around the room.
I will first address the point about consultation. Noble Lords will appreciate it when I say that, personally, I have not had the chance of undertaking that consultation but it is something that I am committed to doing. Whatever has gone before, I can at least give the reassurance that I will meet the relevant bodies in the next few weeks and discuss their concerns ahead of Report. At least in a forward-looking way, I can provide that reassurance.
As everyone has stated, the critical point here is that the 2006 Act gives the Secretary of State the power to control the price of medical supplies and to collect information about medical supplies. What Clause 5 does is to ensure that the same enforcement and territorial extent to provisions apply to controlling the cost of medical supplies and health service medicines. It does not give the Secretary of State any new powers to control the price of medical supplies. There are currently inconsistencies in the enforcement and territorial extent provisions. For example, a contravention or a failure to comply with the current provisions in the 2006 Act for medical supplies can result in a criminal offence. By contrast, the equivalent penalty for medicines is a civil financial penalty. Clause 5, therefore, aligns the enforcement provisions for medical supplies with those for medicines and, in so doing, makes them more proportionate, as the noble Baroness, Lady Walmsley, has pointed out.
With respect to the territorial extent, the power to control the prices of medical supplies in the NHS Act 2006 currently extends only to England and Wales. Clause 5 would extend the power to control the prices of medical supplies to Scotland and Northern Ireland. That would be consistent with the territorial extent of the powers to control the costs of health service medicines. That is an important point.
A number of noble Lords asked why the Government need the powers to control the prices of medical supplies when they do not currently use them nor have ever used them. That is a perfectly reasonable question to raise and one that occurred to me, too. We do not have any immediate concerns about the pricing of medical supplies. It is true that the market for medical supplies is very different from the market for medicines. It is innovative and competitive, and new medical supplies are generally faced with competition much more quickly than is the case for new medicines. However, I remind noble Lords that until recently we did not think that we needed the powers to set the price of unbranded generic medicines. We thought that competition in the market was working well and keeping prices down. When we realised that the market was not functioning as well as we thought with respect to certain products, and we were faced with companies charging unreasonably high thresholds where they had no competitors, we realised that we did not have sufficient powers to intervene when needed. That is of course one of the reasons for the Bill.
A question was asked about thresholds and when such a provision could be triggered, which is a reasonable question. The two examples I can give are when we had evidence from existing data that there may be an issue with pricing—for example, the reimbursement price that we set in primary care is increasing without an obvious reason—or when there is effectively a bottom-up complaint where patients, clinicians, commissioners or industry raise concerns because it is not obvious what is driving a price rise. I want to minimise the need for future primary legislation on medical supplies pricing controls. The Government should have the ability to intervene, but only when the market is not working well. Whether it is for medicines or medical supplies, it is right that those powers exist but are used only when necessary and proportionately. On that basis, I ask the Committee to agree that Clause 5 stand part of the Bill.
Lord Hunt of Kings Heath
My Lords, I am grateful to the Minister for his response. I also thank him for his consultation and willingness to meet bodies before Report, which I am sure will be very welcome. I understand the first argument, which is that there is a need to ensure consistency in relation to this Bill and the 2006 Act. I fully understand that. I also understand the change from criminal to civil penalties. But we then come to the issue of whether this provision should be in statute at all. The Minister himself has acknowledged that this is a different market, with competitive tendering. It is very competitive. We can see no evidence that this measure has been used for 40 years, and as far as I can see there is no evidence to suggest that it will be used any time soon.
The Minister said that it was not thought that the switch from branding to generics would arise in relation to medicines, and therefore that we should look into a completely different sector and say that because something might happen in the future we need to have this overarching provision in the Bill. But that is not the right approach. It has become clear that there are two courses of action. One is to take this out of the 2006 Act altogether, which at the moment I rather favour. We should not regulate for something that might happen in the mystical future.
I, too, was a better regulation Minister and it was drummed into me that if you do not need it, get rid of it—and if you do not need it, do not legislate in the first place. In his heart of hearts, surely the Minister realises that this is unnecessary. The alternative approach is to take the threshold he suggested and put it in the form of an amendment so that we have some reassurance on the face the Bill that it will not be used inappropriately. Those are two particular options.
In my tour d’horizon, as the noble Lord said, I came across the comments made by the noble Earl, Lord Howe, in 1999 when my noble friend Lady Hayman was taking one of the many health service Bills through your Lordships’ House. The discussion was not about devices but about the PPR scheme, because the then Government had taken powers in relation to prices. The noble Earl, Lord Howe, said that the Government had,
“arrogated to themselves sweeping powers to bring the current voluntary scheme to an end and to control the price of any drug at will. Lower medicine prices are appealing but too much of that will kill the golden goose”.—[Official Report, 9/2/99; col. 118.]
If the noble Earl, Lord Howe, were here arguing for this Bill, I think that he would have reflected that the case had not been made for non-health service medicines to be involved. We need to find a way forward between this stage and Report, otherwise the persuasive argument will be to remove the offending sections from the 2006 Act.
Lord Warner
Perhaps the Minister will consider the Bill’s definition of “medical supplies”. It states that it,
“includes surgical, dental and optical materials and equipment (and for this purpose ‘equipment’ includes any machinery, apparatus or appliance, whether fixed or not, and any vehicle)”.
That seems to take the Government into any bits of kit—not just ordinary devices as we normally understand them. It covers ambulances and all sorts of fixed equipment in the NHS. Is the Minister really saying that the Department of Health needs a power to cover that range of subjects—I presume that it includes scanners—where competitive tendering may be used, and that the Government reserve the right to intervene in that? That is what the Bill seems to say.
Lord O'Shaughnessy
On that specific point, there are number of things—for example, supplements, cosmetics and foods—that fall outwith the categories of health service medicines or health service medical supplies but are sometimes provided or prescribed by the NHS. The intention of the part of the Bill to which noble Lords draw attention is to capture such items when they are provided by the NHS for the benefit of patients—but not in general.
Lord Hunt of Kings Heath
Perhaps I may continue, my Lords. My noble friend will move an amendment on this later on, but the Bill states:
“‘Health service products’ means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) and any other medical supplies, or other related products, required for the purposes of that health service”.
So it is a draconian regulatory power. Having said that, I think that we have had a very good debate. I am sure that we will come back to this on Report.
“Specials
After section 260 of the National Health Service Act 2006 (control of maximum price of medical supplies other than health service medicines) insert—“260A Specials(1) When commissioning the production of ”specials”, National Health Service clinical commissioning group, hospital trust and community pharmacies must seek no less than three quotes for non-tariff items, at least one of which should be from a National Health Service manufacturer.(2) Unless there are over-riding reasons not to accept it, the cheapest quote must be selected.(3) When setting the tariff price for “specials”, NHS England, in its tariff-setting process, should seek prices from National Health Service, as well as private, manufacturers.(4) For the purposes of this section, a “special” is an unlicensed batch of a medicine prepared or extemporaneously dispensed.””
Baroness Finlay of Llandaff
My Lords, I will now move into a very different area, but one that is integrally related to the Bill: that of “specials”. Concerns relating to specials and obtaining them have been brought to my attention by the British Association of Dermatologists, the Royal College of Ophthalmologists, the Royal College of General Practitioners and others—so the issue goes more broadly than simply dermatology.
Specials are unlicensed medicines manufactured or procured specifically to meet the clinical needs of an individual patient. They may be put on the skin; they may be alternative ways of making a medication that can be ingested when there are swallowing difficulties: for example, in babies fitted with a fine-bore nasogastric tube, and so on. The most frequently prescribed specials are made in small batches, but sometimes there are only one or two patients at any one time in the country who need this particular preparation.
Baroness Walmsley
My Lords, I hope that the Minister will accept the common-sense amendment of the noble Baroness, Lady Finlay. The amounts of money that the NHS would save on specials may not be in their billions but, as my granny used to say, “Look after the pennies and the pounds will look after themselves”. I am sure that other noble Lords will have heard that from a couple of generations back. It seems crazy if there is no opportunity for the Government to stop this. It sounds like exploitation to me and a fairly simple change to the Bill could stop it in its tracks.
Baroness Wheeler
My Lords, we very much support the intention behind this amendment and commend the noble Baroness, Lady Finlay, for her determined and dogged campaigning in highlighting this issue and trying to persuade the Government to recognise the problem. In a Bill designed to close loopholes, this is a particularly important one to address. At the same time, it would obviously save the NHS a substantial amount of money. A BBC investigation six years ago estimated a potential saving of £70 million a year just for England, so it is hard to see why the Government should not want to take urgent action now.
We have heard from the noble Baroness, and from the excellent work undertaken on this issue by the British Association of Dermatologists and other organisations, of the overall costs and substantial savings that could be made on unlicensed medicines. Addressing this issue would be to the benefit of the NHS and the many patients in community and primary care who are denied access to special order medicines because of the way in which the current procurement system operates. The anomaly is that if they were in hospital, they would have stood a good chance of being given the drug.
We have also heard how the current system can result in some suppliers charging hyperinflated costs for specials, particularly when chemists do not buy direct from a specials manufacturer but via a wholesaler which adds its costs to the price. This results in the NHS having to pay the chemist the wholesalers’ rather than the manufacturers’ price, because there is no price tariff on the unlicensed specials. Moreover, prices for specials in the primary care sector are set by reference to the Association of Pharmaceutical Specials Manufacturers, which covers private companies that generally manufacture only smaller and therefore much more expensive quantities of drugs. The whole system, which has one much cheaper and cost-effective system for hospitals and another for community and primary care, surely needs to be urgently addressed.
I ask the Minister whether consideration can be given to the Competition and Markets Authority being asked to investigate suppliers. Why have the Government not looked at and learned from the Scottish system, which takes a whole-market approach in the way that the noble Baroness proposes should operate here? We understand that the Government have proposed a six-month review of the existing and proposed arrangements, but we do not feel that this adequately recognises the urgency and scale of the problem. In the Commons, the Minister, Philip Dunne, acknowledged that the Government have existing powers to address the issue, so why is it not being addressed?
The amendment contains the important provision to require NHS England, as part of its tariff-setting processes, to seek prices from the NHS as well as private manufacturers—the whole market—and we fully support this. If the Minister would at last take the important step of recognising and acknowledging the problem, then work could commence on the procurement process required to bring the new system into effect.
Lord O'Shaughnessy
My Lords, I thank the noble Baroness, Lady Finlay, for the work that she has put into investigating this issue, for her amendment and, indeed, the intent behind it, which is to save the NHS money and provide a better bang for our buck. That is something that everyone would support.
I say first that it is the Government’s priority to make sure that we get the best possible results for all NHS patients with the resources we have. That is what the Bill, in its entirety, aims to do. This amendment seeks to save the NHS money on specials by requiring CCGs, hospital trusts and community pharmacies to seek no less than three quotes for non-tariff items, at least one of which should be from an NHS manufacturer and, where possible, to select the cheapest quote. It also requires NHS England to take into account prices of NHS manufacturers when setting reimbursement prices. A special is a medicine manufactured or imported to meet the specific needs of a specific patient. By nature they are bespoke, and therefore they do not have the same economies of scale during manufacture and distribution as licensed medicines. Due to the bespoke nature of specials, the costs associated with manufacturing and distribution will never be as low as the often relatively cheap components that make up the special. I say that by way of background for those who are perhaps not as familiar with the subject as the noble Baroness is.
I turn now to the idea of setting tariff reimbursement prices and including data from NHS manufacturers. In England, reimbursement prices for the most commonly prescribed specials are listed in the drug tariff. Those prices are based on sales and volume data, which the department currently obtains from specials manufacturers under a voluntary arrangement. The new provisions in the Bill would make reimbursement data more widely available and more accurate—which would clearly be a benefit in making sure we get value for money with specials. By setting a reimbursement price, we encourage pharmacy contractors to source products as cheaply as possibly because it allows them to earn a margin, which in turn creates competition in the market and, as a result, lowers reimbursement prices. Since these reimbursement arrangements were introduced in 2011, we have observed that, in England, the average cost for specials listed in the drug tariff decreased by 39% between 2011 and 2016.
In setting that out, I do not disagree with the idea that there are instances of wild variation. Indeed, I ask the noble Baronesses, Lady Finlay and Lady Wheeler, for any examples and evidence that they have. I would be keen to see them, to better understand instances where it has happened.
Basing reimbursement prices on selling prices from more manufacturers than we do now, which the Bill would allow us to do, would make our reimbursement system more robust. For specials, we currently rely on information from those manufacturers that have signed up to our voluntary arrangement. There have been talks with NHS manufacturers to provide information on a voluntary basis. However, we have not been successful so far in securing data from NHS manufacturers that we are able to use. The Bill would enable us to get information from all manufacturers, including NHS manufacturers, for the purpose of reimbursing community pharmacies—that being, of course, one of the main aims of the Bill. Once we receive data from NHS manufacturers, we will be able to assess whether it is appropriate to include it in calculating reimbursement prices. We are actively looking to see whether we can include data as part of our reimbursement price setting, and the Bill will help us to get it. Consequently, we do not need the amendment.
Baroness Finlay of Llandaff
I am grateful to the Minister for his very full reply, which I intend to study in detail. While he has made several points, I have ongoing concerns about leaving this unaddressed in the Bill. In light of what he said, I still do not understand why some manufacturers quote different prices for Scotland and England. Their production costs are exactly the same, so why are they quoting higher prices for England? It does not make sense. England is then paying a higher price than Scotland.
The dispensing fee that goes to the community pharmacists is the same, irrespective of the price paid. I worry that the bureaucratic burden of the clinical commissioning group refusing to pay for something because it seems inordinately expensive is a short-term view in the interests of immediate budget containment, and does not take a long-term view over the life course of an illness that could be contained by using something specifically designed for that patient so that, in the long term, there could be a decreased cost to the NHS. I remain concerned.
I have absolutely no intention of there ever being delays in accessing things in an emergency, but only where a patient is not in an emergency situation. In the community, the pharmacist often does not have things in stock anyway and has to order them. The patient or their representative has to come back the following day or 48 hours later, when something has arrived. I am not convinced that the bureaucratic burden would be that great. I can see that three quotes may be too many, but an alternative quote might be a way forward. In the meantime, I beg leave to withdraw the amendment.
Lord Lansley
“Price control: exemptions
After section 264 of the National Health Service Act 2006 (statutory schemes: supplementary) insert— “264ZA Price control: exemptionsIn controlling maximum prices of any health service medicines and medical supplies, including amounts payable to the Secretary of State under a voluntary or statutory scheme, the Secretary of State may not set a maximum price in respect of any product for which the cost of that product to the National Health Service has been determined through an open and competitive tender process.””
Lord Lansley
Amendment 16 takes us to an issue that was the subject of consultation prior to the introduction of the Bill: whether the Government should take powers to control prices in circumstances where there has been an open and competitive process—for example, a tender process. We know that one reason why the legislation is required is because it does not follow that because products have become unbranded generic medicines they are necessarily available on a fully competitive basis in the marketplace. We have seen examples of that. In explaining the purpose of the Bill, it was stated that:
“The government’s intention is to use these new powers where due to a lack of competition in the market, companies charge unreasonably high prices for unbranded generic medicines”.
That is understood. There can be circumstances where there is a lack of competition.
Quite clearly, however, there are circumstances where the products available and the prices set are themselves the product of an open and competitive process, such as a tender process; for example, in relation to blood products being supplied to the NHS. There may well be a degree of market dominance in some of those, even though some of the complex medicines may be generic. For example, I know a company that produces medicines in circumstances where it has to use opiates, and the availability of those opiates might be limited.
None the less, if the NHS can procure on the basis of a tender that is open and competitive, why should the Government leap in and try to amend it? I understand that the response to that is to say that companies can take account of the rebate in the prices that they set. But surely when one enters into a tender, the companies concerned may not be in symmetrical positions in relation to the implications of the rebate. Some companies are indifferent to the rebate because they are not affected by it and other companies are affected by it. The nature of the rebate over a period of time and the extent of it may be variable, and they may make completely different assumptions about what that process looks like. So it seems, on the face of it, that a much cleaner approach to the Bill would be exemption from the price control mechanism in those circumstances where clearly the mischief that the Bill is intended to remedy does not apply: that is, in an open and competitive process. I beg to move.
Lord Hunt of Kings Heath
My Lords, this is helpful. Medicines have been referred to, but I would have thought that it could be helpful with other medical supplies. I have had a letter from the British Healthcare Trades Association. It says, in relation to other medical supplies:
“We cannot think of any procurement scenario in our sector where products, on an ongoing basis, are not subject to tender or tariff procedures. The price is tested at entry and reviewed at regular intervals, and the terms and conditions pertaining to the contract or tariff arrangements will include requirements for provision of information”.
That deals with the issue of information. So the noble Lord has put forward a very interesting suggestion and I hope that the Minister might be sympathetic to it.
Lord Warner
My Lords, I too am sympathetic to this amendment. I have a linked amendment, Amendment 33, which is about introducing a trigger before information is required. Both amendments, I think, are intended to curb the enthusiasm of Secretaries of State to intervene in a market situation where things are working reasonably well. So I have every sympathy with the amendment of the noble Lord, Lord Lansley, and I hope that the Minister will consider it sympathetically.
Baroness Walmsley
I too have a great deal of sympathy with the amendment, but I just wonder what the definition would be of an “open and competitive” process—perhaps it would be defined in regulations. Does the noble Lord agree?
Lord Lansley
That is a helpful suggestion. It might not necessarily be defined in regulations, but one might contemplate that the Secretary of State would issue guidance as to what constituted such a process.
Lord O'Shaughnessy
I thank my noble friend for his amendment and am very happy to show sympathy with it, as other noble Lords have done. I will start by stating that the Government’s view is clearly that competition and market forces are the best way of delivering value. Wherever possible, we should ensure that competition is there, that it works and that it involves as many participants as possible. In many instances, that is the way to drive better value. That being the case, my first priority is to look at ways of improving how markets operate, before reaching for the lever of regulation. That principle is guiding our work on the pricing and cost control of medicines and medical supplies.
For that reason, I understand the sentiment behind the amendment. The underlying assumption here is that if the NHS tenders for a product in a competitive market, the tender should always secure the NHS the best possible deal, and that there should be no need for further government intervention. However, while that is the case sometimes, it is not always the case. I will give a couple of examples. The department or the NHS may conduct tenders for a number of reasons, including security of supply. Furthermore, EU procurement rules —of course, that may change in future—which have been implemented into domestic legislation pursuant to the Public Contracts Regulations 2015 mean that, for contracts for products over a certain value, the NHS has to tender such contract opportunities in accordance with the requirements specified in the procurement rules.
Where there is a sole supplier of a particular product, or other factors such as supply or specificity of products apply, a tender exercise in itself is unlikely to result in significantly lower prices. For example, the department has run competitive processes for von Willebrand factor. This is used to treat patients with a genetic deficiency in the quality or quantity of this protein, which causes problems with blood clotting. Although there are six or seven products that may meet our tender specification, they all have a different concentration of von Willebrand factor, so they are not easily interchangeable. This means that, in practice, the suppliers of such products do not compete on price, knowing that clinicians need access to all the products to select on clinical need and that the department will make awards on this basis.
Lord Lansley
I am grateful to my noble friend for his interesting response. Like the noble Baroness, Lady Finlay, I want to take it away and think about it. I probably felt kind of comfortable with what my noble friend said in relation to branded medicine. I thought it was specifically in relation to unbranded generic medicines that the issue was, perhaps, most likely to arise. However, I can see that he is identifying circumstances where there might be a tender process, and that the fact of it being a tender does not necessarily mean that it is open and competitive on price. I therefore see why the amendment does not do the job. However, I can still see where there might be a risk, none the less. There might be open and competitive tender situations where the companies concerned feel that they are in subsequent jeopardy that the price that has been determined competitively might be overridden by the powers that are available to Ministers. We just need to see whether, perhaps in further discussion, we can find some way to give companies an assurance that that would not be the case, whether statutorily or otherwise. I would very much value my noble friend’s assurance that we will have that conversation. On that basis, I beg leave to withdraw the amendment.
Baroness Wheeler
Baroness Wheeler
My Lords, this important group of amendments to Clauses 6 and 7 covering England and Wales is intended to reduce the scope of the burdensome information requirements under the Bill by excluding medical technology and supply sectors from its provisions. The Bill itself is inconsistent throughout on how it refers to this key part of the industry, variously referring to the producing of medical supplies, of health service supplies or of health service products. This gives fuel to the widespread assumption that the medical supplies parts of the Bill were a hastily drawn-up afterthought addition to its main purpose.
Our amendments in this group—excluding Amendment 19—remove all references to “health service products” in these clauses and substitute the “health services medicines” reference consistent with the other parts of the Bill applicable to the pharmaceutical industry. Despite extensive questioning and probing of Ministers by noble Lords and in the Commons and today’s explanation from the Minister in our earlier debates we have still to hear any evidence-based justification for these heavy-handed information and disclosure requirements. Both the ABPI and the ABHI have voiced strong concern at the onerous information requirements under the Bill and draft regulations and the potentially huge impact on SMEs across both sectors.
We were encouraged at Second Reading when the noble Lord, Lord Prior, in response to the widespread and deep concerns put forward, told us that,
“the last thing in the world we want to do is to build a bureaucratic edifice … or to gold-plate regulations, information requirements and the like … we are absolutely open to all ideas and suggestions on how we can reduce the regulatory and bureaucratic requirement on companies that supply the NHS”.—[Official Report, 21/12/16; col. 1685.]
Just to remind noble Lords—a point underlined earlier by my noble friend—the Bill currently requires,
“a person who manufactures, distributes or supplies any UK health service products”,
and in England it is applicable to,
“any medicinal products used to any extent for the purposes of the health service continued under”
proposed new Section 264A(1),
“and any other medical supplies, or other related products, required for the purposes of that health service”.
In other words, millions of products and thousands of small, medium, large and very large businesses.
Within Clause 6, information may be required on:
“the price charged or paid by the producer for products … the price charged or paid for delivery or other services in connection with the manufacturing, distribution or supply,”
of those products,
“the discounts or rebates or other payments given or received … in connection with the manufacturing, distribution or supply”,
of those products and,
“the revenue or profits accrued … in connection with the manufacturing, distribution or supply”,
of these products. These are the current draconian provisions and the only response so far to the Government’s insistence that they are open to ideas and suggestions is to promise to consult the medical supplies sector after the legislation has been passed.
We will not go into the issue of the dreaded Section 260 of the 2006 Act, which already contains powers to get price control and information powers over the companies concerned, but we have still to hear a convincing argument as to why it cannot be used as a basis for seeking any further information that is required. We are told that the new provisions clarify, modernise and streamline and now, in the noble Lord’s words, “make the provisions much clearer than they currently are in the 2006 Act”, but Ministers have still to explain exactly how this is the case.
To remind the Committee, the impact assessment makes the astonishing admission that the costs of these provisions have not been quantified for manufacturers, wholesalers and dispensers. Can the Minister tell the Committee whether any further work has been done on this? Surely proposals that stand to impact tens of thousands of businesses should be part of the evidence base before the Government decide to proceed with legislation? It is crucial that the Government accept our amendments and delete the medical supplies industry from the scope of Clauses 6 and 7; only then can they have the meaningful consultations with the industry that should have taken place before the introduction of the Bill. As noble Lords have underlined, it is not acceptable for Ministers to seek to change primary legislation to give the Government new information powers when the details and impact of the new powers will emerge only in future.
Finally, Amendment 19 in this group seeks to address the huge burden that the new information requirements will place on thousands of small businesses across the country. Bearing in mind that the Government have done no work on the potential impact on SMEs, this amendment would at least introduce a threshold limiting the businesses affected to those companies with a total workforce of more than 250 employees or with annual revenues of more than £50 million in each of the preceding three fiscal years prior to the information request. This is based on the EU threshold in relation to procurement. However, given our upcoming withdrawal from the EU, it seems sensible to specify a roughly equivalent amount in pounds. The value of the pound is, of course, currently subject to ongoing fluctuations. If the Government are inclined to act on this amendment, the Minister and his colleagues may wish to give some thought to an exact figure ahead of Report.
The potential impact of the proposed powers on SMEs is significant and could come with a significant unseen cost to domestic businesses and, as a result, to patients. A small firm such as Mediplus, with 55 employees and a turnover of approximately £6.5 million, already has to meet a range of requirements to demonstrate that it is providing value for money. The Bill would increase the time and cost of demonstrating compliance with regulations without any discernible improvement in final outcome. Increasing the bureaucratic burden on SMEs could force firms to consider how they bring products to market, which could have only a negative impact on the NHS and its patients.
The Government have indicated that they would exempt businesses with a turnover of approximately £5 million. The noble Lord will appreciate that, although that sum sounds large, it is very little in comparison with the revenues of the larger pharmaceutical firms which the Bill aims to regulate. The Government’s proposed exemption will still subject a company such as Mediplus to an increased regulatory burden. As noble Lords keep pointing out, all this is completely counterintuitive, given the Government’s supposed commitment to deregulation, and can only risk the viability and innovative streak of very small businesses, which we should be supporting in the current climate. I beg to move.
Lord Warner
My Lords, I have added my name to the set of amendments and strongly support what the noble Baroness, Lady Wheeler, said.
The Minister is new to this legislation. He has joined the party a little late on the Bill. I ask him to stand back and look at some of the terminology used in it. It skips lightly through about four different terms: health service medicines, medicinal products, medical supplies and health service products. It zigzags in and out of those terms throughout the Bill. It then gives a set of definitions at the end which, on the most generous interpretation, overlap with each other. So we are imposing new obligations on a whole set of people in and around the NHS and the pharmaceutical industry without being very clear which group of products we are most concerned about. We are taking powers in the Bill to put obligations on all suppliers of those products to keep a lot of information in case the Government should at some point in future call on them to provide it. That does not seem to me a sound basis on which to legislate when we are trying to reduce the regulatory burden on not just small but medium-sized companies. We always talk about the small companies, but Amendment 19 is useful because it involves reducing the burden on medium-sized companies as well.
The impact assessment then adds to the problem by giving no idea of the impact of these provisions on those companies. At least these amendments narrow the focus to where there is an acknowledged problem—medicinal products—which is where the Bill started. If you read the Long Title, it looks as though it started as a Bill about medicines to which someone has tacked on “and related issues”, or similar words. I suspect that the Bill started off trying to deal with a genuine problem but has grown just in case it might be helpful to have some other provisions. Then, to add unnecessary complexity, it has moved around on what products are to be covered to the point where we are putting obligations on a very large number of organisations in case the Government come calling for information.
That is why I shall return to this subject when we come to Amendment 33, which tries, at the very least, to put some obligation on the Secretary of State to show that he has good reason for requiring the information sought in this Bill. That is a debate for another day, but the Minister should look very carefully at whether the Bill has a confusing set of definitions and a use of words that is going to cause a lot of confusion for the world outside.
Lord O'Shaughnessy
My Lords, I thank noble Lords for their many amendments in this group. They cover two very important aspects of the Bill and I am grateful for the opportunity to provide further clarification.
I will look first at the issue of small and medium-sized enterprises. As noble Lords will understand, the medicines sector is very diverse, with companies ranging from the largest global enterprises with multiple interests to very small companies that manufacture specials on a bespoke basis. The Government have no intention to put unnecessary burdens on companies, and especially not on SMEs. The information that we would require them to keep, record and provide would not be more than companies are currently required to keep for tax purposes. For routine collections, we know that they are not an excessive burden on companies. We heard the director-general of the British Generic Manufacturers Association say at the evidence session for the Bill in the Commons that:
“Providing those data is not a big issue for the majority of our members because it is run from their invoicing system”.—[Official Report, Commons, Health Service Medical Supplies (Costs) Bill Committee, 8/11/16; col. 7.]
For non-routine collections, the illustrative regulations specifically make provision for SMEs, defined here as companies with a UK turnover of less than £5 million, which can provide information in the form of pre-existing information such as invoices. This is the method by which we currently collect information from pharmacies, and we know that the process places barely any burden on them. We will consult the industry on the definition of an SME and will look also at the different definitions—I am aware that multiple definitions are being used across government. We would rely on the information provisions in the Bill to be able to obtain information to operate any price and cost control schemes. This definition of an SME would make it impossible to obtain information from certain companies and, therefore, it would be much harder effectively to operate our voluntary and statutory schemes. The amendment has the effect, therefore, of limiting applications of pricing controls set out in this Bill to large companies only.
We have considered carefully the application of the statutory scheme to small companies. Our consultation last year proposed that the exemption threshold for the new statutory scheme should be set at £5 million of branded health service medicines sales. This maintains the current statutory scheme arrangement and aligns, as we are trying to do throughout the Bill, with the current PPRS. Most industry responses agreed with this proposal, and the illustrative regulations published to aid discussion of the Bill show how it would be incorporated into the operation of the scheme.
It is also important to note that this bespoke definition is focused on the level of sales rather than company turnover, ensuring that only those businesses that make branded health services medicines sales of more than £5 million a year to the NHS will be included in the schemes. On that basis, any company, including those which fall within the EU definition of an SME, will be included in the scheme only if their sales reach this threshold. Not only does this align with the current PPRS and the Government’s broader aims to support SMEs but this bespoke definition ensures that the focus is kept on sales of branded medicines to the NHS. More details are set out in the illustrative regulations for the statutory scheme that have been published alongside the Bill.
There would, however, as a result of this amendment, be additional impacts to the reimbursement of community pharmacies and GP practices, which is one of the core purposes of the Bill, and to the collection of information. Community pharmacies purchase the medicines they supply against NHS prescriptions. The drug tariff sets out a reimbursement price that they will be paid for the majority of medicines. The Government have voluntary agreements in place with manufacturers and wholesalers of unbranded generic medicines and specials. They provide us with information on their prices and volumes, which informs our reimbursement prices. As a consequence of these arrangements, the Government have been able to reimburse community pharmacies more robustly for the products covered by the arrangement.
If SMEs, whether defined as set out in the amendment or under any other definition, were excluded from the requirement to provide information, then not all manufacturers and wholesalers would be included. Reimbursement would be based on large company data alone, with the risk that the prices being paid by small and medium-sized enterprises would not be reflected in the reimbursement prices, to their disbenefit.
In order for the reimbursement system to work effectively, appropriate data are needed from all parts of the supply chain, both large and small companies. If the prices charged by larger companies were generally lower, and these would be the only prices used to inform reimbursement prices, we would be systematically underfunding community pharmacies. This in turn could drive them to purchase products from the large companies only. The effect of this could be that small companies go out of business leading to less competition.
The third purpose for collection of information is for the Government to be assured that adequate supplies of healthcare products are available and on terms which represent value for money. We recognise that this non-routine provision of information is somewhat different from that associated with reimbursement and running our price and cost control schemes, and this is exactly why we have made provisions for SMEs.
I hope that I have assured noble Lords that the burden on SMEs has been considered carefully. We have provided bespoke definitions for both the price control schemes and the information provisions, in order that requirements are placed only on relevant companies for essential information. Broader definitions would risk both the price control schemes and critically the reimbursement mechanisms failing to work as well as they do now, let alone how they could work in the future.
I turn now to the other effect of the amendment, which is to limit application of the information-gathering powers to medicines and remove medical supplies or other related products from the scope of the clause. In response to the noble Lord, Lord Warner, I will look at the use of language and definitions subsequent to our debate today and provide reassurance that that is being done in the appropriate way and not to create confusion.
The 2006 Act gives the Government powers to control the price of medical supplies, as we have discussed at length, to collect information on medical supplies and to take enforcement action in the event of non-compliance. The Bill changes the 2006 Act in relation to medical supplies by reducing the enforcement penalties from criminal to civil, and aligns medical supplies provisions with those for medicines.
Clause 6 of the Bill brings together in one place all of the information requirements underpinning the provisions within this Bill. Without that information the provisions cannot apply to those companies. Removing medical supplies and other related products from this clause would therefore mean that we would not have the necessary information to put in place and operate a price control scheme if we wanted to and take specific action against instances of unwarranted price rises that come to our attention, although I appreciate that noble Lords have concerns that those two things will never happen in reality. Finally, it would impede our ability to put in place more robust reimbursement arrangements for medical supplies provided by community pharmacies for all the reasons that I touched on in the context of small and medium-sized enterprises. That is very important information to have to ensure that reimbursement happens properly.
It is right and proper for the Government to have effective powers to gather information regarding medical supplies and other related products in order to improve our understanding of the costs across the supply chain and ensure that those are providing value for money and that we are properly reimbursing community pharmacies. The medical supplies industry is made up largely of SMEs, and my comments earlier reflect my very real concern to ensure that we ask only for essential information that does not provide an additional burden on such companies. On that basis, I ask the noble Baroness to withdraw the amendment.
Baroness Wheeler
My Lords, I thank the Minister for his response. Quite honestly, at this late stage, I will not go into the debates that we have already had on the issue of inclusion of non-medicines in the scope of the Bill or of the burden on SMEs. But it is hard to see from the Minister’s response how the Government can say that they are open to ideas and suggestions on how they will reduce the regulatory burden on the medical supplies industry and particularly on SMEs. The Minister knows that we remain to be convinced on this whole area. I hope that we can have ongoing discussions on this matter before Report. We will certainly return to this issue, but meanwhile, I beg leave to withdraw the amendment.
Health Service Medical Supplies (Costs) Bill
Wednesday 25th January 2017
(7 years, 10 months ago)
Grand CommitteeRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-II Second marshalled list for Grand Committee (PDF, 70KB) - (23 Jan 2017)
Lord Lansley
“(4A) In connection with the requirements in subsection (2), the Secretary of State may serve a notice (an “information notice”) to a UK producer in order to require the person to supply the specific information required.(4B) An information notice must include particulars of—(a) the form in which the information must be supplied;(b) the date by which the information must be supplied;(c) the purpose for which the information is required;(d) with whom the information may be shared; and(e) the right of appeal under this section.(4C) A UK producer to whom an information notice has been served may appeal to the Upper Tier Tribunal against the notice.(4D) Regulations may make provision for, and in connection with, the determination of appeals under this section.”
Lord Lansley (Con)
It is a pleasure to start this, the second and concluding session in Committee. We have reached Clause 6, which relates to the provision of information. In the 2006 Act as it stands, there is a wide-ranging requirement to provide information under the statutory scheme for medicinal products. However, in the Bill the Government have resolved to go rather wider in the scope of the information-gathering power. We will come on to some of the reasons why I think that process of gathering information more rigorously is necessary and why I support it.
Happily, we are in this Bill discussing legislation that is, in principle, supported by the industry—it recognises the importance of securing a good relationship between the Government and the industry in determining the right pricing structure. This is particularly true because, in the past, under the voluntary scheme and statutory scheme, the information-gathering capacity was built into the schemes themselves.
In addition, there is the issue of gathering information relating to the reimbursement of pharmacies under what I think is known as scheme W. I completely understand why it is necessary. I remember that, back in about 2006—I am not sure which of our noble friends, if I may be so bold, was in ministerial office at that time—the issue that arose with pharmacies was the lack of contemporaneous data that enabled the gap between the wholesale purchasing and the reimbursement price on dispensed drugs to be determined accurately. At that time, I was the shadow spokesman, and whistleblowers came to me to tell me that the pharmacy industry was taking anything up to £500 million a year more, by way of its margin over its purchasing of drugs, than was allowed for in the global sum negotiated with the department. That was investigated by the National Audit Office and the whole system was tightened up.
We are, however, still not where we should be. On Monday, we debated the idea that if one ends up hearing about purchasing only from large organisations, one will get it wrong because one might leave out the fact that small pharmacies cannot necessarily purchase at quite so fine a price. However, unless I am very much mistaken, and contrary to that, if you gather information only from small pharmacies—even if they have a collective purchasing operation—and leave out the very biggest pharmacy chains, the chances are that you may be overestimating the wholesale price. Of course, there are some integrated operations, and getting that information from an integrated supply chain is extremely difficult.
The starting proposition for this debate is that there is a need to broaden the information-gathering power. Amendment 34, in my name, is consequential, but Amendment 32 is about what happens once one goes down the route of gathering quite so much information, potentially. I do not seek to amend the purposes that are set out, as the Committee will see, in Clause 6(3).
In Clause 6, there is a long list of the reasons why the Secretary of State might wish to gather information and the purposes required for that. It is potentially necessary for the information to be gathered. As a consequence, I do not wish to change all that list but at the moment, compared to most of the analogous information-gathering requirements for government laid upon industry, there is no safeguarding process. There is no process which, in itself, requires the Government to be much clearer about the information they require, the purposes for which they require it, the character of the use to which it will be put or, since there is a power to share information, with whom that information will be shared. Amendment 32 sets out to do this.
Under the voluntary or statutory schemes, there can be a scheme for gathering information that does not necessarily require information notices. Amendment 32 essentially says that in any circumstances where the Secretary of State does not receive the information the Government are looking for under a scheme, including presumably scheme W and others, there should be a power for the Secretary of State to issue an “information notice”. But where a notice is to be issued to somebody, it would then have to say some very specific things: what is required, in what form, by when, for what purpose, with whom it will be shared and about giving a right of appeal. There may inevitably be circumstances where there is a belief on the part of industry that the information being sought is not required—that the Government are unnecessarily hoovering it up, as it were. It may have a particular set of reasons of its own to try to resist this.
This amendment would give industry an opportunity to seek appeal if the Government are being disproportionate. Of course, it would have a right to judicial review but it would be much easier if this were governed under statute by way of simple appeal to the General Regulatory Chamber, as happens in a number of other areas where there is a requirement to gather information from people. I hope that the Minister will be sympathetic to an understanding that, notwithstanding the general support of industry, concerns have been properly raised about the scope and extent of the information-gathering power the Government propose in the Bill. I hope he will recognise that the amendment would reassure the industry that it would be properly informed about what information is required, and would have some recourse if it objects to that information being taken. I beg to move.
Lord Hunt of Kings Heath (Lab)
My Lords, I want to express some sympathy with the remarks of the noble Lord, Lord Lansley. I am not sure whether he has got the terms of his amendment right; my noble friend Lord Warner has an amendment in the next group which, in a sense, covers the same ground.
The noble Lord, Lord Lansley, knows that I am sceptical about whether these powers should be extended to non-medicines but the issue here is that they are very broad, as he says. As far as I can see, there are absolutely no safeguards regarding how these powers will be used. The safeguards are not in the Bill or the 2006 Act, and certainly not in the draft regulations as far as I can see. We are looking for the Minister to table amendments on Report to build in thresholds or safeguards to stop the department simply undertaking fishing expeditions. That would give us some sense of proportionality. I am not sure whether the noble Lords, Lord Lansley and Lord Warner, have got their amendments quite right but I am certain there will be a consensus for building in some safeguards over the use of these powers.
The Parliamentary Under-Secretary of State, Department of Health (Lord O'Shaughnessy) (Con)
My Lords, it is nice to be back with you again today to finish the Bill’s Committee stage. I am grateful to my noble friend Lord Lansley for tabling his amendments, and for his support for the Bill’s ultimate purpose: more rigorous gathering of data to support voluntary and statutory schemes and pharmacy reimbursements. That support is very welcome. I have huge sympathy with his argument. It is because we agree with the need properly to set out the information powers that we have published two sets of illustrative regulations to help Parliament scrutinise the information powers in the Bill. Reflecting on those, I believe that I can reassure my noble friend about the concerns behind his amendment.
I start by addressing the general proposition that a UK producer should be provided with an information notice every time the Secretary of State seeks to require information from that producer. Many noble Lords have expressed concerns about the regulatory burden the Bill might impose, and the amendment could exacerbate those worries. Regarding routine information collection, the Government already collect information on prices and volumes every quarter to support the operation of the PPRS and statutory schemes, and to inform reimbursement prices for community pharmacies. The Bill would expand routine collections to inform reimbursement prices to enable us—as my noble friend pointed out—to use data from more companies, to make the reimbursement of community pharmacies fairer and more robust, and to set reimbursement prices for more products.
For the purposes of requiring information on a routine basis, the illustrative regulations clearly set out what information would need to be provided, the form in which it would need to be supplied, the period of time it would need to cover and the date by which it would need to be supplied. Where information is required on a non-routine basis, the illustrative regulations demonstrate that the Secretary of State would notify a UK producer of that request. The regulations set out the notice that the Secretary of State would give a UK producer, the form in which the notice would be given and the type of information that would be required. The regulations would also require the Secretary of State to inform UK producers of the time period the information would need to cover and the time within which the information would be required.
Turning to the purposes for which information can be required and the persons to whom confidential and commercially sensitive information can be disclosed, I reassure the Committee that the Government take these matters very seriously. We have sought clearly to set out in the Bill the limited purposes for which information can be required and the persons to whom confidential or commercially sensitive information can be disclosed in relation to those purposes. The Bill makes it clear that information can be required for only three purposes: first, to reimburse community pharmacies and GPs; secondly, to support the PPRS and the cost-control provision in the NHS Act 2006; and thirdly, to ensure that healthcare products provide value for money.
The information that we would collect under the first two purposes would generally involve routine collections, to operate the reimbursement system and our voluntary and statutory schemes. However, assuring ourselves that products or the supply chain provide value for money would be done through ad-hoc collections. This is where we get to the critical issue of thresholds. Those collections would be triggered by evidence from existing data that there may be an issue with pricing—for example, when the reimbursement price we set in primary care is increasing without obvious reasons—or patients, clinicians, commissioners or the industry raising concerns, for example about price rises without obvious reasons or access problems. I hope that that makes it clear that this is not intended for fishing expeditions, to use the expression of the noble Lord, Lord Hunt.
Lord Hunt of Kings Heath
Have I missed this? Are those qualifications for the use of the provisions set out in the Bill?
Lord O'Shaughnessy
They are not. I am using this opportunity to set out on the record the reasons why information would be sought.
The Bill is also clear about with whom confidential and commercially sensitive information can be shared. This is restricted to other Government departments, the devolved Administrations and specific NHS bodies and persons providing services to any of these bodies. The information can be disclosed to these bodies only for the purposes set out in the Bill—which I just reprised. The Bill also enables the Secretary of State to share information with trade bodies, and Regulation 11 of the illustrative regulations sets out the trade bodies with whom the Secretary of State might want to share information, and the type of information that he would want to share with them.
The illustrative regulations currently limit the information that we can share with trade bodies to aggregated data that cannot be led back to a specific company. Furthermore, the Bill enables the Government to prescribe in regulations any other person to whom the Secretary of State can disclose information. The flexibility provided by this regulation-making power allows the Secretary of State to disclose information to other persons who may become involved in payment or reimbursement for health service medicines, medical supplies or other related products, including, for example, in circumstances of regional devolution. Again, it would be possible to disclose confidential or commercially sensitive information to these persons only for the purposes set out in the Bill. We will have further opportunities to discuss these powers of disclosure when we discuss the amendments relating to the report of the DPRRC. In summary, we would not be able to disclose information to bodies not listed in the Bill or prescribed in regulations, so the legislation will restrict to whom we can disclose information.
Lord Lansley
I am grateful to the noble Lord, Lord Hunt, and my noble friend for their response to this amendment. I can see from the illustrative regulations that, as I said earlier, there would be a general scheme for the collection of information, and I am not looking for the amendment to replace a general scheme with a requirement to issue individual information notices. That would be excessive and burdensome. However, under the illustrative regulations there is, in addition to the general scheme, what is effectively the restatement of the power for the Secretary of State additionally to require specific information from companies that breach the requirements of the general scheme—frankly, for any other purpose that the Secretary of State is looking for. That is in draft Regulation 19(2), which really just restates what is already in the legislation: that there is this general ability to say “just give me this information”.
I entirely understand the point that my noble friend is making about the appeal against enforcement, but there is no appeal against such a specific information notice. I may not have got it absolutely right, but in the case outside the general scheme of information, when the Secretary of State asks a company to provide specific additional information, I was proposing not an appeal against enforcement of request, where the company resisted, but for the company to be able to appeal against the information notice on the basis that it is an excessive use of powers; that is, rather than a judicial review, an appeal against that specific information notice.
My noble friend referred to the Delegated Powers and Regulatory Reform Committee’s view, which relates specifically to the question of with whom the information may be shared. The illustrative regulations really do not add anything from that point of view; they do not tell us, beyond what the legislation already states, with whom they may be shared. From any company’s point of view, there is little reassurance in the restrictions that the Minister has just referred to. The information could end up in all sorts of places. Remember, we are talking about an NHS body and, of course, all NHS bodies always behave absolutely properly in the use of information under all circumstances—I am being ironic.
From the point of view of a company engaged in selling these products, we are talking about a monopoly purchaser—a single payer—and a set of organisations with tremendous financial leverage in relation to the products that are being sold. If we are simply handing all the information over to the Secretary of State in the expectation that he could—I am not saying that he would—hand this information on to NHS bodies which are themselves the purchasers of these products, it could significantly skew what would otherwise be a proper commercial relationship between seller and buyer.
Companies must have a point at which they can cry foul, but I am not sure that we have yet given them the ability to do so at the appropriate stage when the information is being asked for. In a way, my amendment does that. I was rather comforted by the DPPRC’s report, in that it seemed to me that my amendment at least sought to make clear how the DPPRC’s recommendation in relation to the Bill might be met. I am implying in what I say that I can see how the amendment is not right; we could go further.
Lord O'Shaughnessy
I thank my noble friend for that clarification. I think that we are talking about the same thing, but we should have the opportunity to explore it between Committee and Report. Certainly, we will talk about the DPPRC issues. It is understood that the powers as currently set out need to be looked at.
Lord Lansley
I am again grateful to my noble friend. On the basis of what I have explained, there is a conversation to be had and I hope that we may be able to resolve this satisfactorily before Report. I therefore beg leave to withdraw the amendment.
Lord Warner
“( ) The Secretary of State may require information falling within subsection (4)(d) from a UK producer under circumstances where a specific health service product has significantly increased in price and where there are reasonable grounds to believe that the National Health Service is not receiving value for money.”
Lord Warner (CB)
My Lords, this amendment creates a trigger mechanism before the Secretary of State can require companies to submit to the new information requirements set out in this Bill. In effect, the Secretary of State has to be satisfied that a particular health service product has significantly increased in price and has reasonable grounds to believe that the NHS is not receiving value for money. In those circumstances, he can require the information falling within Clause 6(4)(d), on page 5 of the Bill.
It is possible of course, as the noble Lord, Lord Hunt, has mentioned to me, that I have been a shade too lenient with the Secretary of State and should have required this trigger to be applied to a wider range of products. I suspect that he may want to probe that area a little later on. However, I will explain the reasoning behind my amendment, which follows serious concerns expressed to me—strongly and convincingly—by the ABPI. From the concerns that were expressed, it is clear that the association supports the department’s intention to bring all information requirements under a statutory footing to ensure that the reimbursement system is run effectively. There is no dispute over that. However, it is very concerned, as has already been expressed in Committee, that the Bill will require information from all pharmaceutical companies, which is beyond what is required to fulfil this aim.
UK pharmaceutical companies already provide comprehensive information to the Government on profits they make at company level. The Bill would require companies to allocate profit figures to individual products. The sector believes that this approach is totally disproportionate compared to what is needed to fulfil the Government’s policy intention, for a number of reasons. First, the information requirements would extend to a company’s global business. Secondly, information on distribution costs of individual products is not currently recorded by pharmaceutical companies at product level. Thirdly, it would be extremely difficult for companies to share information at this level, with any information obtained likely to be estimated. Fourthly, such costs typically bear no relation to the cost of medicines to the NHS or reimbursement schemes. The Government have signally failed to convince the sector that what they are doing is both proportionate and necessary for their aims. I found the sector’s claims extremely convincing, which is why I have suggested a trigger mechanism of the kind set out in Amendment 33.
The Minister and the department have not got right the information provisions in the Bill and have signally failed to convince the industry that they have done so. Therefore, not only are the information provisions regulatory gold-plating, as has been suggested by the noble Lord, Lord Hunt, but they could be said to be rather ineffective and cheap gold-plating at that. The industry strongly supports a provision of this kind and I think it is perfectly prepared to sit round the table and discuss alternatives. Others may also want to apply this trigger to other parts of the Bill. I am certainly not a proud author, and if noble Lords want to try that, they can by all means go ahead.
I do not think that the Minister can get away with the argument that I suspect he may use, which is that the details of these arrangements can be sorted out in regulations and guidance. The truth is that the Bill gives the Secretary of State wide powers to require information, and it is the sweeping nature of those powers that I and others are challenging. It is also worth mentioning that one could regard the Government’s proposals as a recipe for gaming the system. If you make this stuff so complicated that it is very difficult to assure things, or you accidentally provide incentives to game the system, that is where you end up. I am not saying that on behalf of the ABPI, but I have been around in government a long time and have seen well-intended actions leading to very unexpected and unsatisfactory consequences. I am sure that most people will not do this, but if the Government choose to proceed with a disproportionate system of information collection, they should not be surprised if it happens.
The Minister mentioned in his response to the amendment in the name of the noble Lord, Lord Lansley, that the Government can give a range of assurances on how they will and will not use this information. I have to say to the Minister that we have been round this track on many pieces of legislation in this House. The warm words that one set of Ministers give about safeguards too easily get forgotten when they move on to other things and it suits a government department a little later in history to use the powers that are there. We have already seen with the Bill how the Government have found some inadvertent powers that no one can explain and which have been knocking around since 1977 with which to build an edifice in the Bill on information collection. Therefore it is not foolish to consider the possibility that the Minister’s assurances, which are not in the Bill, could still lead to abuse of this system later.
I still cannot see that the Government have made the case for this potentially massive increase in information requirements Bill that the Secretary of State can impose on the sector in the Bill. That is why we need to curb the Department of Health’s enthusiasm for this kind of collection of information, which could lead to fishing expeditions, no matter how the Minister tries to assure us in Committee. I beg to move.
Baroness Finlay of Llandaff (CB)
My Lords, I have some sympathy with the amendment of the noble Lord, Lord Warner. It strikes me that the information being asked for in the Bill requires a degree of detail that probably is not going to reflect reality. This is very often a global industry, so defining a “UK producer” will be quite difficult. If we make the information requirements too difficult, I see a risk of some of the larger companies deciding to produce more offshore rather than here.
The other difficulty with the pricing of any medical treatment that comes to market is that it has often had a very long lead time—over years. So the true cost of that particular item becomes almost impossible to disaggregate from all the other costs. Then, once it is produced and packaged, there are distribution costs, the mark-up at wholesale level and so on. I can see how a producer, in wanting to keep a cost high, could potentially move around its budgeting line to protect itself. But the problem is that if you do not have a trigger, you may get so much data that you cannot actually extract the true knowledge and the important information from them. I understand why you would want to have a lot of data to be able to move the cost and map it efficiently, but there is only any point in mapping it if it has accuracy attached to it.
I have a question for the Minister. In all these information requirements, how will a “UK producer” be defined, as distinct from an international producer from elsewhere? I may have missed it, but I could not find it defined in the Bill; I can see only products defined.
It will become almost impossible to know where the true cost is, but if a cost is going up, that becomes counterintuitive. Generally, for medication that is out there on the market, the cost should fall. Usually, production costs drop, because, for example, antibiotic production used to be incredibly expensive and is now very much cheaper because of efficiencies and the way that the science has moved forward. So you would expect, with bulk sales and technological advances, that the cost should come down. I therefore have a question for the noble Lord, Lord Warner, on the trigger mechanism. Is his price absolute—in pounds—or is it also considered relative to other products in that field that may be on the market? For example, we have seen some major discrepancies with ophthalmic products. Eye drops for glaucoma have been incredibly expensive compared to exactly the same substance that is being used in oncology and has been priced at a much lower rate. The question has to come up as to whether the price is being held and maintained inappropriately, rather than having gone up.
Lord Warner
In response to the noble Baroness’s point, I would not claim to have actually considered the detail of what level of pricing we will use. My point in this amendment is to try to establish the principle of a trigger mechanism, and I am happy to be advised on ways of improving it.
Baroness Walmsley (LD)
My Lords, the noble Lord, Lord Warner, is right that we need to have a trigger mechanism. This is gold-plating, and not very effective gold-plating. As the noble Baroness, Lady Finlay, just said, it will produce an absolute mass of information. The question is how to find, among that mass of information, situations where there is malpractice, abuse or unwarranted price rises. It is the same sort of argument as we had when the police wanted to collect everybody’s internet information. Really, it is like looking for a needle in a haystack. It is much better to have it targeted, where there is a reason to believe that there is something going on.
How will the department identify from this mass of information those situations that it needs to investigate further? Will it apply some sort of algorithm to the information at any point along the production or distribution line when there is an increase of more than a certain percentage or a certain percentage related to the average—or what? How is it going to be done? These companies have quite enough to tackle with Brexit coming along the track and do not need a further burden such as this.
Lord Young of Norwood Green (Lab)
I am not an expert in this area, but I am puzzled. If it is that difficult to identify, how come the Times managed it in its expose? It did not seem very difficult or complex. The Times found drugs that had come out of patent and were available on a generic basis and for which the company that bought the patent increased the cost by staggering amounts. You do not have to be Sherlock Holmes to alight upon that. I do not know which way to go on this debate. My noble friend worries about fishing expeditions, and he is right, but I am even more worried about the NHS being ripped off for inordinate amounts of money by people whose corporate responsibility polices omit the word “ethics”. I asked once before why none of the current audit processes inside the health service exposed this until the Times brought it to public attention. There may be a mass of information, but I would have thought that these things could quite easily be identified. I may be wrong because, as I said, I am not an expert in this very complex area, but those points need to be answered. The problem was identified. We have this Bill because we know that the current system is not working. Even though people in the various systems in the NHS were reporting their concerns, no action was taken for quite a long time. It certainly justifies the legislation. The Delegated Powers Committee expressed its concerns about whether the legislation is right, and I do not profess to be qualified to rule on that, but my major concern is about the ability of some companies to rip off the NHS.
Lord Hunt of Kings Heath
My Lords, my noble friend is right because he goes to the heart of the argument about this Bill. I think we have all said that we support the core aim, which is to deal with branded products becoming generics and the issues that were identified. The question is whether the Bill is a proportionate response to that and what impact it will have on future investment in this country.
I have been wracking my brains to puzzle out why this was first legislated for in 1977. My noble friend will remember that that was the time of the prices and incomes policy. Lady Williams of Crosby and my esteemed noble friend Lord Hattersley were Secretaries of State for Prices and Consumer Protection. I would not be at all surprised if it had something to do with that. I have to say that it was not altogether successful as a policy, and I am not sure that it is a great precedent for the Minister to rely on now. Certainly, in 1979 the electorate did not think that it was a very successful policy, that is for sure.
The only point I want to put to the Minister is this: I think there is a consensus in the Committee that there needs to be some trigger mechanism. We have had elements of that. The noble Lord, Lord Lansley, proposed an amendment that included appeals. He suggested what would trigger action, which was very helpful. In his amendment, my noble friend suggested another approach. The Delegated Powers Committee is concerned about the general terms of this clause. It said:
“We consider the general power to be inappropriate unless the Minister is able to explain why it is not feasible to specify the further bodies to whom information may be disclosed on the face of the Bill, and why it is not feasible to limit the kinds of bodies to whom disclosure may be made”.
That picks up the point raised by the noble Lord, Lord Lansley, and I agree with him about NHS bodies,
The question is this. The only satisfactory safeguards will be in the Bill. This House has no influence on regulations. The Minister will know that only six or seven statutory instruments have ever been defeated, so regulations in themselves provide very little safeguard. This is our only opportunity to provide safeguards in the Bill. Essentially, the choice for us is to press on with amendments at Report or to come to some agreement with the Government about what is appropriate. That we need something in the Bill is not in doubt.
Lord O'Shaughnessy
I thank noble Lords for that very good debate, which has again got to the heart of why we are all here. While we are reflecting on the 1970s, we have an industrial strategy again, so who knows? The wheel turns.
I am grateful to the noble Lord, Lord Warner, for his amendment and understand that he seeks to minimise the burden on businesses; we agree with him on that aim. However, the amendment would have serious unintended consequences. I will set out why I believe that to be the case and in doing so, I hope to respond to other noble Lords’ questions.
The amendment would restrict the circumstances under which the Government could ask for information on revenues or profits accrued in connection with the manufacturing, distribution or supply of UK health service products. We have been clear throughout that the information that we seek for routine data collection does not go beyond that which would be required for tax purposes. That is the reassurance that we provide on the overall burden and how it would affect businesses. I appreciate that there is a separate question about non-routine data collection, which I will come to, but the overall intention is not to create any additional burden.
The amendment would restrict the information-gathering powers to where a specific health service product has significantly increased in price and where there are reasonable grounds to believe that the NHS is not receiving value for money. However, it would prevent us operating our cost and price control schemes. The reason for that is that the Government collect information on revenues from companies as part of the various cost and price control schemes to be able to determine the sales of those companies to the health service. This enables us to identify the savings achieved through price cuts and which, in our reformed statutory scheme, would be a prerequisite for calculating the payments due from individual companies.
The Government require this information at product level to satisfy ourselves that the terms of the scheme are being applied correctly. As noble Lords know, this model has been in operation through the PPRS for many years, and we have not heard concerns from industry about the burden that it places upon it. Indeed, it is precisely this mechanism which demonstrated to both the Government and the ABPI that the current PPRS was not operating as expected during 2016—something to which the noble Lord, Lord Hunt, referred during our previous sitting.
We had constructive discussions with the ABPI during 2016 about why the spend measured by the PPRS and used to calculate payments under the scheme had fallen, compared to the real growth in NHS spending on branded medicines, which continues to rise. Joint analysis of company data by the ABPI and the Department of Health shows that the NHS is spending more than ever on branded medicines, with spend growth in 2016 likely to be around 5.3% of the budget.
It became clear that the cap mechanism was not capturing significant areas of branded medicines spend—in particular, parallel imports. Also, some companies left to join the statutory scheme, or divested individual products from the voluntary to the statutory scheme, but this growth was not captured by the PPRS methodology. Without action, this would have led to a significant drop in income from the scheme while branded medicines spend continued to rise, which is obviously against the spirit of the agreement. After a short period of very constructive negotiation just before Christmas, we agreed a new deal with the ABPI to cover the last two years of the scheme, details of which I set out in a Written Ministerial Statement published last week, I think—it has been only three and a half weeks, but it feels longer. This shows how well industry and the Government can work together to develop and maintain voluntary arrangements, but we can do so only with the right information available.
We have provided illustrative versions of both the information regulations and the statutory scheme regulations. I emphasise that these regulations show that the Government have no intention of routinely collecting information on profits. They do, however, set out the circumstances in which the Government might want to collect information about profits.
First, the illustrative regulations set out that we would be able to ask for information related to products where a company asks for a price increase under the statutory scheme regulations. To agree such an increase, the Government require assurance that the product is no longer profitable at its current price. Information on profitability is therefore crucial to determine this.
Lord Warner
I am grateful to the Minister for his detailed explanation, although I am not totally convinced. The intention was to apply my amendment to the new information requirements, not the existing routine collection. That is a drafting issue rather than an issue of principle. If I got the drafting wrong, we can sort it out.
I still think we need some kind of trigger safeguard in the Bill. I am not particularly wedded to this provision. I am quite attracted to a trigger mechanism, linked to the information notice and appeal idea suggested by the noble Lord, Lord Lansley. I am certainly very happy to discuss with the Minister and other colleagues on the Committee how we might improve this.
The Minister cited the example of abuse of the PPRS system, but if there were such abuse and the Government or the department were aware of it, nothing in my amendment would stop them intervening. Those would be the reasonable grounds for expecting abuse which this trigger mechanism provides. Therefore, it would not be that the Government’s hands would be tied behind their back when they had some reasonable grounds for thinking that the NHS was being abused. The trigger mechanism does not stop intervention when there is evidence; it just requires the Secretary of State to have some prima facie evidence that some kind of abuse is going on that requires the collection of more information. That is where the ideas of the noble Lord, Lord Lansley, fit in rather well. You would then specify exactly what you need to deal with the abuse you suspect is going on, but which you do not have enough information to prove. That would enable you to act way before a case came to the CMA. You would need only some reasonable grounds for issuing the kind of information notice that the noble Lord, Lord Lansley, wanted to see what was going on.
The Minister mentioned the consultations with the ABPI, but if those were such a success, why does the ABPI come to people like me and say that it is highly dissatisfied with the system that now appears in the Bill? The messages must have got lost in the night somewhere along the way, because the Minister certainly did not convince it to be comfortable with what is proposed in the Bill.
We need some kinds of safeguard, whether it is this trigger mechanism or a blend of that and the idea of the noble Lord, Lord Lansley—
Lord Hunt of Kings Heath
It seems from this debate that you could put together into an amendment the appeal mechanisms suggested by the noble Lord, Lord Lansley, the general thrust of the amendment in the name of the noble Lord, Lord Warner, and the three examples the Minister gave of what would trigger the investigation. The Minister clearly has “resist” on every briefing for every amendment. However, this is the House of Lords and basically, we are either going to put an amendment through ourselves, which will win on Report, or the Minister will sit down with us to try to agree something. If the Minister is not able to give way on anything, frankly, it is pretty hopeless and departs from what your Lordships’ House is about. That is what I find frustrating. It is quite clear that there is a broad consensus that we need to see a trigger mechanism of some sort in the Bill. We would like to work with the Government, otherwise we are left with no option but to construct something ourselves.
Lord O'Shaughnessy
On that point, two separate issues are in play here. One is about the information required to be routinely collected for the purposes particularly of community reimbursement, but also for the operation of the schemes. It is welcome that that information will be put on a statutory basis and there is clarity about the kind of information that might be required. In doing so, it will provide for better information and better pricing. Then, there is the separate discussion that the noble Lords, Lord Hunt, Lord Warner, and other noble Lords have alighted on: the collection of non-routine data. Effectively, the question is, what are the circumstances under which that kind of non-routine collection would be justified? Assuming I have interpreted that correctly, I would be happy to talk to noble Lords about how we do that, as I committed to doing during the last sitting. My desire throughout is to make sure that, despite the fears of the noble Lord, Lord Hunt, the Bill is proportionate in its efforts to achieve our aims.
Lord Warner
Those interventions from the noble Lord, Lord Hunt, and the Minister were helpful. It certainly should not be difficult or beyond the wit of man for the department and the industry to have an agreed set of routine information collections. What goes on top is the issue, as the Minister rightly said. I would be very happy to participate—as far as I can, because I shall be away on holiday tomorrow, although I am sure my representatives on earth will be able to cover this very satisfactorily. If we can make progress on this issue, it would avoid our having to table amendments on Report. In the meantime, I beg leave to withdraw the amendment.
Baroness Walmsley
Baroness Walmsley
My Lords, the next two groups of amendments relate to the concerns expressed by the Delegated Powers and Regulatory Reform Committee in its 12th report of the 2016-17 Session. Amendments 49 and 51 refer to Clause 6, which inserts a series of new sections into the NHS Act 2006 authorising the Secretary of State to disclose information provided by suppliers of health service products. New Section 264B(1) lists the bodies to which information may be disclosed. It also allows the Secretary of State to prescribe in regulations further persons to whom information may be disclosed. We have already heard from the noble Lord, Lord Hunt, about Parliament’s inability to have much effect on that.
There are two powers: a specific power to prescribe bodies which appear to represent manufacturers, distributers and suppliers of health service products and a general power to prescribe any other person. In his Amendment 50 the noble Lord, Lord Hunt of Kings Heath, has attempted to place in the Bill the specific organisations that represent UK producers. This is reasonable enough, although I know that Ministers hate having lists in Bills. However, it is the general power that the Delegated Powers Committee objects to. As the noble Lord, Lord Lansley, said a few minutes ago when talking about Amendment 32, disclosure under new Section 264B may involve confidential and commercially sensitive information, even though the purposes for the disclosure are limited by subsections (2) and (3). The committee felt the general power to be inappropriate. No explanation of the need for this power was provided to the committee in the memorandum.
Amendment 49 therefore seeks to delete the general power in subsection (1)(l) of new Section 264B to enable the Minister to justify why the Secretary of State would need such a broad and wide-ranging power. Amendment 51 is consequential. Can the Minister say why it is not feasible to specify in the Bill the further bodies to which information may be disclosed, or even the groups of people or organisations? After all, in subsection (1)(k)—in lines 7 and 8—the Government specify representative bodies of producers. Why not specify other groups at the end of the subsection? This appears to me to represent a power too far, and the committee feels the same. What is this power for and how is it to be used? I beg to move.
Lord Hunt of Kings Heath
My Lords, I have a little list, which is a bit bigger than the Minister’s list.
Lord Hunt of Kings Heath
Indeed so. In following the remarks of the noble Baroness, Lady Walmsley, this is really a probing question. Lists are generally avoided in primary legislation for the obvious reason that you need flexibility. I can see why a list of bodies has been put into paragraph (11) of the draft regulations. At this stage, I am just puzzled to know why those organisations which are in the list have been chosen and why others have not.
First, I see that the BMA is in the list. I assume that is because it represents dispensing pharmacists, but I would be grateful to have clarification. I think that may have been clarified. For instance, why is the British Healthcare Trades Association not in the list? Clearly, its membership, although sometimes the same, is rather different from the ABHI. There are other organisations that I have put down to probe how the department has come to that list. When we know that, we can then come back to the general principles that the noble Baroness has so rightly raised.
Lord O'Shaughnessy
I thank the noble Baroness, Lady Walmsley, and the noble Lord, Lord Hunt, for these amendments. As both have set out, it is clear that they have been tabled in response to the report of the Delegated Powers and Regulatory Reform Committee. I am very grateful to the committee for its consideration of the Bill and for providing its report. The committee has concluded that the general power in new Section 264B(1)(l) to describe in regulations any other persons to whom information may be supplied is too wide and not justified at present. I assure noble Lords that I am considering these comments very carefully, and the views expressed by the noble Baroness, Lady Walmsley, and the noble Lord, Lord Hunt, have been helpful in explaining the issues.
The amendment in the name of the noble Lord, Lord Hunt, would put in the Bill the industry representative bodies to which the Secretary of State can disclose information. The Government would prefer to prescribe these bodies in regulations and have done so in the illustrative regulations—albeit the current version includes only a limited number of such bodies and they are given purely as examples rather than as an attempt to be exhaustive. By prescribing a large number of representative bodies in primary legislation we would, as I think the noble Lord, Lord Hunt, admits, lose the flexibility to be able to add new representative bodies, if needed, in regulations.
In its report, the DPRRC was satisfied with the way the Bill was drafted in this area, and it considered the power to prescribe bodies that appear to the Secretary of State to represent manufacturers, distributers or suppliers to be a specific power. The committee thought, however, that the general power to prescribe any other person was too general and suggested that the Government limit the kinds of bodies to which disclosure may be made, as is done with the power to prescribe representative bodies. Like the DPRRC, I believe that the power to prescribe representative bodies is sufficiently specific, while still allowing some flexibility. However, we are giving serious consideration to the general power.
As noble Lords are aware, there is a balance to be struck between ensuring clarity in primary legislation and, at the same time, giving sufficient flexibility to enable arrangements to change in response to external changes to ensure that, in the future, we have flexibility to work with the right stakeholders without requiring primary legislation to do so. I once again reassure the Committee that I am considering these recommendations very carefully and will respond to the DPRRC shortly. I expect, subject to the appropriate procedures, to bring forward proposals on Report. On that basis, I ask the noble Baroness to withdraw her amendment.
Baroness Walmsley
My Lords, I am most grateful to the Minister, and I look forward to, I hope, being copied in to his reply to the committee. I certainly understand what he said about the representative bodies being in regulations and that it is just an illustrative list that we have before us. If the list is in regulations, it is much easier to add a new representative body. It is reasonable to assume that, some day, perhaps one or more new bodies may be set up. However, the general power is another animal altogether. I look forward to hearing from the Minister after he has considered the matter. I beg leave to withdraw the amendment.
Baroness Walmsley
“(5A) Any penalty provided for under subsection (5) may be—(a) a single penalty not exceeding £100,000, or(b) a daily penalty not exceeding £10,000 for every day on which the contravention occurs.(5B) Welsh Ministers may by regulations increase (or further increase) either of the sums mentioned in subsection (5A).”
Baroness Walmsley
My Lords, I will speak to Amendment 58 and to the other amendments in the group. This group also reflects concerns expressed by the DPRRC in relation to Clause 7, which deals with information to Welsh Ministers. The substantive amendments are 58, 61 and 66; the others in the group are consequential.
New Section 201A of the NHS Wales Act 2006 will enable Welsh Ministers to require information from producers of health service products to be used in Wales. Subsection (5) of the new section allows regulations to be made for the payment of a penalty if a person contravenes these regulations. Noble Lords may have noticed that there are no equivalent provisions in Clause 6, which inserts new sections into the NHS Act 2006. There is no need, because the original Act already enables regulations to provide for the payment of penalties. However, if we look back at these provisions in the NHS Act 2006, we notice that there are some differences between the penalty sections there and those in the Bill. Specifically, under the NHS Act 2006, there is a limit on the penalty that can be imposed—I think that that is what we have been given in the illustrative regulations. Secondly, any increase in the penalty must be done by affirmative order. In Wales, we have no limit and no affirmative order.
Amendment 58 puts limits on the penalties in this Bill in line with those in the NHS Act 2006, and Amendment 66 changes the relevant bit of the NHS (Wales) Act 2006 so that regulations under new subsection 5B in Amendment 58 would have to be made by the affirmative order procedure. This provides us with consistency, because the provisions in the two pieces of legislation would be similar. I am not wedded to the actual penalty limits that I have laid down, but they are the same as those specified in Section 265 of the NHS Act 2006, so they would be consistent. However, as in this case they would apply to a narrower range of people, it may be appropriate to have a different limit. The main point is that there should be a limit.
Amendment 61 deals with a different issue but reflects what I was trying to do in Clause 6 with my Amendment 49 in the last group. It relates to new Section 201B of the NHS (Wales) Act 2006 on disclosure of information. As with Clause 6, the bodies to whom information can be disclosed are not specified in the Bill. Instead, these can be prescribed by Welsh Ministers. Since there has been no information as to why it is not feasible to specify these further bodies to whom confidential, commercially sensitive information can be disclosed, can the Minister explain why not? Surely it should be possible at least to limit the kinds of bodies to whom disclosure may be made. It seems to me to be a flexibility too far and beyond what is really necessary to ensure the purposes of the Bill. The Delegated Powers Committee regards it as “inappropriate”. Can the Minister convince us of the need for this very broad power?
Lord O'Shaughnessy
My Lords, I am grateful to the noble Baroness, Lady Walmsley, for her sharp eyes and even sharper suggestions with regard to these amendments, which are again in response to the report of the Delegated Powers and Regulatory Reform Committee. The committee concluded that the power in Clause 7, which enables Welsh Ministers to make regulations that make provision for payment of a penalty if a provider of pharmaceutical or primary medical services contravenes regulations requiring them to record and provide information about health service products that are required for the health service in Wales, should be consistent with similar provisions in the 2006 Act.
In particular, the committee recommends that the maximum penalty that may be imposed under what would be Section 201 of the NHS (Wales) Act 2006 should be set out in the Bill and that there should be a power to increase this maximum by regulations made subject to the affirmative procedure, as the noble Baroness set out. I assure noble Lords that, as with the previous set of amendments, I am considering these comments very carefully; the views expressed by the noble Baroness have been very helpful in highlighting the issue, for which I am grateful.
Noble Lords will understand that these provisions relate to the powers of the Welsh Ministers, and it is therefore necessary for me to seek the views of Ministers in Wales on this matter. However, I acknowledge the concern that, as drafted, the Bill does not impose a limit on the penalty which may be imposed by Welsh Ministers. Noble Lords will appreciate that, in the case of penalties, the powers in relation to Wales are different from those in relation to the UK as a whole, in so far as Welsh Ministers will be able to impose penalties only on providers of pharmaceutical and primary medical services. In contrast, the 2006 Act allows for penalties to be imposed on manufacturers and distributers, and the size of any penalty should reflect this. It would therefore be disproportionate if the level of maximum fine allowed for in the 2006 Act were to be replicated in the NHS (Wales) Act. I accept, however, that the framework governing the maximum size of any penalty and increasing that maximum should be the same.
Turning to the amendment which would remove the provisions allowing Welsh Ministers to disclose information to persons prescribed in regulations, this is a matter which I understand Welsh Ministers are content to reconsider in light of the DPRRC’s recommendations. I reassure the Committee that I accept the recommendations of the DPRRC regarding limits being placed on the penalties that can be imposed by Welsh Ministers and the need to specify in the Bill the further bodies to which Welsh Ministers may disclose information. I will respond to the DPRRC in due course with proposals once I have discussed them with Ministers in Wales. I intend, subject to the appropriate procedures, to bring forward proposals on Report.
As these will be my final remarks in Committee, I thank all noble Lords for a constructive and informative debate. It has been important to be able to draw on the wisdom of so many former Ministers in making sure that the Bill is properly scrutinised and best equipped to carry out the purposes we have set for it. I have committed to consider many of the issues raised before Report on 7 February, not that far away, and I will be holding as many meetings as I can in the short time available to aid that process. My officials and I are available to noble Lords should they have any other questions or concerns about the Bill, and I look forward to bringing forward any necessary proposals on Report. To conclude on this group, I ask the noble Baroness to withdraw her amendment.
Baroness Walmsley
My Lords, I am most grateful to the Minister for his assurance that these matters will be considered before Report. I look forward to hearing the result of his considerations. I am very happy to beg leave to withdraw the amendment.
Health Service Medical Supplies (Costs) Bill
Tuesday 7th February 2017
(7 years, 9 months ago)
Lords ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 94-I Marshalled list for Report (PDF, 89KB) - (3 Feb 2017)
17:25 - Division on Amendment 3 - Ayes: 253 / Noes: 208 - Amendment 3 agreed.
18:42 - Division on Amendment 12 - Ayes: 114 / Noes: 190 - Amendment 12 disagreed.
Lord O'Shaughnessy
“Remuneration for persons providing special medicinal products: England
In section 164 of the National Health Service Act 2006 (remuneration for persons providing pharmaceutical services), after subsection (8) insert—“(8A) Regulations may impose requirements in relation to remuneration in respect of special medicinal products.(8B) Such regulations may, for example, require determining authorities to ensure—(a) that remuneration is to be calculated by reference to the outcome of prescribed procedures, or(b) that determinations do not provide for or permit remuneration to be paid in prescribed circumstances.(8C) Procedures prescribed by virtue of subsection (8B)(a) may include the person to whom remuneration is payable, a health service body or a determining authority—(a) carrying out inquiries to ensure that remuneration is reasonable, or(b) estimating an amount of remuneration that is reasonable (whether or not the estimated amount corresponds exactly to expenses in respect of which remuneration is to be paid).(8D) Circumstances prescribed by virtue of subsection (8B)(b) may include circumstances in which special medicinal products are made available to persons who provide pharmaceutical services under this Part—(a) by a health service body, or(b) under an arrangement for the supply of special medicinal products to which a health service body is a party.(8E) In subsections (8A) to (8D)—“health service body” has the meaning given by section 9(4);“special medicinal product” means a product which is a special medicinal product for the purposes of regulation 167 of the Human Medicines Regulations 2012 (S.I. 2012/ 1916).””
The Parliamentary Under-Secretary of State, Department of Health (Lord O'Shaughnessy) (Con)
My Lords, I am bringing forward this amendment and others in this group in response to the matters relating to specials raised in Committee by the noble Baroness, Lady Finlay, who regrettably is not able to be here with us today, the noble Baroness, Lady Masham, and others. I must thank noble Lords for the work they have done to explore these issues by bringing them forward for debate in a most constructive manner. I also take this opportunity at the start of Report to thank noble Lords for the generally constructive debate in Committee, and in other meetings since then.
A special is a medicine manufactured to meet the specific needs of a specific patient. By nature they are bespoke and therefore do not have the same economies of scale during manufacture and distribution as licensed medicines. In Committee, the noble Baroness, Lady Finlay, presented a strong case that the current arrangements for reimbursement of specials are not sufficiently effective at securing value for money for the NHS. In England, reimbursement prices for the most commonly prescribed specials are listed in the drug tariff. Those reimbursement prices are based on sales and volume data, which the department currently obtains from specials manufacturers under a voluntary agreement. By setting a reimbursement price we encourage pharmacy contractors to source products as cheaply as possible because it allows them to earn margin, which in turn creates competition in the market. As a result, reimbursement prices decrease. Since these reimbursement arrangements were introduced in 2011, we have observed that in England the average cost for specials listed in the drug tariff decreased by 39% between 2011 and 2016.
Basing reimbursement prices on selling prices from more manufacturers than we do now would make the reimbursement system more robust. For specials, we currently rely on information from those manufacturers that have signed up to our voluntary agreement. There have been talks with NHS manufacturers to provide information on a voluntary basis. However, we have not been successful so far in securing data from NHS manufacturers on this basis. The Bill would enable us to retrieve information from all manufacturers, including NHS manufacturers. Once we receive data from NHS manufacturers, we will be able to assess whether it is appropriate to include them in calculating reimbursement prices.
However, through our very constructive debates on previous stages of the Bill and the further discussions I have had with the noble Baronesses, Lady Finlay and Lady Masham, I am persuaded that we need to do more. The unique nature of specials and their manufacturing arrangements means that we need to do more to ensure that the prices paid by the NHS represent good value for money for all these products. I am therefore bringing forward amendments that will enable alternative approaches to be developed to address this issue.
The amendments make changes to Section 164 of the NHS Act, which relates to the remuneration of persons providing pharmaceutical services. Proposed new subsection (8A) provides for a new regulation-making power in respect of special medicines. This would enable us to develop options that will secure the improved value for money that we all wish to see. Proposed new subsections (8B), (8C) and (8D) go on to provide illustrations of how that power might be used but do not restrict its application to those approaches.
A number of different options may be considered. The example the noble Baroness, Lady Finlay, gave in Committee, drawing on the Scottish experience of using a quotes-based system, may be one option, although we recognise the potential difficulties with such an approach—in particular, the burden it may place on the pharmacist, who has to seek the quotes, and the potential delay it may cause to patients getting their medicines. We will draw on the Scottish experience and the knowledge and expertise of stakeholders to develop and clarify the options.
I reassure noble Lords that we are legally obliged to consult the body that represents those providing pharmaceutical services—dispensing contractors—the Pharmaceutical Services Negotiating Committee, and will consult other interested stakeholders before making a decision.
I hope your Lordships will understand that, at this stage, I am bringing forward a legislative framework which I believe to be fully justified by the need for action that was so clearly expressed by the noble Baronesses, Lady Finlay and Lady Masham, and other noble Lords. The detail of any new arrangements will need to be drawn up and consulted on with those who represent providers of pharmaceutical services, but I can give every assurance that I fully intend to explore the options provided by these powers to improve value for money for the NHS, which I know we all wish to see.
I thank the noble Baronesses, Lady Finlay and Lady Masham, and other noble Lords for bringing this matter forward. I beg to move.
Baroness Masham of Ilton (CB)
My Lords, I thank the Minister for his helpfulness and the work he has done on this amendment about specials. I also thank him on behalf of my noble friend Lady Finlay of Llandaff, who has to help her pregnant daughter who has had an emergency health problem. She had hoped to be here. I hope this amendment will help patients get the specials they need at a reasonable price.
Baroness Walmsley (LD)
My Lords, the noble Baroness, Lady Finlay, is so grateful to the Minister that she asked two of us to convey her thanks for the time he has given to addressing her concerns. She is very happy with these amendments.
Baroness Wheeler (Lab)
My Lords, I am the third person to congratulate the Minister. I add the support of these Benches for these amendments, which address unlicensed special medicines, and I congratulate the noble Baroness, Lady Finlay, on her tenacity in pursuing this issue and securing an important concession from the Government. I am sorry she cannot be here, but we can be pretty sure she will be reading Hansard to make sure we have got it right.
It has been hard to understand why the Government were refusing to recognise the need for urgent action on medicinal specials, particularly in view of the substantial price variation between hospital and community care, the many patients in community and primary care who are currently denied access to some specials, and the potential savings across the NHS that introducing a cheaper and more cost-effective whole-market procurement system will provide.
We are very pleased that the Minister has now recognised the need for the Bill to address this important issue in England and Wales. I welcome the legislative framework he has presented. As he pointed out, he has an extensive consultation exercise to conduct on all parts of the Bill, and this will certainly be included in that.
Lord O'Shaughnessy
I am truly touched to have been thanked personally by proxy by two noble Baronesses. I am grateful for that, and I am grateful for the support for these amendments, which are a testament to the tenacity of the noble Baroness, Lady Finlay.
I do not think it is quite fair to say that the Government did not recognise the need for action. The amendments tabled by the noble Baroness, Lady Finlay, disinterred a work programme that had been put on pause in order to deal with the Bill and discovered that lots of interesting work and thinking was going on, so we have been able to bring that to the fore, which is a fantastic thing, and the way legislation should work.
Lord O'Shaughnessy
“Remuneration for persons providing special medicinal products: Wales
In section 88 of the National Health Service (Wales) Act 2006 (remuneration for persons providing pharmaceutical services), after subsection (8) insert—“(8A) Regulations may impose requirements in relation to remuneration in respect of special medicinal products.(8B) Such regulations may, for example, require determining authorities to ensure—(a) that remuneration is to be calculated by reference to the outcome of prescribed procedures, or(b) that determinations do not provide for or permit remuneration to be paid in prescribed circumstances.(8C) Procedures prescribed by virtue of subsection (8B)(a) may include the person to whom remuneration is payable, a health service body or a determining authority—(a) carrying out inquiries to ensure that remuneration is reasonable, or(b) estimating an amount of remuneration that is reasonable (whether or not the estimated amount corresponds exactly to expenses in respect of which remuneration is to be paid).(8D) Circumstances prescribed by virtue of subsection (8B)(b) may include circumstances in which special medicinal products are made available to persons who provide pharmaceutical services under this Part—(a) by a health service body, or(b) under an arrangement for the supply of special medicinal products to which a health service body is a party.(8E) In subsections (8A) to (8D)—“health service body” has the meaning given by section 7(4);“special medicinal product” means a product which is a special medicinal product for the purposes of regulation 167 of the Human Medicines Regulations 2012 (S.I. 2012/ 1916).””
Lord Warner
“Duty to have regard to the life sciences sector and access to new medicines and treatments
In discharging, through the provisions established or amended by this Act, its responsibility to secure best value for the National Health Service in purchasing medicines and medical supplies, the Government must have full regard to the need to—(a) promote and support a growing life sciences sector within the United Kingdom economy; and(b) ensure that patients have rapid clinical access to new clinically effective and cost-effective medicines and treatments approved by the National Institute for Health and Care Excellence through their technology appraisal process.”
Lord Warner (CB)
My Lords, Amendment 3, in my name and those of the noble Lords, Lord Patel and Lord Hunt of Kings Heath, and the noble Baroness, Lady Walmsley, is very straightforward. At the start of the Bill, it would lay a clear duty on the Government, in discharging the Bill’s provisions, to have full regard to promoting and supporting a growing UK life sciences sector and to ensuring patients have rapid clinical access to new medicines approved by NICE through its technical appraisal process.
This is to ensure that the Bill does not just focus on driving down the price of NHS drugs regardless of other considerations—which, in my view, there is a clear danger of given the way the Bill is framed. I made absolutely clear at Second Reading and in Committee that I fully support the Government acting through the Bill to prevent the NHS being blatantly ripped off under the statutory scheme when a branded drug comes off patent, as happened with Flynn Pharma when a Pfizer anti-epilepsy drug came off patent. The ABPI has never challenged actions in cases of this kind. However, the broad wording of the Bill goes well beyond closing this particular loophole. The Bill gives the Government the power, in the statutory scheme, to replace a list-price discount system with one in which a company repays the Government a percentage of net sales, with as yet no clear indication of what this level will be.
That might well be an acceptable approach if the system was applied solely to the statutory scheme, but not if it is then used in the voluntary PPRS. The industry’s concern is that this statutory scheme provision will create a precedent that could be applied later by the Government to the voluntary PPRS. My reading of the Bill is the same as that of the ABPI, namely that the legal precedent could enable a future Government to try unilaterally to apply the same approach to the voluntary scheme when a PPRS period ends, whatever assurances the current Minister may give. This would effectively abort a negotiated system of settling NHS drugs prices and encouraging research and innovation that has worked well for industry, UK plc and successive Governments for over 50 years. Ministerial assurances that this will not happen have not convinced the pharmaceutical industry or me that this could not happen. We both believe that stronger legislative safeguards are needed.
I think I can speak with some authority on this issue, having been a Minister with responsibility for the pharmaceutical industry and NICE, and having had, perhaps unlike the Minister, to negotiate a PPRS settlement with the industry, which achieved a 7.5% price cut in branded drugs prices for the NHS. I do not think anybody in the industry would see me as a soft touch for big pharma, but I knew that my job, like the Minister’s, was to balance a number of factors and not just get the cheapest drugs for the NHS. These factors involve the safety and value for NHS money of new medicines, but they also involve helping the UK life sciences industry to grow and flourish and to secure speedy access for patients to new drugs approved by NICE.
The Government have not done a spectacularly good job with their consultations on the Bill in showing the industry that they understand this balancing act. They certainly have not convinced the industry, and suspicions have been raised by the inclusion of elements that were not in the 2015 consultation on the Bill. The effect has been to foster distrust within an industry that UK plc badly needs to nurture at this time of massive economic uncertainty. This has been made worse by a negotiation currently taking place with the industry to slow the introduction of NICE-approved drugs if they exceed a certain financial threshold. Why is this so important? Why should the Government not just focus on getting the cheapest drugs they can for the NHS at this time of financial constraint?
The pharmaceutical industry invests over £4 billion a year in R&D in the UK, more than any other sector. It employs 62,000 people with a geographical spread outside London and the south-east. Pharmaceutical manufacturing employees have the highest gross value added of any high-technology industry, at over £330,000 per employee. One in four of the world’s top prescription medicines was discovered and developed in the UK. All this will be put at serious risk by Brexit, as the Prime Minister seems to recognise in the new industrial strategy that she recently announced.
We know that through Brexit the UK will lose the European pharmaceutical regulator, the EMEA, but there are also many other threats to the UK life sciences industry from Brexit. We could lose market access for our innovative products and there could be a flight of researchers and research. At such a time, the last thing this highly successful UK sector needs is a rather indifferent piece of legislation proposing what are in my view unnecessary regulatory burdens and creating uncertainty about the future arrangements of settling NHS prices for new drugs.
The second leg of the amendment covers the issue of speedy patient access to new drugs approved by NICE. I will not detain the House on this issue because others will probably want to say more about it. However, I remind the House that we already have a poor record on the take-up of new NICE-approved medicines. For every 100 European patients who can access new medicines in the first year that they are available, just 15 UK patients have the same access. Even when NICE has approved drugs and treatments, the NHS take-up still lags behind what it should be, despite the legal obligations.
To be fair to the Government, they seem to recognise the threat to the UK life sciences industry that Brexit poses. In the industrial strategy they identify life sciences as one of the five world-leading sectors that they wish to cultivate, and they have asked Sir John Bell—I can describe him only as brilliant—to lead work on early deals in this sector. That only makes the timing of this rather scrappy piece of legislation all the more surprising. However, we are where we are. The best thing we can do is put a protective overarching duty at the beginning of the Bill, and that is what Amendment 3 does. I hope the Minister considers that the amendment is helpful to the Government’s industrial strategy and the work Sir John is doing, as well as being a reassurance to the life sciences sector. It also needs to be the first clause in the Bill. I beg to move.
Baroness Walmsley
My Lords, in supporting the amendment, I reiterate my support for the general purpose of the Bill, which is to ensure good value for the NHS. However, there is a danger that it could result in reduced access for UK patients to new drugs and treatments if badly handled by the Government in future. As usual, the devil is in the detail—and, in particular, how the Government use the powers given to them in the Bill. That is why I support the imposition of a duty to ensure the continued growth of the life sciences sector and to protect access for patients to new medicines and treatments.
I share the concerns of the noble Lord, Lord Warner, about the effect of Brexit, which I mentioned in my Second Reading speech. In the light of the hard Brexit on which the Prime Minister is intent—without a mandate—there are many hazards to this industry, on which we depend for a major contribution to our economy, and to the future of medicine in the UK, so it is vital that the Government have that in mind when operating the Bill when it becomes an Act.
I have in mind as an example the new biosimilar medicines that the noble Lord, Lord Carter, pointed out in his report have the potential to save the NHS a vast amount of money while providing the same or even better treatment. He said that one new biosimilar drug alone can save the NHS £60 million a year. These biologic drugs currently account for six out of the top 10 medicines by spend in the UK, and I gather that five out of the top seven biologics will come out of patent by 2020—so there will be enormous potential for the development of generic biosimilars for many diseases. These drugs cost about 100 times more to research and develop than other generic drugs, but the current pricing system does not take that into account. They are different and, because of their enormous cost-saving potential and the competitive environment in which they will be marketed, which could bring down the cost even further, I think that they need special consideration from the Government.
Amendment 7, tabled by the noble Lord, Lord Lansley, which I support, could achieve this if the Government were inclined to use it, but I think we need to go further and put at the heart of the Bill a duty on the Government to protect future cutting-edge medicines when they first come into the market. Unless that is done, UK patients could become the last in the developed world to get these medicines. We want to be first, not last.
A healthy, competitive market will deliver tremendous cost savings to the NHS in the long term, but this requires sufficient—not excessive but sufficient—financial returns to compensate for the high cost of R&D. Otherwise, we will not have enough companies prepared to compete over a long period. This will prevent the NHS benefiting from the potential savings offered by these medicines. For those reasons, I support the amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, first, as we are entering Report, I declare my interests as president of the Healthcare Supplies Association and of GS1, the barcoding organisation.
Like the noble Baroness, Lady Walmsley, and the noble Lord, Lord Warner, I make it clear that in supporting the amendment, the Opposition support the core purpose of the Bill. The recent fines imposed by the Competition and Markets Authority on two companies, which essentially exposed a loophole, left the Government with no option but to act—we agree with that. I have to say that it is interesting to note that the powers that the Government have taken upon themselves in the Bill will give them draconian influence over drug prices in future.
The Bill allows the Government to institute price controls. It states that the Government may have reached a voluntary agreement with industry over pricing but can none the less come in and impose price controls over that agreement. To cap it all, it massively extends the Government’s powers to ask for information about any health service product sold to the NHS. Such information could cover prices, discounts, rebates, revenues and profits, and could apply to millions of products every year.
It is a socialist dream of state intervention. Speaking here as a great believer in central state intervention, my heart warms to the Minister’s vigour and enthusiasm for regulation. It gives an idea of the nirvana of post-Brexit, light-touch regulation from this Government. Perhaps we should dream of EU directives in future, because this Government are so bent on their home-grown regulation.
We will come to the issue of proportionality, because many of our later amendments involve whether the Government have been proportionate. For me, this amendment is essentially about access, because I do not think you can talk about price controls on drugs without talking about patient access to innovative drugs and treatments. At the moment we are seeing an unprecedented level of rationing, both locally and nationally. Locally, clinical commissioning groups are making some really perverse decisions, ranging from cutting out health promotion programmes to being incredibly restrictive on operations and restricting access to innovative drugs.
A fairly recent report that I read by leading charities Breast Cancer Now and Prostate Cancer UK, for instance, showed that NHS cancer patients are missing out on innovative treatments that are available in any comparable country to the UK. One example is the PrEP drug. The reluctance of NHS England to fund the use of this extraordinary preventive drug in relation to the treatment of HIV is another example of the problem that we have. When the previous Labour Government set up NICE, it was designed to speed up the introduction of innovative new treatments. But since 2010, access to new drugs approved by NICE has been increasingly impeded, which has culminated in the current consultation that if a NICE-approved treatment is expected to exceed a cost of £20 million in any of the first three years of its use, NHS England can ask for a longer period for its introduction.
We also have a consultation on the introduction of a QALY threshold of £100,000 for evaluating highly specialised technologies. My understanding is that no other country in the world uses such a threshold in evaluating ultra-rare disease treatment. The almost universal view is that this form of assessment is not appropriate and would effectively stop the flow of new medicines reaching patients with rare and complex processes.
Of course, the noble Lord, Lord Warner, is right that the drugs budget cannot be open ended and that the NHS must achieve value for money—and I, too, have engaged with industry over the years in seeking to get the drug budget down. We all understand that. The tragedy is that a ground-breaking agreement reached by the last Government in 2014 with drug companies could have led to many new drugs being introduced. The pharmaceutical industry guaranteed to hold down drug costs for a five-year period and, if the costs went over the agreed limit, the industry would pay back a rebate every quarter. To date, £1.5 billion has been handed over.
I know how irritating it is to point to Scotland and Wales and say that they are doing something better—but something like the Scottish fund that has been established from the rebates to fund the introduction of new medicines would have been a preferable way in which to go forward in the situation that we have in England, where restriction after restriction is taking place in the use of better drugs for patients.
You then have to link the issue to our investment in R&D and life sciences. Sir John Bell, regius professor of medicine at the University of Oxford and chair of the Office for Strategic Coordination of Health Research, who is playing an absolutely pivotal role in this area, spelled this out recently. As he said, the last 30 years have witnessed an unprecedented number of major innovations in healthcare that have resulted in significant extensions in life expectancy and quality of life. The problem is that the National Health Service has been unable to adopt this new innovation effectively and, as a result, many improvements in healthcare have been put in jeopardy.
This is not an easy issue. Sir John Bell says—and I agree—that one problem is that our current model too often layers the cost of supporting the innovation needed to help discover new healthcare innovations on top of existing practice. So, unlike in other sectors, in the health service innovation always seems to cost money. This is a very important issue when it comes to thinking about how we can afford the kind of changes that will fall to health and social care in future.
I will also quote Keir Woods, head of oncology at the major pharmaceutical company Merck. He points to that company’s investment in the UK—20% of its global venture capital is invested in the UK—and he celebrates the UK’s position as a global power in health, with our world-class universities, centres of excellence in clinical research and some of the top medical journals, which has a positive impact on investment. We are home to 4,800 life science companies, with the largest pipeline of new discoveries in Europe. That is something to celebrate. Dr Woods says that we can build on that, but there are two provisos. First, we have to be able to secure the cream of international talent. The discussions around Brexit are very important in relation to that. Secondly, we have to increase the uptake of these new innovations in the UK.
The frustration that I and many others have is that the UK is a wonderful place for innovative and ground-breaking new treatments and drugs, but the fruits are increasingly being enjoyed by patients in other parts of the world. Currently, the UK has developed around 14% of the top 100 global medicines. That is something to celebrate—but 20 years ago we were responsible for about one-quarter of the global medicines that had been developed. The noble Lord, Lord Warner, referred to the £4 billion invested by pharma R&D. However, up to 2011 it was £5 billion—so we are seeing a deinvestment that is very much linked to the hopelessly poor record of adoption of new medicines in this country.
I know that the Minister will talk about some of the initiatives he is taking and I am sure that he will mention the accelerated access review, which aims to make the UK the fastest place for the design, development and widespread adoption of innovations. This is entirely laudable, but the problem is that this approach will take a few items and accelerate access while the NHS goes about crudely rationing a whole host of other innovations and putting at risk our life sciences, R&D investment and, of course, the quality of patient care.
That is why this amendment is so important. We support the Bill and its aims, but what has been lacking so far is any recognition by the Government that there are three planks to this. The first is better value for money in terms of drugs and health service products; the second is the quality, range and health of our life sciences and R&D investment; and the third is access to treatment by patients. So far the Government have not been prepared to grip this last issue. That is why the amendment is so important and I support it.
Lord Lansley (Con)
My Lords, I will speak briefly on this amendment, although there are later ones in my name which will allow me to say more about the way in which the Bill proposes that the Secretary of State exercises his or her duties. The idea that it is not part of government strategy—back in 2014 or now—to promote the life sciences sector through the structure of the PPRS is absurd. It is self-evidently the Government’s intention, and was in 2014. The structure of a negotiated, voluntary PPRS was designed to achieve that. The issue that has emerged since 2014 and the application of the new voluntary scheme is that the industry was looking for stability for the Government in terms of the budget; freedom to price at introduction, and action on access to new medicines. It is in that third area that there has been a lack of progress. In many ways, I agree with what noble Lords have been saying about the desirability of achieving that access. It has not been restricted since 2010, although the noble Lord, Lord Hunt, tended to construct it that way. For example, we introduced the cancer drugs fund in 2010 precisely because prior research by Mike Richards had demonstrated that patients in this country were failing to have access to new cancer medicines at the time when patients in other European countries did. It is not a new problem: it has been around a long time. The cancer drugs fund was intended to meet that gap by 2014 and the PPRS should have taken over, but it did not. After Innovation, Health and Wealth in December 2011, and the accelerated access review now, we are now seeing efforts to try to make that happen and they should be thoroughly supported.
The second limb of the amendment does not help, because it is just about access for patients to those new treatments which have been approved and recommended by NICE. That is only one part of a much wider issue about the adoption and diffusion of new technologies across the NHS more generally, often in circumstances where NICE has not been involved. I find the new consultation proposal on NHS England’s budget impact threshold something of a double-edged sword. The measure could erect another hurdle to be cleared before patients can access new medicines, and we have to avoid that. However, it may have the positive effect of encouraging NHS England, as the budget holder, and NICE, as its pharmacoeconomic evaluation mechanism, to work together with companies at an early stage to arrive at a negotiated price at an early point. That would be much to the benefit of the industry and the NHS given that we are aiming, through this legislation and beyond, to obtain patient access to medicines on reasonable terms that the NHS can afford. If the measure were used in that way, it would have the right benefit. However, I fear that this amendment, particularly its latter limb, does not take us any further in that direction.
Baroness Masham of Ilton
My Lords, there is considerable frustration on the part of patients and the industries when NICE approves new drugs which can be important for preserving life but which patients cannot get. We need to encourage the development of new drugs as there are so many complicated and rare conditions which need them. It takes time and effort to submit the drugs to NICE. Noble Lords can imagine the frustration when they are approved but then not used. I support Amendment 3.
Lord Patel (CB)
My Lords, I support this amendment, to which I have added my name. I do not agree with the noble Lord, Lord Lansley, that the second part of the amendment is not crucial. I take a completely opposite view. I consider that that is the crucial part of the amendment. The proposed new paragraph (b) refers to the need to,
“ensure that patients have rapid clinical access to new clinically effective and cost-effective medicines and treatments approved by the National Institute for Health and Care Excellence through their technology appraisal process”.
The terms “clinically effective” and “cost-effective” are important. I would insert the word “thorough” so that the amendment reads “thorough technology appraisal process”. That is what NICE does. That is what we set it up to do. Parliament agreed that if NICE approved a drug that was cost effective and clinically effective, it should be available to patients. Now we are saying that that should occur only if certain provisions apply, and in certain circumstances they do not. So what are we saying? What message are we sending out if NHS patients cannot get medicines and treatments that are deemed to be clinically effective and cost effective, including drugs and treatments developed by our own scientists and produced by our own life sciences industry? People from our own industry have told me that when the NICE-approved drug is not available in the United Kingdom and we try to market it in other countries, their competitors say, “Why is it not available in your country when you’re trying to persuade us to use it?”. As has been said, many drugs are often available in countries such as Germany, France, Canada, Austria and many others that are not available in the United Kingdom. The noble Lord, Lord Hunt of Kings Heath, mentioned cancer drugs that are not available. Some would say that that leads to the poor cancer outcomes in our country compared with those in some other countries.
Recent proposed changes relate to the budget impact threshold of £20 million over two years. The noble Lord, Lord Lansley, is right that this sword has two sharp edges. Whichever way you tackle it, the patient gets hurt. Around 20% of new treatments with a positive NICE recommendation could have their introduction delayed if we adopt NHS England’s new proposals. For example, about 35,000 patients suffer from secondary or metastatic breast cancer. However, a drug costing £1.56 per patient per day would meet the budget impact threshold of £20 million. It would therefore be delayed for introduction to treat these 35,000 patients. For most of them, their life—quality life—could be prolonged by about six months to a year, but they will be dead before the drug is made available at a cost of £1.56 per patient per day. That is what this proposal of £20 million means. It is a budget impact threshold.
People with rare diseases will fare even worse. There are about 7,000 known rare diseases. Treatment exists for only about 5% of those patients. The British company Shire, for example, has about 30 products in its pipeline to treat rare diseases. But why would it manufacture them at some cost when it might find that it falls foul of the new arrangements even if the new drugs prove effective?
I recognise the economic challenges that the NHS faces. I have heard the 20,000 pages of evidence given to the committee that I chair on your Lordships’ behalf and which we will soon be publishing. We need a system that prepares the United Kingdom to deliver the next generations of innovative medicines, including gene and cell therapy. If we are going to do that, it is important that pharma and the industry have certainty of patient access. That is crucial when companies make decisions on new investments in research and manufacturing.
Regarding proposed new paragraph (a), I would simply say that as we prepare to leave the EU, the delivery of an internationally competitive industrial environment for the bioscience and life science sectors is more important than ever. By making it more difficult for patients to access highly innovative, first-to-market, cost-effective and clinically effective medical products, we not only deny our patients the treatment they need but risk the future of our world-leading life science industry. I am sure we do not want to do that.
The Prime Minister’s industrial strategy, which will invest in science, research and innovation, has already been mentioned. The life science sector—not the pharma industry, which the noble Lord, Lord Warner, mentioned —brings in over £60 billion a year and employs over 220,000 people. British science, with investment in genomics, gene sequences, diagnostics, and now the production of gene and cell therapy, is again investing huge sums of money. To promote this, the Higher Education and Research Bill, which is currently going through your Lordships’ House, creates UK Research and Innovation to do research and innovate therapies, all of it in life science. As to our charity sector, the Wellcome Trust invests probably in the region of £1.3 billion a year in science, which will go to innovation. Cancer Research UK is about to announce four grand challenges. It makes awards of £20 million to find causes and treatments for cancer, and the British Heart Foundation also makes an enormous investment.
Hitherto we have had a pact that operates for the public, the NHS, the scientists and the industry on the availability of medicines and treatments for both diagnosis and treatment, delivered at a cost that is fair, transparent and appropriate. When we break that pact by not making available treatments to patients even though they are cost effective and clinically effective, we are denying treatment to many patients. The fundamental basis of the pact—which Parliament approved when agreeing to how NICE should operate—is that if NICE deems that a medicine is cost effective and clinically effective, patients should get it. That is why I strongly support the amendment.
Lord O'Shaughnessy
My Lords, I am grateful for the quality of the debate on this amendment. Before I turn to the specifics of the amendment, I join noble Lords in reflecting on the success of the UK life sciences industry. The UK has a lot to be proud of. We have a world-class science base and an excellent reputation for the quality and rigour of our clinical trials and the data they produce. The UK has one of the strongest life sciences industries in the world, generating turnover of more than £60 billion each year. Indeed, it is our most productive industry. This Government are deeply committed to supporting that industry to flourish and, in doing so, to provide jobs and transform the health of the nation. That is why it was a Conservative-led Government which introduced the first life sciences strategy in 2011.
More recently, we have introduced a range of measures through the taxation system to create good conditions for business growth and to encourage business investment. These include: R&D tax credits for small and medium-sized enterprises; R&D expenditure credit for larger firms; the patent box; a permanent annual investment allowance; and the seed enterprise investment scheme, the enterprise investment scheme and the venture capital trust scheme, as well as entrepreneurs’ relief.
Take just one of those examples: the patent box. Phased in from 2013, under a Conservative-led Government, it incentivises companies to develop and manufacture new, innovative patented products in the UK by giving an effective 10% corporation tax rate on UK profits derived from the product’s qualifying UK and EU patents and equivalent forms of intellectual property. In 2013-14, a total of 700 companies claimed relief under the patent box, with a total value of £342.9 million, with 64% of those in manufacturing. In 2013, GSK decided to invest more than £500 million in the UK after the patent box was announced. Its CEO Sir Andrew Witty said:
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments”.
The Government’s R&D tax credit is one of the biggest sources of financial support for innovative UK companies and one of the most competitive in the world. It is widely commended and, in 2014-15, almost 21,000 companies claimed tax relief, totalling £2.45 billion, with R&D expenditure used to make these claims reaching £21.8 billion. The Autumn Statement announced £4 billion of additional investment in R&D, specifically targeting industry-academia collaboration, which is so important in the life sciences. We would expect the life sciences industry to be a substantial beneficiary. I am sure your Lordships will agree that these are bold, new, high-value measures which demonstrate that the Government are serious about attracting inwards R&D investment into cutting-edge industries like the life sciences.
This determined action is reaping rewards. The UK ranks top in major European economies for foreign direct investment projects in the life sciences. Just last week, Danish drugs company Novo Nordisk announced a new £115 million investment in a science research centre in Oxford. This comes on top of £275 million additional investment announced by GSK in June and AstraZeneca reaffirming its commitment to a £390 million investment in establishing headquarters and a research centre in Cambridge. As the noble Lord, Lord Patel, mentioned, we are also working on the creation of UK Research and Innovation to enhance this further. These are examples of the positive policy changes that are supporting the life sciences industry and transforming the health of our nation.
Looking ahead, Professor Sir John Bell, whom several noble Lords have mentioned, has agreed to lead the development of a new life sciences strategy for the long-term success of the UK. The formation of the strategy will bring together broad representation from across the sector, including from industry, charities, academia and the health and care system. It is aligned with the industrial strategy announced recently by the Department for Business, Energy and Industrial Strategy. The strategy will outline what the life sciences industry can deliver for the UK economy and for UK patients and set out what actions government needs to take to set the framework on the road to success. Building on a sector deal for this diverse and complex sector, the life sciences strategy will be bold and ambitious as befits the needs of a global Britain. We will seek to make the UK the global home of medical innovation, creating jobs, improving health outcomes and transforming the NHS.
As all noble Lords have mentioned in the debate today, the issue of access to or uptake of new medicines in the NHS must be a key part of that life sciences offer. I recognise and share the desire of noble Lords to ensure that the NHS is at the forefront of innovation, and that medicines which have been approved by NICE are made available quickly to the patients who could benefit from them. This Government have been very active in improving access, and have already taken a number of important steps to do so. The early access to medicines scheme, introduced in 2014, provides a platform for drugs that do not yet have a licence to get to patients at a much faster rate than before. We have now seen 29 promising innovative medicine designations, and 10 positive scientific opinions have been awarded by the MHRA, the regulator. As my noble friend Lord Lansley mentioned—and I must give him credit for the introduction of this policy—the cancer drugs fund, created in 2011 and renewed in 2016, has provided over 95,000 patients with access to innovative cancer drugs that would otherwise not have been available.
Lord Mackay of Clashfern (Con)
Did I understand my noble friend to say that, once a medicine or treatment has been approved by NICE through its technology appraisal process for clinical and cost effectiveness, it is supposed to be available to patients within three months?
Lord O’Shaughnessy
The treatments become available throughout the NHS from three months after the appraisal.
Lord Hunt of Kings Heath
My Lords, given that I took the order through Parliament many years ago, I can confirm that the whole intention was that the NHS had 90 days to prepare for funding a medicine that had been designated by NICE as both clinically and cost effective. The problem is that, subsequently, in particular over the past few years, clinical commissioning groups have done everything they can to avoid this responsibility. Alongside that, the purity of the 90-day rule is being eaten into, and that is at the heart of the concern of this amendment.
Lord Warner
My Lords, I am grateful to all my colleagues for the powerful support they have given to the amendment. I do not doubt the Government’s commitment to the life sciences, which I acknowledge from what they have put in the industrial strategy and the person they put in charge of leading that work. However, they have not convinced the industry with the Bill. They seem to be sending out separate messages.
The amendment is meant to tackle the two issues of supporting a flourishing life sciences industry and guaranteeing patient access to drugs that have been approved by NICE. It is very clear that that second part is not working well and is getting worse. It does no harm whatever to reinforce that message in the Bill with this amendment.
On life sciences, I say to the Minister that it is a funny way to show he is supporting that industry, at a critical time for this country, by bringing along a Bill that, as the noble Lord, Lord Hunt, made very clear, overdoses on regulatory requirements, price control and information requirements. This is a pretty strange message to say to a load of international companies when you want them to settle here and do your research.
I have listened to the Minister very carefully. I am much more persuaded by my colleagues’ supportive speeches, for which I am grateful. I wish to test the opinion of the House.
Lord Lansley
“( ) After subsection (1) insert—“(1A) When making a scheme under this section for controlling the cost of health service medicines, or determining any amount to be paid to him or her, the Secretary of State must take account of any voluntary scheme in force under section 261 (powers relating to voluntary schemes), and should seek, so far as is practicable and relevant, to secure comparable effects in relation to products in the statutory scheme as would apply if those products were participating in the voluntary scheme.””
Lord Lansley
My Lords, even though the House has just divided, the Bill has been characterised by a substantial measure of agreement on the purposes we are trying to achieve and I am sure that will be reflected in the further amendments that are to be discussed. I neglected earlier to draw attention to the register of interests and, in particular, to my position as an adviser to MAP BioPharma, which is not itself a participant in the PPRS in any way.
Let me make the purpose of Amendment 4 clear to noble Lords. The Government, in bringing this legislation, were prompted in part by the fact that expenditure on medicines was rising somewhat faster than the Government had anticipated, the amount of the rebate being achieved by way of payment back to the Government was less than was anticipated, and the difference was, in part, explicable by virtue of the transfer of certain products into the statutory scheme. In the statutory scheme they had a price cut applicable but no rebate scheme applicable and the Government did not feel that they had the necessary power to amend the statutory scheme to make a rebate apply.
The purpose of the legislation is to make the two schemes broadly equivalent. As the Minister told the Committee, the Government’s intention was to make the revenues being rebated back to the Government from the two schemes broadly equivalent. However, in my view that would potentially have the perverse impact that certain products in the statutory scheme would end up with a much higher rebate percentage being applied to them as a consequence—or, alternatively, that products outwith the price control under the voluntary scheme, because they were introduced after December 2013, would have the price control applied to them under the statutory scheme. So a discontinuity would apply, potentially either way, by applying the broadly equivalent proportion of cost of sales being returned to the Government in the form of a rebate.
I have therefore suggested that it is a perfectly reasonable principle on the Government’s part, as we explored in Committee, to try to make the two schemes equivalent so that there cannot be gaming, as it were, by moving into one scheme rather than the other. That should be applied, as the amendment specifies, by means of asking the Government, wherever a voluntary scheme is in place—which is an important caveat—to ensure that a statutory scheme should seek, so far as is practicable and relevant, and it will not be precise, so I do not think it can be regarded as too rigid, to make it so that the equivalent effect is applied at a product level: not at a company level or a whole-scheme level, but in relation to the individual products. Individual products, whether they are in the voluntary scheme or the statutory scheme, should expect to have broadly the same overall treatment applied to them. The net effect would therefore be that the schemes will become equivalent and the scope for gaming will be reduced. I hope that explains the amendment and I beg to move.
Lord Hunt of Kings Heath
My Lords, the noble Lord, Lord Lansley, has raised a very important point. For me, the question is: what is the future of the voluntary scheme? Over the years it has clearly served its purpose well. In Committee, the noble Lord acknowledged the benefit of the PPRS, which is the voluntary scheme, and said that it showed how Government and industry could work together to develop solutions. I draw the noble Lord’s attention to a piece written by Sir John Bell recently. When talking about what we have just discussed, the dynamic between access, cost and life-science investment and the problem the NHS has in investing in innovation, he said:
“A solution for both parties is necessary and must come from healthcare systems and innovators working more closely together, sharing risk and cost and attempting to use innovation to take cost out of health systems wherever possible”.
This is a wider issue than drug costs and PPRS, but it would be good to hear about the context in which the Minister thinks a potential new PPRS is going to be agreed. Many in industry think that the Government are not really committed to a new PPRS. It would be interesting to get some sense from the Minister as to where he thinks things are going.
Lord O'Shaughnessy
My Lords, I am grateful to my noble friend Lord Lansley for bringing this amendment and for the opportunity to talk about the intentions of the Bill. He is quite right to highlight that the reason for bringing the Bill forward is to stop the behaviour of switching between schemes in order to reduce liabilities. That has characterised behaviour in the past few years and has had an impact on the successful operation of the PPRS. I will discuss the PPRS towards the end of my speech.
Amendment 4 is about the relationship between the voluntary and statutory schemes. I thank noble Lords for their views in this area. This amendment would require us to secure that, for any given product, the voluntary and statutory schemes would have an equivalent impact. It presents a slightly different approach to securing equivalence between the voluntary and statutory schemes, but I understand that, fundamentally, equivalence is what the amendment is seeking to achieve. I gave my views on this matter in Committee and I am happy to respond in similar terms on this occasion.
The Government’s intention is for the two schemes to deliver a broadly equivalent level of savings as a proportion of the total sales covered by each scheme. However, to require the terms of each scheme to be the same, in so far as possible, is inappropriate and would restrict the scope of the two schemes to operate in a complementary manner. Requiring equivalence to operate at product level, as the amendment suggests, would be even more restrictive.
The voluntary scheme is a matter for negotiation with industry. As such, there is scope to have a range of measures included that reflect the priorities of both sides at any point. It may be helpful to the House if I reiterate some of the examples I set out in Committee. The current voluntary scheme, the PPRS, includes a range of provisions, developed through negotiation with industry, that sit alongside the payment mechanism. This includes price modulation, which enables companies to put prices up and down as long as the overall effect across their portfolio is neutral. This has commercial value to companies, which may be willing to accept a higher payment percentage as a result.
In another example, while new medicines in the PPRS are excluded from PPRS payments, the PPRS payment percentage level itself is set at a level to achieve the agreed level of savings across both new and older medicines. This means that each company’s share of the income due to government will vary depending on the balance of new and old products in their portfolio, with companies that have mainly new products paying less than companies with mainly old products. However, it would be very challenging to replicate this model in the statutory scheme, as many fewer companies are affected by the statutory scheme regulations than are members of the PPRS. As a result, there is a much smaller pool of companies with older products. To achieve the same level of savings overall from the statutory scheme as from the PPRS while exempting newer products would require an extremely high payment percentage. This provides an example of where minor differences in terms may be required in order to deliver an equivalent level of savings across the two schemes overall. As noble Lords know, as we discussed in Committee and as I now repeat, the detail of how any future statutory scheme will work will be subject to further consultation.
As was discussed here and in the Commons, the freedom to negotiate the voluntary scheme has been valued greatly by both industry and government. As the noble Lord, Lord Hunt, reminded us, I said as much in Committee. Our intention for the future of the PPRS is to work collaboratively and constructively with industry on future medicines pricing arrangements when the current PPRS comes to an end.
Lord Hunt of Kings Heath
This time, will NHS England be a full partner in the discussions and negotiations? Clearly, unless it owns the solution as well, you have the problem that an agreement can be reached but it does not quite translate itself into action on the ground. I realise that this is traditionally a negotiation between the Department of Health and the industry but it would be useful if NHS England were fully part of that.
Lord O'Shaughnessy
The noble Lord makes an excellent point. Clearly, as the budget holder, NHS England ultimately must be a key part of negotiations for any future schemes. We intend that any future voluntary scheme should be established through negotiation in this way, but linking the payment mechanisms would inevitably place a restriction on that freedom.
I am grateful to my noble friend for raising this issue and I hope I have reassured him on equivalence, while also explaining why I believe the amendment goes too far by focusing specifically on products. On that basis, I ask my noble friend to withdraw his amendment.
Lord Lansley
I am grateful to my noble friend for his helpful response setting out the Government’s continuing position. The exchange with the noble Lord, Lord Hunt, was also useful. I said in debate on the previous group that earlier engagement and development of NHS England’s role in trying to assess what is a reasonable price and what is the value proposition in relation to new medicines that are being adopted by the NHS would be helpful at the same time in trying to develop the shape of a new voluntary scheme. I am sure that the industry, having been frustrated in the outcome of the 2014 PPRS, would want the principles for 2019 to be broadly similar: freedom of pricing and introduction; the ability to modulate prices in the way my noble friend referred to; the Government’s desire for a stable overall budgetary outcome; but also access to new medicines and diffusion across the NHS.
If we are going to meet those principles together—and balance them, as we discussed in the last group—NHS England should be at the table when the scheme is being designed. I am sure it was frustrating in the previous scheme that Scotland and Wales had identifiable resources for access to new medicines and NHS England had those resources but not in an identifiable form. It would be helpful for the new scheme to see the rebate, if it is rebated scheme, being specifically directed towards promoting access. I do not think that that is an unreasonable objective.
That said, the Minister has very kindly reiterated that the Government consider it desirable to have broadly equivalent proportions of sales in the two schemes being rebated and not disaggregated to product level. I can see that if you disaggregate to product level, you have a problem with price modulation between products for companies. That is a practical issue. However, as an inevitable consequence of the Government’s approach to equivalence, the schemes will not be the same. Generally speaking, once the legislation goes through, the statutory scheme will be less attractive.
That may well be the Government’s intention. Indeed, the Government may well like to have a situation where they can encourage companies to provide the necessary payments back through the rebate in the voluntary scheme with the threat of putting them into the statutory scheme. That might be something that the Government have occasionally thought of doing. I do not think that it is a desirable situation. The effort—I put it at no more than that—to define the equivalence of the two schemes should be a continuing effort. I know my noble friend the Minister has that in mind. It is not his intention to create two schemes that diverge in ways that could potentially be difficult for the industry if the Government were so minded in that direction.
It has been a useful debate but I certainly do not want to pursue it any further. We have had two opportunities to explore important issues that, frankly, we should attempt to resolve in the design of the new scheme rather than in legislation. I beg leave to withdraw Amendment 4.
Lord Lansley
“Report to ParliamentAfter section 264 of the National Health Service Act 2006 (statutory schemes: supplementary) insert—“264ZZA Report to Parliament(1) Where the Secretary of State enters into a voluntary scheme under section 261, 263 or 264A, or makes a statutory scheme under section 263 or 264, he or she must lay a report before each House of Parliament, setting out how the scheme concerned will enable the Secretary of State to fulfil his or her statutory duties under section 266(4).(2) The report must also cover the impact of the scheme on the statutory duties of the National Institute for Health and Care Excellence under section 233 of the Health and Social Care Act 2012 (general duties).””
Lord Lansley
Amendment 5 refers back to the discussion we had on Amendment 3 about the duties that the Secretary of State must meet in relation to the scheme. This is another aspect of that but a more particular one.
In Committee, I explored the idea that the Secretary of State should pursue through the voluntary scheme—or indeed the statutory scheme, as necessary—pricing that was related to value. There were a number of criteria for what value is. In response to that, my noble friend said that many of the aspects that constitute value are reflected in existing statutory duties. For example, in Section 266(4) of the National Health Service Act, which is concerned with the price control mechanisms we are amending through this legislation, the Government are required to bear in mind,
“the need for medicinal products to be available to the health service on reasonable terms”—
the value proposition and access proposition that we have just been debating—and,
“the costs of research and development”,
which of course are important to the industry in promoting innovation. We do not need to replicate those. But my noble friend the Minister also said that there were other statutory duties: for example, that under Section 233 of the Health and Social Care Act NICE is required to have regard to,
“the broad balance between the benefits and costs of provision … the degree of need … and … the desirability of promoting innovation”—
all of which are indeed very much part of the overall value proposition. But because they are statutory duties relating to NICE, they are not necessarily factors that the Secretary of State must have regard to in the formulation of the PPRS, which is what we are dealing with here.
The purpose of Amendment 5 is to say that there are these existing statutory duties applicable to the Secretary of State. Separately, there are statutory duties applicable to the National Institute for Health and Care Excellence. The Secretary of State, when making a scheme and reporting on such to Parliament, should state how those statutory duties, both in respect of the Secretary of State and as they might impact on NICE, could be met through the design of the scheme. In that sense, it is a mechanism for trying to ensure that the value proposition gets to the heart of the assessment of what the price control mechanism should seek to achieve. I beg to move.
Lord O'Shaughnessy
I am grateful to my noble friend for his amendment and for raising the issue of reporting requirements and how that relates to the responsibilities of NICE.
Under the current PPRS, the Department of Health regularly publishes information relating to the operation of the voluntary scheme. For a future statutory scheme, as my noble friend is aware, the illustrative regulations, which we have published alongside the Bill to assist in scrutinising the provisions, already include regulations for both the statutory scheme, in Regulation 32, and the information regulations, in Regulation 14, for an annual review of the regulations and a requirement to publish our report of each review. Our illustrative regulations require an annual review to,
“set out the objectives intended to be achieved … assess the extent to which these objectives are achieved; and … assess whether those objectives remain appropriate”.
These requirements will be tested through the consultation on the regulations and we will of course take account of those views.
I assure my noble friend that that review would take into account the duties under Section 266(4), which currently are,
“the need for medicinal products to be available for the health service on reasonable terms, and … the costs of research and development”.
Of course, subject to further consideration of the Bill, there may be further duties. I accept that reporting is an important principle but setting out the requirements in primary legislation is too restrictive. Over time, it is to be expected that both the statutory scheme and the information requirements will be amended through their respective regulations to reflect changing circumstances. It is essential that the review and reporting arrangements be able to be similarly flexed, so that they remain appropriate to the schemes in operation. My noble friend has suggested that we report every time there is a new voluntary or statutory scheme. I believe the annual reviews as set out in the illustrative regulations would provide more frequent review than the amendment proposes, at least for the statutory scheme.
Lord Lansley
I am grateful to my noble friend. I entirely take his point about the structure of reporting and review proposed through the regulations, which I will not necessarily pursue. On the second limb, however, the duties relating to NICE, there is a gap. The reality is that the development of a value proposition through the structure of the PPRS, or outcome-based pricing—that may be the next iteration, to try to take out some of the complexities associated with the broader value-based pricing structures that were consulted upon—means having a direct relationship between the pricing structure under the PPRS and the ability of NICE to make recommendations that drugs are cost-effective. We have just had that debate and I will not go through it all again.
At the very least, to say that these things are unrelated therefore seems wrong. The Government should at least look at these regulations and say, “Given that there is a relationship between the structure of PPRS and the price control mechanism as it works—or the rebate mechanism, if there is one—NICE’s ability to do its statutory job should be perhaps discussed, recognised, reviewed and reported upon”. Having made that point, I know from the very helpful discussions we have had in Committee and separately that my noble friend is actively looking to promote that kind of understanding. I will leave it in his capable hands and seek leave to withdraw the amendment.
Lord O'Shaughnessy
“( ) In section 272(6)(orders, regulations, rules and directions subject to affirmative procedure), after paragraph (a) insert—“(aa) the first order under section 260,”.”
Lord O'Shaughnessy
My Lords, in Committee we debated the Government’s existing powers to control the prices of medical supplies. I have listened carefully to the concerns expressed by noble Lords and tabled this government amendment to address them. Before I go into more detail about the amendment, I would like to take the opportunity to address some concerns raised in Committee about the definitions used in the Bill, including that of medical supplies.
The Bill refers to health service products, which is the overarching term for medicines, medical supplies and other related products used in the health service. The term “medical supplies” is used in the NHS Act 2006 and the existing definition covers a broad range of medical supplies, from bandages to MRI scanners. It could include ambulances, to answer a question asked in Committee by the noble Lord, Lord Warner. “Other related products” are those which are not medicines or medical supplies but are prescribed in the NHS—for example, vitamins. The Government have powers to control the costs of health service medicines and the prices of medical supplies. If the Government were to introduce any controls on those prices then we would, of course, need to define which supplies the control would apply to. This would be done within the regulations. Similarly, in the information regulations we will specify which medical supplies and other related products will be covered. These regulations will, of course, be subject to consultation.
The illustrative regulations published alongside the Bill give examples of the categories of medical supplies and other related products on which we would expect information to be kept, recorded and provided. For example, one category includes those medical supplies and other related products listed in the drug tariffs. As noble Lords know, the illustrative regulations are not in their final form and have been provided to demonstrate how we would specify which products are covered by the regulations. We have already started discussions with representative bodies of the medical devices industry about how we could restrict the types of medical supplies and other related products that the regulations cover. It is not our current intention, for example, to include ambulances in the regulations. We will carry a formal consultation to consider the products that need to be covered.
While I am still on definitions—please bear with me—the Bill also refers to UK health service products and English health service products. This reflects that the Bill has some aspects that are reserved and others that are devolved. While medicine pricing is a reserved matter with respect to Scotland and Wales, reimbursement is a devolved matter. I acknowledge that the distinction between reserved and non-reserved matters adds complexities, not least for me, but I assure noble Lords that the definitions are consistent and in line with the existing provisions of the NHS Act 2006. I hope that this explanation helps noble Lords to understand those definitions.
Regarding Amendment 6, which I have tabled, I understand the views expressed by some Peers asking why the Government need the powers to control prices of medical supplies when they are not using those powers. In the words of the noble Lord, Lord Hunt, it is a question of proportionality. At this moment, the Government have no immediate concerns about the prices of medical supplies as it appears that the market is generally competitive. Nevertheless, noble Lords will be aware of the work of the noble Lord, Lord Carter, on efficiency and variation in the NHS—indeed, it has been referenced today—and the work being done to implement that report. He concluded that there is considerable variation between trusts on the value that they extract from the procurement of goods and services, so while the market may be competitive the NHS could be getting better value for money for the products it buys. This is one area where the information powers in the Bill, which will not be burdensome, could help the NHS to save money. Again, I know that we all share this goal.
We also know that markets can dysfunction for any number of reasons and that competition will not always operate to control prices. This is the unfortunate situation we have found ourselves in with unbranded generic medicines, which the powers in the Bill will help us to deal with. I continue to believe that the Government should have the ability to intervene but only when a market is not working. As noble Lords know, as part of the 2006 Act the Government already have the power to introduce price control schemes into the medical supplies sector but concern was expressed in Committee that these powers, and how they are developed in the Bill, are not proportionate. As I have set out, we have no concerns about the current operation of the medical supplies market, so noble Lords justifiably asked whether some additional threshold or hurdle should be required before the introduction of any price control scheme in this sector.
I have listened to their concerns, which have much merit, and so have tabled this government amendment so that the first order to control the prices of medical supplies would be subject to the affirmative procedure. The order would then require the formal approval of both Houses of Parliament before it becomes law and there would be debates on the proposals, in which the Government would have to justify their case for action. This means that if the Government want to introduce a pricing scheme, they would have to convince Parliament that there were sufficient grounds for doing so. I am very grateful to many noble Lords for their engagement on this issue and I trust this amendment meets the concerns raised. I hope that noble Lords across the House will be able to agree to it.
Lord Warner
My Lords, I am grateful to the Government for taking some modest steps in the direction we were asking them to take in Committee. My sympathies are entirely with the Minister, who had to bring forward this amendment and explain it in the way he did. It shows what a tangle the Government have got themselves into by taking some powers which they are not sure they will need but which the noble Lord, Lord Carter, may suggest they need. It represents a decision by the Government that, when they think the NHS cannot tender and run a proper competition, they will be willing to step in to control the price of a product when the NHS has failed to do proper purchasing.
This is a pretty big step because the noble Lord, Lord Carter, has shown that chunks of the NHS are not terribly good at tendering and purchasing. Are we now going into the kind of Soviet era that the noble Lord, Lord Hunt, painted a picture of on a previous amendment, in which the Government are going to step in whenever they have evidence that there is a pretty lousy trust down in Little Cullompton or wherever and start to control the price of a number of medical devices? I do not think I have exaggerated where the Government are using this legislation to take them. It seems pretty peculiar. Can the Minister reassure me about whether the Government have big plans to go about this and tell me what evidence they have that it is a serious problem?
Lord O'Shaughnessy
I thank the noble Lord, Lord Warner, for the lukewarm endorsement of an attempt to improve the Bill. We seem to have zipped from socialism to communism, which for a Conservative is a fairly terrifying idea. The noble Lord raises an important point. I am not in a position to comment on the provenance of the Bill as I was not around. He is right to focus on the issues of procurement and competition. It must be the policy intention to make sure that competition works the best it can. In the generics market, we found an instance of where that is not working. Through the much-referred-to Sir John Bell, the industrial strategy is looking at issues around the manufacture of generics, biosimilars and so on, which, as the noble Baroness, Lady Walmsley, said earlier, has the ability to reduce prices through competition.
Equally with procurement, there is the NHS supply chain. The feedback is that it could do a lot better. A lot of work is going on on the future operating model—another piece of jargon. It is a thorough piece of work that is getting a lot of scrutiny to make sure that it can deliver the kind of savings that the noble Lord talks about. I agree that there are other things that a Government must do to make markets work better. It is for that reason that I insisted that the amendments we have brought forward today should involve an affirmative resolution. When they introduce the first scheme, the Government are going to have to justify exactly what they have done to make competition work, why the procurement is not working and what is going on. Obviously, I cannot anticipate at this point what that might look like. Given the experience we have had with generics, I do not think it unreasonable for that power to be there. Indeed, the power is already in the 2006 Act. This Bill circumscribes that power and makes it more reasonable. I hope I have been able to persuade the noble Lord, Lord Warner, that we are not slipping into communism, that the Government are taking a reasonable approach that understands the importance of markets, and that this power would be used only in situations where it could be justified when interventions to improve competition and procurement have not worked.
Lord Lansley
“Price control: exemptions
After section 264 of the National Health Service Act 2006 (statutory schemes: supplementary) insert—“264ZA Price control: exemptionsIn circumstances where the Secretary of State considers that the price or security of supply of any health service medicine or medical supply, or category of health service medicines or supplies, may be determined most appropriately through an open and competitive tender process, the Secretary of State may exempt that product, or category products, from the application of the scheme.””
Lord Lansley
My Lords, I am grateful for the further opportunity to touch on an interesting issue which we discussed in Committee. On Report, I have proposed a different amendment that tries to meet some of the considerations that were quite properly raised in Committee. This relates to where the method of procurement for a branded medicine or product to which the statutory scheme would apply would be through a tender process and there would be an expectation that the best available price would be obtained through that process. I completely accept that previously we were looking at possibly exempting tender processes generally. The Minister quite rightly said that sometimes the tender process is used not to secure the best price, but to secure supply or procure products which are not directly comparable and where price competition would not be expected to be available.
I completely understand that, so this amendment says not that the Secretary of State under any circumstances is obliged to exempt a tender which has delivered a price outcome but that he may do so. Why do I think it is useful to do that? It is because there will sometimes be products where, for reasons of security of supply, it is important to undertake a tender process. At the moment, all companies in the statutory scheme or the voluntary scheme will have the implications of the PPRS pricing and rebate structure applying to them. As we have heard previously, the way that applies to individual products may be subject to price modulation depending upon how the company overall is affected by the scheme. It may therefore have a distorting effect on products that are offered through the tender. That is undesirable. We should want the tender process to be as transparent as possible and the price, supply and other considerations of the tender to be as self-contained as possible. That is perfectly possible to achieve if the Secretary of State has the discretion to exempt a tender process from the scheme.
As the Minister told us in Committee, the Government intend that framework agreements agreed before the regulations come into force will be exempted in any case. This amendment would helpfully give the Secretary of State the ability to exempt specific tenders from the application of the scheme. I do not want to anticipate too much, but the Minister may respond that the Secretary of State has the power to do that. If he says that the Government will actively assess where we may use such discretion to make it clear that tenders should be conducted in that way, I would be content. My noble friend instanced von Willebrand factor, where there are very similar products which are not necessarily competing on price. There is a general problem with plasma protein therapies because the cost structure that applies to them does not reflect the cost structure over the life of a product as it is reflected in patented, branded medicines generally. There is a good case for looking at an exemption in relation to products which have that high level of fixed cost rather than applying the price control and rebate in the way that happens now. I hope my noble friend will be able to say positive things about how we can maintain competition in the tender process and recognise the cost structures of certain medicines, because there is likely to be the application of the same principles to those products whether or not the company has opted into the voluntary scheme. Therefore the Government should be more willing under the statutory scheme to apply exemptions to those companies which have not opted into the voluntary scheme. I beg to move.
Baroness Walmsley
My Lords, as I mentioned in the debate on Amendment 3, I support this amendment because it gives the Secretary of State a bit more flexibility to take account of the specific circumstances of a company with very high fixed costs, in the interest of making sure that we have security of supply and patient access to the particular products that it produces. I do not think it undermines any of the objectives of the Bill in any way, and because of that, I hope that we will hear something encouraging from the Minister.
Lord Hunt of Kings Heath
My Lords, in Committee the noble Lord said that he did not think that biosimilars should be excluded from the voluntary or statutory pricing schemes, as competitive tendering would not generate sufficient levels of price reductions. I had a note from one of the companies involved, Sandoz, which says that one of the issues here, alongside the fact that fierce competition is already driving significant price reductions for the NHS, is that development costs of generic medicines do not compare with those of biosimilars. Those costs can be up to 100 times those of generic medicines, partly because of the licensing process and the time needed for development. I hope the noble Lord will be able to address that and explain how the Bill aligns with recent NHS policy, which has expressed support for the uptake of biosimilar medicines, particularly through the intention for specialised services commissioning. The noble Lord’s comments in Committee on biosimilars caused some disappointment, and if he could respond more positively now that would be helpful.
Lord Warner
My Lords, from time to time I have been approached by plasma companies and vaccine companies about supply issues, particularly where there have been changes in the structure of the industry and a reduction in the number of producers of some of these products, and sometimes on the point of whether British companies may start to go out of business because of some of those structural changes. My question to the Minister is whether the amendment would actually help enable the Secretary of State to deal with some of those supply problems when this becomes an issue. It becomes an issue for those patients who really need that particular product when no other will do. Is this the kind of amendment that would help with these supply problem areas, which to my knowledge have been experienced from time to time, particularly in plasma and vaccine areas?
Lord O'Shaughnessy
My Lords, I am grateful to my noble friend for his amendment and for providing the opportunity to talk about this important issue. It is important to note that the substance of this amendment is different from the substance of the amendment that was tabled in Committee, which would have given a blanket exclusion, while this is much more about providing the Secretary of State with the opportunity to exercise his or her judgment to exempt a product.
I absolutely appreciate the intent of the amendment, and reassure my noble friend that we believe it unnecessary. Due to the powers in the 2006 Act, the Secretary of State already has the ability to exempt individual products or groups of products from the terms of any statutory scheme, so this amendment would duplicate existing powers. For example, the Secretary of State uses these powers in the current statutory scheme to exempt products already under a contract or framework agreement. It is currently the Government’s intention that under the new statutory scheme, products procured under framework agreements that were entered into prior to the regulations coming into force would be exempt from the pricing controls and payment mechanism. However, branded products procured after the regulations come into force would be subject to the pricing controls and payment mechanism. Like any other cost, companies would be able to take this into account when proposing a price in response to a new tender. The regulations will of course be subject to consultation.
The point here is that there may well be cases where an exemption is required, and noble Lords have given examples of what that might look like. I hope your Lordships would agree that it would not be responsible for me to try and set out a list of them now, but clearly there will be occasions where that might be necessary. Any statutory scheme must of course also be sensitive—as indeed the legislation demands that it is—to the differing R&D costs that apply to the development of different medicines.
I hope that provides some reassurance on the points that noble Lords have made. We would be able to use the powers that already exist in the creation of the new statutory scheme for whichever purposes are desired at the time. On that basis, I ask my noble friend to withdraw his amendment. I hope those reassurances have done the trick.
Baroness Walmsley
My Lords, before the noble Lord sits down, is he able to respond to the issue about biosimilars, which I raised in an earlier debate and which the noble Lord, Lord Hunt, has just raised?
Lord O'Shaughnessy
I thought I had, when I talked about taking into account the differing R&D costs, which I think was the substance of the point made by the noble Baroness and the noble Lord, Lord Hunt. We have to take into account both getting a good price and the R&D costs, and that needs to be reflected within a statutory scheme, and would clearly apply to the case in point.
Lord Lansley
I am grateful to my noble friend and completely understand that at this stage it would be inappropriate to try and itemise in any way how the Secretary of State’s discretion to exempt products or categories of products could be used. I am grateful for what my noble friend said because it is clear that while some companies opt into the voluntary scheme, we will arrive at a situation where, in effect—force majeure—other companies with other products are in the statutory scheme without any choice in the matter. They should come out of this debate with the confidence that they can make their case to the Government. We have seen some really good examples, and I am grateful to the noble Baroness, Lady Walmsley, and the noble Lord, Lord Hunt. Biosimilars clearly have a case to make about the structure of the scheme and how it applies to them in relation to this.
As the noble Lord, Lord Warner, mentioned, the cost structure of plasma product therapies and things of that kind is very different from the cost structure of many other branded medicines that enjoy their patent life. To that extent, recognising their cost structure might require an exemption from the PPRS as it stands at the moment. We cannot just seek some of those products, particularly some of the blood products we are talking about, in isolation in Britain. There is a limited supply. We import them from abroad, and there are sometimes higher prices in other markets. It is absolutely necessary for us sometimes to say, for security of supply reasons, that this product, this tender process or this framework agreement for the delivery of products of this kind is exempted from the PPRS in the future. It does not automatically follow that they will be included. However, I gather from what my noble friend says that the power is there to do this and that this will be considered, as and when, on its merits. On that basis I certainly seek leave to withdraw Amendment 7.
Lord Hunt of Kings Heath
Lord Hunt of Kings Heath
My Lords, I will speak very briefly to Amendment 8 and then allow the Minister to explain his amendments. I can then perhaps come back at wind-up to refer to my own Amendment 12 to his Amendment 11.
We have discussed whether the Bill is proportionate, and this is particularly apposite in relation to this clause. There is concern that the powers may be too intrusive in requiring companies to submit profit-level information on individual products, which I understand from many of the companies involved that they consider complex and onerous to provide, and not necessary routinely for the Government. My amendment attempts to deal with this in a way which I think is proportionate and not intrusive, but which should provide the kind of information the Government want. I will be very interested to hear what the Minister says about his amendments. I beg to move.
Lord Warner
My Lords, my name is on this amendment and I support it. I want to emphasise the point about the UK, which is in this amendment from the noble Lord, Lord Hunt. Members of the industry are concerned that they will be brought into a conflict between them and their headquarters over the pricing of particular products in the UK. The point that the noble Lord has made in his amendment about specifying the UK is extremely important.
Lord O'Shaughnessy
My Lords, I am grateful to the noble Lord, Lord Hunt, for his amendments. I shall speak to government Amendments 9, 11, 25 and 26 relating to information notices and appeals, and will refer to Amendments 8, 10 and 12 tabled by the noble Lord.
We had a good discussion in Committee about the information powers. My noble friend Lord Lansley proposed information notices with a right of appeal; the noble Lord, Lord Warner, proposed to place certain restrictions around the Government’s ability to collect information on profits; and the noble Lord, Lord Hunt, proposed that those restrictions be in the form of “triggers”. As I hope noble Lords will know from the individual meetings that I have had the chance to have with them, I have been listening carefully to what has been said and I am conscious of the importance of proportionality in the Bill. In particular, I have reflected on the suggestion from the noble Lord, Lord Hunt, that we may be able to combine these different ideas into a workable solution that would deliver the sort of safeguards that I believe noble Lords are seeking. The government amendments that I have tabled would do precisely that.
There was broad agreement in Committee that the Government should be able to collect the information required to reimburse community pharmacies and to operate our cost-control schemes for medicines as effectively as possible. That includes straightforward information about sales income actually received or the amount actually paid in relation to health service products at each point in the supply chain. We already collect much of this information now under a mix of voluntary and statutory arrangements, including scheme M, scheme W and the community pharmacy margin survey.
We have discussed previously that our current arrangements need to be strengthened. The changes proposed by the Bill would allow us to expand routine collections to inform reimbursement prices. They would enable us to use data from more companies, make the reimbursement of community pharmacies fairer and more robust and set reimbursement prices for more products. Setting reimbursement prices leads to more competition—whose merits we have discussed—as pharmacies are incentivised to source the products as cheaply as possible, allowing them to retain a margin. That in turn helps us to keep the drugs bill down.
However, I have heard the concerns raised by noble Lords in relation to the collection of information on the profits associated with particular products. The noble Lord, Lord Warner, spoke about his concern that it would be burdensome for the pharmaceutical industry to apportion certain operating, development or manufacturing costs to individual products. The government amendments that I have tabled would address that concern. Amendments 11, 25 and 26 would introduce the requirement in regulations for the Secretary of State to issue an information notice for the collection of information on the costs incurred by a producer in connection with the manufacturing, distribution or supply of UK health service products. The exception to that requirement would be information on the amounts actually paid for purchasing health service products from an organisation in the supply chain. As I set out earlier, our current routine collections already cover the acquisition costs of the products themselves, as distinct from the overheads incurred by an organisation in supplying them.
Amendment 9 makes clear that in order to collect information in relation to certain types of profit made by suppliers, the Government would by necessity need to collect information on certain costs. I know that the collection of information on profit has been of concern to some Peers. Taken together, these amendments therefore make clear that the Government would be required to issue an information notice before they could collect particular types of profit-related information.
I have sympathy for the amendments from the noble Lord, Lord Hunt, that would restrict the term “profit” to aggregate UK profit. However, this approach may mean that we would be unable to collect information on the purchase costs and sales revenues that we currently collect and use to inform the reimbursement of community pharmacies and ensure that our reimbursement arrangements deliver value for money. I hope he would be willing to support the Government’s approach, which addresses the concerns raised by the pharmaceutical industry without undermining our ability to reimburse community pharmacies effectively. It might be worth adding at this point that I have had the opportunity to meet a couple of representative groups and explain the approach that we were taking in order to provide proportionality, and that approach was welcomed by those groups.
I should point out that in drafting Amendment 11 the Government have omitted to reflect that under the voluntary scheme, on a routine basis, we already obtain information from companies on profits and costs, including the costs of manufacture, R&D and distribution. This is company-level information, not product-level information. I will therefore bring forward a small amendment to Amendment 11 at Third Reading to reflect this, which would enable the Government to obtain that information on a routine basis under a future statutory scheme. I believe this would also be in line with the intention behind Amendment 8 from the noble Lord, Lord Hunt, which distinguishes between company-level or aggregated information on the one hand and information on individual products on the other.
I turn to the circumstances in which the Government may wish to collect information on costs via an information notice. In Committee we spoke about triggers, and the noble Lord, Lord Hunt, has tabled amendments along those lines. I have thought about this carefully but have concluded that we cannot set particular conditions for when we issue information notices. First, we cannot predict all the circumstances where this or a future Government may need to investigate further the value for money of a particular product or supply chain. Secondly, we may want to issue an information notice when we have an information gap and cannot properly assess whether a product or the supply chain is delivering good value for money. It would be a Catch-22 situation if we were to have triggers for an information notice in legislation that would allow us to issue an information notice only when we already had the evidence. I trust noble Lords will understand the Government’s concerns about triggers for an information notice.
However, in Committee I said I would provide examples of when the Government may wish to collect information about costs. These include where companies in the statutory scheme ask for a price increase for a particular product and we want to assess whether that is justified; where we have concerns about the high price of an unbranded generic medicine and want to assess whether the prices are warranted; or where the Government have no visibility over costs in the supply chain and want to assure ourselves that the market is working effectively. These are only some examples but I hope they illustrate where the Government may benefit from more information than that which is collected routinely to run our community pharmacy reimbursement system and to operate our cost-control schemes for medicines. The information notice would of course clearly set out what information would need to be provided, the form and manner in which the information would need to be supplied, the period of time that that information would need to cover and the date by which that information would need to be supplied. It would inform those issued with an information notice of their right of appeal.
The government amendments would introduce a right of appeal for those served with an information notice, an important point made by my noble friend Lord Lansley in Committee. UK producers could appeal an information notice if they believed the request was beyond the powers in the NHS Act 2006. That is in addition to the existing appeal mechanism against any enforcement decision made by the Government when a company refuses to submit information.
I thank noble Lords, especially my noble friend Lord Lansley and the noble Lords Lord Warner and Lord Hunt, for helping to shape these amendments. I hope that through the government amendments I have reflected the concerns raised in Committee, and that the House will agree them. I also hope I have addressed the amendments tabled by the noble Lord, Lord Hunt, and I ask him to withdraw his amendment and instead support the Government’s amendments.
Lord Lansley
My Lords, I reciprocate my noble friend’s thanks. In Committee he said he was going to think very carefully about the subject of information and the circumstances in which it is required from companies. Having done so and engaged us in a conversation about it, he has come forward with an amendment that seems specifically designed to meet the concerns raised in Committee. From my point of view, and this is very simply put, there must be a general scheme to acquire information, but when one goes beyond it the company has a right to expect that the information notice must be specific, itemised and additional, and that, as is now provided for, there should be a right of appeal in relation to that. My noble friend has very kindly listened and brought forward an amendment to do in substance the things that we were looking for, so I am grateful to him.
Lord Hunt of Kings Heath
My Lords, I thank the Minister. I am grateful for his amendments, because he clearly listened to the debate. I just want to encourage him to go that little bit further. I am glad that we have a government amendment on Third Reading, because that means that we can continue this debate: his amendment is amendable, which is always the issue for noble Lords on Third Reading.
The Minister said on my Amendment 12 that he was anxious not to put particular conditions into the Bill, but my reading of his Amendment 11 is that he imposes particular conditions. Its first four lines state:
“Regulations under this section must require the Secretary of State to give a UK producer an information notice if information is required in respect of the costs incurred by the producer in connection with the manufacturing, distribution or supply”.
All I want to do in my amendment is add the word “access”. I am just taking his elegant drafting and adding a bit to it. I beg leave to withdraw Amendment 8.
Lord O'Shaughnessy
Lord O'Shaughnessy
“(5) Regulations under this section must require the Secretary of State to give a UK producer an information notice if information is required in respect of the costs incurred by the producer in connection with the manufacturing, distribution or supply of UK health service products (other than costs which relate to any transaction with a UK producer for those products).(5A) An information notice is a notice stating—(a) the period in relation to or for which, or intervals at which, information is required to be provided,(b) the form and manner in which information is required to be provided,(c) the time at which or period within which information is required to be provided, and(d) that a right of appeal is conferred by virtue of section 265(5A).(5B) Regulations under this section may require information which does not fall within subsection (5) to be provided—(a) in relation to or for a prescribed period or at prescribed intervals,(b) in a prescribed form and manner, and(c) at a prescribed time or within a prescribed period.”
Lord Hunt of Kings Heath
Lord O'Shaughnessy
“(l) such of the following as may be prescribed—(i) an NHS foundation trust;(ii) any health service body within the meaning of section 9(4)(not falling within any of paragraphs (a) to (k) above).”
Lord O'Shaughnessy
My Lords, I beg to move Amendment 13 and am grateful to the noble Baroness, Lady Walmsley, for putting her name to this amendment and to the others in my name.
The amendments relate to the report and recommendations of the Delegated Powers and Regulatory Reform Committee, and I am extremely grateful to the committee for its scrutiny of the Bill—which, I believe, together with the government amendments, will lead to improved legislation. In my response to the committee, I confirmed that the Government would accept all four recommendations and would table amendments to take forward these actions. Once again, I am grateful for the work of the noble Baronesses, Lady Walmsley and Lady Finlay, and the noble Lord, Lord Hunt, for continuing to highlight the issues raised in the report.
I shall take each recommendation in turn. First, the committee concluded that the general power in new Section 264B(1)(l) proposed in Clause 6 to prescribe in regulations any person to whom information may be supplied is too wide, with insufficient justification. The government amendment clarifies this issue by confining the ability to prescribe in regulations to any health service body already listed in Section 9 of the NHS Act 2006 and NHS foundation trusts which are not listed in Section 9. This would have the effect of enabling government to prescribe in regulations the sharing of data with other health service bodies such as clinical commissioning groups, but not enabling other persons to be included by means of subsection (1)(l). We have made this change, as we would want to be able to share information with local health bodies, such as CCGs or hospital trusts, if we had concerns about prices—but not with others.
The committee concluded that the power in Clause 7 to enable Welsh Ministers to make regulations that make provision for payment of a penalty if a provider of pharmaceutical or primary medical services contravenes regulations requiring them to record and provide information about health service products which are required for the health service in Wales, should be consistent with similar provisions in the 2006 Act. In particular, the committee recommended that the maximum penalty which may be imposed under what would be Section 201A of the National Health Service (Wales) Act should be set out in the Bill, and that a power to increase this maximum by regulations should be made subject to the affirmative regulations. I am pleased to say that, following discussions with the Welsh Government, an amendment has been tabled which would amend Section 201A(5) to introduce maximum penalties into the National Health Service (Wales) Act 2006. We will amend the Bill to enable through regulations the power to increase the maximum penalty, and these regulations will be subject to the affirmative procedure.
Noble Lords will appreciate that, in the case of penalties, the powers in relation to Wales are different from those in relation to the UK as a whole in so far as Welsh Ministers will be able to impose penalties only on providers of pharmaceutical and primary medical services. By contrast, the 2006 Act allows for penalties to be imposed on manufacturers and distributers, and the size of any penalty should reflect this. It would therefore be disproportionate if the level of maximum fine allowed for in the 2006 Act were to be replicated in the NHS Wales Act. To address these concerns, the government amendment would limit the single penalty to £10,000 and the daily penalty to £100.
I turn to the amendment which would remove the provisions allowing Welsh Ministers to disclose information to persons prescribed in regulations. Welsh Ministers have agreed that the Bill should be amended to limit the types of bodies with whom information may be shared. The government amendment would specify the following persons to whom information may be disclosed by virtue of Section 201A. They include: a local health board or other person appointed under Section 88(3)(b) of the National Health Service (Wales) Act 2006 to exercise the functions of a determining authority under Part 7 of that Act; a National Health Service trust established under Section 18 of the National Health Service (Wales) Act 2006; any person who provides services to Welsh Ministers or to any person falling within paragraph (a) or (b); and any body that appears to the Welsh Ministers appropriate to represent Part 4 providers or Part 7 providers, as defined by Section 201A(8).
I turn to the amendment from the noble Lord, Lord Hunt, which seek to put those bodies that represent UK producers on the face of the Bill instead of in regulations. The Government will prescribe these bodies in regulations; the illustrative regulations we published merely provided some examples of representative bodies that the Secretary of State may disclose information to, and I assure the noble Lord that further work will be done on this list. We will discuss the list with stakeholders and we will, of course, publicly consult on the list to ensure that we get it right. I know that that was a concern of his.
Finally, we are proposing to table technical amendments to the Bill at Third Reading to reflect the fact that the Northern Ireland Assembly was not able to pass its legislative consent Motion on the Bill before it dissolved, despite the relevant committee having approved it. We will seek to amend the Bill to enable the Northern Ireland components of the Bill to be commenced separately through regulations once it has been possible to secure legislative consent.
As I hope your Lordships will see, the Government have addressed the concerns of the DPRRC. I also hope that I have addressed the concerns of the noble Baronesses, Lady Walmsley and Lady Finlay, and the noble Lord, Lord Hunt. I ask noble Lords who have tabled amendments not to press them and support the amendments in my name and those of the noble Baroness, Lady Walmsley.
Baroness Walmsley
My Lords, I am grateful to the Minister for what he has just said and for the conversations that we had about this group of amendments at Richmond House. As noble Lords will see, I have added my name to the government amendments in this group, because they achieve exactly what I was hoping to achieve when I tabled amendments in Committee. I am grateful to the noble Baroness, Lady Finlay of Llandaff, for supporting me in that intention. Unfortunately, when I withdrew my amendments in favour of the Government’s amendments, my message to the noble Baroness, Lady Finlay, did not get through, so she has unfortunately failed to withdraw her name. That is why she has asked me that, when the amendments in her name come to be put in order, I should make it clear on her behalf that they are not moved, which will achieve our joint intention. I know that the committee is also grateful to the Minister for hearing our concerns and taking action.
Lord Hunt of Kings Heath
My Lords, I am grateful to the Minister for the way he responded to Amendment 14 in my name. I am satisfied that the Government will consult closely on the list of bodies.
Lord O'Shaughnessy
“(5A) The penalty may be—(a) a single penalty not exceeding £10,000, or(b) a daily penalty not exceeding £100 for every day on which the contravention occurs or continues.”
Lord O'Shaughnessy
“(7A) The Welsh Ministers may by regulations increase (or further increase) either of the sums mentioned in subsection (5A).”
Lord O'Shaughnessy
(a) a Local Health Board or other person appointed under section 88(3)(b) to exercise the functions of a determining authority under Part 7;(b) an NHS trust established under section 18;(c) any person who provides services to the Welsh Ministers or to any person falling within paragraph (a) or (b);(d) any body which appears to the Welsh Ministers appropriate to represent Part 4 providers or Part 7 providers (as defined by section 201A(8)).”
Lord O'Shaughnessy
Lord O'Shaughnessy
“( ) After subsection (5) insert—“(5A) Provision must be made by regulations for conferring on UK producers a right of appeal against enforcement decisions taken in respect of them in pursuance of section 264A and this section if the enforcement decisions relate to information notices given by virtue of section 264A(5).””
“(18) In section 203(6) of the National Health Service (Wales) Act 2006 (statutory instruments which are subject to affirmative procedure) after “section 25B(3)(c) or” insert “201A(7A) or”.”
Lord O'Shaughnessy
Health Service Medical Supplies (Costs) Bill
Thursday 23rd February 2017
(7 years, 9 months ago)
Lords ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 100-I Marshalled list for Third Reading (PDF, 60KB) - (22 Feb 2017)
Lord O’Shaughnessy
That the Bill be now read a third time.
Clause 9: Provision of information to Secretary of State and disclosure
Amendment 1
Lord O’Shaughnessy
The Parliamentary Under-Secretary of State, Department of Health (Lord O’Shaughnessy) (Con)
My Lords, there are two sets of amendments within this grouping. The first comprises small amendments relating to the circumstances in which the Government would be required to provide producers with an information notice. The second relates to the arrangements required for implementation of the legislation in Northern Ireland.
I turn, first, to Amendments 1 and 2. Amendment 1 clarifies that an information notice is required in respect of the costs incurred by a company in connection with the manufacturing, distribution or supply of a particular UK health service product. Amendment 2 is a technical drafting change to further clarify the intent of this clause and the type of transaction being contemplated.
On Report, I tabled amendments to the information requirements that would necessitate the Government issuing an information notice if they wanted UK producers to provide certain cost and profit information. This was in response to reasonable concerns raised by several noble Lords that attributing costs and profits to individual products, as opposed to simple aggregate-level data, would be burdensome for companies. The amendments that I have brought forward today reinforce these information notice procedures by clarifying that they apply to cost and profit information relating to individual products but not to aggregate-level data across a portfolio of products supplied by a company to the health service.
As I explained on Report, we already collect cost, sales and profit information on an annual basis under our voluntary scheme, the PPRS. This information is supplied at an aggregate level across a range of branded medicines supplied by a company to the health service. Clearly we need to be able to continue to collect these data in a routine way in order to maintain the voluntary scheme, and indeed to collect a similar type of routine aggregate-level company information in any future statutory scheme.
These amendments enable us to continue with the current approach to collecting company-level data in a non-bureaucratic way while, critically, ensuring that the information notice procedure, which was a concern of noble Lords, is focused on the area which we know is the greatest burden to companies—providing cost information on a product-by-product basis. I am pleased to say that my officials have discussed these amendments with the ABPI, the trade body for the pharmaceutical industry, which is content that they address industry concerns.
I now turn to Amendments 3, 4, 5 and 6. As noble Lords know, most of the Bill extends to England, Scotland, Wales and Northern Ireland, with some elements extending only to England and Wales or only to Scotland. A legislative consent Motion is required from Scotland, Wales and Northern Ireland for the matters in the Bill that are devolved.
I am bringing forward these technical amendments to address the fact that the Northern Ireland Assembly was not able to complete the passage of its legislative consent Motion on the Bill before it dissolved, although significant progress had been made, with the relevant committee having given approval. Our amendments therefore seek to change the Bill to enable the Northern Ireland components to be commenced separately through regulations. These components of the Bill will be commenced only after legislative consent has been secured.
Lord Lansley (Con)
My Lords, I do not propose to detain the House. I merely wish to thank my noble friend the Minister for the further clarification that Amendments 1 and 2, in particular, give to Clause 9.
I was among those who raised a concern. Although the industry completely understood that in order to make the PPRS effective there was a requirement for a scheme for the acquisition of data in aggregate, as my noble friend described, the powers would have enabled there to be a lot of demands for information which went beyond what had previously been required and which had the potential to be very intrusive. Under those circumstances, an information notice system, with proper details supplied to companies and with a potential appeal right, was required. We discussed that and I am very grateful to the Minister for taking it on board and putting in place something which I think will give considerable reassurance to the industry that the scheme will not be as burdensome as it could have been.
Baroness Walmsley (LD)
My Lords, we on these Benches are also happy to support the amendments. Like the noble Lord, Lord Lansley, I have no intention of detaining the House with long-winded thanks. However, I want to voice my recognition that the Minister, in his new role, has both understood and responded to the issues raised on the Opposition and Cross Benches about the shortcomings of the Bill, which had been through the House of Commons without anybody noticing or trying to amend its unintended consequences, rather like the Article 50 Bill that we debated in this House on Monday and Tuesday.
Lord Warner (CB)
My Lords, I thank the Minister for listening so intently during the proceedings and for his response. I am also grateful to those on the Front Benches opposite for their co-operative approach—they are a shining example to their colleagues in the Commons of how to be effective in persuading the Government to change their mind. I hope the Minister’s emollient approach will continue when the Bill leaves this place in relation to the new clause that we have put in at the front of the Bill, despite the advice he was given. I hope that good will will continue to operate as the Bill completes its passage through both Houses of Parliament.
Lord Hunt of Kings Heath (Lab)
My Lords, I too welcome the amendments. Clearly, the Opposition will support them. I must remind the House of my presidency of the Health Care Supply Association and GS1 UK.
First, I thank the Minister and his officials for their warm co-operation. The ability to have a number of meetings has been much appreciated. This has been a very good example of cross-House co-operation. Various noble Lords, including the noble Lord, Lord Warner, and the noble Baroness, Lady Walmsley, worked very hard together on the core issue of ensuring that NHS patients get access to effective new medicines. I say to the Minister that I hope Clause 3 will remain in the Bill when it comes back to your Lordships’ House, if indeed it needs to come back—I take the point of the noble Baroness, Lady Walmsley, that this House has done the job it is here to do: it has revised and scrutinised the legislation. I would have thought that the other place should simply accept the Bill as it is, and I hope the Minister will be able to confirm that when he responds. I also thank my noble friend Lady Wheeler for her tremendous support, and Dan Stevens, our health researcher.
It seems to me that the Minister has shown himself adept at handling health legislation in your Lordships’ House, and so we look forward to the next health Bill. If he is looking for suggestions, we are going to have the great repeal Bill and perhaps we can look forward also to the repeal of the Health and Social Care Act 2012. That would bring great joy to many.
Lord O'Shaughnessy
I am very grateful to noble Lords for their support for these amendments. I am also grateful to my noble friend Lord Lansley, one of the architects of this new approach to information notices; that was extremely useful and we have ended up in a good place. I am grateful to the noble Baroness, Lady Walmsley, who I have enjoyed getting to know through the process of this Bill. She is quite right to emphasise the vital role that this House plays through its proper constitutional role in revising legislation—I will not say anything more than that. I thank the noble Lords, Lord Warner and Lord Hunt, both of whom have been in my shoes in the past. Good will will certainly operate, and I hope that both noble Lords, and indeed the noble Baroness, Lady Wheeler, have found me to be open, open-minded and willing to work with them. Throughout the passage of the Bill I have been keen to ensure that it is a proportionate response to tackle this challenge, and I think we are all agreed on that.
To conclude, I am delighted that we have come this far on the scrutiny of the Bill and are now debating the final amendments to bring it to a close. As we end Third Reading I would like to take this opportunity to place on record my thanks to all noble Lords who have taken part in the debates, beyond those I mentioned just now, throughout all stages in this House. It is fair to say that the collected efforts of this House in bringing together different views have paid dividends in the improvements that we have seen. It has been a good example of the rigour and attention to detail that this House is known for.
I particularly thank the many officials involved in the Bill, who have worked not only to support me but to ensure that noble Lords are briefed and that any concerns are addressed, within what at times have been very tight timescales. They have done a tremendous job and I am sure the House will join me in paying tribute to them.
Although this may not be the final word on the Bill, I am convinced that the House is sending it back to the other place having been significantly improved in key respects.
Lord O'Shaughnessy
Lord O'Shaughnessy
“( ) appoint different days, or make different provision, for different purposes or areas, and”
Health Service Medical Supplies (Costs) Bill
Wednesday 15th March 2017
(7 years, 8 months ago)
Commons ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Amendments as at 15 March 2017 - (15 Mar 2017)
17:06 - The House divided: - Ayes: 288 / Noes: 241 - Question accordingly agreed to.
Madam Deputy Speaker (Natascha Engel)
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 1, 2, 18, 19 and 21. If the House agrees them, I will cause an appropriate entry to be made in the Journal.
Before Clause 1
Duty to have regard to the life sciences sector and access to new medicines and treatments
The Minister of State, Department of Health (Mr Philip Dunne)
I beg to move, That this House disagrees with Lords amendment 3.
Madam Deputy Speaker
With this it will be convenient to discuss Lords amendments 1, 2 and 4 to 24.
Mr Dunne
I remind the House of the importance of this Bill. NHS spending on medicines is second only to staffing costs. The NHS in England spent more than £15 billion on medicines during 2015-16, a rise of nearly 20% since 2010-11. With advances in science and our ageing population, the costs will only continue to grow.
The UK has a lot to be proud of: we have a world-class science base and an excellent reputation for the quality and rigour of our clinical trials and the data they produce. The UK has one of the strongest life sciences industries in the world, generating turnover of more than £60 billion each year. Indeed, it is our most productive industry. The Government are deeply committed to supporting it to flourish and, in doing so, to provide jobs and transform the health of the nation.
In the 2016 autumn statement, an additional £4 billion of investment in research and development was announced, specifically targeted at industry-academia collaboration. We expect the life sciences industry to be a substantial beneficiary. That comes on top of measures such as the patent box and the R and D tax credits that the Government have introduced to encourage investment from innovative businesses.
That determined action is reaping rewards. The UK ranks top among the major European economies for foreign direct investment projects in life sciences. Last month, the Danish drugs company Novo Nordisk announced a new £115 million investment in a science research centre in Oxford. That comes on top of an additional investment of £275 million announced by GSK last June and AstraZeneca reaffirming its commitment to a £390 million investment to establish headquarters and a research centre in Cambridge—it is good to see the hon. Member for Cambridge (Daniel Zeichner) in his place. Looking ahead, Professor Sir John Bell, the regius professor of medicine at Oxford, has agreed to lead the development of a new life sciences strategy for the long-term success of UK.
At the same time, it is important that we secure better value for money for the NHS from its growing spend on medicines and other medical supplies. I remind the House that, overall, the Bill will do three things. First, it will enable us broadly to align our statutory scheme for the control of prices of branded medicines with our voluntary scheme, by introducing the possibility of a payment percentage for the statutory scheme. That could deliver £90 million of savings annually for the NHS. Secondly, the Bill will give us stronger powers to set the prices of unbranded generic medicines if companies charge unwarranted prices in the absence of competition.
Thirdly, the Bill will give us stronger powers to require companies in the supply chain for medicines, medical supplies and other related products to provide us with information. We will use that information to operate our pricing schemes, to reimburse community pharmacies for the products they dispense and to assure ourselves that the supply chain of specific products provides value for money for the NHS and the taxpayer.
During the Bill’s passage through the other place, the Government tabled 23 amendments, following debate and discussion in this House and with peers. I firmly believe that those amendments make it a better Bill. However, I will start with Lords amendment 3 and set out the reasons why it does not improve the Bill.
Lords amendment 3 would introduce a duty on the Government, in exercising their functions to control costs, to have “full regard” to the need to
“promote and support a growing life sciences sector”
and the need to ensure that patients have access to new medicines. The amendment would undermine one of the core purposes of the Bill by hindering the ability of the Government to put effective cost controls in place. Controlling the prices of medicines cannot, in itself, promote the interests of the life sciences sector and deliver growth. Having such a requirement in legislation could encourage companies to bring legal challenges where the cost controls have not, in themselves, promoted growth in the life sciences industry. That could significantly hinder the Government’s ability to exercise their powers to control costs effectively.
For example, if the Government were to take action to control the price of an unbranded generic medicine, because it was clear that the company was exploiting the NHS—several examples of that have been raised throughout the Bill’s passage through this House—it could be argued that that action did not promote the life sciences sector, because every generic drugs manufacturer could argue that it is a life sciences company. Nevertheless, that would, of course, be the right thing to do for the NHS, for patients and for taxpayers. Lords amendment 3 would enable companies to challenge any action by the Government to control costs by arguing that proper regard had not been paid to supporting a growing life sciences industry. The amendment would therefore make it more difficult to control costs, including where companies seek to exploit the NHS over and above the interests of patients, clinicians and taxpayers.
I say gently to those on the Labour Benches that it is ironic that they talk tough on the pharma companies, which they claim in other forums routinely seek to exploit the NHS, when today they are arguing the cause of the industry by supporting an amendment that would provide it with a legal stick with which to challenge the NHS when it seeks to control the costs of drugs, some of which, as they acknowledge, are exorbitantly priced. I therefore have to ask the hon. Member for Ellesmere Port and Neston (Justin Madders): whose side is Labour on?
The Government are seriously concerned that Lords amendment 3 has the potential to impact negatively on our ability to control costs. I do not expect that that was the aim of well-intentioned Members in the other place. I hope both Houses agree that it would be damaging to the NHS if, on every occasion that the Government deem it necessary to use their powers to control costs, the Government could be challenged for failing to give full regard to promoting the interests of life sciences companies.
The second part of Lords amendment 3 requires the Secretary of State to have full regard to the need for NHS patients to benefit from swift access to innovative medicines that have been recommended by the National Institute for Health and Care Excellence through its technology appraisals. However, NHS commissioners are already legally required to fund drugs and other treatments recommended in NICE technology appraisal guidance, normally within three months of final guidance. The Secretary of State’s power to control costs is a completely separate process. Therefore, this part of the amendment would not achieve anything.
Dr Andrew Murrison (South West Wiltshire) (Con)
The Minister is of course absolutely right on the primacy of NICE in this matter, but today the NICE board will be imposing a budget threshold of £20 million a year, which would have the effect of at least delaying or possibly preventing the roll-out of new medicines. Does he share my concerns, particularly in relation to cancer drugs?
Mr Dunne
My hon. Friend is right to point out that NICE is considering today in its board meeting thresholds for the introduction of new medicines. What I would not do, however, is share his concern that it will necessarily lead to delay in their take-up. In essence, it will provide NHS England with greater commercial flexibility to negotiate with drugs companies that propose to introduce a drug that may cost more than £20 million in a full year. It will give NHS England more time to negotiate a lower price with the pharma company. That should not, in and of itself, lead to either delay or less take-up.
I am aware of the concerns, expressed by my hon. Friend, other Members and some charities in a national newspaper today, about the joint NICE and NHS England consultation on the proposed changes to the appraisal and adoption of new technologies. There have been suggestions by Opposition Members that this is rationing of NICE-approved medicines. I assure the House that that is not the case. Patients will continue to have the right to NICE-recommended drugs, as enshrined in the NHS constitution. The proposals are intended to ensure that patients benefit from even faster access to the most cost-effective treatments, while addressing issues of affordability as well as effectiveness.
Let me be very clear: Lords amendment 3 would not impact on the proposals; the NHS will continue to fund a product approved by NICE, in line with NICE recommendations. I also remind Members that NICE and NHS England are making the changes to address concerns about the affordability of high-cost new drugs and other technologies that were raised by the Public Accounts Committee, which is chaired by the hon. Member for Hackney South and Shoreditch (Meg Hillier).
I have read the suggestion by the Opposition that the NICE and NHS England proposals would be contrary to our intent to increase the uptake of new medicines. As I said to my hon. Friend the Member for South West Wiltshire (Dr Murrison), that is false. In reality, last year saw spend on medicines grow more quickly than in any of the past 10 years, as we seek to secure rapid access to new medicines for patients.
Access to medicines is primarily dependent on clinicians’ choices about what is best for their patients. Clinicians need to be aware of new medicines and persuaded that they may be a better option for their individual patients, taking into account other conditions each patient may have and other medicines they are taking. We need to change the culture and behaviour of those clinicians who may be reluctant to use innovative medicines, and legislation is not the right way to effect behaviour change in the NHS.
Bob Stewart (Beckenham) (Con)
I want to ask a layman’s question: if NICE approves a drug, is the NHS necessarily required to buy it?
Mr Dunne
The short answer is yes, it is. That is set out in the NHS constitution. The measures considered by the NICE board today provide some additional flexibility for NHS England in its handling of negotiations with the drugs companies over the introduction of new technology.
Let me conclude on amendment 3 by saying that the Government strongly believe that it would have a negative impact on the Government’s ability to operate price controls, so I ask Members to disagree with it.
I will deal briefly with the other amendments. Lords amendments 1 and 2 and amendments 4 to 24 were made in the other place. They are all amendments that the Government brought forward, having worked constructively with parliamentarians on improving the Bill.
Amendments 1 and 2 relate to the remuneration for persons providing pharmaceutical services in England and Wales respectively. The amendments provide for new regulation-making powers in respect of special medicinal products. These are unlicensed medicines that can be manufactured or imported to meet a patient’s individual needs when no licensed product is available.
The unique nature of specials—the hon. Member for Central Ayrshire (Dr Whitford) mentioned them during our consideration in this place—and their manufacturing arrangements mean that we need to do more to ensure that the prices paid by the NHS represent value for money for all these products. These amendments would enable England and Wales to develop options that will secure improved value for money—for example, by using a quotes system that has been trialled in Scotland, but there are also other options. We will consult the community pharmacy representative body on how best to take this forward.
Amendments 4 to 7 introduce a consultation requirement on the Government with regards to medical supplies. Again, the hon. Member for Central Ayrshire helpfully pointed out that such a requirement was in place for medicines, but not for medical supplies. I thank her for engaging with me and my officials, which has helped to improve the Bill.
The Government have listened to concerns in the House of Lords and in this House about the Government’s power to control the prices of medical supplies. These amendments would ensure that the first order to control the price of any medical supply would be subject to the affirmative procedure, giving both Houses an opportunity to discuss that order.
Amendments 8 and 9 and 15 to 17 are amendments to the information powers in the Bill. Responding to concerns from industry about the potential burdens of the proposed information power, they introduce an additional hurdle for the Government to obtain information by requiring them to issue an information notice whenever they require companies to provide cost information related to individual products, which can be appealed by the company concerned.
John Redwood (Wokingham) (Con)
One problem in coming to a fair price for a new drug—we want to reward the company for its innovation, but without being ripped off—is knowing what kind of production run or demand there might be for it. Is there any way that the NHS could get better at forecasting what its volume might be, as that might drive the price down?
Mr Dunne
As ever, my right hon. Friend, who is a champion of market solutions to some of these tricky problems, lights on an important point. We need to be better at trying to predict the take-up of medicines. Of course, until a new medicine has been introduced, it is very difficult to assess that, because it requires clinicians to get behind the product and to choose to prescribe it. He is absolutely right that we need to look at the way in which we model in order to have a negotiation with the pharmaceutical company that ensures that we build in as good a volume as we are expecting to maximise our prospects of getting the best price.
Let me return to Lords amendments 8, 9 and 15 to 17. When the Government ask a company to provide straightforward information about prices and other transaction costs or overall costs, there is no need for an information notice. The rationale is that there could be a significant burden on companies to provide product-level cost information. Any such request should be made only in exceptional circumstances—for example, in order to set the price of an unbranded generic medicine, when the Government would need insight into the costs and profits associated with the specific product.
Justin Madders (Ellesmere Port and Neston) (Lab)
I support the Lords amendments. I believe that they will improve the Bill significantly, and that they draw on many of the points that Opposition Members made during its earlier stages.
When I was asked to lead the debate for the Opposition—it was the first time that I had done so on a Government Bill—I was assured by my colleagues that this Bill was relatively short, but by comparison with the legislation that we passed on Monday, it strikes me as something of an epic. I only hope that we have more success today than we did on Monday with the amendments that were passed in the other place. As with that other Bill, however, the length of this Bill should not in any way detract from its importance. The exploitation of loopholes by a small number of unscrupulous companies left the Government with no option but to act, and we agree with the thrust of the Bill. We welcome the Lords amendments, both those that the Government are supporting today and the amendment relating to a duty to have regard to the life sciences sector and access to new medical treatments.
Let me first deal with the matters on which there is agreement. Lords amendments 1 and 2 relate to special medicinal products. They will do much to improve the reimbursement for specials, given that the current arrangements are in many cases failing to secure value for money for the taxpayer. As the Minister will know, there is a significant price variation between hospital and community care, with the result that many patients are currently denied access to some specials. The amendments could lead to significant savings throughout the NHS by introducing a more cost-effective whole- market procurement system, as well as having the potential to improve access to treatments. I am pleased that there now appears to be cross-party consensus that action is needed. However, I would welcome confirmation from the Minister that any savings made as a result of the amendment will be used to improve access to specials and other new treatments, rather than simply being returned to general budgets.
We also support Lords amendments 4 to 7, which relate to medical supplies. They add a much needed duty to consult before introducing secondary legislation to control the prices of medical supplies. That goes some way to addressing widespread concerns throughout the sector about the failure to engage before measures relating to medical supplies were introduced in the Bill. Lords amendment 7 would subject the first order to control the prices of medical supplies to the affirmative procedure. That means that if the Government wanted to introduce a new pricing scheme, they would have to convince Parliament that there was a case for doing so.
When we last debated these issues, concerns were expressed that the Government were asking us to give them powers in respect of medical supplies, but were not in a position to tell us how they might be used. The amendment does much to allay those concerns by giving a further opportunity for challenge should Ministers wish to exercise those powers. We are pleased that the Government have given some ground in that regard.
We also welcome Lords amendments 8 to 10, which introduce a trigger mechanism for information-gathering powers. These amendments make it clear that the Government would be required to issue an information notice before they could collect certain types of information. Amendment 9 sets out in detail what information would need to be provided, as well as the related form, manner and timings. Importantly, it would also introduce a right of appeal for those served with an information notice. This again goes some way towards resolving the concerns that we set out in this place about the potentially onerous effect of the new information-gathering powers.
Lords amendments 11 to 14 relate to the provision of information to Welsh Ministers and stem from the recommendations of the Delegated Powers and Regulatory Reform Committee in the other place. We welcome these measures, which I understand also have the support of the Welsh Assembly. We also support the remaining amendments, which are consequential.
That leaves us with amendment 3, which would introduce a duty on the Government when implementing the legislation to have regard to the life sciences sector and access to new medicines and treatments. This measure received cross-party support in the other place and I am disappointed that the Government intend to oppose it today.
We strongly support the core of the Bill, which seeks to close loopholes and to secure better value for money for the NHS from its negotiations with the pharmaceutical sector. However, if amendment 3 does not form part of the final legislation, the Bill will be looked upon as a missed opportunity.
The likely departure of the European Medicines Agency raises extremely worrying questions about the future of the life sciences and the pharmaceutical industry in this country. It is reported that up to 20 other countries are now queuing up to host it after it leaves these shores. That shows just what an attractive proposition it is for those looking to say to the sector, “This is a place to invest in.”
We have the strategic disaster of the EMA going against a backdrop of the sector’s investment in R and D already falling in recent years. Between 2003 and 2011 there was significant growth in spending in this area, eventually reaching a peak of £5 billion. However, by 2014 that had fallen to £4 billion, a reduction of 20% in just three years. We are extremely concerned that the potential loss of the EMA could see this figure fall back even further.
Over the last six years, we have ended up with the worst of all worlds: falling investment in R and D by the pharmaceutical industry and appalling rationing of treatments, leaving patients unable to access a range of medicines and treatments unless they have the means to pay for them privately. Members on both sides are beginning to find it ever more frustrating that when increasingly crude and arbitrary rationing is raised, the response from the Minister is often to agree with the concern, but simply to say that it is a matter for the individual clinical commissioning group in question. How many more times will Ministers sit and listen to huge concerns from every area of the country about treatment being denied to people in desperate situations before they finally accept that the unprecedented levels of rationing are not the consequence of a series of decisions that are unconnected and remote from Government, but a direct result of the systematic underfunding of the health service for the past seven years?
Daniel Zeichner (Cambridge) (Lab)
Does my hon. Friend agree that some of the debates in Westminster Hall and the concerns expressed by Members across the House have been prompted by the fact that the resources for new treatments have not become available in the way that was expected because, as the Secretary of State admitted, although the large amount of rebate from the pharmaceutical sector goes to the NHS, it is not being used specifically for new treatments?
Justin Madders
My hon. Friend is right to express that concern. We do not really know where this rebate has ended up, but all Members know from their personal experiences and our debates that across the board rationing is reaching unprecedented levels, particularly for new and innovative treatments. This is not just a manifestation of the financial straitjacket the health service currently operates in, nor is it just a disaster for individual patients, nor is it just an abrogation of the Minister’s responsibility to uphold the fundamental principles of the NHS; it is also a direct threat to the future prosperity of our life sciences industry. In answer to the Minister’s question about whether we are on the side of patients, I say we absolutely are. Proposed new clause 3(b) makes it very clear that we are on the side of patients, and in particular their ability to access new and innovative treatments.
It is impossible to look at the health of the pharmaceutical sector in this country without considering the central issue of access to treatments. The UK is home to about 4,800 life sciences companies and it continues to have the largest pipeline of new discoveries anywhere in Europe. We are all rightly proud of that. However, the fruits of this innovation are increasingly being enjoyed by patients in other parts of the world before NHS patients can benefit. For every 100 European patients who can access new medicines in the first year they are available, just 15 UK patients have the same access. How can anyone look at that and not say that something is going badly wrong?
As I set out in previous debates on the Bill, a recent report by Breast Cancer Now and Prostate Cancer UK showed that NHS cancer patients are missing out on innovative treatments that are available in any other comparable country to the UK. That should surely shame us all, and it looks as though the situation will get worse. A number of cancer charities estimate that the proposals by NICE to introduce a budget impact threshold could affect one in five new treatments. With one of the options available being a longer period for a phased introduction, the worry is that more patients will be denied access to those critical treatments. I thought that this Bill was meant to be the mechanism by which the cost of drugs would be controlled. Can the Minister explain the flaws in the proposed new pharmaceutical price regulation scheme that make this extra method of cost control necessary?
A debate in this place a few weeks ago drew attention to a number of breast cancer drugs, including Kadcyla, Palbociclib and Perjeta, that might no longer be funded due to changes to the cancer drugs fund. Those are but three examples. Media analysis by the King’s Fund found that there were 225 stories relating to rationing of services in 2016, compared with 144 in 2015 and 86 in 2011. There is clearly a trend developing and we need to reverse it.
We do not have much time today, so I shall draw my remarks to a close by reminding the House that this debate touches on many important issues that are all interlinked—three of them in particular. The first involves securing better value for the NHS; the second involves ensuring full and rapid access to treatments for NHS patients; and the third involves the need to support and promote our life sciences sector. The Government will not achieve any of those aims unless they adopt the right approach to all three. The Bill aims to put in place a system that will deal with the first of those aims, which we support. The amendment that we support today seeks to send a clear message to patients and to industry that the Government consider the other two elements equally important. That is why we are so disappointed that they are not prepared to listen to the overwhelming view expressed in the other place and support that amendment. I urge the Minister to reconsider.
Dr Murrison
I shall speak briefly to Lords amendment 3, but first I chastise the hon. Member for Ellesmere Port and Neston (Justin Madders), if I may, for his remarks about money. He is right to say that this is all about money, but I seem to remember that less than two years ago, he stood for election on a manifesto that would have had the effect of opposing the money that is currently going into the national health service, so we should not take any lessons from the Labour party on financing the NHS.
The Government are absolutely right to oppose this amendment. It looks a bit like a probing amendment, to be honest, and I am a bit surprised that it has got this far. It would subject this very good Bill to a whole shedload of judicial review. It would be a lawyers’ beanfeast. It bewilders me that people in this House who argue that the NHS needs more money, which it most certainly does, should support such a proposal when all the money would be going into the pockets of lawyers.
NHS England must fund any new drug found to be cost-effective by NICE within 90 days of that approval. This afternoon, the NICE board will approve this new measure, which will establish a budget impact threshold of £20 million. The hon. Member for Ellesmere Port and Neston is right to say that about one in five drugs will probably be within scope of the measure, and that is a cause for concern. Patients in the UK do not enjoy the full range of advanced medicines that are reckoned to be more or less routinely available in countries with which we can reasonably be compared—or if they do, they usually find that they are subject to unwarranted delays before they are treated. That is of course critical in the case of conditions such as cancer, and could well mean the difference between life and death; it will certainly mean a whole load of difference in quality of life. It is vital that we do nothing that would extend that process.
In response to my earlier intervention, the Minister gave me sufficient reassurance that the delay that the measure would introduce would be small, and that this would be an opportunity for NHS England to negotiate a lower price for these very expensive medicines. Indeed, that is the intention. Given that, I am more than happy to support the Government on this. However, any delay at all will send a signal to those in the life sciences sector; it is important that we make it clear that this will not introduce unwarranted delays in the introduction of new medicines, because frankly that would put them off. A lot of worthy work has been done recently, which has involved spending a lot of money, to support a vital part of our economy, and it would be a great pity if anything in the Bill reduced our life sciences sector’s ability to prosper in the years ahead.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I, too, welcome the principle of the Bill. We have discussed it in a lot of detail as it has gone through Parliament, and the legislative consent motion was passed by the Scottish Parliament last month. I welcome the fact that the Minister listened to our previous discussions, and I therefore welcome Lords amendment 1, which deals with specials—individually produced medicines, usually within dermatology. While the numbers involved may be small, the costs are often eye-watering. In Scotland, that process is controlled through a procurement method, but it was certainly clear that NHS England was simply being ripped off, and I am glad to see that that is being addressed.
I also welcome Lords amendment 6, which will bring in, as I suggested, a consultation on how to maintain the quality of products. We discussed surgical gloves as a perfect example. People talk about quality marks, but they are often simply manufacturing quality marks, not necessarily a mark of suitability for the task. The Medicines and Healthcare Products Regulatory Agency could be involved, or there could be some other process, but it is important that we do not drive down quality by trying to drive down price.
The main thing that we are discussing is the Government’s plan to disagree with Lords amendment 3, which would insert a new clause. The NICE board is today discussing this extra layer behind NICE. We are talking about drugs that NICE has already decided are cost-effective, and giving NHS England the ability to delay them further without negotiation. The amount of antivirals such as sofosbuvir for hepatitis C that hepatologists can prescribe is rationed, even though we know that the most important group to treat are those who are well—not those who are almost bed-bound or near the end of life with cirrhosis—because they are the ones out in society spreading hepatitis C to other people.
It is important to consider the delay, which has two aspects. The first relates to very expensive drugs, which are usually for rare diseases. Looking back, almost none of the drugs that have got through in recent years would pass the new limit. Secondly, the total of £20 million means that regardless of how effective a drug is, perhaps for a common disease, it would not get through. If someone comes up with a wonder drug for type 2 diabetes, it would hit the slowing mechanism if it cost more than £20 million because of the sheer number of people that we would be dealing with.
The hon. Member for Ellesmere Port and Neston (Justin Madders) mentioned the impact of our withdrawal from the European Medicines Agency, but while he focused on the impact on the pharmaceutical industry, the impact on the patient is much bigger. Drugs are launched in America and Europe due to the sheer scale of the market, and countries such as Canada and Australia wait longer. The UK will also wait a little longer because we will no longer be part of a market of 500 million people.
The UK may also be seen as a hostile market, because it takes three to five years for cancer drugs to get into the NHS. As other doctors in this place will know, our patients face a delay in accessing new drugs, and anyone who thinks otherwise is fooling themselves. Pharmaceutical companies will simply think, “Well, we’re not going to get into the NHS for five years, so let’s go and do Australia and Canada. We’ll come back and deal with the UK later.” That delay to licensing in the UK would be a real problem, and it would extend to Scotland, too, because at the moment licensing is a UK-wide process. The drugs would therefore not be available to us outside the European Medicines Agency.
This issue is also important to UK research. If we fall so far behind that we do not use what is considered standard treatment, we will not be able to take part in trials of standard plus new. There is an absolute need to control the cost of drugs, but perhaps we need different discussions with pharmaceutical companies about how drugs come on. We need something more radical than this to find the sweet spot between the companies getting a return on their money, the NHS controlling the cost and patients getting access.
We also need to think about realistic medicine. Not every patient even wants access to the newest chemotherapy, and perhaps we need some hard discussions, and to be much more open with patients about what a drug will and will not do.
Question put, That this House disagrees with Lords amendment 3.
Health Service Medical Supplies (Costs) Bill
Wednesday 26th April 2017
(7 years, 6 months ago)
Lords ChamberRead Full debate Health Service Medical Supplies (Costs) Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 129-I Motion for consideration of Commons amendments (PDF, 65KB) - (25 Apr 2017)
Lord O'Shaughnessy
That this House do not insist on its Amendment 3B and do agree with the Commons in their Amendments 3C and 3D in lieu.
Commons Amendments in lieu
“( ) after “body” insert “and any other person the Secretary of State thinks appropriate”,”
“( ) After subsection (1) insert—
“(1A) Consultation about the proposed exercise of a power under subsection (1) must include consultation about the following—
(a) the economic consequences for the life sciences industry in the United Kingdom;
(b) the consequences for the economy of the United Kingdom;
(c) the consequences for patients to whom any health service medicines are to be supplied and for other health service patients.””
The Parliamentary Under-Secretary of State, Department of Health (Lord O'Shaughnessy) (Con)
My Lords, I beg to move Motion A. In doing so, I apologise to the House for the late change to the running order. Noble Lords who were expecting—or indeed hoping—that my noble friend Lord Nash would be taking the Bill through will have to make do with me.
We are here again to consider whether and how the Government can take into account the impact that exercising the powers in the Bill will have on the life sciences industry and on access to new medicines for patients who may benefit from them.
When we last debated these issues, I set out clearly the Government’s reasons for disagreeing with Amendment 3B. As I explained at the time, it would undermine one of the core purposes of the Bill by undermining the Government’s ability to put effective cost controls in place. This could encourage companies to bring legal challenges where cost controls have not in themselves promoted growth in the life sciences industry, seriously hindering the Government’s ability to exercise their powers effectively to control costs. This would have a detrimental effect if the Government were to take action to control the price of an unbranded generic medicine where it is clear that the company is exploiting the NHS, because the Government might be challenged on the basis that the action does not promote the life sciences sector. Nevertheless, as I am sure that all noble Lords agree, in such an instance it would of course be the right thing to do for the NHS, for patients and for taxpayers. The powers in the Bill that enable such action have received universal support in both Houses throughout the Bill’s passage.
Through our previous debates on this issue, we clarified that there was no intention to undermine the core purposes of the Bill; rather, the intention is to ensure that a mechanism is laid out in the Bill to ensure that the Government pause to reflect on the impact of any proposed statutory price control scheme on the life sciences industry, and on access to cost-effective medicines. With this clarity, the Government have now put forward their own amendment in lieu which will achieve just that, without undermining the Bill’s core purpose.
Consultation requirements are already set out in Section 263 of the NHS Act, prior to the implementation of any statutory price control scheme for medicines. Our amendment, which received support from all parties in the other place, would mean that the Bill would amend the NHS Act to include particular additional factors that must be consulted on. These are: first, the economic consequences for the life sciences industry in the United Kingdom; secondly, the consequences for the economy of the United Kingdom; and, thirdly, the consequences for patients to whom any health service medicines are to be supplied and for other health service patients.
The requirements are framed in this way in order not only to consider the economic consequences for the life sciences industry and for patients who may benefit from new medicines but to balance these factors against wider considerations. I am sure that we can all agree that, although a thriving life sciences industry and access to new medicines are highly desirable, it must not come at any cost and it is the Government’s responsibility to achieve the right balance and to be held to account for it. As with all consultations, the Government must give all responses due consideration before finalising policy. Setting these requirements out in the Bill does not limit the scope of any consultation on a statutory pricing scheme, offering both the Government and consultees the opportunity to give all relevant issues proper consideration.
The amendment is specific to Section 263 of the NHS Act—that is to say, the powers to put a statutory scheme in place for medicines. Where action is being taken against a specific instance of high prices, it would not be appropriate for it to be subject to such a wide-ranging consultation. In such cases, the NHS Act requires consultation with the appropriate industry body or bodies prior to the exercise of the powers.
With this amendment, the Government have therefore addressed the real intent behind Peers’ concerns, giving assurance of proper, balanced consideration of the effects of any statutory pricing scheme on the life sciences industry and patient access to medicine without undermining the Government’s ability to operate such a scheme. I hope that it will meet with the approval of the House.
Before closing, I thank the many noble Lords who have contributed not only to the development of the amendment but to the Bill as a whole. I thank the noble Lords, Lord Warner and Lord Hunt, and the noble Baroness, Lady Walmsley, as well as my noble friend Lord Lansley and the noble Baroness, Lady Finlay, for their contributions to improving the Bill. Finally, I also thank other noble Lords who have made important contributions to the debate, including the noble Lord, Lord Patel, and the noble Baronesses, Lady Masham and Lady Wheeler. I believe that we have worked in a constructive and open spirit and, as a result, the Bill is better and stronger than when we found it. I beg to move.
Lord Warner (CB)
My Lords, I am grateful to the Minister for the further thought that he has given to the amendment that your Lordships passed at an earlier stage. I am also grateful to him for his courtesy in showing me the amendments before he went forward with them; I very much appreciate that. I accept the Government’s arguments for the new approach that they have provided on the set of concerns that we had across the House about the adequacy of the provisions in the Bill on the life sciences industry and on speedy access to NICE-approved drugs. I accept their arguments that the original amendment was to some extent too restrictive on their freedom of manoeuvre when they need to act on unreasonable high prices. The Government have skilfully met the concerns of your Lordships’ House and I am very pleased to be able to support the amendment.
While I am on my feet, I will also thank the Minister for the courteous way in which he has listened to concerns throughout this Bill and taken the issues away, considered them with his officials and come back and tried to respond to many of the concerns. Across the Benches of this House, we are grateful for the way in which he has conducted the discussions during the passage of the Bill.
Lord Lansley (Con)
My Lords, I am glad that my noble friend is on the Front Bench to see this Bill safely through. I share with colleagues an appreciation of how he and officials from the department have worked consensually, carefully and considerately to try to make the Bill as good as we can make it. I welcome the amendments in lieu; they point to a sensible way forward in relation to the consultation on the statutory scheme. I would ask that my noble friend is equally clear that, in the negotiations leading to any voluntary scheme, Ministers will have regard not only to their statutory duties, as we have discussed, but to these considerations reflected in this amendment. One purpose of the Bill is to make a voluntary and a statutory scheme entirely consonant, one with the other.
The only other point that I would make is that, of course, when one passes legislation it is about not just the law but the administration that follows and accompanies it. In that context, it is important that Ministers take these powers, but it is equally important that in the administration of those powers, not least in working with NHS England and NICE, they work in the same constructive fashion to see that the impact on the life sciences industry and the accessibility of the best available treatments for patients, at a price representing value for money, are integral to the purposes of the legislation. I hope that they will equally be part of the further action that the Government take with NHS England and NICE to ensure that, however they manage the budgetary impacts as they must, they do so in a way that has the interests of patients and the country at heart.
Baroness Masham of Ilton (CB)
My Lords, I congratulate the Minister on his hard work on the Bill and his helpfulness. I have one question. As this is a global matter, how can the Government assure us that the prices of drugs will come down?
Lord Hunt of Kings Heath (Lab)
My Lords, I look forward to the Minister’s answer to that last question. From the opposition Benches, I very much welcome the agreed amendment that has come forward from the Government today. It is good to see how wash-up can concentrate minds no end, and we have reached a very satisfactory outcome. I am very grateful to the Minister and his officials for their co-operation on this.
The Opposition have been in no doubt whatever that it is absolutely right to take action against those companies that have clearly been abusing the system. We should also pay tribute to the Times newspaper for its campaign, which has opened up some transparency in a pretty murky area.
There are two key issues that need to be taken forward. First, the key message of debates in your Lordships’ House is that, in seeking to deal with this particular problem, we must not underestimate the contribution of the pharmaceutical industry to this country, to the economy and to the life sciences sector. We have a problem in that we are incredibly innovative in the number of new drugs that are developed in this country, but the NHS is finding it increasingly difficult to invest in them and patients are not getting the benefit.
The second is the whole question of balance between the statutory and voluntary schemes—the noble Lord, Lord Lansley, referred to this. I have reached the conclusion that the current arrangements are simply not up to scratch in relation to how government should negotiate with the industry in the future. The patent lack of transparency about the real price paid by the NHS for individual drugs means, in my view, that the arrangements are no longer fit for purpose. I hope that the Government—whichever Government are in power post election—will look afresh at the need for new arrangements in negotiation which get a fair price and also lead to the adoption of innovative new drugs for NHS patients.
Can the Minister say when he thinks the Government will be in a position to implement the key provisions in this Bill in relation to prices?
Lord O'Shaughnessy
My Lords, I thank all noble Lords for their warm words and I reciprocate those feelings: it has been a very interesting, challenging and enjoyable experience working with noble Lords on this Bill on what is—as the noble Lord, Lord Hunt, has pointed out—a critical matter. It is critical not just that we get the best possible prices for drugs and that we crack down on those who are trying to rip off the system, but that we make sure we are also supporting the life sciences industry and are improving access for patients.
I am particularly grateful for the work done by the noble Lord, Lord Warner, and I appreciate his support for this amendment. My noble friend Lord Lansley and the noble Lord, Lord Hunt, made the point about the equivalence between the voluntary schemes and statutory schemes. There is equivalence in law and equivalence in spirit. It is in the nature of voluntary schemes that they take into account issues around access and life sciences, because that is, in a way, why they come about. You would not have one if you could not have some agreement on that. By making this amendment today we have provided something that was taken into account by the voluntary schemes by moving it into the statutory schemes and providing that equivalence.
My noble friend is quite right about the need to work in a constructive manner. It is possible to create a system in which the interests of patients, industry and the NHS align. There is no necessary reason for them to be in conflict and, indeed, we all want a system where we have improved access and keen prices that raise the standard of care available on the NHS.
I join the noble Lord, Lord Hunt, in congratulating the Times on its investigations, which continue. Indeed, I think that there was a story at the beginning of the week or the end of last week about that. It has put a turbo boost under this, but clearly there is more to do. This Bill will allow us to get up stream and not have to wait until things get to the Competition and Markets Authority many years down the track; it will allow us to improve things up front.
As to whether the current arrangements are up to scratch and what might happen in the future, noble Lords will understand if I resist making a comment on what might happen in the future, or what a future Government might do. My own observation—this is my way of answering the question from the noble Baroness, Lady Masham, which I will avoid slightly—is that any new system ought to be trying to rebalance spending towards innovative drugs, which can of course be done in any fiscal envelope; it is not necessarily a point about spending per se but about the balance of spending. Any system would probably benefit from being both simpler and quicker. I am sure that is something that Ministers in the Department of Health, whoever they may be after the next election, will want to grapple with.
I thank my officials who have done a fantastic job and have worked very hard with noble Lords across the House on the Bill and on amendments. I am very grateful to them. I think that 24 government amendments have now improved the Bill.
On a personal note, I have very much enjoyed taking my first piece of legislation through your Lordships’ House. Pending the election result, it may be my last, but I hope it will not be. Others may disagree.
Lord Hunt of Kings Heath
My Lords, I will not comment on that last remark. The key clause is Clause 5. Can I take it that once the Bill receives Royal Assent the Government can implement that straightaway?
Lord O'Shaughnessy
I believe that would be the case. Of course, there is a difference between what officials can do and what Ministers can give instructions to do in a period of purdah. However, as soon as the measure is in law, it is enforceable.
Royal Assent
Thursday 27th April 2017
(7 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 3 February 2017 - (3 Feb 2017)