Health Service Medical Supplies (Costs) Bill

Debate between Baroness Finlay of Llandaff and Baroness Redfern

Committee: 1st sitting (Hansard): House of Lords
Monday 23rd January 2017 Grand Committee

[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.