Prevention of Trade Diversion (Key Medicines) (EU Exit) Regulations 2020
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Lord Grimstone of Boscobel
That the Grand Committee do consider the Prevention of Trade Diversion (Key Medicines) (EU Exit) Regulations 2020.
Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
My Lords, I hope that the Committee will be unanimous in support of these regulations and their objective. I have no reservation in saying that these regulations perform a laudable function. They ensure that pharmaceutical companies in Great Britain can continue to produce and sell certain medicines to developing countries at a low cost to help fight key diseases such as HIV and malaria without the potential drawback of these medicines being reimported into Great Britain for sale at a price lower than the domestic market price.
As noble Lords will recognise, many of the poorest developing countries are in urgent need of access to affordable essential medicines for the treatment of communicable diseases. These countries are heavily dependent on imports of medicines because local manufacturing may be limited. Price segmentation between developing and developed countries is necessary to ensure that the poorest developing countries have access to essential pharmaceutical products at heavily reduced prices, while also ensuring that fair market prices in wealthier markets incentivise drug development and investment.
Pharmaceutical manufacturers will produce large volumes of pharmaceutical products at reduced prices for the developing world only if they are assured that these products will not find a way into developed countries’ markets. These regulations correct deficiencies in legislation to establish a procedure that identifies the products, countries and diseases covered and prevents the reimport of such products through seizing and disposing in accordance with national legislation.
These regulations were laid in draft before this House on 2 September. They are made under powers in the European Union (Withdrawal) Act 2020. The Committee knows that, given the context, those powers are limited. All that they allow is the correction of technical deficiencies in existing EU law that, by the operation of the Act, were retained in UK law following withdrawal. These regulations correct such deficiencies by, for example, replacing references to the European Union, its institutions and legislation with the appropriate UK references.
This statutory instrument follows the affirmative procedure because it transfers to the Secretary of State a power that currently sits with the European Commission. That is a power to amend the list of pharmaceutical products under the regulations and the criteria for products to remain on that list. This statutory instrument also replaces the requirement that pharmaceutical products, packaging and connected documents should be affixed with an EU logo with a power for the Secretary of State to make regulations providing for marking, labelling or other identification requirements. This relates to a logo more appropriate for the UK now that we have left the European Union. I beg to move.
Lord Grimstone of Boscobel (Con)
My Lords, I thank my noble friend Lord Lansley and the noble Lord, Lord Bassam of Brighton, for their contributions to this debate. I am pleased to acknowledge that they also support the reasoning behind the existence of regulations such as these; as I said, I completely concur with that. Let me respond briefly to some of the important questions that were raised directly by the noble Lords.
My noble friend Lord Lansley asked about the logo. Indeed, it is a rather fine logo; for those who have not seen it—I hope noble Lords with a classical education will not mind if I no doubt mispronounce this—it is the winged staff of Aesculapius, with a coiled serpent in the centre of a circle formed by 12 stars. Obviously, there is a relationship between this and other EU logos but it may be important in future, more so than just a sense of “Why can’t we have our own logo?”, to distinguish drugs that have come from the European Union and are subject to its regulations. Who knows, those may over time move differently from our regulations. We therefore need a logo of our own.
That is why the SI contains a power for the Secretary of State to make regulations providing for the marking, labelling or other identification requirements for tiered-price products as the Secretary of State considers appropriate. Obviously we would do this only in consultation with the manufacturers, and new labelling or other identifications will be provided for in future regulations after consultations with stakeholders.
It is perhaps a shame, given the benefit of these regulations, that only one pharmaceutical company takes advantage of them at the moment. The noble Lord, Lord Bassam, asked whether the Government should be more evangelical about the regulations. I suppose my answer is that in a sense the regulations are neutral. They are there for a pharmaceutical company to take advantage of when it makes an application. I am not sure it is the role of the Government to proselytise and evangelise about the regulations, but maybe the mere existence of this debate today will encourage others to raise these points and ask the valid question, “Why are these regulations not made more use of?”
The need for member states to report to the Commission is not relevant to the United Kingdom after withdrawal. This instrument provides for the Secretary of State to review from time to time whether a product listed as a tiered-price product fulfils the requirements of the retained regulation. How that will work is that information on imports and Border Force activity will be collected, reviewed and, where appropriate, made public by the Government as part of standard procedure. We will remain accountable to Parliament in relation to this in the usual way.
As I said, manufacturers or exporters of pharmaceutical products who wish their product to be added to the list have to submit an application to that effect. The noble Lord, Lord Bassam of Brighton, quite properly, and with a great deal of perception, asked what expertise there is in my department, the Department for International Trade, to handle applications in this area. I am happy to reassure the noble Lord that, although DIT has the role of approving these applications, we will work very closely with the Medicines and Healthcare products Regulatory Agency, the MHRA, which of course has the required expertise to assess any medicinal information provided by manufacturers or exporters, to ensure that all considerations are given appropriate weight.
My noble friend Lord Lansley asked about reporting under these regulations. As he noted—having, as always, done his homework very carefully—the last report was published in October 2015 by the European Union. As my noble friend said, the report said that although the net benefits of the scheme are small, what you might call the signalling impact of these regulations is very large, and it came to the conclusion that there was an economic justification for maintaining the regulation. My understanding is that the next report by the EU will be published towards the end of 2020. We await that to see whether it comes to a similar judgment.
The regulations set a requirement for the Secretary of State to publish a report before the end of the period of five years, beginning with the date on which this instrument comes into force. Because we are about to get a report from the European Union, I believe we will not be rushing to do a report of our own under these regulations. We will allow time to pass to assess how these regulations are used, and then we will bring a report forward in due course within the required timescale.
I hope that I have managed to answer all noble Lords’ questions in relation to this short debate, but of course if either of the noble Lords who spoke today wishes to approach me subsequently for any further information or clarification of the points that I have made, as always I will be delighted to do so. On that basis, I commend these regulations to the Committee.