Medical Devices and Blood Safety and Quality (Fees Amendment) Regulations 2023
(1 year, 1 month ago)
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Lord Markham
That the Grand Committee do consider the Medical Devices and Blood Safety and Quality (Fees Amendment) Regulations 2023
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
I am grateful to be here today to debate these important regulations. Before I turn to the detail of the statutory instrument before us today, I would be grateful for the opportunity to highlight the vital role that the Medicines and Healthcare products Regulatory Agency—the MHRA—plays in safeguarding our public health. The MHRA’s work to regulate medicines, medical devices and blood components for transfusion ensures that the healthcare products used across the UK are safe and effective. It charges fees to recover the costs of providing a direct service for regulatory work; these fees are set in statute and, as such, legislative change is required to amend them.
We have seen throughout the Covid-19 pandemic and beyond the innovative and agile regulator that the MHRA can be. It must therefore have a sustainable financial footing; this is particularly vital as it strives to achieve its vision of being a world class regulator, embracing the opportunities of EU exit and keeping patient safety and access to healthcare products at the heart of regulation without adding additional burden on to the taxpayer or the Exchequer.
This instrument updates the fees that the MHRA charges in relation to its activities regulating medical devices and blood components for transfusion. Its fees have been updated several times in the past to ensure that they remain appropriate, as is standard practice for government bodies that charge fees. However, to provide certainty and stability to the sector throughout the EU exit transition period and the Covid-19 pandemic, the MHRA has not updated its fees since the financial year 2017-18 for medical devices and financial year 2010-11 for blood components for transfusion.
Additionally, a recent change in the legal status of the agency has made the need for full cost recovery more acute. The MHRA previously operated as a government trading fund, which gave it the ability to retain and rely on cash reserves to better manage areas of under-recovery, notwithstanding the fact that fees should fully cover costs. However, since April 2022, following the review by the Office for National Statistics, the MHRA was reclassified from a trading fund to a market regulatory agency. As a result, the MHRA is no longer able to retain cash reserves.
Full cost recovery for the MHRA’s services has become essential to ensure the future financial sustainability of the agency. The SI therefore introduces amendments which fall into three categories. First, there is a 10% indexation increase on all fees. The indexation is linked to staff costs, which have risen in line with the wider Civil Service pay award by 10% since the last substantial MHRA fee increases in 2016. Staff costs account for over half of the MHRA’s total expenditure and therefore have a substantial impact on cost of fees charged. Secondly, there is a further uplift for a specific number of activities that were identified as significantly under-recovering via their fees to ensure cost recovery. Thirdly, there is the introduction of some new fees for services that require cost recovery since the last fee changes in 2018 for medical devices. The SI also introduces two new optional services related to clinical investigation of medical devices which industry may wish to use. These new services relate to obtaining expert regulatory advice or statistical reviews from the MHRA in relation to clinical investigation of a medical device.
The MHRA is obliged to recover the costs of its regulatory activities in accordance with the Treasury’s managing public money guidelines. The amendments that this SI will introduce to the fees for the MHRA’s regulatory work on medical devices and blood components are necessary to ensure that the MHRA recovers its costs associated with delivering these services. It is appropriate that the regulated bear the cost of regulation and that the MHRA does not profit from fees at the expense of industry.
The full cost-recovery approach ensures that the MHRA does not make a loss which would fall on UK taxpayers and patients to subsidise. The MHRA is committed to regularly reviewing its fees and ensuring that these remain fair and reasonable and continue to reflect the true cost of providing regulatory services. The MHRA is also committed to delivering a reliable service and publishes performance targets that are reported against in its annual report and accounts, which are laid before Parliament.
The fees updates are important to ensure that the MHRA has the resources it needs to deliver reliable services. The fees updates will, in turn, contribute to operating modernised systems and processes, recruitment and retention of skilled staff and keeping pace with technological advancements.
To summarise, with this instrument, we have the opportunity to ensure that the MHRA has the financial security it needs to support the delivery of a responsive and efficient regulatory service for the protection of patients and improvement of public health across the UK.
Lord Jones (Lab)
My Lords, I thank the Minister for his concern and his introduction on the very important matter of blood. Much detail is given by the department in the papers that we have, particularly in the Explanatory Memorandum. Clearly, a lot of work has gone into producing what we have before us.
Currently, a lengthy inquiry by a learned judge and his board is drawing to a close. It regards how, a generation ago, contaminated blood was given to unsuspecting patients, resulting in great distress—and worse—for not only the patients affected but their families. I think the learned chair will report soon; the Minister might confirm that.
My basic question is: can the Minister say what sort of people are involved in the receipt of these fees? One presumes that they are medical professionals or ancillaries who perhaps deal with the details of making available what is required. Can he give examples of the status, titles and work of those who receive the fees? He might agree that, on the face of it, the fee rise is steep.
Clearly, time has gone by, so I intend my interjection to be very brief, but I think I have raised a pertinent question. I rise in this Committee fairly often because I believe that many important regulations come to us, but debates are thinly attended. In many cases, what we consider in our debates here would be better taken on the Floor of your Lordships’ House. That is an opinion, but what we are debating now is very important, and I look forward to the Minister’s reply.
Lord Allan of Hallam (LD)
My Lords, we echo the Minister’s comments in praise of the agency for the valuable work that it does in the United Kingdom. Of course, we also want to make sure that it is effectively funded for that work, but we have a few questions on the instrument before us.
First, if we look through the Explanatory Memorandum, the Minister has already explained the item referred to in Paragraph 7.6, that
“the Office for National Statistics reclassified the MHRA from a Trading Fund to a Market Regulatory Agency”,
and said that this affected the way in which it can use cash reserves. In exchanges with the Minister prior to the Committee we talked about the fact that we do nerdy regulation in here. I am curious to know whether any more detail might be made available in writing or otherwise about the way in which that classification or reclassification can take place and the effect that it has, as clearly it may be relevant to other agencies in this space. Understanding what it means to move from being a trading fund to a market regulatory agency is quite important for our work more generally.
Specifically on the cost increases, paragraph 10.2 tells us that there was “a general acceptance” of the need for increased fees in the responses, noting that people said that there was an understanding of the need for an increase in the fees but that they expected to see corresponding consistency in the service that they were given. Again, I hope that the Minister can come back to that later and talk about the assurances that the industry is looking for with regard to the service. However, if we look in detail at the consultation responses, we see that they were not uniformly positive. If we look at the category 1 increases, which was the simple 10% indexation, it was 61% for and 39% against. However, if we look at category 2, where there are some cost-based increases—they are significant and we will touch on those—it was 56% against to 44% for, so clearly, people were more uncomfortable with that. When we come to the third category of new fees, opinion was just in favour but was more balanced: 55% for and 45% against. Importantly, the consultees were then asked whether they thought there would be some impact of the new fees structure on particular kinds of businesses, and 89% said yes and only 11% said no, so a significant number of the consultees felt that in particular small and medium-sized enterprises might be disproportionately affected. We should not gloss over that. I know that officials are trying to summarise things when they produce an Explanatory Memorandum but if you summarise, sometimes you lose these important nuances where there was a much more mixed picture in the response to the proposals.
Paragraph 12.1 of the Explanatory Memorandum tells us that the anticipated costs that will fall on businesses, charities and voluntary bodies will be £1.9 million per year, which is echoed in paragraph 25 of the impact assessment, where it says that these costs will fall on businesses. Of course, the direct costs do, but those businesses will in turn have to pass those costs on to someone, and in most cases the eventual purchasers will be NHS bodies. Therefore again, at one level, it will fall on the business; I do not think that the businesses will simply absorb that cost, and there will be an impact on the taxpayer which does not necessarily come out. I hope that the Government will look at that and at whether, perhaps by increasing the regulatory costs, perhaps for good reasons, we end up increasing the cost base of the equipment. The noble Baroness, Lady Merron, and I were just in the Chamber talking to a Question about the cost pressures on medical equipment and devices and the need to replace significant amounts of outdated equipment with more modern equipment. In many cases, that more modern equipment will go through this approvals process, which will add on cost, so we need to be mindful of that cost base impact.
That brings me to my last point, which was about the impact of the new costs—again, we should not lose sight of them. We get the detailed figures in the annex to the instrument, which is extremely helpful. However, certainly for medical devices, if we look at the status quo ante and the status quo post the adoption of the regulations—these are my rough calculations and I am sure that the people who advise the Minister will be able to do it in more detail—there are costs potentially of £40,000 or of that order under the current regime for somebody to get a new medical device through the designation process, the audit process, and so on. In many cases, those costs are increasing three or fourfold, so you are talking about somebody potentially having to find £150,000 and numbers north of that now to get a medical device through the process.
Baroness Merron (Lab)
My Lords, I thank the Minister for introducing the SI and the important provisions within it. As my noble friend Lord Jones said, it is an important SI, and we acknowledge the role that the MHRA plays and the need to increase the fees that it charges for regulating medicines and related products.
I appreciate that the Minister said that the MHRA has not increased its fees to this extent since 2016-17, which was in an effort to provide the industry with certainty and stability through the EU exit period and the challenges of the pandemic.
The noble Lord, Lord Allan, asked some questions the responses to which I would also be interested to hear. The consultation process was important, and I am glad that it took place and has guided the SI and its provisions, because the views of relevant stakeholders are key in making sure that we get things in the right place.
There is a clear acknowledgement from noble Lords that the MHRA needs to be financially stable, because it needs to be able to deliver regulatory services that protect and improve patient safety with high-quality, safe, effective and innovative medical products. I certainly welcome the greater clarity that the SI provides on the increased costs of providing quality care in our health services. However, I have a question for the Minister specifically on the SI. Where the increased costs of the fee simply cannot be absorbed by the NHS, which is already facing the worst of crises, could the Minister outline how the Government will ensure that the increase will be accommodated without affecting the stability of NHS finances and without impacting patient care? In other words, how will it be done?
I will make some more general points about the work of the MHRA. Innovative companies in this field often say that a key block to their progress—a key block to getting their work through the MHRA—is the speed, or the lack of speed, with which it can be processed. Can the Minister indicate how he will ensure that the MHRA stays up to speed with the latest advances and is able to process them as quickly as possible?
It would also be helpful to know how the department scrutinises and assesses the work of the MHRA. For example, what is the formal matrix for success and the speed at which it processes new devices? How well does the MHRA communicate with other organisations in the sector? What engagement does the department have with the MHRA, both to hold it to account and to improve its practices?
In drawing my more general points to a close, I note and welcome the recent announcement of the extra £10 million of funding for the MHRA. Can the Minister outline the blocks to quick approval to which this money will be targeted? How will the impact of this additional money be measured, and is it sufficient to deliver the service we need to ensure that UK patients have faster access to the most cutting-edge medical products in the world? As part of the additional money, the Chancellor announced last week that treatments already approved by “trusted” regulators internationally would be nearly automatically approved. Which countries are counted as “trusted”? Has an impact assessment been carried out for this change and, if so, can it be published?
We are always looking forward and looking to make further strides in patient safety, it is certainly my opinion that this statutory instrument takes us further along this route, and we welcome it.
Lord Markham (Con)
I thank noble Lords for their contributions today and, as ever, will try to reply and follow up in writing where necessary. I shall try to take them in order, for ease. The noble Lord, Lord Jones, asked who is working on the bloods, for want of a better word. We have qualified professionals who are working to WHO standards, such as phlebotomists. Related to this was the question of who is in receipt of these fees. It is twofold. Obviously, a lot of fees go to fund MHRA itself, but a lot of the cost base is when it is hiring in subject-matter experts. In that case, they get the fees.
The general point raised by all noble Lords was the basis of this. As I said, it is a cost-recovery model. There are swings and roundabouts there, but it has tried to ensure that where there are bigger increases, it is only because that is the legitimate cost, but on average it comes to about 12% to 13%. I think that we would all accept that, for something that has not increased since 2016-17, that is reasonable. It is quite a bit behind inflation. That notwithstanding, I am very alive to the impact on SMEs, having been, as I said, in a similar space myself in the past. There are easements and waivers that can be applied, if that is the case.
To the general point about how we are trying to keep up with the speed of advances in the industry, it is very much the understanding that the industry is providing a service. Of course, safety must always be paramount, but it is a service to bring in innovation and attract new people into the sector. It has a transformation programme to ensure speedy replies—but I was pleased to hear that it is also looking to introduce a consulting service to help companies get into the field. That will be different from the regulatory side—obviously, we need a Chinese wall between the two. But it is recognised, especially for a small company, which does not have a regulatory team in place, that being guided and hand-held through the process, and having someone to tell them that this is what they need to do to get in, is very important. That is something that it is committed to doing.
As for holding the MHRA to account, to be candid, I see that very much as my job. That is obviously for officials as well, but I have the brief for the ALBs, and I set up regular meetings with them. As I said, I am very much alive to the fact that that is needed to make sure that it really is serving the industry properly. Part of holding it to account is about making sure that it is providing a decent service level. That is something that I will look for it to carry on doing. Consultation is useful as a formal process, but it should always talk to its customers and get that sort of feedback.
I have to fess up that I probably cannot answer some of the nerdy questions right now, particularly on the reclassification of the agency. I will have to phone a friend or get my colleagues to reply on that point. Likewise, I think we would all agree that the extra £10 million is welcome in this space. How the MHRA will go about that distribution and how it will measure that effectiveness is something I will follow up in the detailed letter that I will send.
Similarly, on which countries are counted as “trusted”, my understanding is that often the MHRA looks at the processes that are in place—again, I will come back in detail on this. Rather than a country being trusted, per se, it is more about the scrutiny process that it undertook. Obviously a regulator would be accepted as good in a place, but again, I have some personal experience. If you can see that the CDC or the FDA has gone through a very similar process, does it really make sense to do that all again? Clearly, it is felt that I have not quite answered the question—but I mentioned the waivers.
At this point, I hope I have covered most of the questions that I can right now, but I will follow up in detail. I appreciate that noble Lords are generally supportive of what we are trying to do here, and that we all agree that the MHRA has an important part to play and that the cost recovery is a reasonable approach, particularly with some of the price increases in recent years. As I said, I will happily follow up in writing. On that, I commend the regulations to the Committee.