Health Service Medical Supplies (Costs) Bill

Baroness Masham of Ilton Excerpts

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

[Lord Lansley]

I understand that. There is a perfectly good argument for the benefits that are derived from incremental innovation. Not every innovation is a step change compared to what has gone before, so that is a perfectly valid point. One objective that we should arrive at, as I hope my own Amendment 10 will later reflect, is that the structure of value has to understand what those benefits might look like. New medicines will come through that are similar but are significantly better, for example in terms of compliance for patient populations, because they are administered differently. One might say, “Well, it’s a very similar drug”, but one has to look at what the overall benefit might be, which is part of the value.

[Baroness Masham of Ilton (CB)]

My Lords, cost-effective medicines which work for patients are vital, but some orphan drugs will cost more. Why are there differences in the pricing of drugs in Scotland and England? Someone must be making a lot of money.

[Lord Hunt of Kings Heath (Lab)]

My Lords, that is a very interesting question. The exchange between the noble Lords, Lord Lansley and Lord Warner, has been very helpful in focusing on the full intent of the amendment. As it is the first day of Committee, I remind noble Lords of my presidency of the Health Care Supply Association and GS1, the barcoding association.

The amendment is essentially about the life sciences sector and the relationship to it of the pharmaceutical and medical devices and technology industry. However, inevitably, as the noble Lord, Lord Lansley, has shown, it is very difficult not to talk also about issues to do with PPRS and access, and I suspect that those other issues will be dipped into in a number of debates.

First, let me say that the Opposition are strongly in favour of closing the loophole that the core part of the Bill attempts to do. We clearly want to see the NHS get value for money and a good deal out of price negotiations with the different parts of industry it deals with in relation to the matters covered by the Bill. My noble friend Lord Young asked some very pertinent questions. The Minister in passing raised the issue of clinical pharmacology. This is a clinical profession that most clearly enables the health services and, indeed, Ministers to understand the true cost effectiveness and value of new medicines.

The UK is a world leader in clinical pharmacology but, because decisions about the appointment of clinical pharmacologists are made by the NHS, we are at risk of losing the whole profession. I was very disappointed that Health Education England proposed to reduce the number of training posts in its most recent consultation. We were very pleased to have a meeting with the Minister’s predecessor, the noble Lord, Lord Prior, on this, and I very much hope that the Government will be prepared to have a look at it.

This debate is about the contribution of the life sciences sector to this country. Briefly reading the consultation passed today on the industrial strategy I noticed that the introduction talks about the UK benefitting from an,

“open economy: pro-competition rules, flexible labour markets, less intrusive regulation”.

The question that one really wants to put, particularly as this is a sort of declaratory amendment is, if that is so, if—as the noble Lord, Lord Lansley, has suggested—the issue of life sciences post Brexit deserves a great deal of consideration, why have the Government brought what is clearly an overbearing regulatory Bill to your Lordships’ House? If ever I have seen an example of gold plating, this is it. We understand the need to close the loophole but I do not understand and I do not think we really saw a case made at Second Reading for why the Department of Health is determined to intervene in this sector in such a wide-ranging way. It is interesting that your Lordships’ Delegated Powers Committee has already pointed out the open-ended nature of the Government’s approach.

It is impossible to look at the health of the life sciences and the health of the pharmaceutical, medical devices and medical technology industries in this country without looking at the crucial issue of access. I know the Minister’s department is in denial about this and feels that access can be constantly reduced and will have no effect on investment in these sectors. I simply do not believe that that is so. The noble Lord, Lord Lansley, rightly said that this is one of the sectors that we want to protect and enhance—but I believe we are at real risk of losing its pre-eminence in this country.

I understand that the Secretary of State is shortly to go to North America to sweet talk the boardrooms of US pharma. I know the noble Lord, Lord Warner, has been there. I have been there, too. I am sure that the noble Lord, Lord Lansley, has, too. The idea that the Secretary of State will not talk about access is naive. Access is a crucial part of investment decisions by these companies in the UK. The noble Lord, Lord Lansley, referred to the proportion of new chemical entities and top 100 medicines globally that have been developed in this country. I understand that it is now down to 14%. That is healthy compared to 3% turnover, but when I was the Minister responsible we were in the 20% to 25% range. So we have a horrendous decline in the influence of the UK sector. My fear is it is going to decline even further in the years ahead.

We will come back to the 2014 PPRS agreement. Potentially, the industry would have funded the widespread use of innovative medicines in the NHS. Between them, however, the Treasury, the Department of Health and NHS England have completely messed this up. We have ended up with the worst of all worlds, in which rationing in the NHS has reached appalling levels: CCGs are making some of the crudest rationing decisions that I have ever seen.

Health Service Medical Supplies (Costs) Bill

Baroness Masham of Ilton Excerpts

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

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

My Lords, I am bringing forward this amendment and others in this group in response to the matters relating to specials raised in Committee by the noble Baroness, Lady Finlay, who regrettably is not able to be here with us today, the noble Baroness, Lady Masham, and others. I must thank noble Lords for the work they have done to explore these issues by bringing them forward for debate in a most constructive manner. I also take this opportunity at the start of Report to thank noble Lords for the generally constructive debate in Committee, and in other meetings since then.

A special is a medicine manufactured to meet the specific needs of a specific patient. By nature they are bespoke and therefore do not have the same economies of scale during manufacture and distribution as licensed medicines. In Committee, the noble Baroness, Lady Finlay, presented a strong case that the current arrangements for reimbursement of specials are not sufficiently effective at securing value for money for the NHS. In England, reimbursement prices for the most commonly prescribed specials are listed in the drug tariff. Those reimbursement prices are based on sales and volume data, which the department currently obtains from specials manufacturers under a voluntary agreement. By setting a reimbursement price we encourage pharmacy contractors to source products as cheaply as possible because it allows them to earn margin, which in turn creates competition in the market. As a result, reimbursement prices decrease. Since these reimbursement arrangements were introduced in 2011, we have observed that in England the average cost for specials listed in the drug tariff decreased by 39% between 2011 and 2016.

Basing reimbursement prices on selling prices from more manufacturers than we do now would make the reimbursement system more robust. For specials, we currently rely on information from those manufacturers that have signed up to our voluntary agreement. There have been talks with NHS manufacturers to provide information on a voluntary basis. However, we have not been successful so far in securing data from NHS manufacturers on this basis. The Bill would enable us to retrieve information from all manufacturers, including NHS manufacturers. Once we receive data from NHS manufacturers, we will be able to assess whether it is appropriate to include them in calculating reimbursement prices.

However, through our very constructive debates on previous stages of the Bill and the further discussions I have had with the noble Baronesses, Lady Finlay and Lady Masham, I am persuaded that we need to do more. The unique nature of specials and their manufacturing arrangements means that we need to do more to ensure that the prices paid by the NHS represent good value for money for all these products. I am therefore bringing forward amendments that will enable alternative approaches to be developed to address this issue.

The amendments make changes to Section 164 of the NHS Act, which relates to the remuneration of persons providing pharmaceutical services. Proposed new subsection (8A) provides for a new regulation-making power in respect of special medicines. This would enable us to develop options that will secure the improved value for money that we all wish to see. Proposed new subsections (8B), (8C) and (8D) go on to provide illustrations of how that power might be used but do not restrict its application to those approaches.

A number of different options may be considered. The example the noble Baroness, Lady Finlay, gave in Committee, drawing on the Scottish experience of using a quotes-based system, may be one option, although we recognise the potential difficulties with such an approach—in particular, the burden it may place on the pharmacist, who has to seek the quotes, and the potential delay it may cause to patients getting their medicines. We will draw on the Scottish experience and the knowledge and expertise of stakeholders to develop and clarify the options.

I reassure noble Lords that we are legally obliged to consult the body that represents those providing pharmaceutical services—dispensing contractors—the Pharmaceutical Services Negotiating Committee, and will consult other interested stakeholders before making a decision.

I hope your Lordships will understand that, at this stage, I am bringing forward a legislative framework which I believe to be fully justified by the need for action that was so clearly expressed by the noble Baronesses, Lady Finlay and Lady Masham, and other noble Lords. The detail of any new arrangements will need to be drawn up and consulted on with those who represent providers of pharmaceutical services, but I can give every assurance that I fully intend to explore the options provided by these powers to improve value for money for the NHS, which I know we all wish to see.

I thank the noble Baronesses, Lady Finlay and Lady Masham, and other noble Lords for bringing this matter forward. I beg to move.

[Baroness Masham of Ilton (CB)]

My Lords, I thank the Minister for his helpfulness and the work he has done on this amendment about specials. I also thank him on behalf of my noble friend Lady Finlay of Llandaff, who has to help her pregnant daughter who has had an emergency health problem. She had hoped to be here. I hope this amendment will help patients get the specials they need at a reasonable price.

[Baroness Walmsley (LD)]

My Lords, the noble Baroness, Lady Finlay, is so grateful to the Minister that she asked two of us to convey her thanks for the time he has given to addressing her concerns. She is very happy with these amendments.

--- Later in debate ---

[Baroness Masham of Ilton]

My Lords, there is considerable frustration on the part of patients and the industries when NICE approves new drugs which can be important for preserving life but which patients cannot get. We need to encourage the development of new drugs as there are so many complicated and rare conditions which need them. It takes time and effort to submit the drugs to NICE. Noble Lords can imagine the frustration when they are approved but then not used. I support Amendment 3.

[Lord Patel (CB)]

My Lords, I support this amendment, to which I have added my name. I do not agree with the noble Lord, Lord Lansley, that the second part of the amendment is not crucial. I take a completely opposite view. I consider that that is the crucial part of the amendment. The proposed new paragraph (b) refers to the need to,

“ensure that patients have rapid clinical access to new clinically effective and cost-effective medicines and treatments approved by the National Institute for Health and Care Excellence through their technology appraisal process”.

The terms “clinically effective” and “cost-effective” are important. I would insert the word “thorough” so that the amendment reads “thorough technology appraisal process”. That is what NICE does. That is what we set it up to do. Parliament agreed that if NICE approved a drug that was cost effective and clinically effective, it should be available to patients. Now we are saying that that should occur only if certain provisions apply, and in certain circumstances they do not. So what are we saying? What message are we sending out if NHS patients cannot get medicines and treatments that are deemed to be clinically effective and cost effective, including drugs and treatments developed by our own scientists and produced by our own life sciences industry? People from our own industry have told me that when the NICE-approved drug is not available in the United Kingdom and we try to market it in other countries, their competitors say, “Why is it not available in your country when you’re trying to persuade us to use it?”. As has been said, many drugs are often available in countries such as Germany, France, Canada, Austria and many others that are not available in the United Kingdom. The noble Lord, Lord Hunt of Kings Heath, mentioned cancer drugs that are not available. Some would say that that leads to the poor cancer outcomes in our country compared with those in some other countries.

Recent proposed changes relate to the budget impact threshold of £20 million over two years. The noble Lord, Lord Lansley, is right that this sword has two sharp edges. Whichever way you tackle it, the patient gets hurt. Around 20% of new treatments with a positive NICE recommendation could have their introduction delayed if we adopt NHS England’s new proposals. For example, about 35,000 patients suffer from secondary or metastatic breast cancer. However, a drug costing £1.56 per patient per day would meet the budget impact threshold of £20 million. It would therefore be delayed for introduction to treat these 35,000 patients. For most of them, their life—quality life—could be prolonged by about six months to a year, but they will be dead before the drug is made available at a cost of £1.56 per patient per day. That is what this proposal of £20 million means. It is a budget impact threshold.

People with rare diseases will fare even worse. There are about 7,000 known rare diseases. Treatment exists for only about 5% of those patients. The British company Shire, for example, has about 30 products in its pipeline to treat rare diseases. But why would it manufacture them at some cost when it might find that it falls foul of the new arrangements even if the new drugs prove effective?

I recognise the economic challenges that the NHS faces. I have heard the 20,000 pages of evidence given to the committee that I chair on your Lordships’ behalf and which we will soon be publishing. We need a system that prepares the United Kingdom to deliver the next generations of innovative medicines, including gene and cell therapy. If we are going to do that, it is important that pharma and the industry have certainty of patient access. That is crucial when companies make decisions on new investments in research and manufacturing.

Regarding proposed new paragraph (a), I would simply say that as we prepare to leave the EU, the delivery of an internationally competitive industrial environment for the bioscience and life science sectors is more important than ever. By making it more difficult for patients to access highly innovative, first-to-market, cost-effective and clinically effective medical products, we not only deny our patients the treatment they need but risk the future of our world-leading life science industry. I am sure we do not want to do that.

The Prime Minister’s industrial strategy, which will invest in science, research and innovation, has already been mentioned. The life science sector—not the pharma industry, which the noble Lord, Lord Warner, mentioned —brings in over £60 billion a year and employs over 220,000 people. British science, with investment in genomics, gene sequences, diagnostics, and now the production of gene and cell therapy, is again investing huge sums of money. To promote this, the Higher Education and Research Bill, which is currently going through your Lordships’ House, creates UK Research and Innovation to do research and innovate therapies, all of it in life science. As to our charity sector, the Wellcome Trust invests probably in the region of £1.3 billion a year in science, which will go to innovation. Cancer Research UK is about to announce four grand challenges. It makes awards of £20 million to find causes and treatments for cancer, and the British Heart Foundation also makes an enormous investment.

Hitherto we have had a pact that operates for the public, the NHS, the scientists and the industry on the availability of medicines and treatments for both diagnosis and treatment, delivered at a cost that is fair, transparent and appropriate. When we break that pact by not making available treatments to patients even though they are cost effective and clinically effective, we are denying treatment to many patients. The fundamental basis of the pact—which Parliament approved when agreeing to how NICE should operate—is that if NICE deems that a medicine is cost effective and clinically effective, patients should get it. That is why I strongly support the amendment.

Health Service Medical Supplies (Costs) Bill

Baroness Masham of Ilton Excerpts

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

[Lord Lansley (Con)]

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

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

[Baroness Masham of Ilton (CB)]

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

[Lord Hunt of Kings Heath (Lab)]

My Lords, I look forward to the Minister’s answer to that last question. From the opposition Benches, I very much welcome the agreed amendment that has come forward from the Government today. It is good to see how wash-up can concentrate minds no end, and we have reached a very satisfactory outcome. I am very grateful to the Minister and his officials for their co-operation on this.

The Opposition have been in no doubt whatever that it is absolutely right to take action against those companies that have clearly been abusing the system. We should also pay tribute to the Times newspaper for its campaign, which has opened up some transparency in a pretty murky area.

There are two key issues that need to be taken forward. First, the key message of debates in your Lordships’ House is that, in seeking to deal with this particular problem, we must not underestimate the contribution of the pharmaceutical industry to this country, to the economy and to the life sciences sector. We have a problem in that we are incredibly innovative in the number of new drugs that are developed in this country, but the NHS is finding it increasingly difficult to invest in them and patients are not getting the benefit.

The second is the whole question of balance between the statutory and voluntary schemes—the noble Lord, Lord Lansley, referred to this. I have reached the conclusion that the current arrangements are simply not up to scratch in relation to how government should negotiate with the industry in the future. The patent lack of transparency about the real price paid by the NHS for individual drugs means, in my view, that the arrangements are no longer fit for purpose. I hope that the Government—whichever Government are in power post election—will look afresh at the need for new arrangements in negotiation which get a fair price and also lead to the adoption of innovative new drugs for NHS patients.

Can the Minister say when he thinks the Government will be in a position to implement the key provisions in this Bill in relation to prices?