Healthcare (International Arrangements) Bill

Lord Lansley Excerpts

2nd reading (Hansard): House of Lords
Tuesday 5th February 2019 Lords Chamber

[Lord Lansley (Con)]

My Lords, I join colleagues across the House in welcoming my noble friend to this House and to her new position. I had the privilege to serve in the other place with her. I know how highly regarded she was for her work there and in her constituency. As a former Member for South Cambridgeshire, I think it is very like north Oxford as a place. I had the pleasure of campaigning with my noble friend in Abingdon and had something to do, in a very small way, with getting her elected in the first place. The Commons’ loss is our gain. We are delighted to have her with us. I know that the Department of Health and Social Care is delighted to have its former Minister back.

I very much share the view of my noble friend Lord O’Shaughnessy, who was instrumental in the Bill’s composition, that it is very important and necessary. It is important that we do not alarm people about the circumstances of their healthcare. We should make it clear, if we can, that we are all setting out to try to ensure that there is continuity in the existing arrangements for reciprocal healthcare across the European Economic Area. We might not be in a position to guarantee that because the withdrawal agreement might not be implemented. If it is, that will be all well and good, but if not, we have to put something in its place. As a consequence, there may be some urgency associated with securing bilateral agreements to deliver that continuity. That is at the heart of what needs to be in the Bill: an ability for the existing healthcare arrangements to be replicated through bilateral agreements in short order, not necessarily waiting on the approval of the two Houses of Parliament in a logjam.

I know that noble Lords will immediately say, “Hang on a minute, we have to be able to approve this thing”. I bring to the discussion of this Bill the benefit of having just been involved in Committee on the Trade Bill. Because there was a lack of powers, on the Trade Bill we were asked to provide the necessary powers to secure continuity and the rollover of existing agreements. In legal terms, this is not the same. We are not rolling over agreements—we may be implementing agreements —but the substantive purpose is the same: to enable healthcare provision across Europe to be provided for UK residents in the future in the same way as in the past. As we go through the legislation we need to make a distinction between what is a continuity provision and what is a new provision for new agreements. Where the Trade Bill was concerned, we did not need to do that; it was not about new agreements.

The noble Lord, Lord Marks, must be careful with the point he made about Clause 5 and regulations that,

“may amend, repeal or revoke primary legislation”.

Yes, it can be,

“(a) for the purpose of conferring functions on the Secretary of State or on any other person”,

but he added an “or” before paragraph (b). He said,

“or to give effect to a healthcare agreement”,

but it is not this; it is,

“to give effect to a healthcare agreement”.

As my noble friend Lord O’Shaughnessy said, this is all in order to implement international treaties.

[Lord Foulkes of Cumnock]

The noble Lord is absolutely right to distinguish between continuity legislation and totally new provisions in legislation. Does he not agree that it is bad enough to push to get a number of Bills and other legislation through quickly by the end of next month when it is continuity legislation—but that if it is totally new legislation, there is absolutely no justification at all?

[Lord Lansley]

We spent four days in Committee on the Trade Bill. I do not know how much time is planned for this Bill but it is perfectly possible for us to consider this legislation and to put in place the necessary powers for future agreements, as long as it is done with the necessary scrutiny and approval provisions. I will come on to make one or two points about that, and I am sure we will go on to debate that robustly—as my noble friend on the Front Bench said—in the days ahead.

[Lord Marks of Henley-on-Thames]

I accept the noble Lord’s point that I should not have said “or”. My point is that outside the context of the withdrawal agreement, which would have been fully debated, any new agreement is a new healthcare agreement, so the limitation of the lack of an “or” does not make a great deal of difference.

--- Later in debate ---

[Lord Lansley]

I will come on to precisely that point about new agreements and the extent to which we need to amend existing legislation to give effect to such agreements.

I will say a word about what we are trying to achieve here. I do not think we should underestimate that the Government have committed to the significant, continuing—effectively permanent—cost of providing healthcare across the European Union for those who have been resident in the United Kingdom. As we have heard, this is £630 million-plus per year. There is not a corresponding expenditure in this country by other countries because it is only a fraction of that for other EU citizens and residents coming to the United Kingdom. This is quite a generous provision. It is not the case that every beneficiary of this would be eligible for healthcare in the United Kingdom. For example, a pensioner who goes to live in Spain might ordinarily cease to be resident in the United Kingdom and hence to be eligible for NHS care. So this is not simply to provide NHS care to people wherever they happen to be, nor should it be interpreted as such. It is a very specific provision.

Equally, there might be people who are in exactly the same position as a pensioner going to live in Spain but who go to live in Florida. We do not, and are not proposing to, provide such healthcare there. That is not simply because the American Government do not provide a reciprocal benefit for Americans in the United Kingdom, because the legislation does not require reciprocal healthcare. It enables the Secretary of State to provide healthcare for UK residents in other countries. The reason is straightforward and rather ironic. We propose to legislate to give continuing healthcare provision across Europe as a consequence of the freedom of movement provisions, while at the same time proposing to get rid of those freedom of movement provisions.

If we were to follow through the logic of ending freedom of movement, which allows people to live and work in other European countries and pensioners to have access to the social security regulations in other countries, we would scrap all this. But that would not be popular. It would feel very unfair and, as my noble friend Lord Kakkar—if he will forgive me for calling him that—said, this matters a great deal to people. They would be extremely anxious and distressed by the removal of something that they had been accustomed to receiving in the past.

But it may not be available in the future. We cannot say that the European health insurance card will be offered to people and available for travel and work in the future as it has been in the past, although I say to the noble Lord, Lord Foulkes, that I have just looked it up. The website is there. The bit where the Department of Health and Social Care tells you about the European health insurance card is still online, but it unfortunately has to tell people that, because we do not know where we will be after 29 March, they might be advised to take out travel insurance.

The point I come back to is this: we are making a provision and we should recognise that we are doing that so as not to take away something of considerable importance for many people who have come to rely on it. We do not want to create that distress. It is a long-term commitment and I hope that people will recognise the value of that. We cannot go around extending it easily. I am not aware of any proposals for bilateral agreements with other countries to extend this healthcare benefit elsewhere. If there are any I would be very interested to hear of them.

I hope that we will be able to replicate the current structures as far as we can in the way in which this is managed in the future, but it is important that we give proper scrutiny. I will say three things. First, we must be able to have continuity delivered rapidly if necessary. Secondly, like treaties, new agreements must be subject to prior agreement within Parliament about the basis on which the Government should conclude them, rather than Parliament simply being given the opportunity to renege on them or not. Thirdly, when it comes to the amendment of legislation, we should be very clear that not only must any Henry VIII provision that amends primary legislation be subject to the affirmative procedure, but regulations that seek to amend, repeal or revoke direct EU legislation—retained EU law of a significant character—should, equally, be subject to affirmative resolution. The drafting here does not recognise the sources of law with which we have to deal and the way in which we should deal with them in the future.

Subject to all of that, I hope that we will not spread alarm. I hope that noble Lords on the Liberal Democrat Benches will at least recognise that there is a purpose to this legislation and that in our further consideration we will ensure that it is entrenched and the Bill passes with that purpose firmly in place.

--- Later in debate ---

[Baroness Blackwood of North Oxford]

My Lords, I thank the House for a most robust and incisive debate. It is great for me to be welcomed into a very balanced House, with the noble Lord, Lord Marks, admitting that he campaigned against me and my noble friend Lord Lansley having campaigned for me. I feel as though I have been welcomed into a warm embrace. The debate has been strong and, as anticipated, a great lesson for a former Member of the other place. I will attempt to answer as many questions as I can and address the major issues raised. If I cannot, I will write to noble Lords.

First, I am grateful for the widespread support for the intent of the Bill, which, as the noble Baroness, Lady Thornton, said, is essential. As the noble Lord, Lord Bethell, reminded us, it has strong public support. There is a desire to maintain robust reciprocal healthcare arrangements, which benefit many people across the country when working, living, studying and travelling abroad. Every day, the lives of people across the country are improved by these arrangements. Examples range from a young British student with severe asthma, able to study for a year abroad at a European university, to a British grandmother with multi-morbidities, able to visit her newly born grandchild—or, in my case, a young bride with a rare disease honeymooning in perhaps one of the most romantic cities in the world: Venice. On the value of this scheme, it is notable that many noble Lords have their own stories to tell about the importance of us maintaining reciprocal healthcare. I will write to the noble Baroness, Lady Thornton, about her mother’s case when I have found out the details for her.

All these journeys are made easier by a reciprocal healthcare system ensuring that if you require healthcare in another EU member state, you will be looked after. The British Government want such arrangements to continue; the Bill provides a legislative framework for that. I recognise that a number of noble Lords have raised important and substantive issues concerning the Bill. I will address as many of them as possible in the time available but I look forward to debating them further in the coming weeks.

The noble Lords, Lord Foulkes, Lord Marks and Lord Thurlow, the noble Baronesses, Lady Barker, Lady Brinton and Lady Jolly, and my noble friend Lord Dundee mentioned the DPRRC report. It was characteristically robust, as I said in my opening remarks. The Government responded to it; I placed a copy of that letter in the Library for your Lordships’ consideration. The committee will consider that response on 13 February, which I will take into account and reflect on very carefully. On the Bill’s powers, we must find a balance between the flexibility and agility we need as we go forward into our EU exit, and appropriate scrutiny, as my noble friend Lord Bridgeman said so eloquently.

It may be helpful for me to outline the five delegated powers in the Bill in a little more detail. Four of those powers come under Clause 2, and one under Clause 4. The first, in Clause 2(1)(a), would be used to set out in detail complex payment arrangements under reciprocal healthcare deals. The second, in Clause 2(1)(b), is needed to provide healthcare abroad outside reciprocal healthcare arrangements. The third, in Clause 2(1)(c), is needed to give effect to comprehensive healthcare agreements entered into in another country or international organisation, such as the EU. The fourth, in Clause 2(3), is needed to allow the Secretary of State to give directions to a person to whom they have delegated functions under the Bill. The fifth, in Clause 4(6)(e), enables the Secretary of State to make regulations to add to the list of people who can process data for the purposes of the Bill, for example a future arm’s-length body that does not currently exist. I know that data issues have been raised by a number of your Lordships, which I will return to later.

I know of a lot of legitimate concern over the inclusion of Henry VIII powers in EU exit legislation. The only Henry VIII power in the Bill comes under Clause 5. It is not a standalone power: it is a tidying power to ensure that the statute book is coherent when implementing future arrangements under the Bill. In particular, I have heard noble Lords’ preference for wider use of the “made affirmative” procedure, which I will reflect on more as we head towards Committee.

The noble Lords, Lord Marks and Lord Foulkes, and my noble friend Lord Dundee asked about financial reporting procedures in future reciprocal healthcare. In the letter to the DPRRC, we committed to issuing an annual ministerial Statement on the operation of reciprocal healthcare arrangements, which will be published as soon as is practicable after the end of each financial year to allow for accurate financial reporting. The Statement would include, but not be limited to: information on the expenditure and income of healthcare provisions overseas as a whole, which would include aggregated expenditure, income from the financial year and a country-by-country summary of expenditure and income; an update on the operation of arrangements, which could identify areas of successful operation or where arrangements are being improved to promote efficiency; and the strategic direction of reciprocal healthcare arrangements, which could be a statement either on future priorities for the current operation or on where the UK is engaging with other countries to establish new arrangements. I hope that that is helpful.

The noble Lord, Lord Foulkes, was absolutely right to identify the importance of EU workers to the NHS. I want to put on record again both my and the Government’s appreciation of the work of EU staff in the NHS. Let me be very clear: we want those staff to stay. I am very pleased to report that more than 4,300 more EU workers are now working in the NHS than before the referendum. We wish to continue with that positive trend.

My noble friend Lord O’Shaughnessy has already clarified the point regarding right of access to NHS services for those ordinarily resident in the UK, but the noble Lord, Lord Thurlow, and the noble Baronesses, Lady Brinton and Lady Jolly, raised the issues of the impact of these changes on the NHS and charging. Let me be clear that we do not need to have any new front-line NHS services to charge visitors or tourists from the EU, either directly or via reciprocal healthcare arrangements. We already have these processes in place as part of our current EU reciprocal healthcare arrangements. EHIC claims and EU visitors are identified for the purposes of whether they are chargeable or directly covered through the current system. This is done by overseas visitor managers in the NHS trusts, who manage charging. The Government have been the first to make significant progress regarding charging overseas visitors and recouping funds. To reassure the noble Lord, Lord Thurlow, since 2015 we have increased identified income for the NHS with reciprocal arrangements by 40%. Directly charged income has increased by 86% over the same period. We are not satisfied with that progress, but it is certainly moving in the right direction.

I also reassure the noble Baroness, Lady Brinton, that we have work ongoing with NHS Improvement, which is now working with 50 NHS trusts, to improve further its practices in this regard, with a bespoke improvement team in place providing on-the-ground support and challenge, and identifying and sharing best practice. That should be of great assistance as we move into this next period.

A number of noble Lords raised the global scope of the powers, in particular the noble Lord, Lord Bethell, and the noble Baronesses, Lady Jolly and Lady Thornton. As I have noted, the Government’s immediate priority with the Bill is our reciprocal healthcare arrangements with the EU. That is absolutely right, but we already have a number of existing reciprocal healthcare arrangements with countries outside the EU, such as Australia and New Zealand, as my noble friend Lord Bridgeman noted. The passage of the Bill through Parliament presents us with a natural opportunity to consider how we can best support Britons in an increasingly global world. International travel is under- taken by increasing numbers of people for professional, social, recreational and humanitarian purposes. More people travel greater distances and at greater speed than ever before. Global reciprocal healthcare agreements have the potential to protect public health by supporting international visitors to access emergency and needs-arising treatment when they need it.

In addition, international collaboration through reciprocal healthcare agreements can also make it much easier for people to receive treatment, including specialised treatments, such as those mentioned by the noble Baroness, Lady Thornton, which may be more clinically effective or better for a person to access abroad. For example, as I mentioned in my opening speech, in 2017, 1,352 UK patients received pre-planned treatments in the EU, while 1,241 EU patients received pre-planned treatment in the UK. Some of those treatments would not have been possible if we did not have that scheme in place. We do not want to prevent ourselves being able to strengthen our agreements with non-EU countries by curtailing the Bill’s scope, but we must obviously ensure that appropriate scrutiny and parliamentary oversight is in place as we do that.

I move on to the questions raised by the noble Lord, Lord Marks, and the noble Baronesses, Lady Brinton, Lady Thornton and Lady Jolly, regarding trade. The Government are completely committed to the guiding principles of the NHS—that it is universal and free at the point of need. Our position is definitive: the NHS is not and never will be for sale. The Bill’s powers are to allow the department to enter into reciprocal healthcare agreements, either bilaterally or with international organisations, entirely independently of any other international organisations or agreement. I hope that that statement is clear enough.

To reassure noble Lords even further, I will briefly set out the scrutiny powers available to the House for the international treaties under which these agreements would be agreed. It is obviously the Executive’s responsibility to negotiate these treaties under the royal prerogative. The Bill does not replace or limit the prerogative power to enter into international agreements, in the healthcare sphere or more generally. We already have international healthcare agreements, as I have stated, with non-EU countries such as Australia and New Zealand, and Crown dependencies, allowing them certain free access to NHS services.

Parliamentary scrutiny of international treaties is of great importance. Ministers are accountable to Parliament for the exercise of those functions. The principal statutory framework providing scrutiny of these treaties is the Constitutional Reform and Governance Act 2010—CRaG—established by Parliament under its own powers. CRaG has enshrined in statute the long-standing convention known as the Ponsonby rule that was the product of lengthy consultation and dialogue. The Act enables either House to object to the ratification of a treaty and the House of Commons can block ratification of a treaty indefinitely.

I understand that the House of Lords Constitution Committee has an ongoing inquiry into future scrutiny of international treaties. The Committee will look into all aspects of treaty scrutiny, which is obviously apposite at this moment, including what, if any, new committees need to be set up to deliver scrutiny of treaties post exit. I obviously look forward to the review’s findings, but noble Lords can be reassured that this Bill’s purpose is the implementation of international treaties that can be scrutinised under the CRaG process. Noble Lords can also be reassured that all international healthcare agreements will be subject to the scrutiny route considered most appropriate by Parliament.

[Lord Lansley]

At the commencement of the Committee stage of the Trade Bill the House voted for a Motion whose effect was that the Government should bring forward their proposals for the future scrutiny of further treaties before the Report stage. The expectation from the debate on the Trade Bill was that we would go beyond the CRaG legislation. It would be helpful for my noble friend to make it clear that Ministers will be doing that for the Trade Bill and that that bears directly on this Bill. It would be very useful for the Bill to proceed in the light of that same response from Ministers.

[Baroness Blackwood of North Oxford]

I thank my noble friend Lord Lansley for that intervention. One of the reasons why I raise that process is because I am aware that there are ongoing discussions in other parts of the House. We will reflect on that as we progress the Bill.

My noble friend Lord O’Shaughnessy spoke of positive engagement with his EU counterparts on bilateral arrangements in the event of no deal. A number of noble Lords raised what would happen should the withdrawal agreement not go forward. My noble friends Lord Ribeiro and Lord Lansley both raised the question of no deal. My noble friend Lord Lansley is right that we should be careful and seek to reassure those who currently rely on reciprocal healthcare that they will be able to rely on these arrangements going forward. Great interest has been expressed by our counterparts in the European Union, where we are seeking bilateral arrangements with relevant member states in the event that we reach 29 March without a deal with the EU.

Organ Donation (Deemed Consent) Bill

Lord Lansley Excerpts

2nd reading (Hansard): House of Lords
Friday 23rd November 2018 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am privileged to have the opportunity to speak following the noble Lord, Lord Hunt. I very much applaud the way in which he has brought the Bill forward and the way he presented it today. I thought he covered exactly the points that must be at the forefront of our minds in thinking about its implementation. It is my hope and expectation that the Bill will pass into law, and that it will have precisely the beneficial effects that its promoters have sought.

It might be helpful, at this early stage in the debate—I know we all share the objectives—to review the previous thinking about these issues, not least from the passage of the 2004 legislation that we are amending. The noble Lord, Lord Reid of Cardowan, was Secretary of State at the time of the 2004 Act. I was shadow Secretary of State in another place. My interest in these issues was not least as a constituency Member of Parliament, in that I represented both Addenbrooke’s Hospital, where clinicians led by Roy Calne did ground-breaking work in reducing the rejection of transplanted organ tissue, and Royal Papworth Hospital, which has the largest number of heart and lung transplants, and is where Terence English conducted the first UK heart transplant and John Wallwork and colleagues performed the first heart and lung transplant. So I was always closely concerned with and supportive of the transplant work they were doing.

In 2004, however, it was not concluded during the passage of the legislation that we should proceed on the basis of deemed consent. There were two parts to that. First, the evidence continued to be inconclusive that deemed consent itself was the principal issue in obtaining the necessary organs for transplantation. The noble Lord, Lord Hunt, referred to the Spanish experience, which was relevant and much debated at that time. We are going back some way, but those responsible for the system of consent in Spain took the view that an opt-out system was not the most important part of their experience in achieving the best transplant rates in Europe. A subsequent review was published in the journal Health Technology Assessment in 2009, so a little later. I was Secretary of State in 2010 and it was part of the thinking then. The conclusion of that systematic review across a number of countries said:

“Presumed consent alone is unlikely to explain the variation in organ donation rates between different countries. A combination of legislation, availability of donors, transplantation system organisation and infrastructure, wealth and investment in health care, as well as underlying public attitudes … and awareness … may all play a role”.


I am simply reiterating what the noble Lord made clear in moving the Second Reading today. All of those things matter.

In 2004, the noble Lord, Lord Reid of Cardowan, said that he did not agree with the principle of deemed consent because, across the National Health Service and healthcare, we were setting out to ensure that consent was enshrined in our activity and that we should not proceed except on the basis of informed consent. To deem consent, arguably, is to abandon that principle. In this instance, we have to recognise that we are treading across an important ethical boundary, and understand why and how we are doing it. It is not that we should not do it, but that we understand the importance of recognising it.

As the noble Lord said, there is a provision in the Bill that says that, where families can demonstrate a reasonable basis for thinking that the deceased person would not have consented to transplantation, they should not proceed. The question also arises of a family who has no evidence of what the deceased person may have said, but objects themselves. We need to think carefully about that, not least because of what I remember from talking to nurses involved in transplanting at both Addenbrooke’s and Papworth, during the passage of the legislation in 2003. They said they did not quite understand what an opt-out system really meant. What is the difference between, on the one hand, asking the family of somebody who has died whether they would consent to donation; or, on the other hand, saying that, although consent is deemed to have been given, we are none the less going to ask whether you agree or object? They found it difficult to understand the difference.

In practice, we should recognise that there is a difference in terms of public attitude and awareness. I think that was demonstrated in Wales, and I look forward to hearing from the noble Baroness, Lady Randerson, about the Welsh experience. In the first year or so, it was not evident, because the numbers were small and the period of time relatively short, that there was a major shift. It may well be that more of a shift is taking place over time. But much of that may be less to do with the fact of deemed consent and more to do with public awareness and support for the process itself.

After our debate on the 2004 legislation, I would not want us to proceed in this debate thinking that the broader range of issues were then neglected. They were not. In 2008, the then Labour Government instituted the Organ Donation Taskforce, the objective of which was in the subsequent five years, I think, to increase donor rates by 50%. In practice, they went up by about 45% and have continued to increase. That is precisely because the things that we know are also important were happening. There was increased public awareness and there has been an increase in the number of people on the organ donor register. After 2010, we engaged the nudge unit—the behavioural unit—to think about how we could nudge people to make that choice before their death. That has had some benefit through organisations such as the DVLA, but especially in the training of staff in the NHS and the appointment of additional specialist nurses for organ donation. It is important that it is not the clinicians who have been trying to save a life who then have to speak to the family about organ donation. Having those specialist nurses available and staff having the right training is really important.

All those things happened under the Organ Donation Taskforce, so on that basis, I do not share the view of Chris Rudge, who was the transplant director when I was Secretary of State and was responsible for the implementation of the task force, who I believe continues to oppose deemed consent. I think we have an almost ethical obligation to do everything that may contribute to the achievement of higher donor rates and thereby to save lives. The noble Lord, Lord Hunt, is absolutely right: it is tragic that so many people are on the waiting list for organs and die or leave the list without the benefit of a transplant. We must do everything we can.

I urge colleagues to recognise that we must think very carefully about how we do that and to recognise that there are other things that we have done and should continue to stress which may themselves make a significant contribution. We should proceed only on the basis that there is consensus, which happily there is, between parties and, I suspect, widely in the country. The objective is so important that we must be willing to take the ethical step of deeming consent where we cannot be absolutely sure what the deceased person’s view would have been. On that basis, I hope that the House will give the Bill a Second Reading.

NHS: Staff

Lord Lansley Excerpts

Tuesday 13th November 2018 Lords Chamber

[Lord Lansley (Con)]

Does my noble friend agree that the production of a workforce plan by Health Education England for the first time is a significant step forward for the health service and for healthcare in this country? Will he assure the House that providing Health Education England with the resources to deliver that plan is a priority in the forthcoming spending review?

[Lord O'Shaughnessy]

I am grateful to my noble friend, who set the foundation for this long-term workforce plan—indeed, the long-term plan for the NHS. He is right. It is not just a workforce plan for health workers but also looks at care workers. We need more staff, and that decision will be taken at the spending review, but it does have the highest priority.

Brexit: Health Policy

Lord Lansley Excerpts

Wednesday 6th December 2017 Lords Chamber

[Lord O’Shaughnessy]

The European Medicines Agency will be moving to Amsterdam.

[Lord Lansley (Con)]

My Lords, the life sciences sector deal has been published today. From the point of view of the pharmaceutical and medical devices industries, one of the important and immediate objectives of the negotiations is to secure agreement to mutual recognition for things such as batch product testing and release, so that at the very least, through the transitional deal, they will not be required to move elsewhere in Europe for batch product testing and release in March 2019. Could my noble friend reassure the industries that the transition deal will give them that degree of protection for an additional period?

[Lord O’Shaughnessy]

I thank my noble friend for mentioning the sector deal. There are some big announcements in it on investments and creating growth and jobs in the UK, which is a huge endorsement of our leading role as a life sciences hub throughout the world. We have said that we want a continued relationship with EMA. The MHRA, our sovereign regulator, makes a huge contribution, by both approving licences for medicines and issuing safety notices. It is our intention as we move to the next phase of talks that we will have that kind of relationship going forward with the EMA.

National Stroke Strategy

Lord Lansley Excerpts

Wednesday 5th July 2017 Lords Chamber

[Lord O’Shaughnessy]

I thank my noble friend for that question. She is quite right. That is why public health campaigns around both obesity and smoking—a cause I know the noble Lord, Lord Rennard, is also passionate about—are so important. That is why we are continuing to invest in those public health programmes that have led to the improving stroke outcomes that I have described.

[Lord Lansley (Con)]

My Lords, as a former chair of the All-Party Parliamentary Group on Stroke, I agree with the Minister that we have done tremendous things over the past decade and a half in improving acute care of stroke in this country—although there is more to do, such as getting all stroke patients into a specialist stroke unit. However, too often stroke patients find that there is something of a cliff edge when it comes to leaving acute care and going into the community. Will my noble friend look at the ability of NHS England and local government together to deploy the better care fund specifically to support rehabilitation and recovery in the community for a period after discharge from hospital?

[Lord O’Shaughnessy]

My noble friend is quite right to highlight that issue. I must congratulate him on the progress made in stroke treatment during his time as Secretary of State for Health. I shall certainly look at whether the better care fund can be used in the way that he has described.

Health Service Medical Supplies (Costs) Bill

Lord Lansley Excerpts

Ping Pong (Hansard): House of Lords
Wednesday 26th April 2017 Lords Chamber

[Lord Warner (CB)]

My Lords, I am grateful to the Minister for the further thought that he has given to the amendment that your Lordships passed at an earlier stage. I am also grateful to him for his courtesy in showing me the amendments before he went forward with them; I very much appreciate that. I accept the Government’s arguments for the new approach that they have provided on the set of concerns that we had across the House about the adequacy of the provisions in the Bill on the life sciences industry and on speedy access to NICE-approved drugs. I accept their arguments that the original amendment was to some extent too restrictive on their freedom of manoeuvre when they need to act on unreasonable high prices. The Government have skilfully met the concerns of your Lordships’ House and I am very pleased to be able to support the amendment.

While I am on my feet, I will also thank the Minister for the courteous way in which he has listened to concerns throughout this Bill and taken the issues away, considered them with his officials and come back and tried to respond to many of the concerns. Across the Benches of this House, we are grateful for the way in which he has conducted the discussions during the passage of the Bill.

[Lord Lansley (Con)]

My Lords, I am glad that my noble friend is on the Front Bench to see this Bill safely through. I share with colleagues an appreciation of how he and officials from the department have worked consensually, carefully and considerately to try to make the Bill as good as we can make it. I welcome the amendments in lieu; they point to a sensible way forward in relation to the consultation on the statutory scheme. I would ask that my noble friend is equally clear that, in the negotiations leading to any voluntary scheme, Ministers will have regard not only to their statutory duties, as we have discussed, but to these considerations reflected in this amendment. One purpose of the Bill is to make a voluntary and a statutory scheme entirely consonant, one with the other.

The only other point that I would make is that, of course, when one passes legislation it is about not just the law but the administration that follows and accompanies it. In that context, it is important that Ministers take these powers, but it is equally important that in the administration of those powers, not least in working with NHS England and NICE, they work in the same constructive fashion to see that the impact on the life sciences industry and the accessibility of the best available treatments for patients, at a price representing value for money, are integral to the purposes of the legislation. I hope that they will equally be part of the further action that the Government take with NHS England and NICE to ensure that, however they manage the budgetary impacts as they must, they do so in a way that has the interests of patients and the country at heart.

[Baroness Masham of Ilton (CB)]

My Lords, I congratulate the Minister on his hard work on the Bill and his helpfulness. I have one question. As this is a global matter, how can the Government assure us that the prices of drugs will come down?

Health Service Medical Supplies (Costs) Bill

Lord Lansley Excerpts

Wednesday 5th April 2017 Lords Chamber

[Lord Lansley (Con)]

My Lords, I intervene in this instance not to agree with but, I am afraid, to disagree with the amendment in the name of the noble Lord, Lord Warner. However, I will also make some important points that are relevant to the issues raised in this Motion and the amendment.

I am against the amendment to the Motion because I entirely agree with my noble friend the Minister that Lords Amendment 3, which the Commons disagreed to, was flawed in the sense that—in relation to the specific responsibilities under the Act for the PPRS and pricing medicines and supplies—it would have put into legislation a set of statutory requirements to have regard to, or indeed to take account of, that are partial and disjointed. Over many decades we have argued that the Secretary of State’s responsibility under the PPRS is not to create an industrial strategy. If we had said that that was the objective, it would have been regarded as a state aid, and it was never regarded as such.

It is not the job of the Secretary of State, through the PPRS, to deliver a successful industry. There are many ways—my noble friend illustrated them better than I could have—in which the Government can discharge that wider responsibility, and should do so. That responsibility is to secure the best value for the NHS in purchasing medicines and supplies. We should all be in favour of that and not wish to see it abridged.

[Lord Warner]

Perhaps I may just ask the Minister to explain how, under the PPRS, incentives are often given through R&D tax allowances. Does he not consider that state aid?

[Lord Lansley]

I am perfectly happy if the Minister wants to reply but, from my point of view, I do not regard the PPRS as state aid. If R&D tax credits are available, they should be made available. When the Office of Fair Trading reviewed the PPRS back in 2008-09, I think, it concluded that it was neither a state aid nor a spur to innovation but was actually all about managing the drugs budget. That is what this legislation is all about: managing the drugs budget.

It is, however, important to recognise that the statutory duties in Lords Amendment 3 do not include the one which the Secretary of State should have specific regard to: affordability. It is deficient in not providing for that. Noble Lords will recall that, at an earlier stage, I tabled an amendment the purpose of which was to insert a more complete set of statutory duties for the Secretary of State to have regard to. Affordability must form part of that, but it is not present in this amendment. I am therefore against the amendment.

In the course of this legislation we have discussed other important issues which are still coming to a head. It is absolutely right, as my noble friend said, that the Government are setting out to promote innovation and the life sciences sector, and there are many ways of doing that. The Conservative Party manifesto of 2015 stated:

“We will increase the use of cost-effective new medicines and technologies”.


It also stated:

“We will speed up your access to new medicines”.


It is important that we do that as it is in the interests of patients, our life sciences industry and ourselves as a world leader in science in this area. However, we have on the stocks the accelerated access review—which, ironically, took too long to be produced, was delayed in its publication and has not yet been replied to. We also have a life sciences strategy. The many positives in that run the risk of being negated by the way in which NHS England and NICE have gone about the consultation.

As I said at an earlier stage, it is possible to see how NICE and NHS England can work together in ways that would give industry greater confidence as it would mean that it could get early engagement with NHS England about the managed entry of new medicines into the NHS, including, as my noble friend said, on issues of importance to industry, such as the volume of purchasing of new medicines in the early stages of access. However, the budget impact test, at £20 million, is probably not one-fifth of all new medicines; it is one-fifth of all new medicines regarded as cost effective by NICE. Therefore, this is not a case of any old medicine that might be very expensive; it just happens to be medicines which are cost effective but have relatively high volumes, which is exactly the point to which the noble Baroness, Lady Walmsley, referred.

However, the issue for NHS England should not be the cost of introducing new medicines that are cost effective and in the voluntary PPRS, as the purpose of the pharmaceutical price regulation scheme, as currently designed, is—through the clawback—to give government assurance about the overall increase in the drugs budget. As a consequence, that money is made available as part of the overall funding provided to NHS England. Therefore, NHS England should in theory have in its budget the money that is necessary to meet the drugs bill, including new medicines as they come on stream, because there is clawback for that.

We have this Bill in front of us partly, but not entirely, because the drugs budget was rising much faster than anticipated, and much of that growth was outside the voluntary PPRS. This Bill plugs that gap and sorts that out. However, in doing so—and here we are at the beginning of April—once this Bill is on the stocks and secures Royal Assent and the Secretary of State is able to align the statutory PPRS with the voluntary PPRS, there is no reason why NICE and NHS England should continue to apply an overall budgetary impact test. I say to my noble friend that I think the Government should step in at that point and say, “Where this product has come through a PPRS where a clawback is applied and we have a budgetary mechanism in place—redress—for any extra cost to the drugs bill in the course of this PPRS through to the end of 2018, NHS England should not interpose any extra delay, or seek any extra delay, through NICE in introducing that medicine to the NHS”. I am afraid that if it continues to do so in the way that it is at the moment, that will have a severe negative impact on the view held by the boards of major corporations in relation to the take-up of new medicines by the NHS.

I am sorry to say to the noble Lord, Lord Warner, and other noble Lords that the remedy is not contained in this amendment. The remedy is in the Government’s hands if they choose to make that point very clearly to NHS England in relation to what this legislation enables us to achieve in controlling the drugs budget.

[Baroness Finlay of Llandaff (CB)]

My Lords, I thank the Minister for the way in which he has conducted all the previous stages of the Bill, the amount of discussion and negotiation that he has had with all of us, and for accepting many of the amendments. It might be helpful to the House, if, when he sums up, he could clarify how much of the 7% increase is due to new NICE-approved drugs coming through into the system.

It would also be helpful to know whether NICE has the ability to refuse to go along with the budget impact test on this estimated one-fifth of medication that it deems to be cost effective if it feels that a new medicine coming on line is extremely cost effective and that its cost efficacy will have a major impact on those with life-limiting or life-altering conditions. I am talking about people with a disease that will progress at quite a rate, meaning that over a 90-day period they will be likely to experience a significant decline without the intervention of whatever the new medication might be.

It would also be helpful if the Minister could tell us how the independence of NICE will be assured with this budget impact test. In many parts of the world NICE has been viewed as exemplary in deciding how a medication is approved to come on line, but there are problems with it. If it were viewed as having its independence eroded, that would seriously undermine public confidence in the whole process, particularly among those who have serious and life-limiting or life-altering illnesses.

Adult Social Care: Funding

Lord Lansley Excerpts

Thursday 16th March 2017 Lords Chamber

[Lord O'Shaughnessy]

As I have said to several noble Lords, the intention of the review is to put the adult social care system on a sustainable and long-term basis and to make sure that it is fair and transparent and that it delivers high-quality care. It will address all the issues required to do that.

[Lord Lansley (Con)]

My Lords, will my noble friend acknowledge that he does not start this process with anything like a blank sheet? In particular, does he recognise that there is continuing merit in the recommendations of the Dilnot commission? I will not elaborate on that, save to say that they include the fact that it was a manifesto commitment of the Government at the last election.

[Lord O'Shaughnessy]

I thank my noble friend for bringing that to the House’s attention—some might describe it as a hospital pass, if noble Lords will excuse the pun. The Government remain committed to implementing Dilnot from April 2020. My noble friend is quite right that this is not a blank sheet of paper. There have been some really important reforms over the last seven years, including the better care fund and the Care Act. In the Budget, we have more funding for the short-term sustainability of the social care system, as well as a commitment to the Green Paper.

Health Service Medical Supplies (Costs) Bill

Lord Lansley Excerpts

3rd reading (Minutes of Proceedings): House of Lords
Thursday 23rd February 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Health (Lord O’Shaughnessy) (Con)]

My Lords, there are two sets of amendments within this grouping. The first comprises small amendments relating to the circumstances in which the Government would be required to provide producers with an information notice. The second relates to the arrangements required for implementation of the legislation in Northern Ireland.

I turn, first, to Amendments 1 and 2. Amendment 1 clarifies that an information notice is required in respect of the costs incurred by a company in connection with the manufacturing, distribution or supply of a particular UK health service product. Amendment 2 is a technical drafting change to further clarify the intent of this clause and the type of transaction being contemplated.

On Report, I tabled amendments to the information requirements that would necessitate the Government issuing an information notice if they wanted UK producers to provide certain cost and profit information. This was in response to reasonable concerns raised by several noble Lords that attributing costs and profits to individual products, as opposed to simple aggregate-level data, would be burdensome for companies. The amendments that I have brought forward today reinforce these information notice procedures by clarifying that they apply to cost and profit information relating to individual products but not to aggregate-level data across a portfolio of products supplied by a company to the health service.

As I explained on Report, we already collect cost, sales and profit information on an annual basis under our voluntary scheme, the PPRS. This information is supplied at an aggregate level across a range of branded medicines supplied by a company to the health service. Clearly we need to be able to continue to collect these data in a routine way in order to maintain the voluntary scheme, and indeed to collect a similar type of routine aggregate-level company information in any future statutory scheme.

These amendments enable us to continue with the current approach to collecting company-level data in a non-bureaucratic way while, critically, ensuring that the information notice procedure, which was a concern of noble Lords, is focused on the area which we know is the greatest burden to companies—providing cost information on a product-by-product basis. I am pleased to say that my officials have discussed these amendments with the ABPI, the trade body for the pharmaceutical industry, which is content that they address industry concerns.

I now turn to Amendments 3, 4, 5 and 6. As noble Lords know, most of the Bill extends to England, Scotland, Wales and Northern Ireland, with some elements extending only to England and Wales or only to Scotland. A legislative consent Motion is required from Scotland, Wales and Northern Ireland for the matters in the Bill that are devolved.

I am bringing forward these technical amendments to address the fact that the Northern Ireland Assembly was not able to complete the passage of its legislative consent Motion on the Bill before it dissolved, although significant progress had been made, with the relevant committee having given approval. Our amendments therefore seek to change the Bill to enable the Northern Ireland components to be commenced separately through regulations. These components of the Bill will be commenced only after legislative consent has been secured.

[Lord Lansley (Con)]

My Lords, I do not propose to detain the House. I merely wish to thank my noble friend the Minister for the further clarification that Amendments 1 and 2, in particular, give to Clause 9.

I was among those who raised a concern. Although the industry completely understood that in order to make the PPRS effective there was a requirement for a scheme for the acquisition of data in aggregate, as my noble friend described, the powers would have enabled there to be a lot of demands for information which went beyond what had previously been required and which had the potential to be very intrusive. Under those circumstances, an information notice system, with proper details supplied to companies and with a potential appeal right, was required. We discussed that and I am very grateful to the Minister for taking it on board and putting in place something which I think will give considerable reassurance to the industry that the scheme will not be as burdensome as it could have been.

[Baroness Walmsley (LD)]

My Lords, we on these Benches are also happy to support the amendments. Like the noble Lord, Lord Lansley, I have no intention of detaining the House with long-winded thanks. However, I want to voice my recognition that the Minister, in his new role, has both understood and responded to the issues raised on the Opposition and Cross Benches about the shortcomings of the Bill, which had been through the House of Commons without anybody noticing or trying to amend its unintended consequences, rather like the Article 50 Bill that we debated in this House on Monday and Tuesday.

Health Service Medical Supplies (Costs) Bill

Lord Lansley Excerpts

Report stage (Hansard): House of Lords
Tuesday 7th February 2017 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, as we are entering Report, I declare my interests as president of the Healthcare Supplies Association and of GS1, the barcoding organisation.

Like the noble Baroness, Lady Walmsley, and the noble Lord, Lord Warner, I make it clear that in supporting the amendment, the Opposition support the core purpose of the Bill. The recent fines imposed by the Competition and Markets Authority on two companies, which essentially exposed a loophole, left the Government with no option but to act—we agree with that. I have to say that it is interesting to note that the powers that the Government have taken upon themselves in the Bill will give them draconian influence over drug prices in future.

The Bill allows the Government to institute price controls. It states that the Government may have reached a voluntary agreement with industry over pricing but can none the less come in and impose price controls over that agreement. To cap it all, it massively extends the Government’s powers to ask for information about any health service product sold to the NHS. Such information could cover prices, discounts, rebates, revenues and profits, and could apply to millions of products every year.

It is a socialist dream of state intervention. Speaking here as a great believer in central state intervention, my heart warms to the Minister’s vigour and enthusiasm for regulation. It gives an idea of the nirvana of post-Brexit, light-touch regulation from this Government. Perhaps we should dream of EU directives in future, because this Government are so bent on their home-grown regulation.

We will come to the issue of proportionality, because many of our later amendments involve whether the Government have been proportionate. For me, this amendment is essentially about access, because I do not think you can talk about price controls on drugs without talking about patient access to innovative drugs and treatments. At the moment we are seeing an unprecedented level of rationing, both locally and nationally. Locally, clinical commissioning groups are making some really perverse decisions, ranging from cutting out health promotion programmes to being incredibly restrictive on operations and restricting access to innovative drugs.

A fairly recent report that I read by leading charities Breast Cancer Now and Prostate Cancer UK, for instance, showed that NHS cancer patients are missing out on innovative treatments that are available in any comparable country to the UK. One example is the PrEP drug. The reluctance of NHS England to fund the use of this extraordinary preventive drug in relation to the treatment of HIV is another example of the problem that we have. When the previous Labour Government set up NICE, it was designed to speed up the introduction of innovative new treatments. But since 2010, access to new drugs approved by NICE has been increasingly impeded, which has culminated in the current consultation that if a NICE-approved treatment is expected to exceed a cost of £20 million in any of the first three years of its use, NHS England can ask for a longer period for its introduction.

We also have a consultation on the introduction of a QALY threshold of £100,000 for evaluating highly specialised technologies. My understanding is that no other country in the world uses such a threshold in evaluating ultra-rare disease treatment. The almost universal view is that this form of assessment is not appropriate and would effectively stop the flow of new medicines reaching patients with rare and complex processes.

Of course, the noble Lord, Lord Warner, is right that the drugs budget cannot be open ended and that the NHS must achieve value for money—and I, too, have engaged with industry over the years in seeking to get the drug budget down. We all understand that. The tragedy is that a ground-breaking agreement reached by the last Government in 2014 with drug companies could have led to many new drugs being introduced. The pharmaceutical industry guaranteed to hold down drug costs for a five-year period and, if the costs went over the agreed limit, the industry would pay back a rebate every quarter. To date, £1.5 billion has been handed over.

I know how irritating it is to point to Scotland and Wales and say that they are doing something better—but something like the Scottish fund that has been established from the rebates to fund the introduction of new medicines would have been a preferable way in which to go forward in the situation that we have in England, where restriction after restriction is taking place in the use of better drugs for patients.

You then have to link the issue to our investment in R&D and life sciences. Sir John Bell, regius professor of medicine at the University of Oxford and chair of the Office for Strategic Coordination of Health Research, who is playing an absolutely pivotal role in this area, spelled this out recently. As he said, the last 30 years have witnessed an unprecedented number of major innovations in healthcare that have resulted in significant extensions in life expectancy and quality of life. The problem is that the National Health Service has been unable to adopt this new innovation effectively and, as a result, many improvements in healthcare have been put in jeopardy.

This is not an easy issue. Sir John Bell says—and I agree—that one problem is that our current model too often layers the cost of supporting the innovation needed to help discover new healthcare innovations on top of existing practice. So, unlike in other sectors, in the health service innovation always seems to cost money. This is a very important issue when it comes to thinking about how we can afford the kind of changes that will fall to health and social care in future.

I will also quote Keir Woods, head of oncology at the major pharmaceutical company Merck. He points to that company’s investment in the UK—20% of its global venture capital is invested in the UK—and he celebrates the UK’s position as a global power in health, with our world-class universities, centres of excellence in clinical research and some of the top medical journals, which has a positive impact on investment. We are home to 4,800 life science companies, with the largest pipeline of new discoveries in Europe. That is something to celebrate. Dr Woods says that we can build on that, but there are two provisos. First, we have to be able to secure the cream of international talent. The discussions around Brexit are very important in relation to that. Secondly, we have to increase the uptake of these new innovations in the UK.

The frustration that I and many others have is that the UK is a wonderful place for innovative and ground-breaking new treatments and drugs, but the fruits are increasingly being enjoyed by patients in other parts of the world. Currently, the UK has developed around 14% of the top 100 global medicines. That is something to celebrate—but 20 years ago we were responsible for about one-quarter of the global medicines that had been developed. The noble Lord, Lord Warner, referred to the £4 billion invested by pharma R&D. However, up to 2011 it was £5 billion—so we are seeing a deinvestment that is very much linked to the hopelessly poor record of adoption of new medicines in this country.

I know that the Minister will talk about some of the initiatives he is taking and I am sure that he will mention the accelerated access review, which aims to make the UK the fastest place for the design, development and widespread adoption of innovations. This is entirely laudable, but the problem is that this approach will take a few items and accelerate access while the NHS goes about crudely rationing a whole host of other innovations and putting at risk our life sciences, R&D investment and, of course, the quality of patient care.

That is why this amendment is so important. We support the Bill and its aims, but what has been lacking so far is any recognition by the Government that there are three planks to this. The first is better value for money in terms of drugs and health service products; the second is the quality, range and health of our life sciences and R&D investment; and the third is access to treatment by patients. So far the Government have not been prepared to grip this last issue. That is why the amendment is so important and I support it.

[Lord Lansley (Con)]

My Lords, I will speak briefly on this amendment, although there are later ones in my name which will allow me to say more about the way in which the Bill proposes that the Secretary of State exercises his or her duties. The idea that it is not part of government strategy—back in 2014 or now—to promote the life sciences sector through the structure of the PPRS is absurd. It is self-evidently the Government’s intention, and was in 2014. The structure of a negotiated, voluntary PPRS was designed to achieve that. The issue that has emerged since 2014 and the application of the new voluntary scheme is that the industry was looking for stability for the Government in terms of the budget; freedom to price at introduction, and action on access to new medicines. It is in that third area that there has been a lack of progress. In many ways, I agree with what noble Lords have been saying about the desirability of achieving that access. It has not been restricted since 2010, although the noble Lord, Lord Hunt, tended to construct it that way. For example, we introduced the cancer drugs fund in 2010 precisely because prior research by Mike Richards had demonstrated that patients in this country were failing to have access to new cancer medicines at the time when patients in other European countries did. It is not a new problem: it has been around a long time. The cancer drugs fund was intended to meet that gap by 2014 and the PPRS should have taken over, but it did not. After Innovation, Health and Wealth in December 2011, and the accelerated access review now, we are now seeing efforts to try to make that happen and they should be thoroughly supported.

The second limb of the amendment does not help, because it is just about access for patients to those new treatments which have been approved and recommended by NICE. That is only one part of a much wider issue about the adoption and diffusion of new technologies across the NHS more generally, often in circumstances where NICE has not been involved. I find the new consultation proposal on NHS England’s budget impact threshold something of a double-edged sword. The measure could erect another hurdle to be cleared before patients can access new medicines, and we have to avoid that. However, it may have the positive effect of encouraging NHS England, as the budget holder, and NICE, as its pharmacoeconomic evaluation mechanism, to work together with companies at an early stage to arrive at a negotiated price at an early point. That would be much to the benefit of the industry and the NHS given that we are aiming, through this legislation and beyond, to obtain patient access to medicines on reasonable terms that the NHS can afford. If the measure were used in that way, it would have the right benefit. However, I fear that this amendment, particularly its latter limb, does not take us any further in that direction.

--- Later in debate ---

Moved by

[Lord Lansley]

4: Clause 3, page 2, line 32, at end insert—
“( ) After subsection (1) insert—“(1A) When making a scheme under this section for controlling the cost of health service medicines, or determining any amount to be paid to him or her, the Secretary of State must take account of any voluntary scheme in force under section 261 (powers relating to voluntary schemes), and should seek, so far as is practicable and relevant, to secure comparable effects in relation to products in the statutory scheme as would apply if those products were participating in the voluntary scheme.””

[Lord Lansley]

My Lords, even though the House has just divided, the Bill has been characterised by a substantial measure of agreement on the purposes we are trying to achieve and I am sure that will be reflected in the further amendments that are to be discussed. I neglected earlier to draw attention to the register of interests and, in particular, to my position as an adviser to MAP BioPharma, which is not itself a participant in the PPRS in any way.

Let me make the purpose of Amendment 4 clear to noble Lords. The Government, in bringing this legislation, were prompted in part by the fact that expenditure on medicines was rising somewhat faster than the Government had anticipated, the amount of the rebate being achieved by way of payment back to the Government was less than was anticipated, and the difference was, in part, explicable by virtue of the transfer of certain products into the statutory scheme. In the statutory scheme they had a price cut applicable but no rebate scheme applicable and the Government did not feel that they had the necessary power to amend the statutory scheme to make a rebate apply.

The purpose of the legislation is to make the two schemes broadly equivalent. As the Minister told the Committee, the Government’s intention was to make the revenues being rebated back to the Government from the two schemes broadly equivalent. However, in my view that would potentially have the perverse impact that certain products in the statutory scheme would end up with a much higher rebate percentage being applied to them as a consequence—or, alternatively, that products outwith the price control under the voluntary scheme, because they were introduced after December 2013, would have the price control applied to them under the statutory scheme. So a discontinuity would apply, potentially either way, by applying the broadly equivalent proportion of cost of sales being returned to the Government in the form of a rebate.

I have therefore suggested that it is a perfectly reasonable principle on the Government’s part, as we explored in Committee, to try to make the two schemes equivalent so that there cannot be gaming, as it were, by moving into one scheme rather than the other. That should be applied, as the amendment specifies, by means of asking the Government, wherever a voluntary scheme is in place—which is an important caveat—to ensure that a statutory scheme should seek, so far as is practicable and relevant, and it will not be precise, so I do not think it can be regarded as too rigid, to make it so that the equivalent effect is applied at a product level: not at a company level or a whole-scheme level, but in relation to the individual products. Individual products, whether they are in the voluntary scheme or the statutory scheme, should expect to have broadly the same overall treatment applied to them. The net effect would therefore be that the schemes will become equivalent and the scope for gaming will be reduced. I hope that explains the amendment and I beg to move.

[Lord Hunt of Kings Heath]

My Lords, the noble Lord, Lord Lansley, has raised a very important point. For me, the question is: what is the future of the voluntary scheme? Over the years it has clearly served its purpose well. In Committee, the noble Lord acknowledged the benefit of the PPRS, which is the voluntary scheme, and said that it showed how Government and industry could work together to develop solutions. I draw the noble Lord’s attention to a piece written by Sir John Bell recently. When talking about what we have just discussed, the dynamic between access, cost and life-science investment and the problem the NHS has in investing in innovation, he said:

“A solution for both parties is necessary and must come from healthcare systems and innovators working more closely together, sharing risk and cost and attempting to use innovation to take cost out of health systems wherever possible”.


This is a wider issue than drug costs and PPRS, but it would be good to hear about the context in which the Minister thinks a potential new PPRS is going to be agreed. Many in industry think that the Government are not really committed to a new PPRS. It would be interesting to get some sense from the Minister as to where he thinks things are going.

--- Later in debate ---

[Lord O'Shaughnessy]

The noble Lord makes an excellent point. Clearly, as the budget holder, NHS England ultimately must be a key part of negotiations for any future schemes. We intend that any future voluntary scheme should be established through negotiation in this way, but linking the payment mechanisms would inevitably place a restriction on that freedom.

I am grateful to my noble friend for raising this issue and I hope I have reassured him on equivalence, while also explaining why I believe the amendment goes too far by focusing specifically on products. On that basis, I ask my noble friend to withdraw his amendment.

[Lord Lansley]

I am grateful to my noble friend for his helpful response setting out the Government’s continuing position. The exchange with the noble Lord, Lord Hunt, was also useful. I said in debate on the previous group that earlier engagement and development of NHS England’s role in trying to assess what is a reasonable price and what is the value proposition in relation to new medicines that are being adopted by the NHS would be helpful at the same time in trying to develop the shape of a new voluntary scheme. I am sure that the industry, having been frustrated in the outcome of the 2014 PPRS, would want the principles for 2019 to be broadly similar: freedom of pricing and introduction; the ability to modulate prices in the way my noble friend referred to; the Government’s desire for a stable overall budgetary outcome; but also access to new medicines and diffusion across the NHS.

If we are going to meet those principles together—and balance them, as we discussed in the last group—NHS England should be at the table when the scheme is being designed. I am sure it was frustrating in the previous scheme that Scotland and Wales had identifiable resources for access to new medicines and NHS England had those resources but not in an identifiable form. It would be helpful for the new scheme to see the rebate, if it is rebated scheme, being specifically directed towards promoting access. I do not think that that is an unreasonable objective.

That said, the Minister has very kindly reiterated that the Government consider it desirable to have broadly equivalent proportions of sales in the two schemes being rebated and not disaggregated to product level. I can see that if you disaggregate to product level, you have a problem with price modulation between products for companies. That is a practical issue. However, as an inevitable consequence of the Government’s approach to equivalence, the schemes will not be the same. Generally speaking, once the legislation goes through, the statutory scheme will be less attractive.

That may well be the Government’s intention. Indeed, the Government may well like to have a situation where they can encourage companies to provide the necessary payments back through the rebate in the voluntary scheme with the threat of putting them into the statutory scheme. That might be something that the Government have occasionally thought of doing. I do not think that it is a desirable situation. The effort—I put it at no more than that—to define the equivalence of the two schemes should be a continuing effort. I know my noble friend the Minister has that in mind. It is not his intention to create two schemes that diverge in ways that could potentially be difficult for the industry if the Government were so minded in that direction.

It has been a useful debate but I certainly do not want to pursue it any further. We have had two opportunities to explore important issues that, frankly, we should attempt to resolve in the design of the new scheme rather than in legislation. I beg leave to withdraw Amendment 4.

Amendment 4 withdrawn.

Moved by

[Lord Lansley]

5: After Clause 3, insert the following new Clause—
“Report to ParliamentAfter section 264 of the National Health Service Act 2006 (statutory schemes: supplementary) insert—“264ZZA Report to Parliament(1) Where the Secretary of State enters into a voluntary scheme under section 261, 263 or 264A, or makes a statutory scheme under section 263 or 264, he or she must lay a report before each House of Parliament, setting out how the scheme concerned will enable the Secretary of State to fulfil his or her statutory duties under section 266(4).(2) The report must also cover the impact of the scheme on the statutory duties of the National Institute for Health and Care Excellence under section 233 of the Health and Social Care Act 2012 (general duties).””

[Lord Lansley]

Amendment 5 refers back to the discussion we had on Amendment 3 about the duties that the Secretary of State must meet in relation to the scheme. This is another aspect of that but a more particular one.

In Committee, I explored the idea that the Secretary of State should pursue through the voluntary scheme—or indeed the statutory scheme, as necessary—pricing that was related to value. There were a number of criteria for what value is. In response to that, my noble friend said that many of the aspects that constitute value are reflected in existing statutory duties. For example, in Section 266(4) of the National Health Service Act, which is concerned with the price control mechanisms we are amending through this legislation, the Government are required to bear in mind,

“the need for medicinal products to be available to the health service on reasonable terms”—

the value proposition and access proposition that we have just been debating—and,

“the costs of research and development”,

which of course are important to the industry in promoting innovation. We do not need to replicate those. But my noble friend the Minister also said that there were other statutory duties: for example, that under Section 233 of the Health and Social Care Act NICE is required to have regard to,

“the broad balance between the benefits and costs of provision … the degree of need … and … the desirability of promoting innovation”—

all of which are indeed very much part of the overall value proposition. But because they are statutory duties relating to NICE, they are not necessarily factors that the Secretary of State must have regard to in the formulation of the PPRS, which is what we are dealing with here.

The purpose of Amendment 5 is to say that there are these existing statutory duties applicable to the Secretary of State. Separately, there are statutory duties applicable to the National Institute for Health and Care Excellence. The Secretary of State, when making a scheme and reporting on such to Parliament, should state how those statutory duties, both in respect of the Secretary of State and as they might impact on NICE, could be met through the design of the scheme. In that sense, it is a mechanism for trying to ensure that the value proposition gets to the heart of the assessment of what the price control mechanism should seek to achieve. I beg to move.

[Lord O'Shaughnessy]

I am grateful to my noble friend for his amendment and for raising the issue of reporting requirements and how that relates to the responsibilities of NICE.

Under the current PPRS, the Department of Health regularly publishes information relating to the operation of the voluntary scheme. For a future statutory scheme, as my noble friend is aware, the illustrative regulations, which we have published alongside the Bill to assist in scrutinising the provisions, already include regulations for both the statutory scheme, in Regulation 32, and the information regulations, in Regulation 14, for an annual review of the regulations and a requirement to publish our report of each review. Our illustrative regulations require an annual review to,

“set out the objectives intended to be achieved … assess the extent to which these objectives are achieved; and … assess whether those objectives remain appropriate”.

These requirements will be tested through the consultation on the regulations and we will of course take account of those views.

I assure my noble friend that that review would take into account the duties under Section 266(4), which currently are,

“the need for medicinal products to be available for the health service on reasonable terms, and … the costs of research and development”.

Of course, subject to further consideration of the Bill, there may be further duties. I accept that reporting is an important principle but setting out the requirements in primary legislation is too restrictive. Over time, it is to be expected that both the statutory scheme and the information requirements will be amended through their respective regulations to reflect changing circumstances. It is essential that the review and reporting arrangements be able to be similarly flexed, so that they remain appropriate to the schemes in operation. My noble friend has suggested that we report every time there is a new voluntary or statutory scheme. I believe the annual reviews as set out in the illustrative regulations would provide more frequent review than the amendment proposes, at least for the statutory scheme.

--- Later in debate ---

I hope I have been able to address the issues that my noble friend has raised. I know he is a passionate proponent of the importance of value-based pricing, and look forward to continuing to work with him to see how those considerations could be included not only in future NICE assessments but in the operation of any pricing control Bill. On that basis, I ask him to withdraw his amendment.

[Lord Lansley]

I am grateful to my noble friend. I entirely take his point about the structure of reporting and review proposed through the regulations, which I will not necessarily pursue. On the second limb, however, the duties relating to NICE, there is a gap. The reality is that the development of a value proposition through the structure of the PPRS, or outcome-based pricing—that may be the next iteration, to try to take out some of the complexities associated with the broader value-based pricing structures that were consulted upon—means having a direct relationship between the pricing structure under the PPRS and the ability of NICE to make recommendations that drugs are cost-effective. We have just had that debate and I will not go through it all again.

At the very least, to say that these things are unrelated therefore seems wrong. The Government should at least look at these regulations and say, “Given that there is a relationship between the structure of PPRS and the price control mechanism as it works—or the rebate mechanism, if there is one—NICE’s ability to do its statutory job should be perhaps discussed, recognised, reviewed and reported upon”. Having made that point, I know from the very helpful discussions we have had in Committee and separately that my noble friend is actively looking to promote that kind of understanding. I will leave it in his capable hands and seek leave to withdraw the amendment.

Amendment 5 withdrawn.

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Moved by

[Lord Lansley]

7: 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 circumstances where the Secretary of State considers that the price or security of supply of any health service medicine or medical supply, or category of health service medicines or supplies, may be determined most appropriately through an open and competitive tender process, the Secretary of State may exempt that product, or category products, from the application of the scheme.””

[Lord Lansley]

My Lords, I am grateful for the further opportunity to touch on an interesting issue which we discussed in Committee. On Report, I have proposed a different amendment that tries to meet some of the considerations that were quite properly raised in Committee. This relates to where the method of procurement for a branded medicine or product to which the statutory scheme would apply would be through a tender process and there would be an expectation that the best available price would be obtained through that process. I completely accept that previously we were looking at possibly exempting tender processes generally. The Minister quite rightly said that sometimes the tender process is used not to secure the best price, but to secure supply or procure products which are not directly comparable and where price competition would not be expected to be available.

I completely understand that, so this amendment says not that the Secretary of State under any circumstances is obliged to exempt a tender which has delivered a price outcome but that he may do so. Why do I think it is useful to do that? It is because there will sometimes be products where, for reasons of security of supply, it is important to undertake a tender process. At the moment, all companies in the statutory scheme or the voluntary scheme will have the implications of the PPRS pricing and rebate structure applying to them. As we have heard previously, the way that applies to individual products may be subject to price modulation depending upon how the company overall is affected by the scheme. It may therefore have a distorting effect on products that are offered through the tender. That is undesirable. We should want the tender process to be as transparent as possible and the price, supply and other considerations of the tender to be as self-contained as possible. That is perfectly possible to achieve if the Secretary of State has the discretion to exempt a tender process from the scheme.

As the Minister told us in Committee, the Government intend that framework agreements agreed before the regulations come into force will be exempted in any case. This amendment would helpfully give the Secretary of State the ability to exempt specific tenders from the application of the scheme. I do not want to anticipate too much, but the Minister may respond that the Secretary of State has the power to do that. If he says that the Government will actively assess where we may use such discretion to make it clear that tenders should be conducted in that way, I would be content. My noble friend instanced von Willebrand factor, where there are very similar products which are not necessarily competing on price. There is a general problem with plasma protein therapies because the cost structure that applies to them does not reflect the cost structure over the life of a product as it is reflected in patented, branded medicines generally. There is a good case for looking at an exemption in relation to products which have that high level of fixed cost rather than applying the price control and rebate in the way that happens now. I hope my noble friend will be able to say positive things about how we can maintain competition in the tender process and recognise the cost structures of certain medicines, because there is likely to be the application of the same principles to those products whether or not the company has opted into the voluntary scheme. Therefore the Government should be more willing under the statutory scheme to apply exemptions to those companies which have not opted into the voluntary scheme. I beg to move.

[Baroness Walmsley]

My Lords, as I mentioned in the debate on Amendment 3, I support this amendment because it gives the Secretary of State a bit more flexibility to take account of the specific circumstances of a company with very high fixed costs, in the interest of making sure that we have security of supply and patient access to the particular products that it produces. I do not think it undermines any of the objectives of the Bill in any way, and because of that, I hope that we will hear something encouraging from the Minister.

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[Lord O'Shaughnessy]

I thought I had, when I talked about taking into account the differing R&D costs, which I think was the substance of the point made by the noble Baroness and the noble Lord, Lord Hunt. We have to take into account both getting a good price and the R&D costs, and that needs to be reflected within a statutory scheme, and would clearly apply to the case in point.

[Lord Lansley]

I am grateful to my noble friend and completely understand that at this stage it would be inappropriate to try and itemise in any way how the Secretary of State’s discretion to exempt products or categories of products could be used. I am grateful for what my noble friend said because it is clear that while some companies opt into the voluntary scheme, we will arrive at a situation where, in effect—force majeure—other companies with other products are in the statutory scheme without any choice in the matter. They should come out of this debate with the confidence that they can make their case to the Government. We have seen some really good examples, and I am grateful to the noble Baroness, Lady Walmsley, and the noble Lord, Lord Hunt. Biosimilars clearly have a case to make about the structure of the scheme and how it applies to them in relation to this.

As the noble Lord, Lord Warner, mentioned, the cost structure of plasma product therapies and things of that kind is very different from the cost structure of many other branded medicines that enjoy their patent life. To that extent, recognising their cost structure might require an exemption from the PPRS as it stands at the moment. We cannot just seek some of those products, particularly some of the blood products we are talking about, in isolation in Britain. There is a limited supply. We import them from abroad, and there are sometimes higher prices in other markets. It is absolutely necessary for us sometimes to say, for security of supply reasons, that this product, this tender process or this framework agreement for the delivery of products of this kind is exempted from the PPRS in the future. It does not automatically follow that they will be included. However, I gather from what my noble friend says that the power is there to do this and that this will be considered, as and when, on its merits. On that basis I certainly seek leave to withdraw Amendment 7.

Amendment 7 withdrawn.

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[Lord O'Shaughnessy]

My Lords, I am grateful to the noble Lord, Lord Hunt, for his amendments. I shall speak to government Amendments 9, 11, 25 and 26 relating to information notices and appeals, and will refer to Amendments 8, 10 and 12 tabled by the noble Lord.

We had a good discussion in Committee about the information powers. My noble friend Lord Lansley proposed information notices with a right of appeal; the noble Lord, Lord Warner, proposed to place certain restrictions around the Government’s ability to collect information on profits; and the noble Lord, Lord Hunt, proposed that those restrictions be in the form of “triggers”. As I hope noble Lords will know from the individual meetings that I have had the chance to have with them, I have been listening carefully to what has been said and I am conscious of the importance of proportionality in the Bill. In particular, I have reflected on the suggestion from the noble Lord, Lord Hunt, that we may be able to combine these different ideas into a workable solution that would deliver the sort of safeguards that I believe noble Lords are seeking. The government amendments that I have tabled would do precisely that.

There was broad agreement in Committee that the Government should be able to collect the information required to reimburse community pharmacies and to operate our cost-control schemes for medicines as effectively as possible. That includes straightforward information about sales income actually received or the amount actually paid in relation to health service products at each point in the supply chain. We already collect much of this information now under a mix of voluntary and statutory arrangements, including scheme M, scheme W and the community pharmacy margin survey.

We have discussed previously that our current arrangements need to be strengthened. The changes proposed by the Bill would allow us to expand routine collections to inform reimbursement prices. They would enable us to use data from more companies, make the reimbursement of community pharmacies fairer and more robust and set reimbursement prices for more products. Setting reimbursement prices leads to more competition—whose merits we have discussed—as pharmacies are incentivised to source the products as cheaply as possible, allowing them to retain a margin. That in turn helps us to keep the drugs bill down.

However, I have heard the concerns raised by noble Lords in relation to the collection of information on the profits associated with particular products. The noble Lord, Lord Warner, spoke about his concern that it would be burdensome for the pharmaceutical industry to apportion certain operating, development or manufacturing costs to individual products. The government amendments that I have tabled would address that concern. Amendments 11, 25 and 26 would introduce the requirement in regulations for the Secretary of State to issue an information notice for the collection of information on the costs incurred by a producer in connection with the manufacturing, distribution or supply of UK health service products. The exception to that requirement would be information on the amounts actually paid for purchasing health service products from an organisation in the supply chain. As I set out earlier, our current routine collections already cover the acquisition costs of the products themselves, as distinct from the overheads incurred by an organisation in supplying them.

Amendment 9 makes clear that in order to collect information in relation to certain types of profit made by suppliers, the Government would by necessity need to collect information on certain costs. I know that the collection of information on profit has been of concern to some Peers. Taken together, these amendments therefore make clear that the Government would be required to issue an information notice before they could collect particular types of profit-related information.

I have sympathy for the amendments from the noble Lord, Lord Hunt, that would restrict the term “profit” to aggregate UK profit. However, this approach may mean that we would be unable to collect information on the purchase costs and sales revenues that we currently collect and use to inform the reimbursement of community pharmacies and ensure that our reimbursement arrangements deliver value for money. I hope he would be willing to support the Government’s approach, which addresses the concerns raised by the pharmaceutical industry without undermining our ability to reimburse community pharmacies effectively. It might be worth adding at this point that I have had the opportunity to meet a couple of representative groups and explain the approach that we were taking in order to provide proportionality, and that approach was welcomed by those groups.

I should point out that in drafting Amendment 11 the Government have omitted to reflect that under the voluntary scheme, on a routine basis, we already obtain information from companies on profits and costs, including the costs of manufacture, R&D and distribution. This is company-level information, not product-level information. I will therefore bring forward a small amendment to Amendment 11 at Third Reading to reflect this, which would enable the Government to obtain that information on a routine basis under a future statutory scheme. I believe this would also be in line with the intention behind Amendment 8 from the noble Lord, Lord Hunt, which distinguishes between company-level or aggregated information on the one hand and information on individual products on the other.

I turn to the circumstances in which the Government may wish to collect information on costs via an information notice. In Committee we spoke about triggers, and the noble Lord, Lord Hunt, has tabled amendments along those lines. I have thought about this carefully but have concluded that we cannot set particular conditions for when we issue information notices. First, we cannot predict all the circumstances where this or a future Government may need to investigate further the value for money of a particular product or supply chain. Secondly, we may want to issue an information notice when we have an information gap and cannot properly assess whether a product or the supply chain is delivering good value for money. It would be a Catch-22 situation if we were to have triggers for an information notice in legislation that would allow us to issue an information notice only when we already had the evidence. I trust noble Lords will understand the Government’s concerns about triggers for an information notice.

However, in Committee I said I would provide examples of when the Government may wish to collect information about costs. These include where companies in the statutory scheme ask for a price increase for a particular product and we want to assess whether that is justified; where we have concerns about the high price of an unbranded generic medicine and want to assess whether the prices are warranted; or where the Government have no visibility over costs in the supply chain and want to assure ourselves that the market is working effectively. These are only some examples but I hope they illustrate where the Government may benefit from more information than that which is collected routinely to run our community pharmacy reimbursement system and to operate our cost-control schemes for medicines. The information notice would of course clearly set out what information would need to be provided, the form and manner in which the information would need to be supplied, the period of time that that information would need to cover and the date by which that information would need to be supplied. It would inform those issued with an information notice of their right of appeal.

The government amendments would introduce a right of appeal for those served with an information notice, an important point made by my noble friend Lord Lansley in Committee. UK producers could appeal an information notice if they believed the request was beyond the powers in the NHS Act 2006. That is in addition to the existing appeal mechanism against any enforcement decision made by the Government when a company refuses to submit information.

I thank noble Lords, especially my noble friend Lord Lansley and the noble Lords Lord Warner and Lord Hunt, for helping to shape these amendments. I hope that through the government amendments I have reflected the concerns raised in Committee, and that the House will agree them. I also hope I have addressed the amendments tabled by the noble Lord, Lord Hunt, and I ask him to withdraw his amendment and instead support the Government’s amendments.

[Lord Lansley]

My Lords, I reciprocate my noble friend’s thanks. In Committee he said he was going to think very carefully about the subject of information and the circumstances in which it is required from companies. Having done so and engaged us in a conversation about it, he has come forward with an amendment that seems specifically designed to meet the concerns raised in Committee. From my point of view, and this is very simply put, there must be a general scheme to acquire information, but when one goes beyond it the company has a right to expect that the information notice must be specific, itemised and additional, and that, as is now provided for, there should be a right of appeal in relation to that. My noble friend has very kindly listened and brought forward an amendment to do in substance the things that we were looking for, so I am grateful to him.

[Lord Hunt of Kings Heath]

My Lords, I thank the Minister. I am grateful for his amendments, because he clearly listened to the debate. I just want to encourage him to go that little bit further. I am glad that we have a government amendment on Third Reading, because that means that we can continue this debate: his amendment is amendable, which is always the issue for noble Lords on Third Reading.

The Minister said on my Amendment 12 that he was anxious not to put particular conditions into the Bill, but my reading of his Amendment 11 is that he imposes particular conditions. Its first four lines state:

“Regulations under this section must require the Secretary of State to give a UK producer an information notice if information is required in respect of the costs incurred by the producer in connection with the manufacturing, distribution or supply”.


All I want to do in my amendment is add the word “access”. I am just taking his elegant drafting and adding a bit to it. I beg leave to withdraw Amendment 8.