Branded Health Service Medicines (Costs) Regulations 2018

Lord O'Shaughnessy Excerpts

Wednesday 20th June 2018 Lords Chamber

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

My Lords, I begin by thanking the noble Lord, Lord Hunt of Kings Heath, for tabling the Motion on this topic, and I thank all noble Lords who have contributed for their, as ever, wise and incisive interventions.

As we have discussed this evening, there are two separate but intertwined issues here. The first is the appropriate treatment and associated clinical guidance from NHS England to CCGs about the use of the two drugs under discussion in the treatment of hypothyroidism. The second is the powers we have and the actions we take in clamping down on unjustified high prices in generics. I will deal with them in that order, as well as answering other questions that noble Lords have posed.

As we have heard in very evocative descriptions from my noble friend Lord Borwick and the noble Baroness, Lady Jolly, hypothyroidism can be a very debilitating condition in some perhaps slightly unexpected ways, but it can affect every area of someone’s life. One of the principles on which the NHS is founded is that, if someone has a clinical need for a medicine, it is right, provided that it can be done cost-effectively, that they get the most appropriate medicine for their condition.

The drug levothyroxine, T4, is beneficial for the majority of patients with hypothyroidism, as we have heard, but it does not treat the condition in all patients. For some, the alternative drug, liothyronine, commonly known as T3, which is the subject of this evening’s debate, is a treatment which better alleviates their symptoms. NHS England has set out that liothyronine should be prescribed for patients only where levothyroxine does not alleviate symptoms. Following its recent consultations, NHS England guidance states that, where clinically appropriate, liothyronine can be prescribed but its use should be initiated by a consultant endocrinologist in the NHS.

My noble friend Lord Borwick shared the case of Maureen Elliott, and I would be very grateful to him if he could give me details of her case. The care and medicines that have been provided to her do not appear to be in line with NHS England’s guidelines, and that obviously raises some very serious concerns. As I have said, patients for whom liothyronine is deemed clinically appropriate should receive it on the NHS and should not be asked to purchase it abroad. I ask my noble friend and indeed all noble Lords who have contributed to this debate to share details of the case. Tonight, I will commit to pursuing further with NHS England ways in which they can clarify to CCGs the guidelines setting out the circumstances under which liothyronine should be prescribed, including looking at whether greater clarity on the criteria for appropriate patient usage is merited. I will also inform the House—through a letter to the noble Lord, Lord Hunt, a copy of which I will place in the Library—about the progress that we are making on the regional medicines optimisation committee.

I want to touch on one other area that my noble friend Lord Borwick described, and that is the poor understanding of that group of the population who are not able to turn T4 into T3. He mentioned that there might be a genetic factor and I would be interested in pursuing that further. Clearly, some very interesting work on rare diseases is going on in the NHS at the moment through the 100,000 Genomes Project. This might be a qualifying illness where the conversion does not take place naturally, and that might be something that we can pursue. I will take that up with him separately.

As the noble Lord, Lord Hunt, freely admitted, the Motion expresses regret that the Branded Health Service Medicines (Costs) Regulations 2018 do not propose any action in respect of the high cost charged for liothyronine. However, he also knows that this relates to the new statutory scheme to regulate the cost of branded medicines, so that is not the vehicle by which we would act in generics. Nevertheless, it provides a good opportunity to discuss the actions that we are taking, not just in regard to this medicine but more broadly, to clamp down on excessive prices for generic medicines.

For unbranded generic medicines, the Government do not set selling prices. Instead, we rely on competition between suppliers to keep prices down. Several noble Lords expressed concern about the prices that we pay for medicines, but I should stress that the available evidence demonstrates that in general our system works well. Recent studies by the OECD and Milbank Quarterly have shown that the UK has among the very lowest prices for generic medicines as a group in the developed world. However, there are occasions when there are only one or two suppliers, so there is no effective competition.

As several noble Lords set out, for a long time Concordia was the sole supplier of liothyronine. That is why the department took action in the summer of 2016, asking the Competition and Markets Authority to investigate this product. The CMA has very extensive powers to investigate companies suspected of abusing a dominant position in the market, and my department has been supporting the CMA in its investigation. As a result of this investigation, the CMA provisionally found that the manufacturer abused its dominant position and overcharged the NHS by millions of pounds for liothyronine tablets. The CMA also found that, although the price of liothyronine went up by almost 6,000%, production costs remained broadly stable.

I should stress that the findings are provisional at this stage. There has been no definitive decision that there has been a breach of competition law. The CMA is carefully considering representations from the company before deciding whether the law has been broken. In response to the question from the noble Lord, Lord Turnberg, I hope that the CMA’s decision will be issued this year. If it finds that the company has infringed competition law, it can issue it with a penalty of up to 10% of the company’s global turnover and direct it to lower the price. Noble Lords should be assured that on top of any CMA penalty, where companies have breached competition law we will also seek damages and invest that money back into the NHS.

In addition to the CMA’s investigatory work, the department, since last year, now has stronger powers to set the prices of generic medicines following the Health Service Medical Supplies (Costs) Act 2017, which we discussed at about this time last year. We can now also set the prices of generic medicines from companies that are members of the voluntary PPRS. Concordia is in the PPRS, so it is important to say in response to the question posed by the noble Lord, Lord Hunt, and my noble friend Lord Borwick that before the 2017 Act we would not have been able to act on the price, even if we had wanted to, without referring it to the CMA.

The department has also taken new powers to require pharmaceutical companies to disclose information about the sales values and costs of medicines in order to support the department’s powers to set selling prices. These are set out in the Health Service Products (Provision and Disclosure of Information) Regulations 2018, which come into force on 1 July.

Several noble Lords asked why we are not setting a selling price for liothyronine. I also note that my noble friend Lord Borwick said that Concordia had told him that the department had agreed the price of liothyronine. However, following investigations in the department, I can confirm that that is not the case.

On the face of it, I understand the attractiveness of price setting in this case but at this point in time, when the CMA is carrying out an investigation—and notwithstanding the discussion we had earlier—it is the right approach for that to continue, while also taking steps to make sure that appropriate prescribing behaviour goes on within the NHS. Therefore, in this case I believe it is appropriate to separate the two issues. I have confidence in the CMA’s work on this case and I want it to conclude its investigation and come to the judgment that it sees fit.

However, this is not the only tool in our box. We are actively monitoring the price increases of other generic medicines and, where they are not already under investigation by the CMA—and once our information requirements are in place—we will open discussions with some companies shortly, although noble Lords will appreciate that it would be wrong to disclose which companies or which drugs are involved at this stage. Where we believe that a lower price is justified, we may consider imposing a price if the company is not willing to lower it voluntarily. I can confirm to the House that we have the powers to do so and are prepared to act if necessary.

However, we need to act carefully. Typically, where there is little or no competition for an off-patent or generic medicine, this is because, as has been stated, it is a relatively low-volume product. As a result, manufacturers do not benefit from economies of scale and, if they think the price is too low, they may withdraw their product from the market. This would mean that patients would not have access to their medicines at all, which could obviously have detrimental impacts. We have seen that happen in other European countries.

However, in the case of liothyronine, I am pleased to tell the House that there are now multiple marketing authorisations in the UK for the drug. Increased competition traditionally leads to more resilient supply chains and lower prices. We will be watching carefully to see whether that happens in this case and are prepared to act if it does not.

In response to a specific question from my noble friend Lord Borwick about whether regulatory requirements from the MHRA were the cause of the price increase, I know that Concordia suggested this and we have discussed it with the MHRA. However, it is unlikely that that could have led to a price increase of 6,000%. Liothyronine is an old product and when Concordia applied for a marketing authorisation, it was only right that the MHRA required compliance with the minimum standard. But as I said, I do not believe that is a justification for that scale of increase.

My noble friend also talked about imports from other countries. Medicines licensed in the UK and other member states can be parallel imported as long as the imported product has no therapeutic difference from the UK product. As has been stated in this case, small differences in the formulation can significantly change the therapeutic effect on the patient. That is not to say that imported products are unsafe, but if a patient changes to a different source of the product their symptoms may not be controlled to the same extent, which only emphasises how important it is to get the right medication for the right patients through the NHS.

My noble friend Lord Lucas made some observations about the current operation of the PPRS. It undoubtedly has some flaws, which we will attempt to rectify as we negotiate a new one. In 2016-17, the PPRS paid £1.7 billion back to the NHS from drugs companies. I should also point out that it does not apply to unbranded generics, of which liothyronine is one, but it obviously applies to the vast bulk of medicines bought by the NHS. He suggested tendering for generics, which the Commercial Medicines Unit and NHS England are starting to do. It is also one of the options under consideration for getting the prices of specials down, which, again, was something we made progress on in discussions on the Bill last year.

My noble friend made an interesting and radical proposal for a state generics manufacturer. Intermountain Healthcare, which serves the Mormon community in Utah, is setting up a not-for-profit generics manufacturer. I have asked the department to get in touch with it, to understand the work it is doing. It might be possible through a university but I am not sure that state aid rules would allow us to set up a state-owned generics manufacturer. Once we have left the European Union, however, perhaps that could be one of the Brexit dividends.

The noble Baroness, Lady Jolly, asked specifically about the cost of other free medicines. Prescription entitlements were last reviewed under the last Labour Government, who looked at the cost of making all drugs free, which would be about £500 million. As the noble Baroness knows, when the coalition Government came in we decided that that would not be the right use of money and there is no intention to review that at this point. I am sorry to disappoint the noble Baroness.

The noble Baroness asked specific questions about the regulations themselves, which I think was the first time they were discussed this evening. I am grateful to her for that. I will need to write to her on some of the specifics but the review will be completed on 1 April 2019, so I can provide her with that reassurance. We have calculated the QALY benefits of specifying prices in the usual way and I am happy to write to the noble Baroness on the technical aspects of that.

She also asked about deciding on temporary pricing. As I have hinted, this is something we are starting to test. We are taking on these powers and we need to move cautiously. Ideally, we do not want to exercise them at all but if we do, we will do so in consultation with industry bodies.

I hope I have answered noble Lords’ questions. I thank the noble Lord, Lord Hunt, for using the regulations to highlight the challenges we face in prescribing the right medicines for hypothyroidism and in making sure that we have the right powers to ensure that the NHS is not being ripped off by unscrupulous providers of any kind of medicine. In the commitments I have given to pursue this issue, I hope I have satisfied the noble Lord, Lord Hunt, and other noble Lords of the seriousness with which we take this issue. On that basis, I hope he feels able to withdraw his Motion tonight.