Health Service Medical Supplies (Costs) Bill

Justin Madders Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 6th December 2016 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to consider:

Amendment 8, in clause 1, page 1, line 14, at end insert—

“(2A) In exercising functions in relation to the controls on the costs of health service medicines, the Secretary of State must ensure that any payments made by manufacturers or suppliers to whom the scheme relates calculated by reference to sales or estimated sales of medicines are utilised solely for the purpose of reimbursing the NHS for expenditure on medicines and medical supplies.”

This amendment would confirm that the Secretary of State has a duty to reinvest rebates in improving access to new and innovative medicines and treatments.

Amendment 9, in clause 5, page 4, line 5, at end insert—

“(7) Before making regulations under Clause 5 the Secretary of State must conduct a consultation on the potential effect of this clause on the maintenance of quality of those medical supplies, and seek representations from manufacturers, suppliers and distributors of medical supplies as part of the consultation.”

Government amendments 1 to 6.

Amendment 10, in clause 6, page 7, line 11, at end insert—

“(1A) Information provided by virtue of section 264A must be disclosed by the Secretary of State to persons listed in subsection (1)(a) to (i) at that person’s request.”

Government amendment 7.

[Justin Madders]

I rise to speak to new clause 1, which stands in my name; to amendment 8, which is in the name of my hon. Friend the Member for Burnley (Julie Cooper); and to the other amendments in the group. The Opposition do not oppose the Bill. Our proposals are a constructive attempt to help the Government to achieve their stated aims, and to close the growing gap between the UK’s record on developing new drugs and the ability of NHS patients to access them.

New clause 1 would put a duty on the Secretary of State to commission a review within six months of the Act coming into force, focusing on its impact on the pricing and availability of drugs and medical supplies; on research and development; and on the NHS’s legal duty to promote innovation. The pharmaceutical industry in this country employs more than 70,000 people, in predominantly high-skilled and well-paid jobs—just the sort of jobs Members on both sides of the House would want to encourage and see more of.

This country’s record in the pharmaceutical sector has been one of our great success stories, but we cannot take that success for granted, particularly because investment decisions are often taken by parent companies in other parts of the world. There is considerable unease in the sector about the relatively low take-up of new and innovative medicines by the NHS compared with that in comparable nations, and about the ongoing uncertainty surrounding the future of the European Medicines Agency. A number of major companies have based themselves here because of the EMA, and the worry is that they might wish to follow it if it relocates following Brexit.

The impact assessment for the Bill states, as we might expect, that there will be an impact on the revenue of the pharmaceutical sector, and that it could lead to a reduction in investment in research and development and consequent losses for the UK economy estimated at £l million per annum.

While we fully agree with what the Government seek to achieve with the Bill, we are mindful of the storm clouds on the horizon. We therefore believe that prudence requires that such a review takes place within a reasonable timeframe to ensure there are no unintended consequences and that we can remain confident that the pharmaceutical sector in this country will continue to be at the forefront. We face competition not only in Europe but from emerging nations such as Brazil and China. We also need to ensure that the NHS does not trail in the take-up of the new drugs. Worryingly, the Office of Health Economics studied 14 high-income countries and found that the UK ranked ninth out of those14 across all medicines studied.

Successive studies have demonstrated relatively low take-up of new medicines in the UK compared with other countries. That is bad for patients and bad for our pharmaceutical industry. The Bill therefore needs to achieve a balance. We need to ensure the best possible patient access to medication at the fairest price, but we also need to encourage the pharmaceutical industry to invest in research and development.

[Keith Vaz (Leicester East) (Lab)]

I am intervening in my capacity as chair of the all-party group on diabetes. The diabetes drugs bill is enormous: it runs into hundreds of millions of pounds. I accept what my hon. Friend says—that we need to ensure that pharmaceutical companies are able to invest in the provision of new drugs for diabetes—but there are other choices, such as those relating to lifestyle. Does he agree that they need to be investigated while we look for new drugs?

[Justin Madders]

I thank my right hon. Friend for his question. Indeed, if I had known he was in the Chamber, I would probably have anticipated it. He is absolutely right to raise the issue of diabetes drugs and the need for more measures to improve prevention. I attended the launch of the all-party group’s report last week, at which there were a number of interesting initiatives. The “diabetes village” is an interesting concept, which in the long term will hopefully reduce the cost of diabetes treatment for the NHS.

The review would look at the impact of the Bill on the pricing and availability of medicines and other medical supplies. We would gently point out to the Minister that two years ago, when the previous voluntary agreement was introduced, the Government said that it would

“provide an unprecedented level of certainty on almost all the NHS branded medicines bill.”

Evidently that has not come to pass. The review would enable us to identify any issues at an early stage and take the appropriate action. I know that the Government were not willing to commit to such a review in Committee. The Minister referred us to a clause in the draft regulations, referring to a review one year on from the introduction of the regulations. However, that is simply not the same thing as looking at the impact of the legislation in its totality. The way the regulations are currently drafted means that there is more than a little of the Minister being able to mark his own homework, so to speak. The draft regulations talk about the review in a much narrower sense: enabling the Minister to set out the objectives intended to be achieved by the regulations in the report itself rather than at this point, and only specifically mentioning whether those objectives could be achieved with less regulation.

[Rob Marris (Wolverhampton South West) (Lab)]

Does my hon. Friend find it strange that the regulations that might be made pursuant to the Act—the Government have helpfully given us a draft—talk about a review being carried out? Paragraph 14(2) states that the report must in particular

“set out the objectives intended to be achieved by these Regulations”.

Would one not expect those objectives to be set out before the regulations were made? Are the Government not putting the cart before the horse?

[Justin Madders]

My hon. Friend is absolutely right. That is why there is anxiety that we may end up with a self-fulfilling prophecy with these reviews. No doubt the Minister can address that when he replies.

There is nothing to assess the potential impact of the Bill and the regulations on research and development investment, nothing on the potential impact on innovation, and nothing on the availability of medicines and other medical supplies. We believe our anxieties in these areas are well founded, so I hope the Minister will reconsider his stance on this proposal, or at least provide us with some reassurance that these areas of concern will be carefully monitored.

Amendment 8 would to compel the Government to reinvest the rebate from the pharmaceutical sector for the purpose of improving access to new and innovative medicines and treatments. On Second Reading, the Secretary of State confirmed that £1.24 billion had so far been returned to the Department of Health through and it is anticipated that the sum to be received annually will increase when the Bill is enacted.

Although numerous questions have been asked throughout the passage of the Bill, we have still not been able to pin down the Government on exactly where this money has gone, other than into the general pot. It is our fear that this new money, which could have delivered a step-change in access to treatments to the benefit of patients and the life sciences sector, will instead be simply added to the baseline, with every £1 from the pharmaceutical sector meaning £1 less coming from the Treasury. Given the often heated exchanges across the Dispatch Box about the true sums being put into the NHS, it would aid transparency if it were made clear that this money was being put in over and above Government funding and was ring-fenced for a specific use. In Scotland, rebates are already ring-fenced and reinvested to provide new treatments and medicines. Nothing that the Minister has said has dissuaded us from believing that that is the correct approach.

According to James Barrow from the Cystic Fibrosis Trust, using the rebate in this way provides both the access and transparency that are lacking in the rest of the UK. He cites the example of the medicine Kalydeco, which increases the lung capacity of people with cystic fibrosis by up to 10%. It has meant that some patients who were previously housebound are now able to run up to 5 km. Patients in England are unable to access this drug, whereas patients across comparable nations in Europe and in Scotland can benefit from its transformative effect. He points out:

“There is no comparable fund in England. Having the new medicines fund in Scotland provides a much greater chance for patients to be able to access these medicines. We just don’t see a clear pathway in England for how patients can access these medicines.”

There are many other similar examples.

The NHS is our proudest national achievement, but it is to our shame that people in England are deprived of vital drugs and treatments on the basis of financial, rather than clinical, judgments. In Committee, the Minister suggested that the fluctuations in income could have adverse consequences, but we understood the purpose of the Bill was to deliver certainty. In any event, ring-fencing does not preclude additional resourcing if required. For all those reasons, I hope the Government will give serious consideration to this proposal.

Turning finally to the remaining amendments, we welcome the further improvements tabled by the Secretary of State in relation to the devolved Administrations. However, questions perhaps have to be asked about the consultation process if such changes are being introduced by the Government at such a late stage. Perhaps this will be reflected on when it comes to future legislation.

We welcome the amendments to clauses 5 and 6 tabled by the Scottish National party. In particular, we welcome the call for a consultation on the potential impact of controls on other medical supplies. Those provisions were notably lacking from the initial consultation, so there is still considerable anxiety within the sector about how the controls will be used. I understand that this is a matter for future regulations, but it is less than satisfactory for the Government to ask us for powers before telling us how they will be used. We would say this is another reason for us to seriously consider setting out now the kind of review envisaged by new clause 1.

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[Mr Dunne]

I am grateful to the hon. Lady for that clarification. I think this is best addressed through a memorandum of understanding, rather than in primary legislation, in case we need to adjust the memorandum in subsequent years.

Finally, I wish to address Government amendment 7, which provides a definition of “equipment”. The hon. Member for Wolverhampton South West took us through the drafting on the definition of “medical supplies”. The amendment gives a definition of “equipment” in the National Health Service (Wales) Act 2006 to ensure consistency with the National Health Service Act 2006. “Equipment” is defined as including

“any machinery, apparatus or appliance, whether fixed or not, and any vehicle”.

When taken in tandem with the common definition of “medical supplies”, the definition is broad enough to capture any medical supplies on the market, from bandages to MRI scanners. The point of distinction was not so much the definition of “medical supplies” as the definition of “equipment”, which is a subset of the medical supplies definition. I hope, therefore, that hon. Members will accept the amendment.

I have spoken at length on these amendments. I hope I have made my position clear, that Opposition Members will not press their amendments to a vote, and that the House will accept the Government amendments.

[Justin Madders]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Clause 6

Provision of information to Secretary of State and disclosure

Amendments made: 1, page 4, line 12, leave out from “products,” to end of line 13.

This amendment is linked to amendments 2 to 5. It is directly consequential on amendment 4.

Amendment 2, page 4, line 17, at end insert—

“(subject to subsection (6A)).”

This amendment is linked to amendments 1 and 3 to 5. It flags that the provision made by section 264A(2)(a) and (b) of the National Health Service Act 2006 is subject to the provision made by amendment 3.

Amendment 3, page 5, line 47, at end insert—

“(6A) Regulations under this section may not do any of the following—

(a) require any person who provides primary medical services under Part 4 of the National Health Service (Wales) Act 2006, or any person who provides pharmaceutical services under Part 7 of that Act, to record, keep or provide information relating to any Welsh health service products which are supplied by the person in providing the services in question;

(b) require any person who provides primary medical services under section 2C(1) of the 1978 Act, or any person who provides pharmaceutical care services under section 2CA(1) of that Act, to record, keep or provide information relating to any Scottish health service products which are supplied by the person in providing the services in question;

(c) require any person who provides primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14)) to record, keep or provide information relating to Northern Ireland health service products which are supplied by the person in providing the services in question.”

This amendment is linked to amendments 1, 2, 4 and 5. It ensures that regulations under section 264A of the National Health Service Act 2006 may not require the persons specified to record, keep or provide the information specified.

Amendment 4, page 6, leave out lines 3 to 15.

This amendment is linked to amendments 1 to 3 and 5. It is consequential on the new provision made by amendment 3.

Amendment 5, page 6, line 36, leave out “(8)(d)” and insert “(6A)(b)”.

This amendment is linked to amendments 1 to 4. It is a consequential amendment.

Amendment 6, page 7, line 8, leave out “(h)” and insert “(i)”.—(Mr Dunne.)

This amendment makes a change which is consequential on the amendments made in Committee. The effect is to allow the Secretary of State to disclose information to a person who provides services to the Regional Business Services Organisation in Northern Ireland.

Clause 7

Provision of information to Welsh Ministers and disclosure

Amendment made: 7, page 9, line 38, at end insert—

“(and for this purpose ‘equipment’ includes any machinery, apparatus or appliance, whether fixed or not, and any vehicle).”— (Mr Dunne.)

This amendment provides a definition of “equipment“ for the purposes of the definition of “medical supplies” in section 201A(8) of the National Health Service (Wales) Act 2006.

Third Reading

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[Justin Madders]

As the Minister said, the Bill is designed to enable the NHS better to control the cost of medicines and medical supplies and to close some of the loopholes in the system that have been the subject of blatant abuses in recent years. In seeking to achieve those aims, the Government have our support.

I wish to place on the record our appreciation for the amiable way the Minister dealt with our probing of the Bill. Although he has not accepted our amendments, he has explained why not in a reasonable and constructive manner. I would also like to record my appreciation of the work of the members of the Bill Committee, including my hon. Friend the Member for Burnley (Julie Cooper), who ably assisted me in tabling and speaking to Opposition amendments, and the hon. Member for Central Ayrshire (Dr Whitford), who spoke on behalf of the Scottish National party. Particular thanks go to my hon. Friend the Member for Wolverhampton South West (Rob Marris), who has been engaged and informed in equal measure throughout the Bill’s passage through this House.

Expenditure on medicines accounts for a significant and growing proportion of the NHS budget, standing at £15.2 billion in England in 2015-16, which is an increase of more than 20% since 2010-11. That reflects the incredible advances that continue to be made in the development of new and innovative medicines, often by our own life sciences industry here in the UK. Although we welcome and celebrate those developments, it is clear that taxpayers and patients have not always been well served by the market. It is important that we do all we can to secure value for money for the NHS, especially in the current financial context following six years of historic underinvestment by normal standards.

When the most recent five-year pharmaceutical price regulation scheme was agreed in early 2014, the Government said it would provide unprecedented certainty, but as we know and as was reported in February by the then Life Sciences Minister, the hon. Member for Mid Norfolk (George Freeman), estimated incomes in the UK from PPRS payments for 2016-17 were £647 million—a considerable reduction on the £800 million received in 2015, particularly at a time when the overall drugs bill has been increasing apace. Those figures and the fact that we are debating this Bill show that the original scheme has not gone entirely to plan.

There is much in the Bill to be welcomed. We certainly want an end to the playing of the system that has been going on. We hope that the Bill will finally put an end to such antics and deliver a mechanism that ensures consistency in appropriate circumstances. We support the rationale behind aligning the statutory and voluntary schemes, which will create a more level playing field between companies and offer a much better chance of delivering greater savings and value for money to the taxpayer.

We support measures to tackle the small number of cases where we have seen companies disgracefully exploiting loopholes in the regulations to hike the price of medicines, sometimes by more than 10,000%. As we know, the investigation undertaken by The Times in the summer found that the price of medicines was inflated by £262 million a year as a result of this practice. That continues to impact on patients, often those with rarer conditions.

An example is Keveyis, a drug that has been found to be extremely effective in treating some of the symptoms of muscular dystrophy. Until 2012 it was relatively inexpensive, costing around £100 a box per patient. Unfortunately, it was discontinued by its previous manufacturer. Recently Taro Pharmaceuticals obtained the rights under orphan drug status and is now manufacturing it once again. However, its forecast price in the EU is approximately £35,000 per patient per year, despite the fact that no new research and development costs have been incurred by the company. It is therefore very difficult to see what justification there can be for such a significant price increase. Because of the rise in price, the NHS in England is refusing to provide reimbursement for the drug, which means that patients lose out. It is this deliberate manipulation of the system that we want to see dealt with and we hope that this Bill will once and for all put an end to such scandalous practices.

Although we support the broad aims of the Bill, we have had a number of concerns, some of which we have touched on already, about what is perhaps missing from the Bill and about the Government’s policies more widely on access to medicines and treatments. Despite this country’s world-leading pharmaceutical sector, which we are all rightly proud of, successive studies have demonstrated how there is a relatively low take-up of new medicines by the UK compared with other high-income countries. Members across the House will no doubt have received many pieces of correspondence from constituents concerned about the lack of availability of medicines that they or their relatives are trying to obtain. We also see clinical commissioning groups rationing medicines and treatments in ways that would previously have seemed unthinkable.

If we are to create a level playing field for drugs companies, we should be trying to do the same for patients as well. One measure that we have proposed to tackle this issue is to ring-fence future rebates from the sector and invest them in improving access to medicines and treatments. We know that £1.24 billion of new money has been returned through the rebate since it was established. Surely there can be no more logical use for this money than to tackle the gulf between the UK’s record on developing new drugs and patients’ ability to access them.

We know that the Government were not willing to back our amendments, but I urge the Minister to look again at how a similar measure has worked in Scotland. As we heard in the debate today, there seems to be some difference of opinion about that. The hon. Member for Central Ayrshire spoke strongly in support of it.

We note that a number of amendments tabled by the Government during the passage of the Bill mean that the devolved Administrations are subject to the same arrangements, although it was pointed out in Committee that there appear to be no equivalent arrangements for the devolution of health in Greater Manchester. I recall that when the Minister responded to my questions on this point, he suggested that ring-fencing the appropriate amount of the rebate for Greater Manchester might lead to chaos, as its allocation from NHS England already includes an element of income from the rebate. I think the Minister underestimates his ability to resolve the issue and overestimates the difficulty that would ensue.

The annual health budget negotiated for Greater Manchester is about £6 billion, around half the Scottish budget and around a billion pounds less than the Welsh budget, so the size of the budget is not the issue. What is an issue, though, is transparency and consistency. I do not expect any late change of heart from the Minister, but we will be watching future developments in English devolution and the accompanying budgets with interest.

The other aspect about which we have concerns is how these proposals will impact upon the future of the pharmaceutical industry in the UK, in a climate where there is already considerable anxiety in the sector about the future of the European Medicines Agency as a result of Brexit. Clearly, we will be keeping a close eye on both the operation of the scheme and the general health of the sector, particularly in terms of future investment in research and development.

To conclude, we support the broad aims of this Bill and the Government’s aim of better controlling the costs of medicines. However, we should be doing more to tackle the present situation to prevent patients from missing out on innovative treatments, particularly when we compare our record to that of countries with similar wealth. We hope that the scope of the annual review envisaged in the draft regulations is sufficiently broad to enable us to judge the Bill’s effectiveness on this issue and on the others that we have raised, and we look forward to considering the Government’s response once the consultation on the draft regulations has been completed.

As the Minister said, this is a small Bill, but the sums at stake are large. We hope to see a positive outcome for the NHS as a whole. Thank you, Madam Deputy Speaker, for chairing our proceedings today. I thank the Members who served on the Bill Committee, the Chairs and all the staff and civil servants who successfully led the Bill’s passage through the House.