Branded Health Service Medicines (Costs) (Amendment) Regulations 2023

Lord Lansley Excerpts

Thursday 25th May 2023 Lords Chamber

I appeal to the Minister. We have had a number of debates in the past and, frankly, the line in the IA is the line the department has used for 20 years. The noble Lord, Lord Warner and I, are aware of the tensions within the Department of Health in managing the NHS budget on the one hand and, for much of that time, sponsoring the industry. I suspect that the noble Lord, Lord Lansley, faced similar issues. We are at a critical stage. The Minister will know that the UK economy is fragile. We desperately need to grow the life sciences sector, but the action the Government seem to be taking with the industry is guaranteed to ensure that this will not happen. I very much hope that the Government will listen and that this will inform their negotiations with industry on the new VPAS. I beg to move.

[Lord Lansley (Con)]

My Lords, I intervene in this short debate just to make a number of points that I feel strongly about and have done for quite a long time, because now is an important moment, when the Government are entering the process of negotiating the voluntary price access scheme starting at the beginning of next year.

I welcome the fact that the noble Lord, Lord Hunt of Kings Heath, has sought and secured this debate: it is really important. I do not disagree with any of the points he made, and he and I know that in past debates, together with the noble Lord, Lord Warner, we have often made these points—not least when we were debating the legislation which has given the Government the powers to secure whatever pricing outcome they are looking for, frankly. We do not actually have any pharmaceutical pricing freedom in this country; we effectively have government control of it.

The purpose of the regulations is not really in debate: to ensure that the statutory scheme and voluntary scheme align. We have been in a position where they did not align when we had the Gilead example, and that is not a place we want to go back to; we want to ensure that the schemes align, if we need two such schemes at all. That is my starting point. I have no registrable interests, although as a former Secretary of State I was very much involved in these issues, and as a Member of Parliament for South Cambridgeshire I probably had, in my time in the other place, a greater interest directly in the pharmaceutical industry, the life sciences sector and the R&D activity in this country than did Members for any other constituency.

I am sure the noble Lord, Lord Hunt of Kings Heath, is right that there is a relationship at this point between the scheme’s rebate level and the willingness or otherwise of internationally mobile investment and international pharmaceutical boards to consider the United Kingdom as a location for investment. The impact assessment does not sufficiently recognise that truth. It more or less works on the basis that this was the result of the old scheme, it is all for a few months and will all be replaced next year. I fear that is not how the world works. There will be discussions at international board level where people say, “We used to think the United Kingdom was the best place in Europe”—arguably, the best place in the world—“to conduct pharmaceutical research, but at the moment we are not sure that is the case because, if we were to launch in the United Kingdom, the level of pricing rebate being imposed on us makes the risks associated too great”.

From my point of view, clearly this can be remedied with a VPAS next year which re-establishes, from the industry’s point of view, a more predictable level of rebate. I have to say that the VPAS, the statutory scheme, is based on a serious fallacy that there is such a thing within the healthcare industry of a fixed drugs budget. I know of no healthcare system that thinks that is a logical way of approaching it. The drugs budget must be part of a health budget. We have budgets in order to deliver health outcomes. We do not have a drugs budget in order to secure a health outcome, we have a total health budget. The idea that the Government should intervene in order specifically to confine and restrict the amount that we spend on medicines in the healthcare system is wrong.

We should try to get away from that. I am not saying that we should not try to ensure that we get the best possible value for money for the medicines that we buy. The NHS in this country is effectively a monopsony, so we have every possibility of having extremely competitive medicine prices, but frankly we are being, as my mother would have said, penny wise and pound foolish. If we save a bit on NHS purchasing and parade to the rest of the world that we have the lowest medicine prices, the inevitable result—which we have seen—is a doubling of the number of pharmaceutical companies withdrawing their products from NICE evaluations. That is not a place where we want to be. We want those evaluations to take place.

I am going to finish with this thought. Even at this stage, I hope they are looking at this not only in the pharmaceutical companies, not only in ABPI but inside the department and inside the Treasury. I think all of our experience is that at the end of the day these things were determined more in the Treasury and No. 10 than they were in the Department of Health. I did not actually see a PPRS negotiation completed in my time, but I know perfectly well that is what happens. When they read this, I hope they will say: “Why don’t we move away from this kind of system?” The idea of a rate of return regulation as a mechanism for industry control is so out of date, it is practically neolithic. We have the benefit in this country of the National Institute for Health and Care Excellence which has acknowledged expertise in health technology assessment. It should make assessments.

We have in NHS England an increased capacity and propensity to negotiate medicines prices regardless of what NICE says about evaluations anyway. Let us put those two together—we have argued this many times—and enter into negotiations on medicines pricing with the industry. Wherever we can, we should operate on the basis of a market. We have a market in generics and biosimilars. We are close to market on branded generics and biosimilars, but the branded medicines are inside this scheme. They should not be inside it; they should be the subject of negotiated pricing in what is effectively a market context. They should have to demonstrate where there is a benefit to a branded generic or a branded biosimilar relative to one which is not branded but is simply generic.

But for those where there is exclusivity, clearly there is going to be a negotiated price, and it is in our interests for that negotiation to take account not only of the incremental cost effectiveness, not only the quali-benefit, as it were, but also the societal benefits and the innovation benefit of new medicines. Let us say for the sake of argument that in the course of the next five years we were suddenly to find that we had a blockbuster new medicine that gave us immense advantages in terms of delaying the onset of dementia. It is not inconceivable that that could happen. As things stand, the scheme is designed for the pharmaceutical industry to derive no benefit from the fact that it has brought forward a new medicine of that scale and advantage. That cannot be right. If, in the context of healthcare, medicines occupy a stronger position, they should secure greater funding. If, relative to them, medicines do not do the job, they should have lesser funding, but this should be a healthcare and a health budget calculation, not a rate-of-return prior regulation. I hope that, even at this stage, the Government and the industry will think of whether there might be a better way of conducting negotiations on medicines pricing in this country.