Health Service Medical Supplies (Costs) Bill

Debate between Justin Madders and Rob Marris

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

[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.

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

Debate between Justin Madders and Rob Marris

Committee Debate: 1st sitting: House of Commons
Tuesday 8th November 2016 Public Bill Committees

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

Q This question is to Dr Ridge. The pharmaceutical bill has increased significantly in recent years—up another billion pounds in the last financial year. Could you give us some thoughts on why that has been the case?

Dr Ridge: I am absolutely delighted to do so. Just to emphasise some of the increases, I have brought with me the “Prescribing Costs in Hospitals and the Community” report from the Health and Social Care Information Centre, which is now part of NHS Digital. That organisation routinely publishes information on a range of things, including prescribing and drug expenditure. In the 2014-15 report—the latest one—it says that the overall NHS expenditure on medicine in 2014-15 was £15.5 billion, an increase of 7.8% from £14.4 billion in 2013-14 and nigh on 20% from £13 billion in 2010-11. In 2014-15, hospital use accounted for nearly 43% of the total cost—that is up from 40% in 2013-14 and 32% in 2010-11. From 2013-14 to 2014-15, the cost of medicines rose by 7.8% overall but by 15.4% in hospitals. This is a particularly important fact: the cost of medicines in hospitals has risen by some 59.8% since 2010-11.

I hope that emphasises where we are in terms of expenditure on medicines. There are a number of reasons for that. One is around an ageing population, with people living longer and multi-morbidities—more than one disease. Of course, in many ways we are very grateful to the pharmaceutical industry. I would say this as a pharmacist: medicines are a truly wonderful thing. They are also the highest expenditure in the NHS after staff, but they have delivered some really important therapeutic gains over the years.

When you look to the future in terms of how medicines in the specialised areas will change in nature, particularly at the reasons around ergonomics, personalised medicine and the ability to be able to target medicines, that will affect expenditure, with development costs in among that, but it will also affect how the pharmaceutical industry will price medicines. So there is a raft of reasons, largely clinical but also technological, from the past. Going forward, we are going to see more of that. Of course, that is set in the context of the NHS financial position and the gaps set out in the five year forward view.

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

Q The new proposals suggest a £5 million threshold exemption for small companies. I wonder what your views of the appropriateness of the magnitude of that threshold are. Perhaps Mr Kennedy might lead on that because it is principally your bailiwick.

Philip Kennedy: Yes. Thank you. I would like to welcome the question. From our perspective at the ABHI, 99% of the medical device industry is made up of small to medium-sized enterprises, which are absolutely vital to the lifeline of the industry as well as to the whole country and employ some 90,000 people. There are over 3,000 companies. The definition of SME within that is companies that employ 250 people or fewer or have annual turnover of £50 million.

In the scope of these proposals, we believe that the considerations of the SMEs in the sector are absolutely crucial, not only to the health of the industry, for which you would expect us to be extremely vocal, but to the effectiveness of the NHS being able to benefit from the innovation and the good working relationship it has with SMEs in the sector. We feel that the potential to put in a layer of bureaucracy and cost is not good for the NHS and certainly not good for the SMEs that are largely representative of the sector.

--- Later in debate ---

[Justin Madders]

Q So you would tender for something you might make a loss on.

Philip Kennedy: Absolutely we might, because we may feel that to keep the factory running that month, we need to make a loss, or if we see potential revenue for further purchases from that particular trust, either in service contracts or future hospital builds, we may decide to take a lower price point for that tender.

[Rob Marris]

Q Or the other way round—what the market will bear. That is our concern.

Philip Kennedy: Or what the market will bear. Of course, in recent years, with the funding concerns, the price is only really going in one direction and that is putting a huge squeeze on niche product manufacturers. The other thing about the medical device sector, which goes back to the point about definition, is that there are some very specialised small businesses that work only within a certain sector. It is difficult to ask them to produce swathes of data to the same extent as a larger generic manufacturer or, indeed, large ostomy company that is quite accustomed to producing data for drug tariff.

--- Later in debate ---

[Justin Madders]

Q You mentioned various challenges to the industry. I wonder whether you could expand on that a little and say whether you feel we are close to a tipping point in terms of the potential impact on investment in jobs and research.

David Watson: As I said, the UK has a really strong history here. The EU transition is clearly one of the specific challenges at the moment, which I will not go into, but there are challenges from industry from a commercial point of view. Access to new medicines in the UK is more challenging for UK patients than it is in a lot of other countries, so we do not always have the best clinical practice here, particularly on newer medicines. As Dr Ridge mentioned, a consultation has just been launched on the interaction between the NHS and NICE. That creates a whole lot of uncertainty for industry, at a time when we have a PPRS in place. The accelerated access review is potentially very good, but it is unclear how it is going to work. At the moment, industry sees a number of different initiatives, some of which it is very encouraged by, others of which it feels are slightly piecemeal and working in isolation from each other. From a global company perspective, I think that it leads to the UK being seen as a confusing place to operate.

[Rob Marris]

Q Following up on that, I understood you to say that other jurisdictions do it better, particularly for new medicines. Forgive me if I misunderstood you there. If I did understand you correctly, can you give some indication of what they are doing that we are not doing, which you and your members think would be desirable for the industry and for patients, were we to do it in the United Kingdom?

David Watson: That was exactly the subject covered by the Government’s accelerated access review, so it has identified some of the reasons. One of the specific things we would say that the NHS could look at is that, where medicines are viewed to be very cost-effective, the implementation of the guidance and quick access for patients to those medicines should be a priority. Quite often, we see medicines that are cost-effective and affordable, but are still not being taken up. I think that is a real concern for everybody.

Health Service Medical Supplies (Costs) Bill

Debate between Justin Madders and Rob Marris

2nd reading: House of Commons & Programme motion: House of Commons
Monday 24th October 2016 Commons Chamber

[Justin Madders]

I agree that it is important that we keep the dialogue open with industry. We are proud of what the pharmaceutical industry can deliver for this country. It is a world leader and we certainly do not want to throw the baby out with the bathwater.

The Government will be aware that concern has been expressed by the medical technology sector that medical supplies are to be brought within the scope of a regime designed ostensibly to tackle a problem in the pharmaceutical industry. The medical technology sector has expressed concern that the Bill’s measures will put additional burdens on that sector and could lead to higher costs overall for the NHS. We welcome the assurances given by the Secretary of State today that the 99% of businesses in this industry that are small or medium-sized will not be unduly troubled by onerous additional reporting requirements. We hope to discuss that in further detail.

The former Minister for Life Sciences reported in February 2016 that the estimated income in England from PPRS payments in 2016-17 would be £518 million. That is considerably less than the amount received in 2015, at a time when the overall drugs bill is increasing, so that tells us that the scheme is not going according to plan. The Government have stated that the measures would save the health service around £90 million a year, so let us consider what has been going on and whether this Bill can address the issues that have arisen.

One of the benefits we have heard about is that the Bill will help to close the loophole that I referred to earlier which has led to extortionate prices being charged for a number of generic medicines. This occurs, as we heard, when a small number of companies purchase off-patent drugs for which there are no competitor products or there is a dominant supplier. They then remove the brand name, which takes the drugs out of the current pricing controls, allowing the companies to hike up the costs by many hundreds or even thousands of per cent. It is clear that some of these companies have made this strategy a key part of their business model.

In the past few months we have seen this House expose some of the worst excesses of capitalism, from Mike Ashley and his employment practices at Sports Direct, to Philip Green, but there should be a special category of obloquy for those who make themselves extremely wealthy by using loopholes in the law to prey on the sick and vulnerable and to extract obscene profits from our health service. An investigation in The Times highlighted how a small number of companies including Amdipharm, Mercury, Auden Mckenzie and Atnahs raised the cost of medicines by £262 million a year through this practice.

When a US pharmaceutical company hiked the price of HIV medication, people across the world were united in their condemnation, but it is less well known that at the same time the price of over 200 medicines more than doubled in this country, with 32 rising by more than 1,000% and in one case, as we heard, an unbelievable increase of 12,500%. An indication of how central to the business plan of some companies this practice has become can be found just by looking at their websites. The company Amdipharm boasts that it was sold to a private equity company for £367 million and talks of acquiring and commercialising niche generic medicines. Another of these companies, Concordia International, which now owns both Amdipharm and Mercury, is quite open about the fact that it

“specializes in the acquisition, licensing and development of off-patent prescription medicines, which may be niche, hard-to-make products.”

This may sound like a noble pursuit, but we know that it can in fact be code for establishing and then abusing a dominant market position to the detriment of vulnerable patients and the taxpayer.

[Rob Marris]

My hon. Friend speaks of the abuse of a dominant market position, and this Bill extends the powers of the Secretary of State effectively to confiscate profits, rather than acting through taxation. Does my hon. Friend agree that the same approach may be worth considering in the case of a company such as Google? It has 85% of the world mobile phone market for Android operating systems, and people use Google for 85% of the searches carried out in the United Kingdom. That is a dominant market position and there are questions about the tax paid by Google. Perhaps profit confiscation might be considered.

[Justin Madders]

My hon. Friend tempts me a little way outside my brief. I note, though, that our health service is entering into partnerships with Google, so I hope that questions are being asked by Ministers about the taxation arrangements.

We know that the vast majority of the generics sector is well controlled by competition and delivers value for money to the taxpayer, and we welcome the extension of pricing controls where competition has failed. Is the Minister confident, however, that the steps taken in the Bill are adequate? We have seen, as my hon. Friend the Member for Wolverhampton South West mentioned, how adept international companies can be at moving figures around to avoid taxation, and we clearly want to ensure that the system that we develop is not vulnerable to the gaming that we have seen elsewhere. I do not think for a minute that given the vast sums of money at stake, the companies will just shrug their shoulders and take the hit if they can avoid it.

I was more than a little concerned when I read a section about this Bill in a Concordia investor presentation, which said that in the past the Department of Health

“would seek informal negotiations with manufacturers where it believed there were pricing issues. We believe this step will remain.”

The notion of informal talks with officials brings up uncomfortable memories of the sweetheart deals between multinationals and Her Majesty’s Revenue and Customs. Although I am happy for chains of communication to be open with such companies, can the Minister reassure us that in all cases prices will be regulated through a transparent, formal process and not through behind-the-scenes talks?