Residential Care

Lord Lansley Excerpts

Monday 6th February 2017 Lords Chamber

[Lord O'Shaughnessy]

The noble Baroness raises an incredibly important point. Patients end up in hospitals for a variety of reasons and it is not always the best setting for them. The kind of care she describes is important; it might be rehab centres or cottage hospitals. Indeed, what we are seeing through the sustainability and transformation plans are ideas for intermediate care and step-down care that provide exactly the sorts of things she is talking about.

[Lord Lansley (Con)]

Does my noble friend recognise that when care users go into a residential care home their own home is very often included in the means test, even if subject to deferred payment? However, if they receive their care at home, their own home is exempted. This both reduces the resources available to support care and also creates a disincentive to go into care homes for people for whom it might be the best result. Does my noble friend recognise this as an issue we should look at?

[Lord O'Shaughnessy]

The most important thing when providing care is that it is in a setting that people want and feel comfortable with. There is, of course, a trend towards more domiciliary and supported housing for precisely that reason.

Health Service Medical Supplies (Costs) Bill

Lord Lansley Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 25th January 2017 Grand Committee

Moved by

[Lord Lansley]

32: Clause 6, page 5, line 32, at end insert—
“(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.

--- Later in debate ---

I hope that my explanation of the Bill and the two sets of illustrative regulations has clarified that the Government have carefully considered the issues of disclosing confidential and commercially sensitive information by restricting in the Bill the purposes for which information can be required and to whom information may be disclosed. I hope that I have also clarified that there is an appeal mechanism in place, albeit in a slightly different manner than that proposed by the amendment. On that basis, I ask my noble friend to withdraw his amendment.

[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.

Amendment 32 withdrawn.

Health Service Medical Supplies (Costs) Bill

Lord Lansley Excerpts

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

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

Moved by

[Lord Lansley]

10: After Clause 3, insert the following new Clause—
“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.””

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Amendment 10 withdrawn.

--- Later in debate ---

Moved by

[Lord Lansley]

16: After Clause 5, insert the following new Clause—
“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.

[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.

--- Later in debate ---

I say to both my noble friend Lord Lansley and the noble Baroness, Lady Finlay, that I have great sympathy for the intention of their amendments in this group and the previous group. I would be very happy to meet them individually to discuss the substance of their proposed amendments to see what more could be done, not necessarily through the Bill, but through any other kind of intervention that might be possible, to deliver something that has come up again and is in constant tension with the other thing that we care about, which is access and keeping prices down—something that we all want to achieve. On that basis, I ask my noble friend to withdraw his amendment.

[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.

Amendment 16 withdrawn.

Health Service Medical Supplies (Costs) Bill

Lord Lansley Excerpts

2nd reading (Hansard): House of Lords
Wednesday 21st December 2016 Lords Chamber

[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.

Adult Social Care

Lord Lansley Excerpts

Tuesday 15th November 2016 Lords Chamber

[Lord Prior of Brampton]

I cannot answer specifically the question raised by the right reverend Prelate, but I would say that voluntary and support groups of the kind that he mentions have a hugely important role to play in delivering social care. I visited Crossroads in Gloucester with the noble Baroness, Lady Royall, last Thursday and was struck by the extraordinary work that voluntary groups do—and what carers do, of course. If we relied purely on statutory services, the whole health and social care system would collapse tomorrow.

[Lord Lansley (Con)]

My Lords, my noble friend will recall that in the coalition Government, Andrew Dilnot and his team produced a report on how to give longer-term sustainability to social care and enable people not to suffer catastrophic losses when they are long-term care recipients. Will the Government commit not only to introducing the Dilnot recommendations but, perhaps earlier, to funding it, and to do so by bringing the domiciliary care means test in line with the residential means care test, which would raise £1.3 billion a year?

[Lord Prior of Brampton]

My Lords, the Government are committed to introducing the proposals of the Dilnot commission by the end of this Parliament in 2020, and I understand that during 2017-18, we will bring back those proposals to refresh them, but with a view to phasing in implementation in 2020.

NHS Funding

Lord Lansley Excerpts

Monday 31st October 2016 Lords Chamber

[Lord Prior of Brampton]

I entirely agree with the comments made by the noble Lord. We have to integrate health and social care to a much greater extent. We also have to integrate healthcare: healthcare is delivered in silos and is highly fragmented around the country, and that comes out of the same budget, so he is absolutely right. However, we have to recognise that another massive reorganisation between social care and healthcare could be highly disruptive. The great beauty of the STP process is that people in local areas—local authorities, health providers and commissioners—are sitting around tables coming up with plans for their local areas.

[Lord Lansley (Con)]

My Lords, does my noble friend agree that it is only by virtue of the 2012 Act that NHS England is an independent body, able to express, on behalf of the NHS, a plan for the future, and that this would not have been possible otherwise? Will he further confirm that the coalition Government, in the last Parliament, met their promise to increase the NHS budget in real terms, year on year, but that that promise applied to an NHS budget that included public health and NHS education and training? The NHS’s future sustainability requires a more preventive approach and increased numbers of domestically trained NHS staff.

[Lord Prior of Brampton]

I entirely agree with my noble friend that the independence of NHS England has been very important. Had the NHS plan been developed by politicians it would have had a lot less credibility. I entirely agree that prevention and public health are hugely important, but of course it takes a long time for public health initiatives to have an impact, so I do not think that any reductions in them in the last two years will have any major impact over the five-year period. Clearly, it will have an impact over a longer period. As for the changes to Health Education England, those savings have largely been generated by moving from a bursary system for nurses to a loans system, which will actually deliver more nurses and therefore help to deliver the five-year forward view.

Drug-Resistant Infections

Lord Lansley Excerpts

Thursday 15th September 2016 Lords Chamber

Moved by

[Lord Lansley]

That this House takes note of the report Tackling Drug-Resistant Infections Globally: Final Report and Recommendations, published on 16 May.

[Lord Lansley (Con)]

My Lords, it is my privilege to be able to introduce a debate on the subject of tackling drug-resistant infections and in particular to take note of, and certainly to welcome and take forward in our debate, the review on antimicrobial resistance led by my noble friend Lord O’Neill. It is a great pleasure to see him in his place for the debate.

In his 1945 Nobel Prize lecture Alexander Fleming said, some 17 years after his discovery of the antibiotic properties of penicillin:

“Then there is the danger that the ignorant man may easily underdose himself … He buys some penicillin and gives himself, not enough to kill the streptococci but enough to educate them to resist penicillin”.

Those words were prophetic in terms of the emergence of antibiotic resistance, which did indeed occur shortly thereafter. But for the subsequent 40 years or thereabouts, although such resistance did regularly emerge, the discovery and development of new antibiotics gave us all an increasing reassurance that no longer would we fall victim to infections either as readily or as rapidly as did our forebears. The burden of mortality, particularly in developed countries, has shifted from infectious diseases to non-communicable disease. Over time, however, the development of increasing antibiotic resistance across a range of bacterial infections has outstripped the limited further development of novel antibiotics, and the extent of the use of the drugs which are currently available has increasingly prompted the development of organisms capable of near universal resistance.

In this decade, and especially over the past three to four years, we have seen a most welcome high-level political and scientific awareness and response to the risks we face from antimicrobial resistance. In this country, not least following the urgings of the Chief Medical Officer, to whom I pay tribute in this regard, the coalition Government adopted in 2013 a five-year strategy. In 2014 the Prime Minister asked my noble friend Lord O’Neill and his team to look at the global response. Working with the Wellcome Trust, the review has produced a series of reports over time describing the extent of the risks we face, how to seek to contain those risks by extending the life of our existing antibiotics through reducing unnecessary use not only in humans but also in animals and the environment, how to speed up diagnosis so as to deliver the right treatment by limiting the use of antibiotics to what is necessary, and to promote the development of new drugs, vaccines and other approaches to combating infections.

Those several papers were brought together in May this year in the review’s final report. I am most grateful to your Lordships’ House for the opportunity to debate that report soon after its publication, and in particular to do so in the wake of the discussions at the G7 and the G20, and in anticipation of the UN high-level meeting on antimicrobial resistance next Wednesday, to take place in the General Assembly. I see our short debate as needing to enable this House to talk about how we move forward from the analysis, work and achievements thus far to try to generate more action and measurable progress. If we do not, my noble friend Lord O’Neill’s report quantifies the risk we face: in the next 35 years the mortality attributable to AMR could rise from 700,000 across the world to some 10 million. Our children and grandchildren could be vulnerable to infections we thought we had conquered.

We need to avoid seeing this as simply a future threat. It is a clear and present danger. If I may, I will delve into the review’s report for one example, which I thought conveyed that very persuasively. It is about dealing with drug-resistant E. coli. Its prediction of what it might look like in 35 years’ time was that some 40% of the economic impact of drug-resistant infections would be attributable to drug-resistant E. coli. But that drug-resistant E. coli is already with us. Incidence of carbapenem-resistant E. coli has doubled between 2008 and 2013 in the United Kingdom alone. There are countries in Europe where it is endemic. The last-line antibiotic to combat it is not always now effective. There are isolated incidents of it failing.

In its methodology, the review conducted research to look at what would happen if, over the next decade, there was an increase in drug resistant E. coli similar to the increase in the last decade of a parallel pneumococcal bacterium. Using that assumption, it would mean that in Europe by 2026, which is only 10 years from now, 40,000 more people would die from E. coli infections as a result, but if we were to develop the additional new and rapid diagnostic systems we need, that in itself could save 6,000 of those lives. If a new antibiotic to combat it were available, a further 7,300 lives could be saved. That is a measureable, specific example of the threat we face and combat, not at some distant time, but now.

We should thoroughly welcome the report and focus on how we now turn this into action. If the House will forgive me, I will not dwell on the importance of the reduction of infection itself through the adoption of the most rigorous means of dealing with hygiene and clinical practice. We have done that a lot over the years. We can demonstrate in this country that after 2006 and all the way through to now, and, I am happy to say, under the coalition Government in the last Parliament, we continued to see a dramatic reduction in the incidence of MRSA and Clostridium difficile in our hospitals. We can take some pride in what we have achieved, but it needs to be true for combating all bacterial infections.

In addition, we need now to have measurable progress. Key to that is surveillance. This is a global threat and we need surveillance globally to be at a high level. I am sure my noble friend the Minister will refer to the Government’s Fleming fund, which gives us a place and resources that can make a dramatic impact on that surveillance. However, my first of a number of suggestions is that through the Department for International Development and the deployment of our international aid budget we can say to the people of this country that that budget can be of direct, significant benefit to them, not only if we deploy it in reinforcing basic health systems in many of the most vulnerable countries—the importance of developing that basic health infrastructure was demonstrated during the Ebola outbreak—but also if we go on to make sure we have lab capacity and surveillance systems, diagnostics and treatment protocols enabling us to combat the rise of drug-resistant infections.

We need quantification of this here and in developed countries. As with everywhere in my experience of healthcare systems, understanding variation and the reasons for it, and combating the worst to bring everybody to the level of the best, are critical. The quantification in this respect shows at least a threefold variation in the use of antibiotics in developed countries. Some use far more antibiotics than other countries. We are not the least: countries such as the Netherlands have extremely good records on antibiotic use. We need to bring everybody not through their national action plans but in the global system to the best possible level of activity.

I focus for a moment on animal health. The One Health model, in working together with the veterinary world, characterises the approach of the World Health Organization to this. It is really important that we reduce the unnecessary use of antibiotics in animal health. Of course, we cannot say that there should not be proper use of antibiotics for animal health but we must reduce the level of prophylactic use in animals. We should look—as I know the Americans are, and we are in Europe—for the elimination of antibiotic use simply for the promotion of growth in animals rather than for treatment. We should make sure that the use of antibiotics in animals is properly subject to veterinary supervision. We should also consider reserving the necessary but small number of last-line antibiotics for human health purposes rather than have them deployed in animal health, with the finite risk of infections forming drug resistance in animal populations and spreading to humans.

The improvement of rapid diagnostics is terrifically important. The Longitude Prize demonstrated public awareness and support for developing cheap, accurate and rapid point-of-care test kits for bacterial infection. That is vital and I hope we will hear more about it. The technology platforms and many of the assays are there. In the NHS, often there is a tendency for innovation, for promoting innovation and seeking to bring it forward, but then it all stops at the moment it should be rolled out through a procurement process within the NHS. In this context, now is the moment to think about putting into the NHS mandate, to be published later this year, specific proposals relating to the NHS England approach to the rollout of rapid diagnostics and the resistance of antibiotic use in the NHS. For example, in America, two-thirds of antibiotics are frankly not needed by those to whom they are prescribed.

I will not dwell on regulated co-operation but frankly we must do a lot of that in clinical trials. Some 80% of the cost of developing a new drug is in clinical trials. If we can make clinical trial practice across the world more consistent and easier to achieve, we will do an enormous amount to bring through new medicines. We must do that; we must bring through new antibiotics. Vaccines have a lot to offer in this respect. Perhaps at the moment we underestimate what we can do. It would make an enormous difference in reducing the overall use of antibiotics if some common infections, such as Clostridium difficile, were capable of being immunised against. We would see the prospective benefit of that. We should use vaccines as a cost-effective approach wherever we can.

On generating new treatments, the US has gone down the road of generating antibiotic incentives though the GAIN system, which gives priority review and market exclusivity. Frankly, if we want a global response we should look at how successful that system is. The US has approved five new antibiotics so far under that proposal. It could be allied to market entry reward, as the review recommends, and that reward could be made much more affordable across the world if market exclusivity—even a transferable market exclusivity—could be allied to it.

Let me conclude. Those are some of the key areas; I have not attempted to talk about all 10 key recommendations. Getting that One Health approach by working on animal as well as human health, as I have described, and really focusing on rapid diagnostics, where we could make an enormous impact quickly with technology that is already available, can take us a long way. However, we need the global system to respond. The G7 recommendations that I read seemed compelling and supportive but did not actually involve much pledging—for example, to support the global innovation fund which Her Majesty’s Government have put in place. That fund needs to be matched and added to by other countries around the world to bring forward new treatments. In the G20 conclusions, I saw that one paragraph at the end—almost an afterthought—simply called for a report back over the course of the coming year to the Berlin meeting. That seemed disappointing.

I look very much for the UN high-level meeting to take measurable and decisive actions in this respect. It is always difficult. I was a chair of a High-Level Meeting on Non-communicable Diseases, back in 2011, where we thought that we might be able to generate a response similar to that of the high-level meeting on HIV many years before. I do not think that it happened. However, what we need for antimicrobial resistance is for the UN high-level meeting next Wednesday to generate the sort of global response in tackling this threat that we saw years back by the UN high-level meeting in relation to HIV. That is what I would like us to achieve. I hope that more of the contributions in today’s debate will prompt that to happen. I am grateful to your Lordships.

--- Later in debate ---

[Lord Lansley]

My Lords, I have been in your Lordships’ House for less than a year and once again I am reminded of how much relevant expertise can be brought to an important subject—in this case an extremely important subject—even in the course of a short debate. I am most grateful to all noble Lords who contributed to the debate. It not only gave force to the report we are taking note of and reinforced our thanks to my noble friend Lord O’Neill of Gatley and his colleagues for an excellent review that is a basis for taking action, but illustrated in a number of specifics how that action should be taken forward, highlighting some of the opportunities that lie ahead in tackling the extremely dangerous situation in which we might otherwise find ourselves.

I was grateful to my noble friend Lord Rees—if I may call him that on a Cambridge basis. The Longitude Prize and the work that went into it demonstrated magnificently that there is public recognition and awareness of the importance of tackling antibiotic resistance and doing so rapidly. I had not realised that there is a 30 minute/90 minute distinction between us and the United States, but I am with the Longitude Prize panel here in saying that we are looking for 30 minutes. These kinds of rapid, desktop, easy-to-use diagnostics can make a fabulous difference: first, in identifying viral rather than bacterial infections—innumerable prescriptions are issued for antibiotics for what turns out to be a viral infection—and in identifying what character of infection we are dealing with and to what antibiotics it may be susceptible. That will make a dramatic difference, and what the noble Lord said about that work was encouraging. That is of the moment; in the current few months that work is being reviewed and it will be reviewed regularly over the period ahead.

I am grateful to my noble friend Lord Selborne for sharing the expertise of the Science and Technology Committee. We were reminded of the previous work of the committee, to which he brought his expertise. He reminded us that the survival of the most adaptable organisms is a demonstration of the underlying biological power of bacterial infection which we have to deal with—we have to be eternally vigilant about that. I will pick out one other thing. He talked quite rightly about the Davos declaration and the relationship with the pharmaceutical industry. The declaration in January was important but we have to take this forward.

I am not sure that I have yet heard from my noble friend Lord Prior in his response to the debate how we can mobilise on a global basis a system of incentives for market entry that we know will be effective in mobilising the pharmaceutical industry’s capacity—to the extent that it has such capacity—to find new treatments. Clearly there is a desire on the part of the industry for this to happen and a desire on the part of Governments to make it happen, but different and distinctive approaches are being taken, whether it is the American one, the market-entry process or the European support for innovation. We need to bring these together, and if we are to deal with this globally, we need to look for a global solution among some of the leading countries. My personal view is that a combination of extended market exclusivity plus a market-entry incentive could be affordable and achievable. I hope that that will be taken forward by some of the leading Governments working together.

The noble Lord, Lord Trees, reminded us compellingly of what has been done in this country and needs to be done elsewhere. That is the essence of it: it is about taking the example of this country and making it global in tackling inappropriate and extensive antibiotic use in animal health, agriculture and the environment. That can be done, as we have demonstrated here.

As the noble Baroness, Lady Walmsley, among others, said, there may be a role for us in trade control and in trying to make sure that it is not productive or profitable for people in other countries to produce food through the inappropriate use of antibiotics. We should certainly look at that.

I am grateful to my noble friend Lord Colwyn for talking about how we can find new treatments. I was always aware of the disinfectant properties of hydrogen peroxide but I was not aware that reactive oxygens specifically could achieve the control of infections in individuals.

The noble Baroness, Lady Hayman, rightly illustrated why vaccines could constitute the most cost-effective and important approach. The noble Baroness, Lady Walmsley, also mentioned vaccine development, and these questions need to be taken up.

Finally, with the high-level meeting coming up, I will say this to my noble friend the Minister: I hope that the Government will take every opportunity next Wednesday to encourage those at the meeting to look for quantified progress in the way that our national action plan does and some other national action plans do. There is no reason now why we should not look for a global action plan that has quantifiable targets. Allied to that, we need more pledges to support the funding that the British Government are putting forward. I hope that, through the high-level meeting, there will be structural follow-up.

The Minister referred to the G20 and said that it was looking to return to this next year, but that is not sufficient. We want structural action to take place straight after that meeting. I am very grateful to your Lordships for their contributions.

Motion agreed.

NHS: Health and Social Care Act 2012

Lord Lansley Excerpts

Thursday 8th September 2016 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am sure that we are grateful to the noble Viscount for initiating the debate. I hope that the debate will be more directed towards the future of the National Health Service, its sustainability and how it can achieve improving quality. I do not, therefore, propose to examine in detail the many assertions made in the noble Viscount’s speech, but I put on record that I think there were many errors in what he had to say about the past.

On one particular point, from my personal point of view, I will just say this. As the Conservative Party’s lead spokesman on health for more than nine years, I am proud that, with David Cameron’s active support, we made it very clear that we would not at any point countenance a shift away from the NHS as a comprehensive, universal service, available free at the point of use and funded out of general taxation. I am also proud that, in the midst of the financial imperatives that we faced in 2010, he and I, together with our Liberal Democrat colleagues in coalition, gave the NHS the priority that it needed and increased its budget in real terms through the last Parliament.

What did the Health and Social Care Act set out to do? It was and has been a structural change. It was founded on a set of principles that were not new to the National Health Service at all. Over the preceding 20 years, pretty much every Secretary of State agreed, with the exception of Frank Dobson—the noble Viscount in his speech was at least even-handed in condemning past Labour Governments and coalitions as well as the Conservative Party—that we needed to devolve responsibility within the National Health Service, to give greater freedoms to providers to promote patient choice and indeed to be very clear about the distinction between the commissioning function and the provider function. I make no bones about the fact that it is designed to create a stronger commissioning structure. Where I agree with the noble Viscount is that that is as yet an unfinished task.

There is a constant pressure within the National Health Service for the providers to control the structure of activity and for commissioners, not independently, to use their budgetary and statutory powers to determine what is in the best interests of patients. That actually is what is in the Bill. It does not say that there has to be compulsory competitive tendering. It does not tell the commissioners how they should go about it in terms of the use or otherwise of competition. What it says is that they have to use their powers in order to deliver what is in the best interests of patients, and if there is something that does not involve competition, they are entirely at liberty under the statute to do exactly that.

Secondly, what did the Health and Social Care Act not do? It did not introduce competition. There is a reason why the noble Viscount referred to 2006 as the starting point for his analysis of private sector activity on outsourcing in the National Health Service. It was in 2006 that the previous Labour Government introduced it. PFI is the largest element of privatisation, and there is nothing in the 2012 Act that requires any extension of privatisation. On the contrary, it did away with the past Labour Government’s ability under the law to discriminate in favour of the private sector. There is no potential to do that. The only reason why any commissioner should use the private sector is because it would provide a better service and at a lower cost. Actually, we shifted the structure of “any qualified provider”—which is not in the Act—from a cost basis to a quality basis; it has to provide a better quality and they are on the same tariffs.

What the Act also did not do is create deficits in the National Health Service. I am proud of the fact that, in the three years during which I was responsible for the financial situation in the National Health Service, it was in surplus all that time and, indeed, not on a declining trend. The number of trusts in deficit in 2013-14 was proportionately the same as in 2009-10. There are subsequent reasons why the NHS has shifted into financial deficit. It is partly to do with the Francis report, which came after I ceased to be Secretary of State. It is not that it was not a good report, but the response to it focused on the extension of staffing and measuring staffing, with the consequent impact on agency costs not least, rather than a focus on outcomes. I am proud of the fact that the outcomes framework for the National Health Service and a focus on quality and outcomes were at the heart of the reform process—and should be, and often still is not. Too often, the debate about the National Health Service is completely obsessed with inputs and activity levels, and far too little focused on outcomes. We have an outcomes framework and we should focus on it.

What do we need to do in the future? We should not, in my view, revert to monopoly. Sustainability and transformation plans, while they are rightly the product of collective and collaborative working, should not attempt to create monopolistic structures in the NHS because a monopoly in the NHS would do exactly the same thing as it does anywhere, which is to pretend, through offering short-term benefits, to provide long-term benefits but actually to entrench provider interests as opposed to the patient interests. We should not restrict choice and we should not end clinical commissioning. We should not allow the commissioning function and the provider function to be submerged into one organisation; they are distinct and separate, and the conflict of role between those two should not be confused. As to sustainability and transformation plans, we should not allow them to become what they were back in 2006, when there were substantial deficits, albeit at a time of rising resources. We should not allow them to be an effort to try to constrain demand by restricting supply, which is what tended to happen back in those days.

What we need is more integration, and the Act led, through health and well-being boards and the role of local government and its ancillary additional functions on public health, to a real opportunity for greater integration. The commissioning function should involve local government and the NHS very much working together. One of the principal reasons for the deficits is the lack of reform in social care, and we should implement Dilnot. As I have said in this House, there were reasons why it was not done, which I do not accept. It should have been done, it still must be done and it should form part of an input to social care.

Finally, we must acknowledge the necessity for the NHS to have the resources it needs for the future. Time does not permit me to explain all that, but we never would have anticipated in 2010 that we would go for a full decade with a less than 1% real-terms increase year by year. We have to accept that the sustainability of the NHS requires resources for the NHS and for social care on a scale that is not presently anticipated in the current spending review.

Tobacco and Related Products Regulations 2016

Lord Lansley Excerpts

Monday 4th July 2016 Lords Chamber

[Lord Faulkner of Worcester]

It is very interesting, because in countries which take tobacco cessation seriously, the tobacco industry is switching to vaping, as it knows its traditional market is largely lost. Only last month, in this country, it attempted to undermine public health by trying to overturn the standardised packaging regulations. It cannot be trusted.

Finally, I share my noble friend Lord Hunt’s call for continued funding for stop smoking services, making them accessible and available to all smokers, and for such services to work with electronic cigarettes. It is wrong that these services are being cut back while the regulations are being introduced.

Our aim must be to be as ambitious as the most committed nations are in achieving a tobacco-free society over the next few decades. Over the last 10 years, we have already come a huge distance in changing public attitudes towards smoking, which is now largely seen as a socially unacceptable behaviour. My concern over vaping is that it must not in any way renormalise the smoking habit.

[Lord Lansley (Con)]

My Lords, from my point of view, my noble friend Lord Callanan chose to talk very selectively about the record of the Conservative Party and the coalition Government in relation to tobacco control. I think he should bear in mind that Conservatives—myself, my noble friend Lord Young of Cookham—worked hard from the Opposition Benches in another place, and succeeded in securing the ban on smoking in public places. When we came into the coalition Government together, we implemented the ban on sales through vending machines and a progressive ban on displays in shops. I also initiated the consultation on standardised packaging, following discussions with Nicola Roxon, who was then Health Minister in Australia, which my successors have taken forward. The product of all that is that we have not only secured continuing reductions in the overall prevalence of smoking—albeit I could wish this rate was faster—but we secured, I think three years ago, recognition that we had among the toughest tobacco-control regimes anywhere in the world. That is right and we should strive to make that the case.

I know it would not be the effect of the Motion in the name of my noble friend Lord Callanan, but were it passed it would indicate your Lordships’ desire to withdraw the regulations if they could. That would be an entirely retrograde step. I will not go through all the ways in which the tobacco products directive helps to strengthen the tobacco control regime other than in relation to e-cigarettes, but it certainly does.

I will isolate one important point which has not yet been mentioned. Much of what we have done in recent years, from my point of view and that of my colleagues—Anne Milton when she was Public Health Minister, and I believe it was among Anna Soubry’s and Jane Ellison’s objectives subsequently—was to focus on reducing the initiation of smoking among young people. We have some 200,000 young people a year initiating smoking. That is what we have to bring down. We want to arrive at the point where the initiation of smoking is minimised. As part of that, we have to look frankly and critically at how electronic cigarettes and vaping can contribute to the reduction of smoking, through access to smoking cessation services. It is absolutely right and I do not have any brief against e-cigarettes in that respect. But, to pick up the final point made by the noble Lord, Lord Faulkner of Worcester, we have to understand what the social and behavioural impacts of large numbers of people continuing to smoke e-cigarettes in the long term look like. I am not sure that promoting it through advertising is necessarily the right way to go.

We should enable smokers to access e-cigarettes and vaping, and do everything we can through the public health budget. Noble Lords will know—I will go into it on another day when more time allows—that my objective in creating a separate public health budget with local authorities was to maximise and protect our preventive activity, not to see it subsequently reduced. I deplore that fact because we were making considerable progress with smoking cessation services, as we should. But we also have to ensure, in addition to the use of e-cigarettes in a way that reduces smoking, that we do not create a new mechanism which might entrench in young people an expectation that they should initiate any kind of smoking, be it through vaping and using e-cigarettes or, even worse, through smoking tobacco. For that reason I agree entirely with many other speakers that it would be undesirable to support my noble friend’s Motion, and I hope that the Minister will agree that we should reject it.

[Lord Rennard (LD)]

My Lords, the noble Lord, Lord Lansley, is to be greatly congratulated on his tremendous record of achievement in this area, and his advice this evening should be followed very carefully. I must declare my interest as a former director of Action on Smoking and Health. There is a consensus in the debate that using e-cigarettes is much safer than smoking. Together with other clean nicotine products, they have an important role to play in cutting tobacco consumption and improving public health, but I do not agree with the e-cigarette trade body brief which has been circulated. It claims that nicotine is not itself dangerous. As the noble Baroness, Lady Hollins, pointed out so effectively, we have to recognise that nicotine is a known toxin that is poisonous when swallowed and is also addictive.

I do not want to see e-cigarettes subject to more regulation than is necessary, but I do want to see them subject to all the appropriate regulation necessary to support public health objectives. We know that the best chance of success for people seeking to quit smoking is to use smoking cessation services as well as alternative nicotine products in order to help reduce withdrawal symptoms. The regulatory regime required for e-cigarettes and related products must be one that supports their use by smokers trying to quit. It is also right to discourage their use by children and young people who have never smoked. Both these objectives are supported by the regulations being introduced.

I agree with the many noble Lords who have said that we need a public information campaign to reassure smokers that electronic cigarettes are less harmful than normal smoking but, as the Motion in the name of the noble Lord, Lord Hunt, points out, there have been major cuts to the media campaigns to persuade smokers to quit. That is very regrettable because such campaigns can be highly cost effective in supporting quitting. We know that alternative nicotine products for smokers have most public benefit when they are used together with expert behavioural support. That is one reason why we need to make sure that such products can be available on prescription for people seeking help to quit tobacco products. Our approach to e-cigarettes, therefore, must be to treat them not as an exciting new social drug or as a cash cow for e-cigarette companies, many of which are owned by the tobacco industry, but as a potentially important means of improving public health and reducing the toll of death and disease caused by smoking.

The regulations under discussion are not perfect, but they include important steps in tobacco control that must not be lost and must be part of a tobacco control strategy that must be properly resourced to produce real public health dividends.

Health: Alcohol

Lord Lansley Excerpts

Thursday 12th May 2016 Lords Chamber

[Lord Prior of Brampton]

I am sure we will all be following in the noble Baroness’s wake when we do that. It is worth making the point that one of the benefits that came out of the responsibility deal, which I know not everyone in this House thinks was successful, is that the labelling on alcoholic products has got much better.

[Lord Lansley (Con)]

My Lords, my noble friend will be aware that the risk of dementia in later life is now one of the public’s principal concerns, and of course it is established that there is a relationship between harmful alcohol use and the risk of alcohol-related dementia and Korsakoff’s disease. The One You website does not readily click through to give that information so that people’s concern about dementia is something that they understand can be related to the harmful use of alcohol.

[Lord Prior of Brampton]

My Lords, that is an interesting point, which I will draw to the attention of Public Health England. If that click-through is not clear, it should be. Since the Blackfriars Bridge agreement, PHE has been working with Alzheimer’s UK to do more research into analysing the impact of alcohol on dementia.