Health Service Medical Supplies (Costs) Bill (Second sitting)

Justin Madders Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[Mr Dunne]

Fortunately, the Committee has the benefit of the Scottish National party’s spokesperson on health, the hon. Member for Central Ayrshire, who I am sure would be happy to give us her experience. The fact is that we have had some experience in England of fluctuating income from these schemes, which is the primary basis for our position.

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

I am grateful to the Minister for his explanation. On the money that is received from the rebate from PPRS, responses I have had to written questions suggest that that is considered part of the baseline budget. With respect to the debate we have had recently about the £10 billion extra, or the £4.5 billion extra—whichever version we prefer—could he advise whether the rebate is included within that extra money, or is it part of the baseline funding?

[Mr Dunne]

The Department of Health receives income from a number of different sources. It mostly deals with expenditure but also receives income from activities conducted through the NHS. One source of income is the rebate through these schemes, which forms part of the funding available to the Department. We have committed that funds available out of the scheme will go into the NHS. The hon. Gentleman raised the issue of the £10 billion. I gently remind him that, in 2014-15, the funds available to the NHS from the Department of Health were £98.1 billion, and by 2021 that figure will be £119.9 billion, which in cash terms is a £20 billion increase and in real terms is a £10 billion increase.

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[Mr Dunne]

Clause 2 will amend the power to control prices in section 262 of the National Health Service Act 2006. That section already allows the Secretary of State to limit the price of any health service medicines except when the manufacturer or supplier is in the voluntary scheme, the PPRS. Section 266 of the 2006 Act allows the prices of health service medicines to be controlled by way of regulation or directions. Clause 2’s amendments to the 2006 Act will enable us to address unreasonably high-priced unbranded generic medicines. Most manufacturers of unbranded generic medicines are members of the PPRS for their branded medicines, and we therefore cannot currently limit the prices of their unbranded generic medicines if they charge excessive prices. We rely on competition in the market to keep the prices of those medicines down. It generally works well and, in combination with high levels of generic prescribing, has led to significant savings for the NHS.

I am grateful for the contributions made on Second Reading by almost everyone who spoke. The intent behind the clause was widely recognised across the House as appropriate and desirable. Members were aware from their own experience, and particularly from a Times article in the summer, that in some instances where there has been no competition to keep prices down, a small number of companies have raised their prices to what look like unreasonable and unjustifiable levels.

There are some clear examples of price increases. The most egregious was one product whose price increased by 12,000% between 2008 and 2016. If the price had stayed the same, the NHS would have spent £58 million less on that medicine last year alone. Another medicine increased in price by 3,600% between 2011 and 2016; the NHS would have spent £2.1 million less on that single medicine had the price stayed the same.

[Justin Madders]

I am grateful for the Minister’s explanation. As he said, we support the broad thrust of the aims behind the clause. Has he engaged in any research or discussions with the developers to understand the reason for those rapid price rises?

[Mr Dunne]

We have had discussions with the trade association for the generic manufacturers. The trade association, which gave evidence to the Committee on a day when I was, unfortunately, not able to attend, made it clear that the generic medicine producers industry as a whole thinks it appropriate that we take this action. We are grateful for that support. Discussions are under way through other bodies. In particular, the Competition and Markets Authority has indicated that it is in discussions with some companies, one of which voluntarily issued a press release last month to tell the market that the Competition and Markets Authority is investigating it.

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[Justin Madders]

What I was trying to elicit was whether anything had been put forward to explain any specific price increases. We are concerned that the clause will have the unintended consequence of limiting supply.

[Mr Dunne]

We are anxious to ensure that we do not inadvertently introduce a regime that might cause difficulty when there might be a valid reason for increasing a drug’s price significantly. That was the justification in the past for not addressing the issue, because abuses were seen to be pretty isolated. However, in the past two or three years, the prices of more drugs have risen seemingly unjustifiably. That is the justification for introducing these measures.

I recognise that there may be occasions when a manufacturer incurs some additional costs: for instance, if a production run or line has finished and the manufacturer must start a new line or restart an old one, that would lead to a justifiable price increase. The clause allows us to take action where we suspect a price has risen excessively. The rest of the Bill provides opportunities for the Department to gain information about the cost of supplies, which allows us to get a better handle on when we think an increase has been unjustifiable, and identify that more rapidly. [Interruption.] Does the hon. Member for Wolverhampton South West want to intervene, or is he just poised in an energetic way?

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[Justin Madders]

I support the hon. Lady’s amendment. She spoke with great personal experience, which we all appreciate, about the importance of maintaining the quality and reliability of products in the NHS. Over the weekend, there were reports of the vast sums paid out by the NHS in clinical negligence costs. I am sure we all agree that that money would be better spent on patient care. Of course, many of those claims are down to human error, or to events that were in some other way avoidable. However, one obvious example of an area where we need to be reassured that the Bill will not have unintended consequences is infection control. About 300,000 people a year—about one in every 16 patients—get an infection while being cared for in the NHS. That causes additional suffering, inconvenience and, sometimes, serious illness or death. It also has a wider impact on the NHS, because patients with hospital-acquired infections spend two and a half times longer in hospital than uninfected patients, on average: they are usually admitted for approximately 11 days.

As well as the devastating impact on the patients affected, there is a significant financial impact on the NHS. I have referred to the costs incurred from clinical negligence claims. The most recent reliable estimate of costs from infections, which appeared in the Plowman report, put the figure at £1 billion a year. According to Professor Briggs’s report “Getting It Right First Time”, if someone gets an infection from an orthopaedic operation, it costs the NHS an extra £100,000 to put it right. We need to be confident that the Bill poses no risk of any reduction in quality, but we would have been more confident about that if there had been a proper consultation on that element in the first place.

[Mr Dunne]

Rather unusually, I start by thanking the hon. Lady for proposing the amendment. She has raised an issue for which we have considerable sympathy. She touched on the way in which medical products are procured in Scotland. I can confirm that we are looking to introduce more centralised purchasing across the NHS under the efficiency proposals made by Lord Carter in the other place. One of the areas of focus was the variability, in purchasing terms, of standard commodity items. She mentioned surgical gloves—I will not go into detail on those with her, because she has obviously used them considerably more than I can conceive of and is therefore very experienced when it comes to the variability not just in price but in quality of such commodity products. We are looking to introduce closer central purchasing—I think 12 items are currently being trialled or introduced in parts of NHS England.

We recognise that, as currently drafted, the Bill does not explicitly state in relation to section 260 that the Government are obliged to consult industry. I am aware that the 2006 Act, in relation to controlling the cost of medicines, does explicitly state that there is an obligation on the Government to consult. The hon. Lady’s amendment is appropriate in its intent. I invite her to withdraw it at this stage, but I undertake to work with her. My officials will consider how to amend the amendment to give it the effect that she seeks, but in a way that works in the context of the Bill. There are technical drafting issues with the amendment that mean that it would give us some unintended difficulties. That is the Government’s position on the amendment; I hope she is happy with that.

The hon. Lady referred to the effect of any pricing controls for medical supplies on the maintenance of those products’ quality. I can assure the Committee that the Government will take into account all relevant factors, including any concerns raised by industry about the quality of medical supplies, when making and consulting on price controls if they were to apply to medical supplies. The Government would not be in favour of putting any of those many factors in the Bill, because it may unnecessarily constrain the conduct of future Governments or the NHS.

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[Mr Dunne]

In essence, we are trying to bring the regimes for medical supplies and drugs into the same environment, so that we are able in future to use the powers, which we are introducing for the first time for drugs, for medical supplies on the same basis, so that we do not have to treat one thing under one Act and the other under another. I hope that is clear.

[Justin Madders]

I am sorry to push this point, but are there any examples? We obviously have clear examples, for example, in the pharmaceutical sector. Is there anything in the supplies sector that would be equivalent?

[Mr Dunne]

I am not aware of any particular examples of medical supplies that we are concerned about at this point. However, I am sure that, if there are people outside watching who have good examples, they will let the Committee know before we conclude our deliberations.

Reverting to the hon. Lady’s amendment 47, we understand the intent behind it. We are not fully convinced that the current drafting would have precisely the effect that she is hoping. I invite her to work with me and my officials between now and Report. The Government will be happy to consider how we could best introduce the requirement to consult in relation to section 260. On that basis, I invite her to withdraw the amendment.