NHS: Staff

Debate between Lord O'Shaughnessy and Lord Lansley

Tuesday 13th November 2018 Lords Chamber

[Lord Lansley (Con)]

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

[Lord O'Shaughnessy]

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

Brexit: Health Policy

Debate between Lord O'Shaughnessy and Lord Lansley

Wednesday 6th December 2017 Lords Chamber

[Lord O’Shaughnessy]

The European Medicines Agency will be moving to Amsterdam.

[Lord Lansley (Con)]

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

[Lord O’Shaughnessy]

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

National Stroke Strategy

Debate between Lord O'Shaughnessy and Lord Lansley

Wednesday 5th July 2017 Lords Chamber

[Lord O’Shaughnessy]

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

[Lord Lansley (Con)]

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

[Lord O’Shaughnessy]

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

Adult Social Care: Funding

Debate between Lord O'Shaughnessy and Lord Lansley

Thursday 16th March 2017 Lords Chamber

[Lord O'Shaughnessy]

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

[Lord Lansley (Con)]

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

[Lord O'Shaughnessy]

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

Health Service Medical Supplies (Costs) Bill

Debate between Lord O'Shaughnessy and Lord Lansley

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

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

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

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

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

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

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

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

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

[Lord Lansley (Con)]

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

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

Health Service Medical Supplies (Costs) Bill

Debate between Lord O'Shaughnessy and Lord Lansley

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

[Lord O'Shaughnessy]

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

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

[Lord Lansley]

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

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

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

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

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

--- Later in debate ---

[Lord Lansley]

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

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

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

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

“the costs of research and development”,

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

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

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

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

[Lord O'Shaughnessy]

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

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

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

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

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

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

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

--- Later in debate ---

[Lord O'Shaughnessy]

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

[Lord Lansley]

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

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

--- Later in debate ---

[Lord O'Shaughnessy]

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

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

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

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

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

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

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

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

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

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

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

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

[Lord Lansley]

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

Residential Care

Debate between Lord O'Shaughnessy and Lord Lansley

Monday 6th February 2017 Lords Chamber

[Lord O'Shaughnessy]

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

[Lord Lansley (Con)]

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

[Lord O'Shaughnessy]

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

Health Service Medical Supplies (Costs) Bill

Debate between Lord O'Shaughnessy and Lord Lansley

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

[Lord Lansley]

I am grateful to the noble Lord, Lord Hunt, and my noble friend for their response to this amendment. I can see from the illustrative regulations that, as I said earlier, there would be a general scheme for the collection of information, and I am not looking for the amendment to replace a general scheme with a requirement to issue individual information notices. That would be excessive and burdensome. However, under the illustrative regulations there is, in addition to the general scheme, what is effectively the restatement of the power for the Secretary of State additionally to require specific information from companies that breach the requirements of the general scheme—frankly, for any other purpose that the Secretary of State is looking for. That is in draft Regulation 19(2), which really just restates what is already in the legislation: that there is this general ability to say “just give me this information”.

I entirely understand the point that my noble friend is making about the appeal against enforcement, but there is no appeal against such a specific information notice. I may not have got it absolutely right, but in the case outside the general scheme of information, when the Secretary of State asks a company to provide specific additional information, I was proposing not an appeal against enforcement of request, where the company resisted, but for the company to be able to appeal against the information notice on the basis that it is an excessive use of powers; that is, rather than a judicial review, an appeal against that specific information notice.

My noble friend referred to the Delegated Powers and Regulatory Reform Committee’s view, which relates specifically to the question of with whom the information may be shared. The illustrative regulations really do not add anything from that point of view; they do not tell us, beyond what the legislation already states, with whom they may be shared. From any company’s point of view, there is little reassurance in the restrictions that the Minister has just referred to. The information could end up in all sorts of places. Remember, we are talking about an NHS body and, of course, all NHS bodies always behave absolutely properly in the use of information under all circumstances—I am being ironic.

From the point of view of a company engaged in selling these products, we are talking about a monopoly purchaser—a single payer—and a set of organisations with tremendous financial leverage in relation to the products that are being sold. If we are simply handing all the information over to the Secretary of State in the expectation that he could—I am not saying that he would—hand this information on to NHS bodies which are themselves the purchasers of these products, it could significantly skew what would otherwise be a proper commercial relationship between seller and buyer.

Companies must have a point at which they can cry foul, but I am not sure that we have yet given them the ability to do so at the appropriate stage when the information is being asked for. In a way, my amendment does that. I was rather comforted by the DPPRC’s report, in that it seemed to me that my amendment at least sought to make clear how the DPPRC’s recommendation in relation to the Bill might be met. I am implying in what I say that I can see how the amendment is not right; we could go further.

[Lord O'Shaughnessy]

I thank my noble friend for that clarification. I think that we are talking about the same thing, but we should have the opportunity to explore it between Committee and Report. Certainly, we will talk about the DPPRC issues. It is understood that the powers as currently set out need to be looked at.

[Lord Lansley]

I am again grateful to my noble friend. On the basis of what I have explained, there is a conversation to be had and I hope that we may be able to resolve this satisfactorily before Report. I therefore beg leave to withdraw the amendment.

Health Service Medical Supplies (Costs) Bill

Debate between Lord O'Shaughnessy and Lord Lansley

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

[Lord Lansley]

There is a risk of going on about this, but the structure of the amendment in the context of the PPRS as presently constructed is illogical, because the PPRS is constructed around budget control. The point, however—we will no doubt come back to this, not least on the next group—is that we should be thinking about how we can arrive at a negotiated price for the NHS to buy medicines which may well be marketed initially or globally at a given price, but the amount that the NHS should pay should reflect value. I have said it before and I will keep coming back to it.

I would not be as disparaging of the current consultation between NHS England and NICE at the noble Lord, Lord Hunt. It could have the effect that he describes: adding additional jeopardy because one has to meet not only all the normal criteria for an effective medicine but the NICE threshold, and NHS England might step in with hobnailed boots and say, “But we are not going to make it available and you must change the funding direction”. But it might recognise reality. The consultation, in my view, may have the effect of avoiding arbitrary post hoc rationing of medicines, because the NHS should be up front, negotiating price discounts on medicines, regardless of the rebate. That means engaging with the industry at an early point.

If the industry understands the consultation properly, it will understand that the budgetary impact for the NHS under current circumstances cannot be ignored. The best way to deal with that is not to go through all these processes and then find, at the end of the day, that the NHS cannot afford it, or that NICE has to say no through the application of the threshold. Rather, it is to use the pharmaco-economic evaluation and the health technology assessment properly alongside NHS England and say: “Here is something that is valuable and we want to be able to use it, but we must recognise the budgetary impacts”. There may well therefore be some risk-sharing processes or discounting processes to enable the product to be available to the NHS at an early stage and to give industry and the NHS all the information they need subsequently to be able to make sure that they have got the pricing right.

[Lord O'Shaughnessy]

I thank noble Lords for these amendments and for the discussion that has followed. I will come back to the issue of budgetary control raised by my noble friend Lord Lansley. I do not think it is enough simply to say that it should not be a factor. It is a factor and I will talk about how that interacts with the current system in my response.

Our concerns with these amendments are twofold—one is a matter of principle and the second is a matter of practice. In my short period in the office I have already had an opportunity to talk about ring-fencing on at least one occasion. Noble Lords understand that the Government’s policy is not to ring-fence with budgets set by politicians but rather to give money to the NHS and its constituent parts and to trust clinical judgment on commissioning health services in response to the regulatory regime that is set up to hold them accountable. I have not yet heard from anybody who disagrees with that fundamental principle.

Amendments 2 and 4 are unnecessary, therefore, because all the income and savings from the PPRS and the statutory scheme are already invested in NHS services. As the noble Lord, Lord Hunt, said, the anticipated income from the PPRS and the statutory scheme are put into the NHS baseline. That baseline is the figure above which we will be spending the additional £10 billion by 2020-21. That money is already in the baseline and it is there to be used with the discretion of clinicians within the system.

The Health and Social Care Act 2012 requires the Secretary of State to promote the autonomy of NHS England and clinical commissioning groups. This includes their decisions as commissioners about priorities for funding. That is because it is a fundamental principle of the NHS that funding should be allocated according to clinical priorities based on the judgment of clinical commissioners. That might include new treatments but it might include scaling up older, effective treatments or investing in staff. The proposed amendments would result in the income received from a voluntary or statutory scheme being used solely for the purposes of reimbursing the NHS for medicines and medical supplies. It is perhaps worth highlighting to noble Lords that the NHS spent over £15.2 billion on medicines in 2015-16—far in excess of the cumulative income received from both schemes.

I come to a couple of points raised by the noble Lord, Lord Hunt. The first, as I mentioned, is on budgetary control. The second is that if additional money were spent, it could be recycled back into funding for innovative drugs. I am not sure. I have not had the opportunity yet to consult with the boards of life sciences companies, but I am not sure that there is an open-ended commitment there either to continue spending money in the NHS. There is a need for budgetary control on both sides. I appreciate—and it is a strong theme in this debate and was in the previous debate—the need to do something about access. The ability to access drugs and to access them quickly is both good for patients—because clearly those drugs are being approved because they are an improvement largely on what has gone before—and also good for life sciences. If we are in the game, as it were, of trying to find a win-win out of the changes we make now or in future, clearly access will be a clear part of that.

My noble friend Lord Lansley touched on a practical objection. It is the potential unintended consequence of ring-fencing the income from schemes specifically for certain types or categories of medicines. The income from the PPRS and the statutory scheme can fluctuate, so allocating the income to a specific area, such as new medicines, brings risk. This could potentially disadvantage patients by making treatment dependent on income from medicines pricing schemes, thereby producing inequities. At the moment the Department of Health manages that risk. The proposed changes would move that risk on to the NHS—which, as we know, is already under a great deal of pressure.

I understand the intention behind the amendments, but I am not convinced that the Government predetermining clinical decisions and clinical priorities for spending on medicines and medical supplies is the right way to go. We believe that the current PPRS is designed to incentivise companies to bring new medicines to market. Companies with mainly new medicines in their portfolios pay less than companies with mainly old medicines, and as part of the PPRS, the Government have made a number of commitments around NICE decisions and the funding of NICE-approved products in order to support access to new medicines.

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[Lord O'Shaughnessy]

My Lords, I am very grateful to my noble friend Lord Lansley for this amendment and I pay tribute to his considerable expertise in this area. We had the opportunity to discuss some of this when we met. I also recognise that the amendment’s purpose is to start thinking ahead to what comes next. It is not so much to define right here and now what is required but to do something which I think he has been trying to do for a long time: to broaden the discussion about how we price value into medicines and bring that broader discussion to bear. I recognise the intention. It clearly is important that we think of these things in the broadest possible sense for the benefit of the most people possible.

Amendment 10 would require the Secretary of State to have regard to factors such as therapeutic benefit to patients, meeting unmet need, wider societal benefits, the promotion of innovation in new therapies and NHS affordability. I would like to draw noble Lords’ attention to the legal duties that already exist, which the Government believe currently achieve the intention behind the amendment. Section 266(4) of the NHS Act 2006 already requires the Government to bear in mind,

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

and,

“the costs of research and development”,

when limiting the price of medicines—something we discussed in the last group. Section 233 of the Health and Social Care Act 2012 requires NICE to have regard to,

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

In reading out these sections, I am beginning to understand that these Acts are often very, very long. I am thankful for small mercies that our Bill is not, yet.

As part of the NICE clinical and cost-effectiveness assessments, NICE already considers factors such as therapeutic benefit to patients, unmet clinical need and the promotion of innovation, and has recently consulted on new affordability considerations. The point here is that some of the factors that my noble friend is concerned about are already taking place but within the NICE process as part of that assessment.

The Government’s priority is to make sure we get the best possible results for all NHS patients with the resources we have. We will continue to look at how to promote better access to effective medicines through NICE recommendations and guidance to the NHS. In developing that guidance, NICE takes account of all health-related costs and benefits, including the benefits to carers. As I am sure my noble friend will recall, in 2014, NICE considered changes to its methods to better capture the wider costs and benefits to society of new drugs and treatments, sometimes known as value-based pricing. It is only responsible to report that, during the consultation, some significant concerns were raised; for example, about the potential implications for products that offer limited life extension without associated gains in quality of life for those with terminal illnesses. The consultation highlighted a significant diversity of responses, demonstrating that this is a complex issue. The point here is to say that there may be a way through, but we do not yet know what the right way forward is. It is critical that stakeholders continue to have confidence in NICE’s work, and we agree with NICE that these issues require very careful consideration before making changes to the way that we assess medicines.

My final point is on freedom of pricing, an issue that has been raised and which this amendment would have an impact on. Noble Lords will be aware that the Government, when setting prices for new medicines, currently operate a system of freedom of pricing for medicines that are a new active substance. This means that the maximum NHS price approved and published by the Secretary of State is that proposed by companies. NICE will then assess the product and consider whether it is clinically and cost effective. The PPRS allows a company to propose a discount to the maximum price.

We know that this system of freedom of pricing for new active substances is of great value to the life sciences industry, providing commercial flexibility, which is important in a context where other countries may reference the maximum NHS price in their own pricing arrangements—something we know to be of huge value. It does not prevent the NHS securing substantial discounts, which indeed it does, and these form part of the overall assessment of value undertaken by NICE. The amendment could, however, have the effect of removing the principle of freedom of pricing, which has been an important pillar of medicines pricing agreements for years. It would require the introduction of assessments akin to clinical and cost effectiveness when determining price, as opposed to determining through NICE whether it should be used. Such an approach would largely replicate the factors that NICE considers as part of its clinical and cost-effectiveness assessments.

I want to make one final point on the current scheme and looking ahead. The PPRS commits the Government to maintaining the basic NICE threshold and take-up periods until the end of 2018. It is my belief that the right time to look at whether the sorts of factors that my noble friend has raised should be taken into account in medicines funding and pricing arrangements is as part of discussions on a new medicines pricing system, where it can then be looked at in the round. That opportunity will arise when considering what should happen when the current PPRS expires. I would be very happy to explore with him proposals on what any new scheme could look like. I look forward to productive dialogue and to benefiting from his wisdom in the months ahead. On that basis, we believe that the amendment is unnecessary, although we sympathise with its intention. I therefore ask my noble friend to withdraw it.

[Lord Lansley]

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

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

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

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[Lord Lansley]

That is a helpful suggestion. It might not necessarily be defined in regulations, but one might contemplate that the Secretary of State would issue guidance as to what constituted such a process.

[Lord O'Shaughnessy]

I thank my noble friend for his amendment and am very happy to show sympathy with it, as other noble Lords have done. I will start by stating that the Government’s view is clearly that competition and market forces are the best way of delivering value. Wherever possible, we should ensure that competition is there, that it works and that it involves as many participants as possible. In many instances, that is the way to drive better value. That being the case, my first priority is to look at ways of improving how markets operate, before reaching for the lever of regulation. That principle is guiding our work on the pricing and cost control of medicines and medical supplies.

For that reason, I understand the sentiment behind the amendment. The underlying assumption here is that if the NHS tenders for a product in a competitive market, the tender should always secure the NHS the best possible deal, and that there should be no need for further government intervention. However, while that is the case sometimes, it is not always the case. I will give a couple of examples. The department or the NHS may conduct tenders for a number of reasons, including security of supply. Furthermore, EU procurement rules —of course, that may change in future—which have been implemented into domestic legislation pursuant to the Public Contracts Regulations 2015 mean that, for contracts for products over a certain value, the NHS has to tender such contract opportunities in accordance with the requirements specified in the procurement rules.

Where there is a sole supplier of a particular product, or other factors such as supply or specificity of products apply, a tender exercise in itself is unlikely to result in significantly lower prices. For example, the department has run competitive processes for von Willebrand factor. This is used to treat patients with a genetic deficiency in the quality or quantity of this protein, which causes problems with blood clotting. Although there are six or seven products that may meet our tender specification, they all have a different concentration of von Willebrand factor, so they are not easily interchangeable. This means that, in practice, the suppliers of such products do not compete on price, knowing that clinicians need access to all the products to select on clinical need and that the department will make awards on this basis.