Health Service Medical Supplies (Costs) Bill

Lord O'Shaughnessy Excerpts

Wednesday 5th April 2017 Lords Chamber

Moved by

[Lord O'Shaughnessy]

That this House do not insist on its Amendment 3 to which the Commons have disagreed for their Reason 3A.

Commons Reason

3A: Because it would not always be appropriate to use the powers conferred on the Secretary of State to control the price of medicines and other medical supplies to promote and support the growth of the life sciences sector, and those powers cannot be exercised to ensure that patients have access to medicines and treatments.

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

My Lords, before I address the specifics of the Motion I would like to remind the House of the wider policy context in which this Bill sits. In their approach to medicines and the life sciences industry, the Government have three objectives: to make sure that patients have access to the most effective treatments; to secure value for money for the NHS and for the taxpayer; and to encourage innovations that save lives. That is the overall role of government and, indeed, these are the three objectives that I have to balance in my ministerial portfolio.

We must remember that the Bill is about only that middle objective: securing value for money. It is not the appropriate vehicle for fulfilling the other objectives that government has in this area, as important as they are. That is why we have tabled Motion A and oppose the amendment put forward by the noble Lord, Lord Warner. I do not downplay the importance of patient access to innovative medicines or the importance of a strong life sciences industry in this country—quite the opposite—but achieving these objectives is best done through other means, and I will return to this point a little later.

As noble Lords on all sides of the House have agreed, the Bill plays a vital role in delivering better value for money for the NHS and for taxpayers. NHS spending on medicines is second only to spending on staffing costs, with a spend of over £15 billion during 2015-16. In 2015-16, total spend on medicines grew by 7%, more than twice the growth rate of the overall NHS budget. The Bill helps us to tackle some particular issues which have contributed to this rising spending. It will allow us to align our statutory scheme for the control of prices of branded medicines more closely with our voluntary scheme, it gives us stronger powers to set the prices of unbranded generic medicines if companies charge unwarranted prices in the absence of competition, and it allows us to secure better information with which to operate our pricing schemes, reimburse community pharmacies and make sure that the supply chain is delivering good value for money.

As a result of close and welcome scrutiny by your Lordships, significant improvements have been made to the Bill and 23 government amendments have been proposed. I am grateful to the work of all noble Lords who contributed to those changes. That work has been acknowledged by Members of the other place, who accepted all the amendments put to them, with the exception of Amendment 3, to which we return today.

While the Bill represents an important part of our strategy to deliver value for money, we are engaged in a substantial and transformative programme of work to support the life sciences and improve access to medicines. Following the publication of the industrial strategy Green Paper in January, we are working with industry and the NHS to develop a new strategy for the long-term success of life sciences in the UK. This work is being led by Professor Sir John Bell, and its aim is for the UK to be the global home of clinical research and medical innovation, with huge benefits to the UK economy and NHS patients.

I expect the life sciences industrial strategy to be published by late spring, to be followed by discussions on an ambitious sector deal that we aim to conclude this summer. The emerging strategy is focusing on six pillars: science; growth; skills; regulation; digital and data; and NHS uptake. I want to reflect for a moment on these themes.

On the science base, the UK is a world leader in this area, and the Government are supporting it by investing more than £1 billion a year in health and care research through the National Institute for Health Research, including 20 new biomedical research centres and 23 clinical research facilities for experimental medicine, to help to speed up the translation of scientific advances for the benefit of patients. The 2016 Autumn Statement announced £4 billion additional investment in R&D, specifically targeting industry-academia collaboration, and we expect the life sciences industry to be a substantial beneficiary.

On growth, this Government continue to support innovative businesses through our highly competitive taxation regime, including measures such as the patent box and R&D tax credits. The recent Budget contained a welcome announcement of investment in a new wave of advanced manufacturing centres to support the development of cell and gene therapies. This determined action is reaping rewards. The UK has one of the strongest life sciences industries in the world, generating turnover of more than £60 billion each year. Indeed, it is our most productive industry.

On skills, we know that attracting the most talented individuals to our life sciences industry is essential. As the Prime Minister has made clear, the UK will always remain open to those with the skills, drive and expertise to support our economic growth. The Budget announced that more than £100 million will be invested in global research talent over the next four years to attract the brightest minds to the UK.

The future of medicine regulation after Brexit is a critical issue. Any future regulatory model will need to ensure that patients have timely access to safe, effective medicines and support a flourishing life sciences sector. I am having extensive discussions with the industry and other stakeholders, and our strong desire is to form a constructive new partnership with the EU on medicine licensing.

On digital and data, technology is already helping to improve patient care, and we are investing £4.2 billion over the spending review period in digital and data transformation, including areas such as electronic patient records, apps and wearable devices, telehealth and assistive technologies. Furthermore, the NHS has a unique opportunity to work with the life sciences industry to use data to patients’ benefit, and we expect the life sciences strategy to provide proposals that will accelerate clinical trials and the uptake of medical innovations.

I reiterate our commitment to improving patient access to new medicines and technologies, a subject that we have spoken about many times in the process of going through the Bill. It is a critical objective of our life sciences strategy. The early access to medicines scheme, introduced in 2014, provides a platform from which to provide patients with innovative medicines prior to licensing. The Cancer Drugs Fund has allowed over 100,000 patients to access innovative, life-saving medicines. NHS England’s test beds programme, launched last year, provides an opportunity to link new technologies with new ways of delivering healthcare, and its commissioning through evaluation programme provides an opportunity for promising but experimental treatments to be brought forward for patient use.

There is clear evidence that those actions are having a positive impact. The latest innovation scorecard, published in January, showed that, of the 77 medicines that are measured, over half saw growth in uptake of over 10% year on year. Still, there is of course more to do. That is why the Government will be responding shortly to the recommendations of the accelerated access review, with the aim of getting transformative products to patients who need them up to four years earlier than we do now.

In discussing patient access, I am aware of concerns about changes that NHS England and the National Institute for Health and Care Excellence are making to the way in which drugs and other treatments are assessed and adopted in the NHS. I must remind noble Lords that these changes have been made in response to the recommendations of the Public Accounts Committee, which stated that NICE should,

“ensure affordability is considered when making decisions”.

I come to the changes themselves. The first is that NICE is introducing a fast-track appraisal process that will bring forward access for NHS patients by around five months to very cost-effective new treatments. In other words, should pharmaceutical companies offer very good value to the NHS in the pricing of their products, we will see faster patient access—a win for patients, a win for the NHS and a win for industry.

Secondly, NICE and NHS England are introducing a budget impact test for new medicines that are expected to cost more than £20 million in any of the first three years after introduction. I want to take this opportunity to address a number of misconceptions about this policy. The budget impact test is not a cap. It does not represent the maximum that the NHS will spend on any individual drug in a given year. The test is simply intended to provide an opportunity for NHS England to enter into commercial negotiations with companies to bring down the price of medicines that have a significant budget impact on the NHS, and in doing so will allow for the kind of flexibilities—for example, commitments around volume—that companies have been asking for. The proposal will affect only around one in five drugs and, while the proposals are intended to improve affordability, they are not intended to create delay. Most negotiations will be concluded quickly and, where agreement is not reached, a managed access scheme will ensure that those whose clinical need is greatest will be prioritised. Patients will continue to have a right to NICE-recommended drugs, as enshrined in the NHS constitution.

Thirdly, the proposals introduce a sliding cost-benefit threshold for very expensive drugs for rare diseases, evaluated through NICE’s highly specialised technologies programme. It will be possible for transformative treatments that offer significant health gains to be approved up to £300,000 per quality adjusted life year, or QALY. That is 10 times greater than NICE’s threshold for treatments considered by its mainstream technology appraisal process. I do not believe, as some have suggested, that the new threshold will prevent medicines being approved via this route. In fact, with increased commercial capacity within NHS England to strike win-win deals, I am very optimistic that patient access will continue for genuinely transformative medicines.

Lastly, let me also be clear that these arrangements apply to new medicines after 1 April. Any suggestion that a patient receiving a medicine approved under the previous arrangements will have their medicine withdrawn due to these changes is wrong.

I turn to the amendments considered in the other place. The Commons rejected the previous amendment proposed by the noble Lord, Lord Warner, a new version of which he has tabled for discussion today. For reasons I have already explained, I do not believe that the Bill is the right vehicle for promoting the life sciences sector or improving patient access: it is only about providing value for money. Furthermore, there are three specific problems with the amendment.

--- Later in debate ---

The Minister says that the Bill is concerned only with value for money and not with patient access and investment in life sciences. However, this is the Bill before us and this is our opportunity to say to the Government that they have got to do something about speeding up access to medicines, not only for patients but in order to strengthen and support a key element in our economy. For that reason, I support the amendment.

[Lord O'Shaughnessy]

My Lords, I am grateful to all noble Lords for the points they have made in the discussion we have just had. I will try to deal with as many of them as I can in my response.

I am afraid that we do not agree with the first point of the noble Lord, Lord Warner, about the change of wording to make it more flexible. Such wording as exists in the current amendment would increase the risk of judicial review. As my noble friend Lord Lansley pointed out, it would impair our ability to crack down on those companies that are abusing the NHS by raising prices in a completely unwarranted way. I cannot believe that this is what noble Lords want.

The noble Lord, Lord Warner, referred to the Bill providing a pausing mechanism. It is important to point out and remind noble Lords that the Bill requires a consultation before the beginning of any new statutory scheme. One of the key amendments that we made—indeed, I accepted proposals from others in Committee and on Report—was to introduce an affirmative resolution on extending price controls into the devices realm. So those consultations and pauses already exist—and they do so in a way that is appropriate to the core purpose of this Bill, which is to control costs.

The noble Baroness, Lady Walmsley, referred to the balance that is being struck. She is quite right that there is a balance to be struck, but that does not mean that the balance needs to be struck in each and every item of government policy. As my noble friend Lord Lansley pointed out, this Bill is not the right vehicle to achieve support for the life sciences and industry and to improve patient access. These aims are achieved through other routes, as I have outlined, and the Government are doing a huge amount of work on them.

I wholeheartedly agree with all noble Lords on the importance of the life sciences sector and of improving patient access. The noble Lord, Lord Hunt, was right to point out that, post Brexit, it will be more important than ever. The noble Baroness, Lady Masham, said that this is not just a macroeconomic point; it is about the lives of humans, often in great suffering, who need to have access to medicines. I thank her for bringing that out. It is precisely why the Government are developing an ambitious strategy and a sector deal; and it is precisely why I have been keen to ensure that the NHS is seen as a partner and beneficiary of that deal. Rather than this being seen as something that is done to it, it has to be a counterparty, as it were. I disagree with the noble Lord, Lord Hunt, because we are seeing improvements in uptake for the reasons that I have outlined.

In the course of dealing with the Bill, while I have had complaints from the life sciences sector about certain things that we have done—I will touch on those in a moment—it is fair to say that I have not received any complaints from the industry that this Bill will affect it negatively. It understands that the Bill is about providing equality between the statutory and voluntary schemes, cracking down on those who seek to abuse the system and making sure that there is proper information to inform the price control schemes that we have.

Looking further ahead, from 2019 onwards we will need to look at the medicine and pricing regulation system in the round—and we will be doing so from a position of being outside the European Union. It is therefore absolutely essential that we have a world-leading price and regulatory environment. I am looking at all aspects of that now and talking to industry and others. As my noble friend Lord Lansley pointed out, it is only right to consider the changes introduced by NICE and NHS England as we look to a comprehensive solution from 2019 onwards.

While we are talking about the outcome of that consultation, I should point out that it was provided in response to the Public Accounts Committee and that there is no threat to the independence of those organisations. I completely agree with the noble Baroness, Lady Finlay, in applauding the reputation that NICE has around the world and the fact that the life sciences industry values getting NICE technology approvals.

The changes being made are consistent with the NHS constitution. I explained in my opening statement how this will work and I have addressed the misconceptions. This is not about delay or reducing uptake, it is about costs, and indeed the changes bring about a variety of positive and welcome benefits to commercial agreements and to a fast-track appraisal process.

The noble Baroness, Lady Finlay, asked what proportion of the growth in the drugs bill has been driven by branded drugs. She will know that that is quite difficult to define because of the issue of what are known as parallel imports. These are branded drugs that are outside the schemes which come in, but of course they make a contribution to the bill. As a country we are one of the best, if not the best, in the OECD in terms of the use of generic drugs, which of course is one way of holding down the bill and creating headroom for innovative drugs. There is a good story to be told about that.

The noble Baroness also mentioned orphan drugs and she is quite right to highlight them. There is the highly specialised technology route. I should also point out that there are routes and specialised commissioning within NHS England, including the commissioning through evaluation programme. These routes have been invented by NHS England to facilitate access to drugs, not to delay it.

To conclude, I want to return to the amendment itself. I should stress to noble Lords that this is not a cost-free amendment and it is not simply a declaratory piece of legislation. It would increase costs to the NHS for drugs for no benefit. No more drugs would be bought and no more people would take them up. Indeed, it would take money away from other care settings. The Government cannot agree with an amendment that would put the NHS at such a disadvantage. I do not believe that it would be in the interests of either patients or the health service. The House of Commons was right to reject the first version of the amendment and this version does not substantively change the intent. I hope and trust that noble Lords will take the same approach in rejecting it, but before that I would like to ask the noble Lord, Lord Warner, on the basis of the arguments that I have made in response to his key points, to withdraw it.

[Lord Warner]

My Lords, this has been an interesting debate and I thank noble Lords for their contributions. I do not interpret this amendment in the same way as the Minister and I am slightly surprised that he thinks there is a happy mood in the industry about all this because that certainly does not square with my contacts. I would also like to draw his attention to a comment made during a pink ribbon conference recently by the oncologist who heads chemotherapy commissioning for NHS England. He was talking about the budget impact test: “That is why we expect the £20 million figure to hit cancer drugs much more than other drugs”. I think that that is quite an interesting revelation which suggests that some of those who are closer to this than perhaps the Minister and me take a different view about how the budget impact test actually works in practice.

The Minister would have had plenty of time, if he had accepted the principle behind the amendment, to negotiate with us a form of wording that would deliver its intent. He has spent his time trying to get us to take it out of the Bill. He has more access to draftspeople than I do. If he had accepted the principle, we could have come up with wording that is more to his taste. Neither he nor his officials have co-operated with that kind of approach. I believe that this amendment as it stands would be of benefit to patients, to UK plc and to the industry. I wish to test the opinion of the House.