National Health Service Commissioning Board (Additional Functions) Regulations 2017

Lord O'Shaughnessy Excerpts

Tuesday 21st February 2017 Grand Committee

Moved by

[Lord O’Shaughnessy]

That the Grand Committee do consider the National Health Service Commissioning Board (Additional Functions) Regulations 2017.

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

My Lords, these regulations will confer on the NHS Commissioning Board, more commonly known as NHS England, new functions covering the work currently undertaken by the Department of Health’s Commercial Medicines Unit.

The principal function of the Commercial Medicines Unit is to procure, conclude and manage procurement framework agreements with suppliers of services, drugs, medicines or other substances or products. These framework agreements are for the use, in the main, of NHS trusts and NHS foundation trusts. In securing competitive prices for these products and services, these framework agreements enable considerable savings to be made by the NHS.

The final report of the Carter review, on hospital productivity, suggested that the Commercial Medicines Unit might be best located within the NHS. After due consideration, the Department of Health and NHS England came to the view that the potential benefits could be realised if the majority of the unit’s work transferred to NHS England. The NHS Act 2006 does not provide NHS England with the necessary powers to undertake this work, so regulations are required to enable this transfer.

The regulations before us confer three additional functions on NHS England. First, they confer a power to conclude and manage framework agreements, which will enable NHS England to take on the functions from the Commercial Medicines Unit. Secondly, they impose a duty to provide assistance to the Secretary of State in relation to the exercise of the first function. This will ensure that the important contribution made by the Commercial Medicines Unit to other health priorities continues. Thirdly, they impose a duty to consult and collaborate with the registered pharmacists of every NHS trust and NHS foundation trust in relation to the exercise of the first function. These stakeholders play a vital role in the work of the Commercial Medicines Unit, and this duty will ensure that this role continues under NHS England. The Government consider that these regulations will bring together related procurement and commissioning functions within NHS England, which will enable the sharing of expertise and support the realisation of various benefits, including better use of NHS resources. I commend the regulations to the Committee.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very grateful to the Minister for his comprehensive introduction to the regulations before us this afternoon. I was interested when in his opening remarks he referred to the NHS Commissioning Board, more commonly known as NHS England. What struck me is that, when challenged on NHS funding, the Minister and his predecessor have been fond of saying that the NHS got the extra money that it had asked for. But what he really meant to say is that the NHS Commissioning Board put forward a five-year forward plan which talked about a £30 billion gap between the resource needed and the resource that was likely to be got, on the projections then published. We know that it was then told by the Treasury how much it could actually ask for. When we come to debate the NHS and its funding, it would give a much better reflection of the actual position if the Minister were to say that the figure which the Government have produced is what the NHS Commissioning Board was told to put into the five-year forward view.

I was puzzled by the way in which NHS England changed the name of its organisation to be that. Much of the two years we spent debating the 2012 Act was around the work of the NHS Commissioning Board. I was a little surprised that a quango took it upon itself simply to change its name and give itself the kind of title to which, statutorily, it clearly had no right—nor is it in its remit. It is interesting that when it comes to regulations such as these, which we have frequently, they have to relate to the NHS Commissioning Board. I suspect that very few people know what it is. At the end of the day, either the Government should regularise this by legislating to call NHS England by that name or it should revert to being the NHS Commissioning Board. As a matter of principle and practice, it is not a good idea to use a name that has not been given in legislation.

These are interesting regulations because, in a way, they take us back to our debates in relation to the Health Service Medical Supplies (Costs) Bill. Much of those debates have been on the cost of medicines, and the operation of the PPRS scheme and the statutory scheme alongside it. I guess that the question I would put to the Minister is: since negotiations with the pharmaceutical industry currently lie principally with the Department of Health, what implications does the transfer of this unit to NHS England have for the department’s own capacity to negotiate agreements in future? Does it essentially mean that NHS England will take over those negotiations?

I have obviously seen the Explanatory Memorandum and the reference back to the Carter report. I understand the reasons why my noble friend Lord Carter, thought that the CMU would be best placed within NHS England. But does this transfer equate at all to the recommendation in the Accelerated Access Review, which called for the creation of a strategic commercial unit to be established within NHS England? Would I be right in thinking that the transfer of the CMU is, in essence, the strategic commercial unit that the accelerated access review called for? What it actually said is that it wanted an SCU to,

“have the capacity and capability to consider a range of flexible pricing models as part of a commercial dialogue with innovators”,

and envisaged:

“Win-win scenarios, where innovators benefit from earlier, and, in some cases, guaranteed market access and the NHS and patients benefit from better value through a reduced price”.


In a sense, that takes us back to our debates during the passage of the Bill about whether we can develop more of a win-win relationship with innovators so that patients get access to innovation at a much earlier stage—but also, because the NHS is moving from a culture that is very often opposed to the introduction of innovation to one that embraces innovation, it therefore gets the advantage of better value for money in the end. If that is not to be the case, does the Minister think that the CMU has the capacity, capability and expertise to agree new and innovative commercial arrangements with companies? Will those processes support improved patient access to medicines and will NHS England consult on any new methodology or guides that will support the commercial unit role? How will the reconstituted CMU within the NHS interact with NICE and the adoption of NICE-approved medicines? If it has an active role, will that affect a patient’s right to NICE-approved medicines as covered by the NHS constitution?

Clearly, the experience of companies dealing with NHS England at the moment is that it is inflexible and is interested not in quality and outcome but simply in price. I have had many representations to that effect. My understanding is that NHS England simply has not got the capacity to negotiate these rather more innovative approaches to innovation, adoption and value for money. At heart, the question is this: will the transfer of the CMU to NHS England enhance the capacity of that organisation to move from a crude bottom-line approach to purchasing to one which looks at best value, innovation and adoption?

Apart from that, I will be interested in the Minister’s responses. As this is about procurement, I should remind the Committee of my presidency of the Health Care Supply Association and of GS1, the bar-coding association.

[Lord O'Shaughnessy]

I am grateful to the noble Lord for his questioning which was, as usual, precise. I will attempt to respond to his questions as best I can. I shall start where he started. I do not think I can take any blame for any confusion that may be caused around rebranding the NHS Commissioning Board Authority as NHS England. It clearly has a commissioning role, and in that commissioning role there is clearly a good fit with procurement. That is what the noble Lord, Lord Carter, concluded. Bringing together specialised commissioning, general procurement capacity and the role of the CMU was a good fit and it might deliver better value for money for the NHS, which I know the noble Lord wants as much as I do, so we can clear that out of the way.

The noble Lord’s big question was about enhancing the capacity of NHS England to become more sophisticated. In one sense, he is getting slightly ahead of things because the regulations do not transfer the entirety of the functionality. Some of the functionality will continue to be in the department as it pertains to public health responsibilities—vaccination, for example, or the procurement of emergency treatments. However, those that are to do with the ordinary activities of the health service are moving over. From that point of view, therefore, there is no change: the framework agreements transfer and people transfer. It is simply transferring a unit from one place to another, but clearly with the idea that there will be an enhancement in everyday activities as a result.

The noble Lord is quite right to refer to the issue of access—we talked about that a lot during the Bill’s passage—and it may well be that in future, when we are thinking about what comes after the PPRS, the kind of things that he is talking about would be within the remit. It would be wrong for me to comment on that now, not least because the PPRS commits us to certain activities and behaviours on simplicity of pricing discounts and so on, and clearly the kinds of things he is talking about—the more sophisticated value-based pricing models—do not currently fall within that scope. I am clear, however, that the Government and the department will continue to take a lead in any future discussions about replacements that leverage capacity across the system.

In answer to a couple of the noble Lord’s other questions, there is no particular impact on NICE from these regulations. We know that within the PPRS there is a commitment to fund after three months: that is part of the agreement. I hope, therefore, that he is reassured about that. To repeat, this is, in essence, quite a simple measure that takes a set of responsibilities from one place to another with the aim of providing greater efficiency—by procuring framework agreements, and so on. That is separate, in a way, to what we have been discussing in the Bill, but it may be that in future the transfer and enhancement of that capacity could set the tone for the kind of negotiations that he would like. However, I hope that he will understand that it would not be right for me to make any commitment on that at the moment, bearing in mind the relationships that we have. If he is satisfied with those responses, I commend the order.

Motion agreed.