Medical Devices (Amendment) (Great Britain) Regulations 2023

Debate between Lord Lansley and Lord Hunt of Kings Heath

Monday 5th June 2023 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, I thank the Minister for his explanation of the statutory instrument. I do not oppose it at all, although the fact that the Government are doing it seems to reflect the serious lack of preparation and planning for the post-Brexit world in which we now exist.

I have two points to put to the Minister. The first is in relation to the 30 June 2030 cut-off date for the sole use of UK conformity assessments for medical devices placed on the market in Great Britain. My understanding is that the transition timelines to 2030 are causing significant confusion for companies, especially SMEs in the health tech and medical devices sector. I refer noble Lords to paragraphs 7.6 and 7.7 of the Explanatory Memorandum in particular, which begin to explore some of the complexities. I say this to the Minister: a clear timeline would be very helpful in giving clarity and certainty to companies.

My second point picks up the point that the Minister made right at the end of his opening speech about the MHRA’s capacity and its plans to reform the current regulatory system. I pay tribute to the MHRA’s work and am sure that it will rise to the challenge but the plan includes proposals

“to reclassify products, to increase information gathered at the point of devices’ registration, to strengthen post-market surveillance requirements to ensure better incident monitoring reporting and vigilance, and to introduce alternative routes to market”.

I can see the reasons for this, of course, but additional regulatory burdens for industry to supply the UK may mean that manufacturers will not bother and will focus on the EU and other larger, certainly more valuable, markets. The number of products made just for the NHS is very small indeed.

The Minister will be aware that the Chancellor talked in the Budget about the rapid, almost automatic approval of devices approved in markets such as the US. Is the MHRA signed up to this? It seems essential to build on current product recognition routes from the EU and rapidly explore building a UK product regulation equivalence route for the approval of medical devices to include other trusted jurisdictions, such as the US, for a greater proportion of products. I would be grateful if the Minister could comment on this.

I now come to the very serious capacity and capability constraints. Clearly, the MHRA has suffered from the reduction in its funding, especially on the devices front. I hope that the Minister will be able to say what is being done to improve it. Also, what philosophy will the MHRA adopt in future? Will it continue to oversee the regulatory process in relation to devices or will it take a more expansive, more centralised and certainly more expensive FDA-style approach, with the attendant recruitment challenges that that brings? It has been announced that one of the MHRA’s senior executives, Dr Laura Squire, will focus on devices and that there is a recognition of skill shortages but I cannot begin to overestimate the problem for UK companies if, in meeting the target that the SI now sets, they find that one of the major problems is a lack of capacity in the MHRA to provide the necessary speedy regulatory assurance that is required.

This comment can generally be made about the post-Brexit arrangements as a whole. If, by “taking back control”, the Government mean that they are serious about developing a new regulatory regime that serves the public interest and is effective in attracting industry to this country, they really must ensure that the regulatory system is both fast and effective. This is the major issue that must lie behind this SI.

[Lord Lansley (Con)]

My Lords, I will speak about the medical devices issues in these regulations. I thank my noble friend the Minister for introducing them. To some extent, I share some of the concerns expressed by the noble Lord, Lord Hunt of Kings Heath. He and I will recall our debates on what is now the Medicines and Medical Devices Act 2021, which provides the power under which these regulations are being made. When the new medical device regulations are laid, we will look very carefully at the extent to which they reflect the considerations put into Section 15 of the 2021 Act, which are about not just the quality, safety and availability of medicines but the ability to support both clinical research and the supply and manufacture of medical devices in this country.

That latter point bears directly on this statutory instrument, which is helpful in that respect because it extends the transitional period. This will create an opportunity for manufacturers based in or exporting to the United Kingdom to supply medical devices here. They will be able to adapt to the changes in the regulations that are yet to come—we do not know when. My noble friend might like to tell us a bit more about that timing since, in a sense, extending the transitional period is all very well but you have to kick the transition off. We need our regulations to be in place in order to see how significant the differences between the existing regulations and the future ones are and how different our regulations are from those that apply in the European Union.

I will make a general point, on which I know my noble friend can say little at this stage. When we debated medical devices regulation and initially agreed that we would accept the UK CE marking for a period of time, there was always a question as to whether it made much sense to disapply the UK CE marking and when to do so.

Procurement Bill [HL]

Debate between Lord Lansley and Lord Hunt of Kings Heath

Committee stage
Wednesday 6th July 2022 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, as this is my first intervention, I remind the Committee of my presidency of the Health Care Supply Association. I have Amendments 82, 92 and 141 in this group, none of which have much to do with each other, but that is part of the mysteries and delights of grouping.

Amendment 82 is particularly concerned with the challenges facing charities seeking to obtain contracts from public authorities. I am very grateful to NCVO and Lloyds Bank for their briefing on this matter. While all types and sizes of charities experience challenges relating to the commissioning and procurement of public service contracts, smaller organisations often face considerable barriers. Yet a large proportion of the voluntary sector is actually fundamental to the delivery of public services. There are many examples, but we know, for instance, that the voluntary sector is the leading provider of services—according to research commissioned by DCMS—in relation to homelessness, and there are many other services where we are absolutely reliant on the voluntary sector.

However, there is a real problem in the huge amount of work that needs to be done to assemble information and make bids. Advance notice of tender opportunities is important for charities. We know that many of them have far fewer resources than private companies to support bid-writing, so they need time to plan. They also want to take time to work with service users or other charities to develop an offer, and that cannot be rushed. When commissioning services for people, especially those experiencing a range of intersecting challenges, a market does not often exist, so preliminary market engagement is critical for understanding what people need and how those needs could be met.

All my amendment seeks to do is create a presumption that contracting authorities should have ample notice through a planned procurement notice, unless there is a very good reason not to do so. This would allow the necessary time, particularly for smaller charities, to prepare bids.

My Amendment 92 is about the need for rigour and accountability in procurement. It starts from the requirement set by Her Majesty’s Treasury to ensure that the investment of public money, especially large sums, is done objectively and in a way that those who have to authorise the investment can rely on. It also deals with the principle of transparency and would ensure that business cases are routinely published.

My understanding is that it is already required under Green Book guidance from Her Majesty’s Treasury, particularly for major projects managed in the government portfolio, that at least a summary of the business case has to be published within four months of contract award. The Green Book, which has been regularly updated by the Treasury as circumstances require, describes in great detail the rigorous process that needs to be followed. The principle is that if you do not abide by this, you will not get approval for the expenditure of resources. Much in the Green Book is based on the need for a proper business case and I believe it was also envisaged that the business case would be published.

The problem is that regulation and good practice are too often ignored in the public sector. I think athere is less appetite for proper enforcement of that guidance. All campaigners can do to raise concerns about a particular tender process is go for judicial review, which, as we all know, can be very expensive.

My particular interest is the NHS. When I was a Health Minister, which seems a very long time ago, there were very strict rules about spending and investment by trusts. If public money was sought for a major procurement or programme then a strong authorisation path led from region to department, and often to the Treasury itself. Some of that remains, but what is missing is that the former strategic health authorities ensured that the required processes were followed properly and intervened when they were not. They also ensured that the public were consulted, but much of that has foolishly been thrown away. That means that it has become much harder for the public to hold decision-makers to account.

It is very noticeable that, last month, the Public Accounts Committee published a report on the Department of Health’s 2020-21 annual report. It commented that the department

“has regularly failed to follow public spending rules and across the Departmental Group there is a track record of failing to comply with the requirements of Managing Public Money. The Department is required to obtain approval from the Treasury before committing to expenditure where such authority is needed. The Treasury has confirmed that £1.3 billion of the Department’s spending in 2020–21 did not have HM Treasury consent and was therefore ‘irregular’. The Treasury has stated that ‘in the vast majority of cases’ this was because either the Department and/or the NHS had spent funds without approval or in express breach of conditions.”

If the noble Baroness, Lady Noakes, was still in the position she held on financial management in the Department of Health, that would not be happening.

My amendment would ensure that there is a proper business case and that it should be publicly available before crucial decisions are taken. If the Minister says that it is already required, the fact is that parts of the public sector are not listening. I hope that this debate will be helpful in ensuring that the Treasury and government departments look at this very closely in the future.

My third amendment follows a briefing from the RNIB and concerns the fact that, in replacing the existing legislation, the Bill overwrites requirements that are of particular significance to 14 million disabled people in the UK because they ensure that publicly procured goods and services are accessible to everyone. It is pretty unclear at the moment how the current Bill will replace that regulatory framework, and my Amendment 141 seeks to re-establish a requirement that contracting authorities have due regard to accessibility criteria for disabled people.

In June last year several organisations, including the RNIB, wrote to the Cabinet Office seeking assurances that accessibility for disabled people would be maintained in public procurement legislation. Responding, the then Minister, the noble Lord, Lord Agnew—who has certainly shown how you should resign, in style and with full transparency and visibility to your Lordships’ House, although I do not think he quite managed the grace of the noble Lord, Lord True, in his very perceptive remarks yesterday—said that the Government are committed to ensuring that accessibility for disabled people is maintained as part of public procurement legislation, and that the new regime will ensure that specifications take into account accessibility criteria and design for all users. Despite that, the only reference we can find to accessibility is in Clause 87(2), which states that any electronic communications utilised as part of the public procurement exercise must be

“accessible to people with disabilities.”

This is partly probing—finding out the government response to it. If the Minister argues that the public sector equality duty under the Equality Act is sufficient, we will argue that it is not sufficient because we have seen contracting authorities failing to consider their obligations and procuring inaccessible products. This amendment is only a start, but I hope the Minister will be sympathetic to the issue.

[Lord Lansley (Con)]

My Lords, before I speak to my Amendments 84 and 88, I will just say that, while I do not think it is a registrable interest or a conflict of interests, my experience in these things is largely derived from my work, over a number of years now, advising LOW Associates SRL in Brussels, which has a number of contracts with the European Commission and other European agencies. We have participated in procurements on a number of occasions each year in the European context. That gives one quite a lot of experience of the system we are moving from and some of the ways it can be improved. I put that on the record.

My noble friend and other noble Lords may recall that at Second Reading the most important point I made—it is one I will return to on a number of occasions, including when we talk about the procurement objectives and the national procurement policy statement —is that procurement by the public sector is a very large element of economic activity. The way in which it is conducted can have a significant and beneficial impact on productivity in the economy if the issues of innovation are properly incorporated into the consideration of how procurement is undertaken and who the suppliers to public authorities are.

In a sense, the noble Baroness, Lady Worthington, is trying to do the same kinds of things in Amendments 85 and 87. We are maybe trying to approach it in slightly different ways. The same will be true in relation to the procurement objectives.

I hope that in responding to this debate my noble friend can at least give us a sense that we can work together to try to ensure that the promotion of innovation is one of the central aspects of how contracting authorities go about their process of delivering best value, and that the broader externalities of procurement, through promoting innovation in the economy, are realised. They are significant.

Health and Care Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

Lords Hansard - Part 3 & Committee stage
Wednesday 26th January 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, I shall be brief. I put my name to Clause 40 stand part, and I think that is the best way to go. I shall add one or two things. First, as Secretary of State, I asked the now noble Lord, Lord Ribeiro, to lead the independent reconfiguration panel, and I never had cause to regret doing so. Secondly, I can say something which other noble Lords cannot, because I am on this side, and I am hoping that we continue to have Conservative Secretaries of State for many years hence. They will be much better off if they do not do this. If the Government take Clause 40 out, they will equally not regret doing so.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I described at Second Reading, or at some point in a meeting with the Minister, an attempt to save Ministers from themselves. I do not understand why on earth the Government want to put this burden on them. The Government have set out an ambitious programme for reform of the NHS. Why put in a clause that guarantees that that reform will be stalled? We know that reconfigurations—most of us have experienced the issue locally, if not nationally—are very difficult. There is always local opposition, often from some leading consultants, and to get it through you have to be very determined. The noble Lord, Lord Warner is right; once Ministers can intervene at any point—for example, if an MP’s local services are threatened with an unpopular change—even in the Lords, the pressure on them to intervene can be huge.

--- Later in debate ---

[Lord Lansley (Con)]

If anyone cares to look at it, it was also a very good illustration of the benefits of the Independent Reconfiguration Panel. Not only did it do something that Ministers could not do; it also did something that NHS management did not do. It is not that we are giving it back to the NHS to do what it likes—it genuinely does something independent.

[Lord Hunt of Kings Heath (Lab)]

Indeed, we have a rigorous process involving the overview and scrutiny committee, as has been said, plus an Independent Reconfiguration Panel. As the noble Lord, Lord Stevens, said, it is rather like the last debate: before us we have a set of amendments which seek to constrain the power of Ministers, and then an amendment which seeks to remove this power. I am clear that we should try to remove this power, and that this is the best course. It will be very interesting to hear from the Minister exactly why Ministers want to put this burden on them, and what benefit they can possibly see in it.

Health and Care Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

Committee stage
Thursday 20th January 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, I want to intervene at not too much length. I welcome these amendments and am grateful to my noble friend Lady McIntosh of Pickering for bringing hers forward. It enables us to touch on a subject which those of us involved in the Medicines and Medical Devices Act will recognise. This is a short version of the debates we had then, but it gives us an opportunity to update a little on those and me an opportunity to ask my noble friend on the Front Bench a few questions arising from that. We are all grateful to the noble Lord, Lord Stevens of Birmingham, who clarified some of the terminology, which saves us going wrong. But I want to do a bit of clarification about some of the amendments as well.

The timing of this is terrific. We are discussing this today and NICE published the outcome of its methods review yesterday, so we can respond immediately. My starting point is to applaud NICE for having taken up and accepted the proposition that there should be a modifier in relation to its appraisals and assessments on severe diseases. We can argue about the precise detail, but it has taken that up.

Secondly, randomised control trials are terribly important but they are not the whole story. NICE has rightly accepted it should look at more real-world evidence and that, too, we can welcome, but it leads me directly to a question. Part of that real-world evidence, and one of the reasons it is not going directly to NICE, though NICE can use it, is the innovative medicines fund. NHS England published its proposal for the innovative medicines fund in July and said that it would consult on it, but it has not done so yet. My first question to my noble friend is therefore: when will NICE and NHS England consult on the innovative medicines fund?

The third point on NICE’s methods review is that it will take account of the wider impacts of the treatments it appraises. That is terribly important, especially given the present opportunities for personalised medicines and gene-based treatments, when one looks at how these can impact substantially on people’s lives from a relatively early stage and the contributions they can make to society and the economy. That is all good news.

The press release from NICE, however, did not draw specific attention to where it had proceeded in a way that its stakeholders did not support. It has maintained a reference-case discount rate of 3.5%, although NICE itself admitted that there was evidence that a lower discount rate would give significant benefits. It said that there would be wider implications for policy and fiscal complexities and interdependencies if it were to do this, which I think means “The Treasury said no”. We need to think very hard about whether a discount rate as high as 3.5% is appropriate for NICE’s application of its appraisals. I ask my noble friend, though he will not be able to give me the answer to this: who is telling NICE that it cannot adopt what it regards as the evidence-based discount rate for the appraisals it undertakes?

[Lord Hunt of Kings Heath (Lab)]

My Lords, on that basis, I have seen it said elsewhere that NICE has referred to its “national stakeholders.” I can only assume that they are Her Majesty’s Government.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord has said that the Bill came because this is what the NHS wanted. But we must be clear who in the NHS wanted it, and it is obvious that it was the senior chief executives at the local level and NHS England. No wonder primary care has been completely squeezed out of it. Listening to this debate, it seems to me that the proposals from NHS England never had any scrutiny. Ministers just accepted this and, because NHS England does not engage externally, there has not been the testing that you would normally get, and we are having to do it now. Frankly, the wheels are falling off. It is tempting to invite the noble Lord, Lord Lansley, to come in, because clearly CCGs were all about putting primary care in the driving seat. This seems to be removing them altogether and it is worrying.

[Lord Lansley (Con)]

My Lords, in response to that, may I say that when I was shadow Secretary of State for several years, GPs consistently told me that if only they were given the responsibility, they could do it so much better than primary care trusts? So we gave them the responsibility in ways that were very like the locality commissioning that was the endpoint of the GP fundholding of the noble and learned Lord, Lord Clarke of Nottingham. To be fair to them, there was less money, but no sooner did they take this responsibility than NHS England said, “Hang on a minute, you’re not doing what we’ve told you to do.” It took about 18 months, perhaps slightly less, before NHS England effectively said, “You have no further autonomy. You’re going to be in the sustainability and transformation plans,” which are the forerunners of ICS. I do not think that the clinical commissioning groups ever got the chance to do what they were asked to.

We have now reached the point where, as the noble Lord, Lord Warner, rightly says, they are being written out of the script, but they are not complaining, which is very interesting. They are not complaining because they do not want to be responsible for the budgets; they want to be responsible for the patients. They always said that they wanted to decide how locality commissioning should be done and the good ones have put tremendous things in place in terms of population health management, patient pathways and commissioning linked to those patient pathways. That is why, if we can do something with this Bill, it is to retain all that locality commissioning with GP input. But be prepared for the ICS, the big battalions, to go away and fight with the barons in the big hospitals.

Medicines and Medical Devices Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Tuesday 12th January 2021 Lords Chamber

[Lord Lansley (Con) [V]]

My Lords, I am very pleased to follow the noble Baroness, Lady Masham, who rightly emphasises the importance of accessible and understandable legislation in this area. There are two issues. As my noble and learned friend Lord Mackay of Clashfern said, there is the question of the sunset clause and the question of the preparation of consolidated legislation.

On Amendment 2 and a sunset clause, I believe that we should reserve the imposition of sunset clauses for legislation where we anticipate that those powers may not be needed in future. This is not the case with this legislation. With the end of the transition period we require our own domestic legislation for medicines, veterinary medicines and medical devices, so these regulations and these powers will be required.

The points made by the noble Baroness, Lady Thornton, quite legitimately, about the framework—the rather skeletal nature of the Bill as introduced to this House—must be dealt with in other ways, and in the group led by Amendment 4, we have substantive changes which make it a framework rather than simply a skeleton, and give us greater assurance about how the powers are structured in the Bill. I hope that if she reflects on it the noble Baroness will realise that shutting down these powers three years after Royal Assent would be a very taxing imposition. It would probably mean that in less than a year and a half, Ministers would be thinking about the reintroduction of legislation. We would risk the powers in this Bill being shut down in order for a Bill very like it to be introduced in a couple of years’ time. I see no intrinsic purpose in that, so I cannot support Amendment 2.

I do however want to specifically refer to the other issue of consolidation and Amendments 26, 39 and 63, in the name of the noble Lord, Lord Patel. There is a general proposition that people agree that, notwithstanding that additional regulations are going to have to be made in the weeks and months ahead using these powers, they will continue for the time being to be a complex mix of powers. Some will use this legislation, some will be in retained EU law and some will be in existing and other statutes and regulations.

What we want, as my noble and learned friend Lord Mackay of Clashfern quite rightly emphasised, is legislation in this important area that is understandable and accessible. These are not regulations for the benefit of lawyers; they are regulations for the benefit of practitioners, so they need to be very clear. The noble Lord, Lord Kakkar, helpfully and kindly referred to the points I made in Committee about the role of the Law Commission. As I understand it, indeed, I think it is well to remember two things about this. First, Law Commission members are the experts in the process of codification and simplification. Consolidation of legislation is valuable, but it is even better for it to be codified and simplified so that the end result is far more accessible and understandable to practitioners.

So I would very much recommend that we proceed by asking the Government to put the areas of human medicines and medical device regulation, and perhaps veterinary medicine as well, into the work programme of the Law Commission. As I understand it, the 14th programme of work for the Law Commission will be the subject of discussion between the Government and the Law Commission up to the spring of 2022. The work programme of course will happen subsequently. So I do not think any rigid timetable should be imposed. I hope that the noble Lord, Lord Patel, would not insist upon a three-year limit or his amendment for this purpose because I hope that, at the end of this process with the Law Commission, we will end up with something much better that is brought forward as a Law Commission Bill—which can have an expedited process of scrutiny and passage through both Houses. As a former Leader of the House of Commons, and therefore responsible for the Government’s legislative programme, I say that all the evidence tells me that, if a requirement to insert a Bill into the Government’s legislative programme can be avoided, it should be.

We have been there with a Law Commission Bill on the regulation of clinical professions and professions allied to medicine, which is still waiting for legislation, because it included not only codification and simplification but substantive changes to the policy—so I am afraid that it is still waiting. So let us not go down that route; let us do the very sensible thing rightly initiated by the noble Lord, Lord Patel, which is call for consolidation, making sure that it is not about changing policy but about making the legislation work effectively for the benefit of the various practitioners and those who depend on them. And let us work through the Law Commission. I hope that, if the Minister were to tell the House that he and the Government were willing to proceed in that direction, without a timetable in place, the noble Lord, Lord Patel, would not press his amendment when the time comes.

[Lord Hunt of Kings Heath (Lab) [V]]

My Lords, rather like the noble Lord, Lord Lansley, I see this as a group of amendments in two parts. The argument for consolidated legislation from the noble Lord, Lord Patel, was very ably supported by the noble and learned Lord, Lord Mackay, and I very much support it. For those working in the health service or in industry, trying to wrestle with all the elements of legislation that cover health is very difficult indeed, and the case for consolidating legislation every so often is a very powerful one. I very much hope that the Government will take note of this, bearing in mind of course that there have been strong arguments from NHS England for a further NHS reorganisation Bill, which might be coming within a short space of time. On that issue in particular, the reorganisation of the NHS, the need to consolidate legislation following such a Bill becomes very persuasive indeed.

Where I do not really agree with the noble Lord, Lord Lansley, is on his remarks on Amendment 2 and his suggestion of a sunset clause. He argued that the problem with that is that you shut down the powers and therefore the Government need to produce another Bill, because we obviously need a regulatory regime. Sticking to the three years in my noble friend’s amendment would mean that work would have to start within 18 months. That does not argue against the principle of a sunset clause, although there can be debate about the length of time in which the new Bill needs to be enacted.

The fact is that this Bill conveys a huge number of delegated powers to Ministers. In a pungent analysis, the University of Birmingham points out that, while delegated powers may be needed to ensure responsiveness to the EU transition period and to meet the challenges of technology change, they should not be used indefinitely or relied on to implement matters of policy. This is the problem. If we take this Bill and we do not have some changes in the future, Ministers ever after will be able to ram changes to medicines and medical devices regulation through the House, and the amount of scrutiny in relation to secondary legislation is limited.

The Delegated Powers and Regulatory Reform Committee was very clear in criticising Ministers for failing to provide a sufficient justification for parts of the Bill adopting a skeletal approach. The recent report from the House of Lords Constitution Committee also said that it recognises

“that the existing powers to amend these complex regulatory regimes will cease to have effect on 31 December 2020 and that alternative arrangements are required. If the Government is unable to specify the principles according to which it intends to amend and supplement the existing law, the delegated powers in the Bill should be subject to sunset clauses.”

That surely must be right.

At Second Reading the Minister suggested that sunset clauses would emasculate the Bill, and in Committee he said that a sunset clause

“will not change the very good reasons why delegated powers are necessary.”—[Official Report, 19/10/12; col. GC 327.]

I think we come then to the fundamental argument: that many noble Lords disagree with the extent of delegation that is going to be given to Ministers for all time. The only proper defence against that is to agree to the kind of amendment my noble friend has proposed in relation to a sunset clause. For that reason, I very strongly support her.

Medicines and Medical Devices Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

Committee stage & Committee: 5th sitting (Hansard) & Committee: 5th sitting (Hansard): House of Lords
Wednesday 11th November 2020 Grand Committee

[Lord Lansley (Con)]

My Lords, I am grateful to the noble Baroness, Lady Finlay of Llandaff, for tabling and moving this amendment for a number of reasons, the first of which is that it allows me to express my appreciation to the noble Lord, Lord Patel, for moving Amendment 28, in his name and mine, last week on the innovative medicines fund and to say how much I welcomed the debate on it, which I have read, and the Minister’s response.

I am also grateful to my noble friend the Minister for his subsequent letter about the innovative medicines fund. There is of course a direct parallel in that Amendment 91A would look for the innovative medical devices fund to be funded in a similar way. I just gently dispute one proposition with my noble friend: he said that the use of the rebate on the voluntary pharmaceuticals access scheme would not be appropriate for the innovative medicines fund because the amounts could vary sharply from one year to the next. This would be a problem only if there were a direct hypothecation for the amount, and that is not necessarily implied. The amount of the innovative medicines fund could be established as a fixed amount that would then be funded by the rebate or, in the absence of a rebate, by the Exchequer or though NHS England’s total budget. It would not necessarily rise or fall with the rebate. The same would of course be true for the innovative medical devices fund.

There is a central proposition that supports both an innovative medicines fund and a medical devices fund; it is not that we in the United Kingdom lack innovation, it is that we lack the adoption of innovation in the National Health Service. That was the starting point for the Cancer Drugs Fund, on which this proposition is based. The Cancer Drugs Fund arose, in policy terms, from an analysis by Professor Mike Richards, who was then the cancer tsar under the last Labour Government, that there was a significant lack of availability of the latest cancer medicines for cancer patients, compared with other, principally European, countries. At the time that was not true for some other disease groups and medicine available for other diseases. It was a problem particular to cancer.

Why does this happen? It is not simply about funding; there is a systematic issue here, separate from the amount of resource, which is that the United Kingdom has a single-payer system. A single-payer system necessarily makes decisions about the availability of medicines on the basis of the whole system moving together. I suspect the same is true for devices. Pretty much all of the other European systems are not single-payer systems, but insurance-based systems, where, essentially, clinicians advise, patients choose and insurers pay. That brings innovations into use much more rapidly. There is potentially a problem with the diffusion of innovation in the NHS, which we have seen before and we have to continually guard against.

I put this question to the Minister for when he responds to this debate: are patients in the NHS getting access to new, effective medical devices as quickly as patients in other countries? I do not know the answer to that. I am absolutely clear that there was a good case for the Cancer Drugs Fund. I am clear that there is a continuing need for the innovative medicines fund, because there is sometimes a continuing gap between the availability of the most effective new medicines here and in other countries. I do not know about devices.

To this extent I offer an apology to the noble Baroness, Lady Finlay of Llandaff, because a medical devices fund might be premature, in the sense that we do not know to what extent there is a gap in the adoption or diffusion of innovation where medical devices are concerned. We identified real potential in the previous debate on Amendment 85 about the funding mandate for medical devices. If that is rolled out, as I think is the intention, and extended to a faster and larger pipeline of medical devices going through the NICE evaluation process, then we may find there is not too much of a problem. There may well be a case for understanding to what extent medical devices are being adopted by the NHS, relative to other health economies. I hope the Minister will agree that is worth looking at.

[Lord Hunt of Kings Heath (Lab) [V]]

My Lords, it is a great pleasure to speak to the amendment tabled by the noble Baroness, Lady Finlay, and to follow the noble Lord, Lord Lansley. Because this is about devices, I should remind the Committee that I am president of GS1 UK, the barcoding association, and chair of the advisory board of TenX Health.

I thought the noble Lord, Lord Lansley, posed a very interesting question about whether NHS patients have less access to innovative new medical devices than those in other European countries. My gut feeling is that they do, but I agree that the more information we can obtain the better so that we can debate whether the fund that the noble Baroness, Lady Finlay, proposed is a good way forward. On the face of it, I think it is. We have a situation in this country that is rather the case for medicines, where we have a very important health technology and medical devices sector. The ABHI informed me recently that the health technology industry employs over 127,000 people, generating a turnover of £24 billion. That is very substantial.

Medicines and Medical Devices Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Wednesday 28th October 2020 Grand Committee

[Lord Hunt of Kings Heath (Lab) [V]]

My Lords, I am glad to add my name to Amendments 23 and 29. I am a strong supporter of community pharmacies. Over the past few months, they have done magnificent work. They stayed open, took pressure off the rest of the NHS, and are a central part of community resilience. We cannot take them for granted. They face a number of extra costs at the moment: increased prescription numbers, extra staff costs from the increased demands for advice and medicines, covering for sickness and the rise in locum rates, and one-off costs such as decontaminating pharmacies when someone infected has visited. Before Covid-19, the community pharmacy network was already pretty vulnerable.

I am glad that, at the end of March, the Government agreed to inject £300 million-worth of advance payments into community pharmacy. A further £50 million was paid in May, followed by £20 million in June. That £370 million cash advance was of course very welcome, but it will not relieve the ongoing financial pressures because it is set against future income. Instead of this being treated as a loan to be repaid, there should be a recognition of the extra costs that community pharmacies have had to carry since Covid-19. Will the Minister consider that? I also ask her to consider what further financial support needs to be given to the sector over the next few potentially very difficult months.

That is the background to the debate about hub and spoke. As the noble Lord, Lord Clement-Jones, pointed out in previous debates, we have to go to the impact assessment to find any reference at all to hub and spoke. Clearly, it could offer many advantages. Mobile deliverers will be able to partner with dispensing pharmacies to deliver their prescriptions; he spelled out the key advantages. Equally, there are fears that it could undermine the whole community pharmacy network. My concern is about the impact on smaller pharmacy groups and individual companies and shops.

The Minister in the other place, on Third Reading, said that she intended

“to give smaller community pharmacies the same opportunity that large pharmacy businesses already enjoy.”—[Official Report, Commons, 23/6/20; col. 1239]

That is a good statement, but I say to our Minister that Governments often make statements about the importance of small businesses and, when it comes to the actual arrangements, those business often struggle to compete. I hope that this is not being done to try to rationalise the community pharmacy network, because it is a great strength that we have so many pharmacies on our high streets, where people can walk in and get immediate access to health advice and help.

The amendment is very reasonable. It simply asks that the Government consult the sector again on their plans. A previous consultation, started in 2016—two Parliaments ago—has never been concluded. Given the impact on the sector and on patients, surely the Government should undertake a proper consultation, to make sure that any legislation follows that rather than the anticipatory approach referred to by my noble friend Lady Wheeler. I hope that the Government will signal their support for the community pharmacy sector as a whole.

[Lord Lansley (Con)]

I thank the noble Baroness, Lady Wheeler, and the noble Lord, Lord Clement-Jones, for tabling their amendments, which allow us to have a useful debate; we might not otherwise reach into what some implications of the use of these powers might be. I particularly thank them for the way in which the amendments were introduced, which set out clearly and fairly the context and facts with which we need to work.

I recognise that Amendment 23 is a probing amendment. I am sure that the noble Baroness knows that, if she actually wanted to remove the capacity for legislating to introduce hub and spoke models, Clause 2(1)(g) would have to go as well as paragraph (c) to make that effective, but I do not think she wants to do that; I do not either. We all want to express our support for the pharmacy sector. In my view, the Government’s proposals in the Bill will allow that support to be given additional expression; they seem a positive step to have taken.

As someone who was shielded earlier in the year, about the only place I ever visited in April and May was the local pharmacy—not that often, but the fact that it was there and working, and the way in which it worked, was immensely impressive. Over the years, I have had a great deal to do with the pharmacy industry. In some cases, I am not sure that it was altogether happy about that. The noble Lord, Lord Hunt of Kings Heath, may remember that I worked with the National Audit Office in about 2008, when I was shadow Secretary of State, to establish the extent to which the pharmacy sector benefited through the category M reimbursement system by hundreds of millions of pounds more than it was supposed to. Those large-scale additional funds that were going into the sector had to be clawed back, as happened in the early part of the decade that we have just gone through.

That led to considerable turbulence in pharmacy incomes and values. They were overinflated and the incomes were higher between about 2015 and 2018, and the considerable clawback had a negative impact. Most recently, it is telling that the value of pharmacies—and the price increase—has gone down. It is also interesting to read the commentaries that say that pharmacy in Scotland attracts greater value because the flow of resources into it there is regarded as more stable than in England.

That is a great pity, because we have reached a point where there should be more stability and funding for pharmacies, and I want to pick up a point made by the noble Lord, Lord Hunt of Kings Heath. He suggested that the Government consider turning the advance payment into not a loan but a grant. It is a large sum of money, so it is not as easy as that. However, whereas earlier this year the global fund for pharmacies was set at about £2.6 billion and was going to be retained at that level in cash terms over five years, we have to think hard about whether that is reasonable under the circumstances. There is a good case for recognising additional costs met by pharmacies this year, and potentially into next year, and for reimbursing them perhaps through a change to the establishment fee before it disappears, with a considerable sum to recognise that.

We must also recognise that pharmacies will need real-terms increases in their resources—much as other parts of the NHS-related system are seeing real-terms increases in resources—and not to stand still in cash terms. Over the next four years, that might be something like £130 million extra.

All the way through, we have never achieved as much as we should in terms of pharmacies delivering additional services, particularly clinical services. It is partly because clinical commissioning groups have never quite recognised the flexibility they have in budget terms to use pharmacies. The noble Lord, Lord Clement-Jones, referred, quite rightly, to medicines use reviews—which are being phased out—new medicine services, nicotine-replacement services, sexual health services, minor illness services and so on. A wide range of additional services can be provided by pharmacies. If they can do it, frankly, the GPs, as those at the heart of the clinical commissioning groups, will find that it benefits them directly in reduced demand on their surgeries, which is of course one of their principal stresses at the moment. I hope that the Government will think about all that.

In this context, with these powers in the Bill, the Government do not need to know whether a large number of independent pharmacies will take advantage of the hub and spoke model. It is entirely permissive; they can choose to do so or not. The fact that they cannot at the moment is a significant potential constraint on the ability of independent pharmacies to access the benefits of automation in their sector. I am absolutely clear that we ought to give them access to this potential benefit. I do not know how many would take advantage of it or to what extent the large company chains would make their hub and spoke model available to allow independent pharmacies to get the benefits of that automation. It seems to me that they should, because there are many parts of the country that they do not reach and where they are not in competition. It is perfectly reasonable for them to allow them to access to it, particularly in some of those more remote parts of the country where dispensing is more difficult.

Many of the concerns raised about this in the debate seem to come down to the separate question that I can remember debating on legislation 15 or more years ago about whether we retain the role of the responsible pharmacist. This does not change that. The responsible pharmacist will remain as is; I do not see any plan to change that part of the pharmacy regulation. The change to hub and spoke seems potentially desirable.

While Amendment 29 does not need to be in the Bill, it makes a very good point, which is that there should be consultation and an agreed framework with the industry, and we should ensure that the framework is one that is seen to link resources and changes in the regulations, to enable it to compete more effectively. To that extent, I hope the Minister will take on board and support the intentions of Amendment 29.

Medicines and Medical Devices Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Monday 26th October 2020 Grand Committee

[Lord Lansley (Con)]

The amendment is in my name and that of the noble and learned Lord, Lord Woolf. This group includes four amendments, three of which are mine. I am glad to see in it too Amendment 124, in the name of the noble Lord, Lord Hunt, because it goes to similar issues. I hope that he will find some common ground between us.

Amendments 17 and 79 would add to the considerations to which the Secretary of State should have regard when making medicines regulations and medical devices regulations respectively—Amendment 17 referring to the former and Amendment 79 to the latter. They would bring the same factors into play.

The first factor is the effect of the regulations on the ability of the National Health Service to meet the needs of patients. There could be two interpretations of how this might be seen. The first is that the medicines regulations could give rise to the authorisation of medicines that the NHS was not in a position at that point to fund. I do not think that it is about that. If the NHS has difficulty in paying for such medicines, it has a power under the National Health Service Act to vary the funding mandate that would otherwise be applicable under NICE. The NICE funding mandate for medicines is in that Act and not in the regulations for medicines. What I think this is about is the NHS being increasingly keen to secure the benefits of innovation. We have had a decade or more of reports telling the NHS that while there is a great deal of innovation there is poor diffusion of its benefits through its adoption in the National Health Service. This is about the ability of the medicines regulations to help the NHS to meet unmet medical need, to bring forward innovations and to deploy them. One might say, “Well, the medicines regulator just authorises medicines”, but let me give a couple of examples.

The first is the early access to medicines scheme, which is precisely about giving the NHS the opportunity to bring forward innovative new medicines that meet unmet medical need and to do so more quickly and in ways that often require collaboration between the NHS, MHRA and NICE. The second example is the Accelerated Access Collaborative, which also looks at other schemes such as the small business research initiative. Its purpose is to bring products through to authorisation and approval, which is quite often in relation to medical devices.

The amendments would require the Secretary of State when making the regulations to have regard to the potential for innovative medicines and medical devices respectively, so that they might be accelerated through processes of authorisation in order to realise their benefits more quickly and hence help the National Health Service to meet its objectives.

The second factor to which the amendments would require the Secretary of State to have regard is consultation. Clause 41 places a requirement on the Secretary of State to consult when making the regulations. A later amendment, Amendment 131, requires the Secretary of State to make a report on any such consultation—I think that my noble friend the Minister referred to it earlier—but there is nothing that links back the consultation to the making of regulations. The amendments say not only must the Secretary of State conduct consultation but he must have regard to the outcome of it—these are specifically “have regard to” factors; they are not factors that should be placed above any other factors in the hierarchy that we are talking about or conflict with them.

Amendment 85 is a bit different. I freely admit, before my noble friend the Minister explains it to me, that trying gently to insert it into Clause 13 is probably quite difficult in terms of the legal structure, because that is a place where requirements are to be laid on those who bring products forward for marketing and supply, whereas the amendment would place a requirement on those who are effectively buying medical devices—that is, the NHS in particular. However, I want to ask my noble friend to consider that we are trying to stimulate innovation in medical devices and bring them through into practice. We know that there are significant potential benefits to the National Health Service in such innovations, which improve outcomes for patients and can reduce costs—it can be a win-win. However, there is no funding mandate for medical devices which mirrors that for medicines, so that when NICE produces a positive evaluation the NHS after a period of delay has an obligation to bring forward the funding for those devices.

In January 2019, the NHS Long Term Plan said that the NHS wanted to accelerate proven affordable innovations into use in the NHS. In November 2019, a consultation was launched to look specifically at what is known as the medtech funding mandate—that is, to give that funding mandate to medical technology devices, not just medicines. By March this year, the Accelerated Access Collaborative was meeting and agreeing—this was one of its objectives—that, in the financial year beginning in April 2020, three such products would be brought forward. Those three products were placental growth factor-based testing, whose title more or less explains what it is; SecurAcath, which, as the title again implies, makes catheters more secure, reducing infection; and HeartFlow, which piloted at the Royal United Hospitals Bath NHS Trust and is a 3D model mechanism for imaging coronary arteries in ways that reduce intensive testing and enable clinicians to work with a highly developed form of imaging in their practice.

Those three products were to come forward in 2021. The intention, as reported to the board of the Accelerated Access Collaborative, was to do more in future years. As I understand it, NHS England intended to establish this as a medtech funding mandate—perhaps with slightly different characteristics and requirements than that of medicines but, none the less, to give medical device manufacturers the same sense of assurance that, if they bring this forward in the United Kingdom, the NHS, with a positive evaluation, will bring them into practice. However, that has stopped. I have seen nothing since April; it seems to have fallen by the wayside. I seek from my noble friend the Minister an assurance that NHS England wants to do it, that the Accelerated Access Collaborative will help to push it forward and that we will see action on this—if not this day, then this year. I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, my Amendment 124 concerns NICE’s current review of its methods and processes as part of the agreement of the voluntary scheme for branded medicines pricing and access—commonly known as the VPAS. I will also speak to Amendment 85 in the name of the noble Lord, Lord Lansley, because he made some important points in his opening remarks.

I have a particular interest in NICE. Under Frank Dobson, I was the first Minister and worked closely with it for the first few years. It was established because of concern that effective new treatments, including medicines and devices, were not getting to NHS patients. This is a continuing problem. At the beginning, we put an additional sum into baseline budgets to cover the estimated cost of technology appraisals.

I have to say that pharmaceutical companies were obviously reluctant to embrace NICE, but so was the NHS. As early as December 2001, I was responsible for a funding direction to the NHS—the original one, referred to by the noble Lord, Lord Lansley—which required NHS bodies to implement their technology appraisals, because research showed that they were not doing so. They had been given the money, although it was not identified but put into baseline budgets, which is an interesting point.

The funding directions have been modified a few times since then and, to an extent, have reduced the impact. But the fact is that the NHS remains a reluctant partner—and you can add that to the unprecedented level of rationing taking place locally. There is a tendency, even when NICE has approved drugs or a technology appraisal, and even when the funding direction applies, for local mechanisms to be used to restrict access by patients. I have already referred to clinical commissioning groups: they are informed by regional medicines optimisation committees. Essentially, these are rationing committees designed to legitimise decisions by CCGs to ration treatments. I come back to this point: why do we tolerate NHS patients missing out on medicines and devices that are available to most patients in most European countries?

We come to the NICE review. I am a great admirer of NICE, which has done a fantastic job and has some brilliant people. It works with some fantastic universities, and we are world leaders in this field. However, I hope that the methods review will lead to tangible change and that we will get a fair and effective assessment of the true value of innovative medicines.

We are clearly at a crossroads: exiting the EU represents a significant threat to the attractiveness of the UK for pharma and devices companies. What factors do companies take into account? Clearly, the strength of our life sciences sector is one of them. Secondly, there is the regulatory system, which we are discussing in Grand Committee. Thirdly, there is the ability to launch medicines and technologies quickly into a market, getting medicines to patients who need them quickly. These are clearly part of the equation for any company, and pharmaceutical companies tend to be global, to all intents and purposes. The risk is that we will start to lose our reputation as a leader at the cutting edge of medical science. My hope is that NICE’s approach to appraising value must take into account the strategic benefits of the NHS remaining at the forefront of medical innovation.

I shall give an example of where NICE’s current rules rule against this. Gene therapy is a prime example of a medical technology that the UK should embrace, but a procedure called discount rate, used by NICE to adjust for future costs and health benefits when valuing treatments, discriminates against one-time therapies that offer potential long-term health benefits over many years, such as gene therapies. NICE almost always uses the 3.5% rate but can apply a lower 1.5% rate for therapies that offer longer-term health benefits. I understand that it chooses to do that only on exceptionally rare occasions. Post the new 2019 voluntary scheme, negotiated to deliver a triple win for patients, government and industry, we now see NHS England doing bespoke commercial agreements, which of course significantly undervalue innovation.

There is always a tension, but the tension is that the main interest of NHS England is to pare down drug costs. The impact that that has is that, for all the brave words about innovation, it simply does not play out in the field. I was very interested in what the noble Lord, Lord Lansley, had to say. There is a HealthTech Connect portal, but I am told that not a single innovation submitted via that portal was adopted by NHS Supply Chain during the first year of operation, March 2019 to April 2020. Are we to assume that none of the submissions meets the criteria in terms of evidence, efficiency or satisfying unmet needs, or are they simply being thwarted by a process that raises the bar to unrealistic levels?

Health Service Medical Supplies (Costs) Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

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 ---

[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 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.

Health Service Medical Supplies (Costs) Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

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

[Lord Lansley (Con)]

It is a pleasure to start this, the second and concluding session in Committee. We have reached Clause 6, which relates to the provision of information. In the 2006 Act as it stands, there is a wide-ranging requirement to provide information under the statutory scheme for medicinal products. However, in the Bill the Government have resolved to go rather wider in the scope of the information-gathering power. We will come on to some of the reasons why I think that process of gathering information more rigorously is necessary and why I support it.

Happily, we are in this Bill discussing legislation that is, in principle, supported by the industry—it recognises the importance of securing a good relationship between the Government and the industry in determining the right pricing structure. This is particularly true because, in the past, under the voluntary scheme and statutory scheme, the information-gathering capacity was built into the schemes themselves.

In addition, there is the issue of gathering information relating to the reimbursement of pharmacies under what I think is known as scheme W. I completely understand why it is necessary. I remember that, back in about 2006—I am not sure which of our noble friends, if I may be so bold, was in ministerial office at that time—the issue that arose with pharmacies was the lack of contemporaneous data that enabled the gap between the wholesale purchasing and the reimbursement price on dispensed drugs to be determined accurately. At that time, I was the shadow spokesman, and whistleblowers came to me to tell me that the pharmacy industry was taking anything up to £500 million a year more, by way of its margin over its purchasing of drugs, than was allowed for in the global sum negotiated with the department. That was investigated by the National Audit Office and the whole system was tightened up.

We are, however, still not where we should be. On Monday, we debated the idea that if one ends up hearing about purchasing only from large organisations, one will get it wrong because one might leave out the fact that small pharmacies cannot necessarily purchase at quite so fine a price. However, unless I am very much mistaken, and contrary to that, if you gather information only from small pharmacies—even if they have a collective purchasing operation—and leave out the very biggest pharmacy chains, the chances are that you may be overestimating the wholesale price. Of course, there are some integrated operations, and getting that information from an integrated supply chain is extremely difficult.

The starting proposition for this debate is that there is a need to broaden the information-gathering power. Amendment 34, in my name, is consequential, but Amendment 32 is about what happens once one goes down the route of gathering quite so much information, potentially. I do not seek to amend the purposes that are set out, as the Committee will see, in Clause 6(3).

In Clause 6, there is a long list of the reasons why the Secretary of State might wish to gather information and the purposes required for that. It is potentially necessary for the information to be gathered. As a consequence, I do not wish to change all that list but at the moment, compared to most of the analogous information-gathering requirements for government laid upon industry, there is no safeguarding process. There is no process which, in itself, requires the Government to be much clearer about the information they require, the purposes for which they require it, the character of the use to which it will be put or, since there is a power to share information, with whom that information will be shared. Amendment 32 sets out to do this.

Under the voluntary or statutory schemes, there can be a scheme for gathering information that does not necessarily require information notices. Amendment 32 essentially says that in any circumstances where the Secretary of State does not receive the information the Government are looking for under a scheme, including presumably scheme W and others, there should be a power for the Secretary of State to issue an “information notice”. But where a notice is to be issued to somebody, it would then have to say some very specific things: what is required, in what form, by when, for what purpose, with whom it will be shared and about giving a right of appeal. There may inevitably be circumstances where there is a belief on the part of industry that the information being sought is not required—that the Government are unnecessarily hoovering it up, as it were. It may have a particular set of reasons of its own to try to resist this.

This amendment would give industry an opportunity to seek appeal if the Government are being disproportionate. Of course, it would have a right to judicial review but it would be much easier if this were governed under statute by way of simple appeal to the General Regulatory Chamber, as happens in a number of other areas where there is a requirement to gather information from people. I hope that the Minister will be sympathetic to an understanding that, notwithstanding the general support of industry, concerns have been properly raised about the scope and extent of the information-gathering power the Government propose in the Bill. I hope he will recognise that the amendment would reassure the industry that it would be properly informed about what information is required, and would have some recourse if it objects to that information being taken. I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I want to express some sympathy with the remarks of the noble Lord, Lord Lansley. I am not sure whether he has got the terms of his amendment right; my noble friend Lord Warner has an amendment in the next group which, in a sense, covers the same ground.

The noble Lord, Lord Lansley, knows that I am sceptical about whether these powers should be extended to non-medicines but the issue here is that they are very broad, as he says. As far as I can see, there are absolutely no safeguards regarding how these powers will be used. The safeguards are not in the Bill or the 2006 Act, and certainly not in the draft regulations as far as I can see. We are looking for the Minister to table amendments on Report to build in thresholds or safeguards to stop the department simply undertaking fishing expeditions. That would give us some sense of proportionality. I am not sure whether the noble Lords, Lord Lansley and Lord Warner, have got their amendments quite right but I am certain there will be a consensus for building in some safeguards over the use of these powers.

Health Service Medical Supplies (Costs) Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

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

[Lord Lansley]

May I say a quick word on these two amendments, which would have the same effect in relation to the voluntary and statutory scheme? I understand the debate that we have just had, but it seems to me that we are likely to have a more productive discussion to this effect on the next group. The purpose of these amendments is simply to say that the money that is generated through the rebate must travel back to pay for medicines. The consequence of any such scheme would be that, whereas at present the Treasury together with NHS England and the Department of Health agree a budget based on the Treasury’s assumption that there will be a drugs bill and that bill will be controlled at that level by virtue of the rebate, the Treasury would be obliged to say that the drugs bill could not be controlled. We know that the rebate does not necessarily correspond to the prior assumption of the level, so the amount of money available to fund medicines would be variable, particularly if it was applied to new medicines, as in Scotland. There would therefore be, from the industry’s point of view, nothing in principle to prevent it from pricing up products that fall within the scheme to which the rebate is applied, with the impact that that would increase the money available to supply additional medicines, knowing perfectly well that there would be no overall budgetary control. At the end of the day, there has to be budgetary control. It is only by virtue of the fact that the rebate is not automatically recycled into additional NHS expenditure that the budget can be controlled. In the absence of any such control, I cannot see how the amendments would work.

[Lord Hunt of Kings Heath]

Surely it is the other way round. The NHS could up its intake of new medicines willy-nilly, knowing that the industry would have to pay a rebate to the department. In essence, industry would be paying for the uptake of new medicines. The problem is that the Treasury discounts the figure. It makes an estimate of what the rebate is likely to be in the next financial year and builds it into the baseline budget, which is based on minimal growth.

[Lord Lansley]

The position is that the PPRS is a deal based on a budget. If you want to construct something that does not have a budget limit, you could certainly do so, but I do not think that the amendments would have the effect that was looked for. As for another way of doing it, this is where we get on to what in my view is the real debate. I am not sure that I have ever believed that there should be a fixed drugs budget in the NHS. We have a health budget and we should aim for the NHS to derive the greatest possible benefit to patients from the budget that it deploys—not the drugs budget but the total health budget.

[Lord Hunt of Kings Heath]

That is very interesting. It has always struck me that when you chair a board of an NHS foundation trust, for instance, there is a philosophy that says that spending on doctors and nurses is a good thing but spending on drugs is a bad thing. It is a ludicrous position. I agree with the noble Lord, Lord Lansley, that there is a big problem. Spending on drugs is seen as a cost pressure, so automatically everyone’s emphasis is on keeping that spending down, whereas a rather more sophisticated approach would take the view that, if you have spent your money on drugs that have had a hugely positive impact on the throughput of patients, cost-effectiveness and efficiency, that might be a good investment. The question when we come to the next group is whether our current arrangements have come to the end of the road and whether we need to move on to something rather more sophisticated.

[Lord Warner]

What we set up a long time ago was, effectively, NICE to be the arbitrator, and we controlled the flow of technology appraisals into it. I used to sign off a limited number of drugs that would go into the NICE process. We have that system, which has now been legally enshrined. It is also open to NICE to withdraw drugs from use, as it has from time to time, or to change procedures. We have a system enshrined in our law in which the NHS is required to commit to introducing NICE-approved technology appraisals, so the idea that we should let the Treasury arbitrarily reduce and control the small bit of that total NHS budget on those grounds seems bizarre. I agree with the noble Lord, Lord Lansley: we have ended up obsessing about this relatively small part of the NHS budget when we have set up a system to ensure that the NHS gets value for money through the NICE appraisal process. We are getting into a strange situation, which is why we are scrabbling around to make amendments to try to make a pretty crazy system slightly less crazy.

--- Later in debate ---

[Lord Hunt of Kings Heath]

My Lords, I will speak to the second part of Amendment 3, as I think we have comprehensively covered the first part in our debates on the first two groups. I am not looking to the Minister to respond to the first part. The second part of my amendment seeks clarification on the relationship and equivalence between the voluntary and statutory schemes. It provides a further opportunity to debate the future of a voluntary PPR scheme, because, clearly, it might be argued that the Bill is setting a precedent for determining in legislation the nature of a voluntary scheme. It would be helpful if the Minister set out in very broad terms the kind of approach he wishes to be taken in the future—in either a statutory or voluntary scheme—looking at the issues we have talked about in relation to pricing, access and value for money.

In many ways, the voluntary PPRS approach has served government, patients and the industry pretty well over the years. There is no doubt, as the noble Lord, Lord Lansley, referred to, that it has provided certainty to government, alongside giving the industry flexibility on the prices it sets, because it acts as a marker to many other countries. However, the actual price paid is very different from the notional price set. What comes to my mind is that this is not very transparent and very few people understand the system. One does begin to wonder whether it is still serving its purpose and whether we need to think about a new approach that is neither the voluntary PPRS approach we have at the moment nor the statutory approach we have in mind for companies that have not signed up to the voluntary system. If anything, there is the issue of equivalence, which companies wish to know about in terms of the two schemes, but it would be helpful to know where we are going in relation to future negotiations, and the amendments from the noble Lords, Lord Warner and Lord Lansley, will address this. I beg to move.

[Lord Lansley]

The purpose of Amendment 5, in my name, is to recognise that the Government have brought forward legislation to do a necessary thing, which is to address the discontinuity between the voluntary scheme and the powers available under the statutory scheme. As such, where companies were operating under the statutory scheme with a pre-existing discounted price, often in the hospital sector, the effect of the statutory scheme imposing a given price cut did not impact on their effective price to their customers. Therefore, they did not make a contribution, in that sense, to the budgetary control that was being looked for. The purpose of the legislation is to bring equivalence to the voluntary and statutory schemes. But if we are creating equivalence between the voluntary and statutory schemes, we should be clear that the legislation does precisely that. The noble Lord, Lord Warner, quite accurately referred to this issue at Second Reading, if I recall. There are companies under the statutory scheme—Gilead is a particular example—with products that would, under the voluntary scheme, not have a PPRS control applied to their pricing because they would not contribute to the rebate as they have been introduced after December 2013. Under the statutory scheme, however, they are required to contribute.

As I understand it, the objection to bringing the two schemes to an equivalent place is that under the statutory scheme, as things stand, there are relatively few products and a significant proportion of them have been introduced since December 2013. Therefore, under the statutory scheme, the effect on the rebate of the rest of the companies would be excessive. That can be dealt with. The powers are available. If we legislate in the form that I propose, the Government can modulate the rebate between the two schemes in order to arrive at a similar result for those companies that have to contribute to the rebate and apply a common percentage. As a matter of principle, if we are legislating for the two to be equivalent, it is desirable to do so.

I am slightly worried about Amendment 3 because it assumes that there is a voluntary scheme. We do not know. There may or may not be a voluntary scheme. But a voluntary scheme will not always be in place at the point at which the Government, in order to protect the NHS, may require there to be one. I do not think that we should be in that position. There would be a flaw in the powers available to set a methodology for a rebate under a statutory scheme. In Amendment 6, which the noble Lord, Lord Warner, has not yet had a chance to speak to, he clearly understands that there needs to be a relationship between these two, but I fear there is a risk of gaming on that amendment because the industry may say that if it does not agree a voluntary scheme there cannot be a statutory scheme. Therefore, there is no scheme, and I do not think that that we want to get ourselves into that position. It will not surprise the Committee that I can see reason for my own amendment even if I am not necessarily in favour of everyone else’s.

--- Later in debate ---

[Lord Lansley]

I am grateful to my noble friend for that thoughtful and helpful response. I will say three things. First, thank you for the opportunity to be consulted as the future PPRS structure is developed. I very much appreciate that.

Secondly, on freedom of pricing and introduction, it does not necessarily follow that putting into the legislation the criteria that Ministers should take into account in so far as they exercise their powers has a direct impact. That might be done, as I described, through the mechanism of modulating the rebate, which would not impact on the freedom of pricing and introduction.

My third point is that I did not invent value-based pricing. I may have advocated it for some considerable time—probably 10 years now—but it was advocated before I took it up by the OECD in a wide-ranging report on pharmaceutical pricing internationally and by the Office of Fair Trading in its review of the previous PPRS.

[Lord Hunt of Kings Heath]

My Lords, I think it goes back even further, to an Oxera report on value-based pricing.

[Lord Lansley]

The noble Lord is absolutely right about that. There is a history to this. The reason why there is a history is, first, that this is an eminently desirable place to arrive at, in that it would give us tremendous transparency in pricing. At the moment, it is extremely difficult to discern the pricing structures in the industry from the point of view of the payers. Secondly, it would enable us—and this is the objective—to arrive at the point where we could give patients the access to the medicines that are most appropriate to them.

[Lord Hunt of Kings Heath]

This is very interesting and rows back to a point that the noble Lord made earlier. One issue is the capacity to negotiate with industry. My understanding is that the pharmaceutical industry has made some approaches to NHS England to look at elements of what the noble Lord is suggesting. There is a sense that, at the moment, there simply is not the capacity to negotiate the kind of sophisticated agreement that he seeks.

[Lord Lansley]

Without repeating what I said earlier about the consultation being conducted jointly by NHS England and NICE, I think that that is precisely the point. These two organisations need to be brought together. There is a degree of sophistication in the NICE processes that needs to be allied to the affordability and therapeutic benefit considerations as seen by NHS England. I freely admit that NHS England is still developing its role.

In relation to specialised health commissioning, I think that it is tremendously positive for it to be able to see the needs and advantages of commissioning all these specialised services on a national basis, as opposed to the patchwork and inconsistencies that we used to see. In that sense, it is only discovering what the commissioning pressures and costs look like—but that will enable it to move on to understanding what that means in terms of the relative benefit and, by implication, affordability of getting into negotiations with companies.

We need to arrive at the point where NHS England can engage up front with industry about the potential cost and pricing of medicines and obviate the need for NICE to go through the long process of the introduction of additional thresholds. As we discussed, there is an issue about the introduction of an additional threshold for highly specialised technologies. We do not want to go to that place with additional thresholds and a variety of arbitrary figures. We should be able to arrive at a point where industry can engage up front with an expectation of understanding what kind of discounting or price it is likely to be able to attract from the NHS because it is able to have a serious discussion about relative value.

I have been dragged back into another, longer conversation. I entirely take my noble friend’s point that there are references to these criteria for Ministers to take account of elsewhere, but there is a risk that the PPRS can be constructed as a budgetary control mechanism without regard to those criteria—notwithstanding that Ministers have a responsibility for them in other places. Even if it were constructed in terms of cross-reference to ministerial duties elsewhere, we could still continue to look at whether this part of the legislation—the statutory basis for the scheme—should cross-refer to the criteria that should be brought to apply. But I take my noble friend’s comments in good part and I am happy on that basis to withdraw the amendment.

--- Later in debate ---

[Lord Lansley]

Amendment 16 takes us to an issue that was the subject of consultation prior to the introduction of the Bill: whether the Government should take powers to control prices in circumstances where there has been an open and competitive process—for example, a tender process. We know that one reason why the legislation is required is because it does not follow that because products have become unbranded generic medicines they are necessarily available on a fully competitive basis in the marketplace. We have seen examples of that. In explaining the purpose of the Bill, it was stated that:

“The government’s intention is to use these new powers where due to a lack of competition in the market, companies charge unreasonably high prices for unbranded generic medicines”.


That is understood. There can be circumstances where there is a lack of competition.

Quite clearly, however, there are circumstances where the products available and the prices set are themselves the product of an open and competitive process, such as a tender process; for example, in relation to blood products being supplied to the NHS. There may well be a degree of market dominance in some of those, even though some of the complex medicines may be generic. For example, I know a company that produces medicines in circumstances where it has to use opiates, and the availability of those opiates might be limited.

None the less, if the NHS can procure on the basis of a tender that is open and competitive, why should the Government leap in and try to amend it? I understand that the response to that is to say that companies can take account of the rebate in the prices that they set. But surely when one enters into a tender, the companies concerned may not be in symmetrical positions in relation to the implications of the rebate. Some companies are indifferent to the rebate because they are not affected by it and other companies are affected by it. The nature of the rebate over a period of time and the extent of it may be variable, and they may make completely different assumptions about what that process looks like. So it seems, on the face of it, that a much cleaner approach to the Bill would be exemption from the price control mechanism in those circumstances where clearly the mischief that the Bill is intended to remedy does not apply: that is, in an open and competitive process. I beg to move.

[Lord Hunt of Kings Heath]

My Lords, this is helpful. Medicines have been referred to, but I would have thought that it could be helpful with other medical supplies. I have had a letter from the British Healthcare Trades Association. It says, in relation to other medical supplies:

“We cannot think of any procurement scenario in our sector where products, on an ongoing basis, are not subject to tender or tariff procedures. The price is tested at entry and reviewed at regular intervals, and the terms and conditions pertaining to the contract or tariff arrangements will include requirements for provision of information”.


That deals with the issue of information. So the noble Lord has put forward a very interesting suggestion and I hope that the Minister might be sympathetic to it.

Health Service Medical Supplies (Costs) Bill

Debate between Lord Lansley and Lord Hunt of Kings Heath

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

[Lord Lansley (Con)]

My Lords, I am very pleased to follow the noble Lord and pay tribute to the fact that he has clearly identified some of the issues to which I will refer briefly here at Second Reading but which we will need to look at in Committee. The noble Lord did so very ably and helpfully. I thought that my noble friend the Minister set out the Bill very clearly, which is very helpful to the House. I understand that he is moving on to new ministerial responsibilities, so perhaps I may be the first to say that I know—having had the privilege of knowing my noble friend over many years since we first entered another place together—that his knowledge, experience, expertise and wise judgment on health matters is highly respected and much esteemed throughout the sector. His guiding hand will be much missed but we extend enormous thanks to him for all that he has done not only at the Department of Health but prior to that at the Care Quality Commission.

I draw attention to my interests in the register, and in particular as an adviser to MAP BioPharma—although the company is not directly affected by the provisions of the Bill.

In another place this Bill was referred to as a technical Bill. That is probably not an accurate description. It extends the powers of Ministers and gives them the ability to secure a payment under the statutory scheme which they did not feel they were able to do. It gives Ministers greater powers to control the prices of unbranded generic medicines which they did not have and it gives them a greater power to require information from suppliers. So there is a significant threefold extension of the powers of Ministers.

I completely understand and accept the reasons for the Bill. Ministers were right to bring it forward. There has clearly been a transfer that one might uncharitably describe as gaming between the voluntary and the statutory scheme—more politely it would be called arbitrage between the two—since there are suppliers of medicines, particularly in the hospital sector, that discount their list prices to those purchasers. Therefore, a statutory scheme that simply consists of a cut to the list price does not necessarily have any effect on their prices. So it does not have the intention that the voluntary scheme has. The Bill, quite rightly, closes a potential gap in control of the supply of generics by those companies that are also members of the voluntary scheme.

The Bill also extends information supplied by companies for dispensing and it might be useful in all of those to have a little bit of history, if I may detain your Lordships on that. I remember that before 2010, when I was shadow Secretary of State for Health, we were very clear that what we wanted to do as a potential incoming Government was to give stability to the industry and to that effect we said that we would not change the then PPRS before the renewal in 2014. But we were equally clear that when we got to the new PPRS in 2014, it needed to change and that, as it stood, its objectives were no longer being satisfactorily met. It gave businesses freedom for pricing medicines at introduction—and we should be well aware of the relative importance of this. The noble Lord, Lord Warner, referred to the relatively small size of the UK pharmaceuticals market, with about 3% of the international marketplace for pharmaceuticals, but the UK list price plays a much larger part in reference pricing internationally, with something like 25% of the total pricing effect. So it is very important to the industry to have that freedom of pricing.

However, the effect of the ability to price at the list price is that one has a NICE health technology assessment and evaluation with a threshold applied, which still leads frequently to NICE saying no to medicines. The net effect is that we have a licensed and effective medicine available to patients—but at the list price NICE says no and patients lose out. In our view, back then, this was an entirely unsatisfactory position. It seemed to us that, when an effective medicine is available to patients, it should be available to clinicians and patients through the NHS, and between the Government and the industry a mechanism should be established to ensure that a fair price is paid for the medicine. The patient should get the drug, the industry should get a fair price and the NHS should pay only what is necessary to achieve that.

The lack of access in the short run, as your Lordships will recall, is why we established the Cancer Drugs Fund, after Mike Richards’ report on the relative access in different countries in Europe to medicines demonstrated a significant shortfall in access in this country to cancer medicines in particular. But the intention always was—and I reiterate this, because it is frequently misrepresented—for the Cancer Drugs Fund to end at the beginning of 2014, because the new pharmaceutical price regulation scheme was intended to achieve the access benefit that the Cancer Drugs Fund was achieving in the short run. The fund did not overspend up to 2014; it was retained beyond 2014 and it then overspent, but that was not its original intention. So I do not accept the criticism of the Cancer Drugs Fund.

However, the PPRS negotiation for 2014 did not deliver the changes that were intended. It delivered budget control to the Treasury, freedom of pricing and introduction for the industry and a degree of rate of return reassurance to the industry. So to that extent, the taxpayer was well represented, the NHS may say that it was quite well represented and the industry was well represented—but I am not sure that patients were. What we need is a PPRS that serves patients at least as well as it serves the NHS.

[Lord Hunt of Kings Heath (Lab)]

This is a very interesting exposition, but could the noble Lord clarify that there is a difference between the notional list price, which is used as a marker for many other countries, and the actual price paid by the NHS? Secondly, does he agree that, if the Treasury had not purloined the rebate, we would have had the money and patients would have had access to new drugs?

[Lord Lansley]

The noble Lord makes interesting points, which point to where we were always intending to go—to a point where there was in effect a negotiated price between the industry and the NHS so that there was a proper discount. Now we have a rebate system. There was a lot of debate in the other place about where the rebate money went. It goes back into the NHS through the mechanism of the overall Consolidated Fund, so it is less transparent than is the case in Scotland, for example. However, that does not mean that it is lost to the NHS.

I will anticipate something that I was going to say later. A consultation is taking place involving NHS England and the National Institute for Health and Care Excellence, looking at how they can work together to introduce budgetary impact considerations alongside NICE evaluations to establish what prices the NHS should pay for medicines. That is taking us in the direction we have to go—namely, what is in effect negotiated pricing through the NHS to ensure access to medicines for patients. That is the positive construction of the present consultation. The negative construction is that it will create in effect double jeopardy. In the first instance NICE may say no on the basis of the list price. Then NHS England may add a second reason to say no because of the budgetary impact of new medicines—so there is an inherent problem with that.

I will finish the history for a moment. Where dispensing is concerned, there is a history under the last Labour Government of the pharmacy sector significantly exceeding the planned margin between the wholesale price and the reimbursement price because of a lack of good information. Therefore, we can be absolutely clear that an important purpose of the Bill is to get the margin survey right and provide more comprehensive data on the prices being achieved in the purchasing of medicines so as to make the reimbursement price deliver the agreed gross margin as part of the global sum to pharmacies.

Therefore, I support the Bill and its intended purposes. It will be important that it is used properly. The noble Lord, Lord Warner, made some very good points, including on equivalence between the two schemes. Gilead, a firm in my former constituency when I was in another place, continues to tell me what it thinks about these things and points precisely to the potential disparity between the statutory and voluntary schemes in relation to medicines introduced since 1 December 2013. If equivalence is the intention, we need to ensure that the Bill specifies that.

We are looking for a competitive environment in relation to unbranded generic medicines. The Competition and Markets Authority is pushing for that and the measures in the Bill can help Ministers to achieve that prospectively, as it were, rather than just dealing with abuse. But it is wrong for Ministers to take powers which would allow them to behave non-competitively. There is monopsony in this—monopoly purchasing by Ministers. Where a competitive environment is created—for example, where the price is determined in a competitive tender process—it would be completely wrong in my view for them suddenly to find that a price agreed through a competitive process is overridden by ministerial diktat—as the noble Lord said, Lord Warner, said.

I hope that we will also discuss two other issues. A very important one is to build back into the thinking on the future PPRS, through this legislation, what a future PPRS should have at its heart. Ministers making decisions about pricing structures should have specific reference to affordability. They should also have reference to the ability for patients to access the medicines they need through the NHS; the extent to which the pricing system enables unmet need to be met; and the extent to which medicines deliver relative therapeutic benefit, so that we literally pay for innovation and for therapeutic advance, but do not pay a lot of money for me-too drugs with brandings attached to them. However, we should pay for societal benefit. One can imagine the considerable benefit to society that would be derived from a new drug to treat early onset Alzheimer’s. We should also give explicit support to innovation. As the Bill proceeds, I hope that we will see more detail on not only the regulations but how the consultation between NHS England and NICE is proceeding. Perhaps the Government could also say more about their formal response to the accelerated access review and the life sciences strategy.

I support the Bill and I hope all the issues that I have referenced will be brought forward and discussed, including the structure of the information powers. At the moment, they are too wide-ranging and lacking in safeguards. Strictly speaking, there may be circumstances in which it is necessary for Ministers, if they ask for information, to provide a notice saying for what purposes it will be used and with whom it will be shared. Under those circumstances there should also be the potential for an appeal to the General Regulatory Chamber—but we can look at that in more detail in Committee.

As I say, I support the Bill and I hope we can look in Committee at giving more clarity on some of those issues and perhaps even building in one or two safeguards.

Health and Care Professions Council (Registration and Fees) (Amendment) (No. 2) Rules Order of Council 2015

Debate between Lord Lansley and Lord Hunt of Kings Heath

Tuesday 24th November 2015 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, this order concerns the Health and Care Professions Council and its fee raise, which is in relation to 330,000 health and social care professionals. They include paramedics, occupational therapists, biomedical scientists, chiropodists, dieticians, physiotherapists, radiographers, prosthetists, orthotists, speech therapists and social workers. That list brings home the importance of this group of professionals. Parliament, through various pieces of legislation, has seen fit to ensure that they are subject to mandatory regulation in the interests of public protection. Parliament also has a role, therefore, in overseeing the performance of the regulatory bodies.

On 1 August, the annual registration fee for members of the professions covered by the HCPC went up by 12.5% overnight as a result of the order that we debate today. The order was passed in the face of cross-party concern, including 100 Members who signed up to an Early Day Motion and indeed the tabling of a Motion to annul in committee at Holyrood. The 12.5% increase in fees followed on the heels of a 5% rise the previous year and in the face of assurances given by the HCPC in 2014 that it would not look to raise fees again until 2016. This is not being done in isolation. I know that we are not discussing other regulatory bodies, but I would mention to the Minister the NMC, which raised fees for nurses in 2013 from £76 to £100 and in 2015 from £100 to £120. The points that I want to raise in principle relate to a number of these regulatory bodies.

The contrast that I want to make is between the regulator’s demand for an increase in fees alongside what is essentially the sixth year of pay freeze and pay restraint and the Government’s policy on austerity generally. It is a puzzle as to how, when the public sector in general is under tight financial control, the one area that seems to be able to raise its fees willy-nilly is that of the professional regulatory bodies and the Care Quality Commission. The Minister will know that the CQC proposes to raise fees hugely, at some financial risk, particularly in the care sector. That is not for debate today, but there is an issue of principle here: in contrast to the issue of pay restraint and restraint generally on the public sector, a group of regulators seems to be able to put forward proposals, which the Government accept, for large fee increases.

I read the consultation paper issued by the HCPC, which said that the unexpected fee rise was prompted by the levy that it now has to pay to fund the Professional Standards Authority for Health and Social Care, the regulators’ regulator. I understand that and it was fully discussed in a debate in the other place in March. However, it subsequently emerged that the levy that it said had to be paid because of the Professional Standards Authority actually accounted for only 30% of the fee rise, and the remaining 70% was so that the HCPC could buy new accommodation for hearings, IT and quality assurance systems. In the consultation document, as far as I can see, that was not made clear. There was no breakdown or detailed justification of the fee increase.

That is particularly striking in light of the judicial review proceedings brought by the British Dental Association against the increase proposed by the General Dental Council whereas I understand that the High Court said that a regulator’s consultation on fee increase must set out a clear and detailed breakdown of the financial case for proposed increases. My point to the Minister is that that did not happen in relation to the HCPC consultation. There are three areas that I want to touch on. The first is that the consultation itself was extremely short. It covered the Easter holidays, May Day bank holiday and the purdah period. It closed on 6 May, the day before the general election. It totalled just 26 working days, leading many to suspect that it was designed to be buried away from scrutiny.

My second point is about accountability. Of those who did respond to the consultation, 86% of individual respondents objected to the increase, as did three-quarters of organisations. Their objections made not one iota of difference.

I come now to the role of the PSA, the regulators’ regulator. One of the problems is that while in a sense it can ask for a levy in order to fund itself, it does not seem to have a role to intervene on how regulators set fees or consult on them. In the light of experience with the HCPC, it would be good for the PSA to take a more proactive role. We know from submissions that I have received from staff organisations—I particularly refer the Minister to a survey by UNISON of nearly 5,000 registrants across the professions—that the fee rise was commonly referred to as a stealth tax. If you have no choice but to pay to practise your profession then it feels like a form of taxation. Yet registrants have little representation in the decision-making process that sets that fee.

Will the Minister also comment on the issue of the HCPC? Does it represent value for money? I know that the HCPC has done very good work, and I do not deny that it has absorbed a number of professions over the years successfully. However, these large fee increases bring concerns about whether the overall operation of the HCPC—and the other regulated bodies—is as efficient as it could be.

I want to raise with the Minister an issue that has been presented to me: although the fee might not be considered large in absolute terms, it is, none the less, a consideration for part-time staff in their choice of profession. The Minister may be aware that, as I understand it, the HCPC has declined to introduce a pro-rata structure, or differentiated fee structure, for part-time workers. That is a pity, given the need for us to attract staff and the fact that part-time staff have a lot to offer.

I understand that nine trade unions and professional associations representing registrants in HCPC fitness-to-practise processes have written to advise the HCPC that more could be done to control its costs, improve its efficiency and reduce the number of unnecessary hearings. They also made detailed recommendations on how the investigating process could be improved in order to root out unnecessary investigations, reduce the number of lengthy hearings and facilitate consensual resolutions. Seeing the noble Lord, Lord Lansley, here of course brings great joy to us all, but I cannot help commenting on the draft Bill drawn up by the Law Commission, which he would have received some time ago. Well, he may have commissioned it, I do not know whether he received it.

[Lord Lansley (Con)]

If I remember correctly, it was commissioned in 2011 and received by my successors in April 2014.

[Lord Hunt of Kings Heath]

My Lords, if he had still been in place I have no doubt that he would have acted on it. The point is, however, that a lot of the problems with the current fitness-to-practise procedures among health regulators generally derive from the fact that we have not implemented the Law Commission’s Bill, which would have allowed for a much more streamlined process.

The HCPC has, as I say, earned a great deal of credit for the way in which it has absorbed new professions over the years. I hope, however, that in this short debate the Minister will agree to look at some of the general principles raised. Does he agree that in any future proposal for a fee increase there needs to be a full breakdown and detailed justification for it? Does he also agree that it is not a good thing for Ministers to entertain fee rises that are higher than the percentage fee rises that are going to be given to NHS staff? There is an issue about pay restraint on the one hand and what seems to be the regulator’s ability to raise fees well above that rate on the other. Will he consider discussing with the PSA whether it will take a more proactive role in monitoring and evaluating any proposed increases by the regulator it oversees? Will he also look at whether the HCPC should be required to introduce a pro rata, or differentiated, fee structure for part-time workers?

Lastly, and I am sure the noble Lord will say yes to this, will he say that the Government will make it a priority to bring in primary legislation as soon as possible to implement the Law Commission proposals? The alternative is that the Minister will have to go through a succession of Section 60 orders when as a general principle he would find widespread support for the Law Commission proposals—there are one or two issues that we will debate—for a streamlined process that would apply consistency across all the regulated bodies. I am sure that it would reduce the cost of the regulators and, if the Government are not able to bring this in as a full Bill, at the very least it lends itself to pre-legislative scrutiny. However, there is enough consensus around the proposal to allow the Government to introduce a Bill. This short debate is a good opportunity to raise the issue of transparency of the regulators, and I hope that the Government are prepared to give this further consideration when a proposal comes up in the future. I beg to move.