Health Service Medical Supplies (Costs) Bill

Philip Dunne Excerpts

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

[The Minister of State, Department of Health (Mr Philip Dunne)]

What a great pleasure it is, Mr Deputy Speaker, to stand before you after this important debate, with a little time in which to satisfy as many Members as I can, while recognising that the Committee stage will begin shortly and we shall then have an opportunity to discuss points with which I cannot deal today. I thank everyone who has taken part in the debate. We have heard a number of excellent contributions, some of which showed a surprising knowledge of the intricacies of pharmaceutical pricing but were none the less very welcome.

The Bill deals with a treasured national institution, our national health service, and with the need to secure the best possible value for the taxpayer. Medicines represent the second largest cost to the NHS, after staff, and it is important that we do not pay over the odds. The level of interest and the quality of the contributions that we have heard today have shown how important that is to all Members. I find it refreshing that a debate involving the NHS should feature the degree of consensus that has erupted across the House today. I am led to believe that—as has been pointed out by other Members—this is a relatively unusual occurrence, so I shall enjoy it for as long as I can.

The debate reinforces the principles of securing the best possible value for the NHS, making decisions on the basis of good-quality information, and supporting this country’s innovative pharmaceutical industry, to which several Members have referred. Those are principles on which we can all agree. However, the debate has raised a number of other issues, some of which I hope to clarify for the benefit of Members who have commented on them. In one of her closing comments, the hon. Member for Worsley and Eccles South (Barbara Keeley) sought to link last week’s announcements about community pharmacy funding with the Bill. I can reassure her that there is no link whatsoever between the Bill’s provisions on information collection and the announcement about decisions on community pharmacy funding. The funding changes will come into effect in December and are not reliant on any of the provisions in the Bill, and the provisions in the Bill will not change those decisions.

[Barbara Keeley]

Perhaps I was not clear enough, but I was not making that point. I was making the point that the cuts imposed by the Government will mean that some community pharmacies—the smaller ones; the independent ones—will not have the necessary staff. If the Government are imposing a new information-gathering requirement, who will carry out that task? As I said, there may be staff cuts amounting to between £60,000 and £80,000, and people will simply not be able to absorb a new requirement.

[Mr Dunne]

Just to reassure the hon. Lady, I can tell her that the establishment cost for each pharmacy is currently £25,000, and there will be a reduction in that cost rather than a much larger cost. She must be referring to companies that have several establishments, rather than to individual ones. I will touch on the points that she has raised about information gathering in a moment.

We have heard a number of allegations during the debate, starting with those made by the hon. Member for Ellesmere Port and Neston (Justin Madders), who I am sure will be joining us shortly, that the Conservative party appears to have broken out in a rash of Corbynism. I can assure the hon. Gentleman categorically that that is not the case. What we are seeking to do through the Bill is address points, which have been made by hon. Members on both sides of the House, about the potential for exploitative pricing, particularly of unbranded generics that are of low volume, in circumstances where there is no competition from an alternative supplier in the market. I believe that there is considerable agreement on that across the House.

I welcome the support for the Bill from the Labour Front Bench, from the Front Bench of the Scottish National party and from the Liberal Democrat spokesman, the right hon. Member for North Norfolk (Norman Lamb). They all support the principles behind the Bill. I look forward to what I hope will be a rapid conclusion to proceedings on this short Bill in Committee. Doubtless hon. Members will be raising important points in Committee, but I am sure that we will continue to have constructive contributions throughout.

The hon. Member for Ellesmere Port and Neston mentioned difficulties of access and funding for new medicines. These points were also raised by the hon. Member for Central Ayrshire (Dr Whitford). The NHS is investing in innovative medicine and, in the first year of the current voluntary scheme, medicines covered by the innovation scorecard saw an increase of more than 18% compared with growth of about 5% in medicines not on the scorecard. That illustrates that we are prepared to fund patients’ use of innovative medicines under the existing scheme. However, we recognise the need to continue to ensure patient access to new medicines. That is why my right hon. Friend the Secretary of State referred earlier to the accelerated access review, which was announced earlier today. That will accelerate the speed at which 21st-century innovation in medicine and medical technologies can be taken up by patients and their families through the NHS. That will present a real advantage—bringing forward innovations from pharmaceutical companies, not only in this country, and driving them through for use in the NHS.

A number of hon. Members have referred to the investigative work of The Times in helping to highlight the problems with unbranded generics. I would like to add our welcome to the investigation that was undertaken by those journalists, but gently to point out that the Government were already aware of some of the problems. Indeed, we published a consultation in December last year raising that issue, and I think it was partly in the light of that that The Times decided to do its work. I do not wish to decry that work in any way, however. It was clearly helpful.

We have referred cases to the Competitions and Markets Authority, as the hon. Member for Wolverhampton South West (Rob Marris) mentioned. The CMA has imposed fines in one case, as he said, and it is expecting to reach a final decision on another in the coming months. Two more cases were opened in March and April this year. We are looking to refer examples of bad practice to the relevant authorities when we come across them.

The hon. Member for Central Ayrshire asked how the data collection would work. That point was also raised by other hon. Members. We already collect significant data from the supply chain for medicines under the voluntary scheme and the statutory scheme. We collect data from manufacturers and wholesalers of generics, and from pharmacies themselves. As part of developing the regulations, and of the consultation that will take place before we introduce the scheme, we are looking to identify as many automated data collection solutions as possible, in order to minimise the burden to which the hon. Member for Worsley and Eccles South referred. In particular, we recognise that some of the medical products companies are small companies, and we want to make their burden as light as possible.

The hon. Member for Central Ayrshire referred to the devolved Administrations and how we will work with them. Our intention is that they would be able to access data not on a timing of our choosing, but as they require, and that, again, will be undertaken in a manner that we hope to capture in a memorandum of understanding so that there is clarity between each Administration and ourselves as to how that will work.

The right hon. Member for North Norfolk asked in particular about how we intend to control the medicines bill overall, and a number of Members have mentioned that. The cost of medicines across the NHS is rising quite rapidly. That is a concern, and it gets to the heart of why we have sought to introduce this legislation.

We are looking in the first place to align the statutory and the voluntary cost control schemes for the supply of medicine. At present, companies may decide to join either scheme depending on the other benefits they perceive in the schemes, but we believe that the financial benefit to the NHS of each scheme should be the same. Our proposals will put beyond doubt the Government’s powers to amend the statutory scheme to achieve this objective, which the impact assessment has indicated should save the taxpayer some £90 million a year. Draft regulations of these provisions will be available at the Committee stage.

The second element of the Bill strengthens the Government’s powers to set prices of medicines where companies charge unreasonably high prices for unbranded generic medicines. In most cases, competition works well to keep prices down. However, when it does not, and when companies are making excessive profits, the Government should be able to take action. This Bill closes a current loophole in the legislative framework. We are all agreed across the House that we cannot allow profiteering at the expense of the NHS.

Thirdly, the Bill will strengthen the Government’s powers to collect information on the costs of medicines, medical supplies and other related products from across the supply chain. Putting existing voluntary provision of information regarding medicines on a statutory footing will enable the Government to set more accurately and fairly the reimbursement arrangements for community pharmacies and dispensing GPs. In addition, the power will provide vital data to underpin the reformed statutory scheme for controlling medicine pricing, and will give us more evidence about whether companies are making excessive profits at the expense of the NHS.

I want to reiterate what my right hon. Friend the Secretary of State said in his opening remarks to assure the House about the impact of the information powers on the medical technologies industry. It may surprise Members, and in particular Opposition Members, that the powers to require information from suppliers already exists in section 260 of the National Health Service Act 2006—[Interruption.]—which the hon. Member for Wolverhampton South West says from a sedentary position he remembers bringing into effect, but we think that those enforcement powers are draconian and wish to make them more proportionate. The Government have never in fact used the powers under the 2006 Act, and we want to marry powers for information gathering with those we will have for medicines, so that there is no confusion in future about which information regime applies.

[Rob Marris]

First, may I say in passing that it does not sound very draconian if the powers have never been enforced? Section 260 of the 2006 Act refers to medical supplies and defines them, as I said earlier, as

“surgical, dental and optical materials and equipment”.

Will the Minister look at that definition, because it seems to me that it is not as wide as many people think, and therefore there is a way to get around it if certain technological companies wish to do so, such as the manufacturers of MRI scanners, which I do not think is the intention of the House. Will he look at that definition?

[Mr Dunne]

I think the hon. Gentleman may be making a pitch to the Committee of Selection and I would be delighted to see him committing his considerable intellect to this topic. I think we will spend much of our discussion refining the definitions of what information is appropriate and how it will be gathered.

The Government intend to table amendments to the Bill to reflect how the information-power provisions will apply in the devolved Administrations. The amendments will ensure that the Government can collect information that relates to devolved purposes and share it—with appropriate safeguards relating to confidentiality—with the devolved Administrations, enabling them to use the information for their own purposes. To avoid duplication, we have agreed with the devolved Administrations that the Government will collect information from manufacturers and wholesalers for the whole of the UK while each country will collect information from the pharmacies and GPs in their territories.

The degree of consensus and the support that we have received from across the House, for which my colleagues and I are extremely appreciative, has made this a remarkable debate. Medicines are a vital part of the treatments provided by our NHS. Robust cost control and data requirements are key tools to ensure that NHS spending on medicines across the UK continues to be affordable while delivering better value for taxpayers and freeing up resources, which supports access to services and treatments. The Bill will ensure a more level playing field for our medicine pricing schemes while ensuring that Government decisions are based on more accurate, robust information on medicine costs. This will be fairer for industry, for pharmacies and for the NHS, patients and the taxpayer. I am pleased to commend this Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Health Service Medical Supplies (COSTS) BILL (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Health Service Medical Supplies (Costs) Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 17 November 2016.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Andrew Griffiths.)

Question agreed to.

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

Philip Dunne Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[Julie Cooper]

It is a pleasure to serve under your chairmanship, Mr Pritchard.

I will begin by outlining our overall priority for the Bill and, in particular, this clause. Our priority is to ensure that the Bill effectively controls the cost of medicines and medical supplies to the national health service while ensuring the best possible patient access to existing products and to new and innovative treatments. In that spirit, I would like to make some observations in support of amendments 44 and 46.

The clause will amend section 261 of the National Health Service Act 2006 and it is concerned with the powers related to the control of voluntary schemes. The stated aim of the clause is to give the Government new powers to require manufacturers or suppliers to pay the Secretary of State an amount that will be calculated on the basis of sales or estimated sales. The Opposition support the move to curtail excessive profits, thereby ensuring that the NHS achieves maximum value for money. Having said that we welcome saving vital NHS funds, we also wish to ensure that those funds are retained within the portion of the health budget that relates specifically to the supply of medicines and medical supplies. We do not wish to see the savings lost in an NHS deficit black hole.

On Second Reading, the Secretary of State confirmed that £1.24 billion had been returned to the Department of Health through the rebate scheme. That is a considerable amount of money, and the figure will increase when this Bill is enacted. However, we were not reassured by his vague statement that the money returned to the Department would be reinvested in the NHS.

Also on Second Reading, the Secretary of State mentioned the considerable pressures facing the NHS and he suggested that one consequence of the Bill would be to transfer funding from the drugs bill to the frontline. I hope that the Minister present recognises that medication is often the frontline and that ensuring the timely access of appropriate medication often prevents hospitalisation and thus saves the NHS money. It is very much a case of a stitch in time.

In addition, it is a fact that community pharmacists the length and breadth of the country have offered to work with the Government to eradicate waste and to cut costs. As the experts on all medication matters, they are best placed to work with GPs and patients to achieve maximum efficiency. Sadly, the Government have responded by taking steps that are likely to lead to a reduction in the number of community pharmacies. This is a missed opportunity and that is regrettable.

Amendment 44 would provide assurance by ensuring that rebates reclaimed against purchases of medicines were reinvested specifically in improving patient access to medicines. In Scotland, rebates collected by means of the voluntary prescription pricing regulation scheme are already specifically earmarked to fund new medicines. In essence, the Bill, which we support in principle, is to ensure that the NHS can procure medicines and medical supplies cost-effectively. I am sure that the intention is not to reduce funding to the NHS, so we cannot have a situation in which every pound repaid from the suppliers and manufacturers equates to £1 less of Treasury funding allocated to the NHS. We are concerned that, too often, budget constraints limit access to new and innovative medicines and treatments.

Recently, I have devoted a lot of time to supporting the campaign to achieve treatment for children suffering from the potentially life-threatening genetic condition of tuberous sclerosis. It is extremely distressing for parents to be informed that their child has been diagnosed with that incurable condition; it is even more distressing to learn that an effective pharmaceutical drug has been developed and licensed—Everolimus, marketed as Votubia —but is not available from the NHS for children in England. The drug is able to shrink the multitude of benign tumours that characterise that serious condition, thereby saving lives, improving quality of life for those affected and often removing the necessity for potentially damaging surgery.

That is one example, and there are many others. James Barrow from the Cystic Fibrosis Trust, speaking in support of the new medicine fund in Scotland, has said that using any reclaimed moneys in that way provides improved access and much needed transparency. Labour’s amendment to the clause would introduce a duty to reinvest any rebates to improve access to new and innovative medicines and treatments, as I have outlined.

Further to that, amendment 46 refers specifically to the duty of the NHS to promote innovation under the Health and Social Care Act 2012. The UK is a world leader in the field of life sciences, and the British pharmaceutical industry is at the forefront of global research and development. In 2014, 20% of all the world’s research and development into new medicines was carried out in the UK.

We have hitherto enjoyed significant benefits from European Union research funding. Given the outcome of the referendum, that is now at risk, and it is essential to ensure that we maintain our dominance in the sector, not least because the pharmaceutical industry employs close to 75,000 people. The promotion of innovation in the field is important not only for the health of the British people, but for the health needs of people worldwide. It is extremely important to the British economy, so it is vital that we do not take our eye off the ball. We need to put on record our continued commitment to research and to develop new treatments.

We face competition not only in Europe, but from emerging nations such as Brazil and China. We also need to ensure that the NHS does not trail in the take-up of those new drugs. Worryingly, the Office of Health Economics studied 14 high-income countries and found that the UK ranked ninth out of 14 across all the medicines studied. Successive studies have demonstrated relatively low take-up of new medicines in the UK compared with other countries. That is bad for patients and bad for our pharmaceutical industry.

The Bill therefore needs to achieve a balance. We need to ensure the best possible patient access to medication at the fairest price, and we need to encourage the pharmaceutical industry to continue to invest in research and development. Therefore, it is right that the Bill should outline our commitment to promote innovation. We look forward to hearing the Minister’s comments, but we are minded to press amendment 44 to a Division.

[The Minister of State, Department of Health (Mr Philip Dunne)]

Mr Pritchard, thank you for calling me and, more particularly, for taking time out of your schedule to chair this important sitting.

On amendment 44, I was interested in the comments of the hon. Lady about the motivation behind it, with which I have some sympathy. I hope that what I say will reassure her that her amendment is unnecessary.

The amendment would require income from the pharmaceutical price regulation scheme and the statutory scheme to be ring-fenced to fund and increase access to new and innovative medicines and treatments. As a Government, we are committed to ensuring that patients have faster access to new and innovative medicines and treatments—I mention briefly the accelerated access scheme that we have introduced.

The hon. Lady touched on the compelling and sometimes tragic cases of individual constituents, friends and relatives seeking to get access to innovative drugs, in particular once those drugs have become authorised. Between 1 March 2000 and 30 June 2016, NICE, the National Institute for Health and Care Excellence, made individual recommendations for 646 separate propositions, 81% of which were recommended or optimised, so there is a steady track record of introducing innovative treatments and, in particular, drugs into our health service. That is done, properly, through the independent NICE structure. I am sure we will talk more about that in Committee.

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

On the number of drugs to which the Minister referred, will he give an indication now or later of how many, if any, of those drugs were repurposed? I am thinking, for example, of a drug that has recently had a lot of publicity; it is primarily used for osteoporosis, but there are indications that it may be very helpful with breast cancer. What about such repurposed drugs, as opposed to brand new drugs?

[Mr Dunne]

I do not have that figure in my head, as the hon. Gentleman might expect. I hope to get inspiration during the sitting and will try to address that question later.

We know that investing in new and innovative medicines and treatments, where they are proven to work and are a clinical priority, has the potential to transform the care of patients and to improve outcomes, which is what we all want. However, it is a fundamental principle of NHS funding that it should be allocated according to clinical priorities based on the judgment of clinical commissioners. That may include new treatments, but it may include scaling up older effective treatments—through repurposing, as indicated by the hon. Gentleman—or investing in more staff.

We understand the intention behind the amendment, but it is for NHS England and clinical commissioning groups to determine clinical priorities and to spend that money on what is clinically most important. It is also important to point out to the hon. Lady that income from the voluntary and statutory schemes can fluctuate from year to year, so allocating such income by means of a ring fence to a specific area, such as new medicines, brings risk because in some years the income received may go down. The perverse consequence of the amendment’s ring-fencing may therefore mean less money being spent in a subsequent year, in the event of the scheme not generating an increase in income. That would disadvantage patients by making treatment dependent on income from medicine pricing schemes, which we do not think should be the determinant of available medicine.

[Rob Marris]

The Minister was talking about such decisions being clinically led. Will he therefore assure the Committee that the decision to cut spending on public health in England, to put the money into frontline medical services, was a clinical decision?

[Mr Dunne]

As the hon. Gentleman knows, decisions to allocate spending across the responsibilities of the Health Department were determined as a result of the spending review last year. The decisions within the NHS that I am talking about, on treatments, rather than preventive public health, are determined by clinicians.

Separate to the Bill, Government are taking action to secure the UK’s future as an attractive place for the life sciences sector and to support faster patient access to medical innovations. For example, the recently published accelerated access review sets out ways to increase the speed at which 21st century innovations in medicines, medical technologies and digital products get to NHS patients and their families. Recommendations included bringing together organisations from across the system in an accelerated access partnership and creating a strategic commercial unit within NHS England that can work with industry to develop commercial access arrangements. We are considering those recommendations with partners and will respond in due course.

NHS England and NICE are jointly consulting on a number of proposed changes to NICE standard technology appraisals and highly specialised technology appraisals, including around speeding up the appraisal process. The Department of Health continues to work closely with NHS England and other stakeholders to improve uptake of new medicines. A key element of that is the innovation scorecard, published quarterly. It is designed to help users—clinicians, patients, commissioning groups, Government and other stakeholders—to understand and monitor the uptake of innovations in the NHS and should ultimately be used to promote an equitable spread of clinically effective, cost-effective innovations.

I hope that having heard in particular what I said about the way in which income from these schemes does not rise in a continuum but fluctuates, the hon. Member for Burnley will recognise that the amendment could have the adverse consequence of leading to a reduction in funding available for medicines.

[Julie Cooper]

Will the Minister give way on that point?

[Mr Dunne]

I was about to ask the hon. Lady to withdraw her amendment, but if she has something to add, I am happy to give way.

[Julie Cooper]

Is the Minister aware of problems with the administration of the scheme in Scotland? Is he aware of what the experience has been in Scotland?

[Mr Dunne]

Fortunately, the Committee has the benefit of the Scottish National party’s spokesperson on health, the hon. Member for Central Ayrshire, who I am sure would be happy to give us her experience. The fact is that we have had some experience in England of fluctuating income from these schemes, which is the primary basis for our position.

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

I am grateful to the Minister for his explanation. On the money that is received from the rebate from PPRS, responses I have had to written questions suggest that that is considered part of the baseline budget. With respect to the debate we have had recently about the £10 billion extra, or the £4.5 billion extra—whichever version we prefer—could he advise whether the rebate is included within that extra money, or is it part of the baseline funding?

[Mr Dunne]

The Department of Health receives income from a number of different sources. It mostly deals with expenditure but also receives income from activities conducted through the NHS. One source of income is the rebate through these schemes, which forms part of the funding available to the Department. We have committed that funds available out of the scheme will go into the NHS. The hon. Gentleman raised the issue of the £10 billion. I gently remind him that, in 2014-15, the funds available to the NHS from the Department of Health were £98.1 billion, and by 2021 that figure will be £119.9 billion, which in cash terms is a £20 billion increase and in real terms is a £10 billion increase.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

As the hon. Member for Burnley said, the system functions quite differently in Scotland. We have a new medicines and rare diseases fund, rather than a cancer drugs fund, which means that the use of funding to access new medicines is not limited to one cohort of patients. Our fund is £90 million, which, given that we are less than 10% of the UK population, means it is proportionately almost three times the size of the cancer drugs fund. As was mentioned, this is very much funded by the PPRS. It is committed to that. The pharmaceutical industry expects the rebates to be used to enable access to new medicines. One problem here is that the rebate goes into base funding, which means it disappears like water in the sand.

We have so many debates in this House about patients who are struggling to access new treatments. Amendment 46 talks about innovation and research, which we support in Scotland. We are quite a research-oriented country. Our research funding to our universities is 30% higher, in proportion to our population. The NHS in Scotland commissions research, particularly on things like informatics and data management around health and social care, which are the big challenges we face in the future.

The Scottish Medicines Consortium, which makes our decisions in the same way as NICE, was reformed in 2013. Since then, we have had a 40% increase in drugs being passed. What we see in England is that even if a drug is passed at the level of NICE, it sometimes does not come into use in the NHS, because the funding is simply not earmarked to make it available.

--- Later in debate ---

[The Chair]

Before we move on, I have a couple of housekeeping points. First, I thank the Doorkeeper for his tenacity and the engineers for getting the windows open. I think that we are all happier for that. Secondly, because we have Health questions today, we will seek to adjourn at about 11.10 am. I will allow the Government Whip to suggest the appropriate minute at which to do that. I now ask the Opposition whether they want to press the amendment.

[Mr Dunne]

I would like your guidance, Mr Pritchard, on whether I can comment on the second amendment in the group now or whether you would like to take the—

[The Chair]

You can comment on it now. I understand that there will not be a vote on amendment 46, but if there is, it will be later. We will be taking amendment 44, but you can comment on amendment 46 now, Minister.

[Mr Dunne]

Thank you, Mr Pritchard. Amendment 46 was also raised by the hon. Member for Burnley, for which I thank her.

We agree that the promotion of innovation, as the hon. Member for Central Ayrshire said, is an important part of what we like to do in this country. The role that we see for the Government is in sustaining the UK not just industrially, but by generating innovation to make our population healthier. That is vital in securing the best possible, evidence-based care and treatment for patients. I am talking about the rapid progress that is being made and technological advance through innovation. That is why the duty to promote innovation was placed not only on NHS England but on clinical commissioning groups and NICE through the Health and Social Care Act 2012.

Supporting innovation brings in many factors beyond the scope of the Bill, as is set out in the accelerated access review, which I have touched on. Supporting innovation is much more about better horizon scanning, faster licensing and assessment, and cutting-edge clinical practice than it is about pricing. It is precisely because this is such a broad area that it is not appropriate for the NHS duty to be linked to the provisions in the Bill. As drafted, the provisions in the Bill focus on the specific issue of the cost of medicines and medical supplies, but in doing so, they take account of the need to balance access to a product, which may be supported by lower prices, and the need for companies to support the costs of research and development.

To attempt to link these measures to the much wider duty on the NHS would be to distort the objectives of the cost control scheme. The Bill has an important role to play in securing the best possible care for patients, but I would like to assure the Committee that the Government, together with NHS England and others, place a very high priority on supporting innovation.

[The Chair]

We have the privilege of having two shadow Ministers. I do not know whether either of them wants to respond on amendment 44 or amendment 46, or whether the hon. Lady wants to press amendment 44.

--- Later in debate ---

[Julie Cooper]

I beg to move amendment 45, in clause 1, page 1, line 14, at end insert—

“(2A) After subsection (1) insert—

‘(1A) In exercising functions in relation to the controls on the costs of health service medicines, the Secretary of State must ensure that any medicine covered by a voluntary or statutory scheme that requires payments calculated by reference to sales of that medicine shall be made available to all NHS patients if recommended by a qualified NHS clinician.’”

The amendment continues in the vein of amendment 44, given our concern to ensure the best access to medicines. We are very much aware of the barriers that exist and are keen that every piece of legislation takes the opportunity to remove those barriers and make medicines more accessible to patients. It is important that the Bill does not inadvertently become a way of restricting that access. Where a clinician deems medicines necessary and desirable, patients should have access to them.

I was worried on Second Reading to hear the Secretary of State’s comment that the prescribing of some medicines is “not strictly necessary”. That questioning of the clinical judgment of the medical profession is not just inappropriate but could be suggestive of a dangerous precedent. We must never reach a stage where politicians decide which medication is appropriate and when. I assume that that was not the Secretary of State’s intention, but we would like to ensure that drugs approved by the National Institute for Health and Care Excellence are made available to patients if so desired by a qualified NHS practitioner.

There is already an agreed fixed limit on NHS spend on branded medicines, with any additional expenditure above that level paid for by the pharmaceutical companies via the clawback by the Department of Health. Currently, NICE assesses new medicines for cost-effectiveness, which provides a further restraint on pricing. There is therefore no reason for the NHS to deny patients any treatment covered by the scheme. We would like the Minister to look favourably on the amendment. We will not press it to a Division, but we are very concerned about the issues I have outlined.

[Mr Dunne]

Again, I understand the hon. Lady’s intent. I was a little confused by her interpretation of the Secretary of State’s remarks on Second Reading as meaning that politicians are involved in making decisions on prescribing. I assure her that, although I have been in the Department for a short amount of time, there has been no suggestion at any point that any politician should get involved in making decisions about which drugs should be prescribed.

[Julie Cooper]

I thought it inappropriate that the Secretary of State for Health expressed an opinion on which medications are necessary and which are not. I question his qualification to make that comment.

[Mr Dunne]

I do not have complete recollection of what the Secretary of State said, but he may have been referring to things such as the over-prescription of antibiotics, which we know is a problem globally. A great deal of work is being undertaken right across the NHS and with other health bodies around the world to reduce the scale of antibiotic prescription.

[Dr Whitford]

Is it not the case, however, that we seem to be developing this additional rationing system between NICE and patients of the NHS? I am talking about NICE’s recommendations being accepted but not funded. The hepatitis C drugs are basically being rationed to a certain number of patients per month, even though they have been passed by NICE and trying to eliminate the viral load in the community can be more effective in the long term.

[Mr Dunne]

Inevitably, some decisions have to be taken when introducing new drugs as to the extent to which they are applicable. Those are clinically-led decisions. There is not a completely bottomless funding pot for the prescription of medicine, so those decisions have to be taken by ordinary clinicians within their practices and within the infrastructure of approvals, which is entirely independent and led by NICE in England.

[Dr Whitford]

With respect to the Minister, that is not what I am hearing from clinicians who work in the field of HIV and hepatitis C. They are being told, “You can have”—for example—“50 patients a month,” and they are having to pick who gets the drugs and who does not.

[Mr Dunne]

I will not be drawn into the detail on a specific drug, because the hon. Lady may have access to information that I do not, but in relation to hepatitis C, as she has raised it, there has been a discussion between the trust and NICE. As I understand it, the trust is continuing to work with NHS England collaboratively to discuss the issue of access to the new hepatitis C drugs. We will always have some discussions about applicability when a new treatment is introduced, to see whether it is appropriate for all conditions; it may be that only some benefit from the drug. I think that that is as far as I can go on this issue.

To return to the Government’s view of the amendment, we are concerned that it would in effect circumvent the critical system of checks and balances around clinicians’ prescribing freedoms. That would present a danger to patients and the sustainability of the NHS. It is also not the purpose of the Bill to address matters other than the cost of medicines and medical supplies.

Treatments that do not demonstrate efficacy, safety and value for money should not be routinely available on the NHS. The National Institute for Health and Care Excellence, an internationally respected organisation that provides evidence-based guidance to the NHS, ensures that the treatments recommended for patients deliver value for money and improved patient outcomes. NICE’s recommendations are developed free from political interference and help NHS organisations to design services that are in line with the best available evidence and that meet the needs of their local populations.

[Rob Marris]

The Minister read out what I understood to be the role of NICE. May I focus for a moment on the words “value for money”? My understanding is that if NICE in England says that a particular medicine—perhaps a new medicine or a repurposed medicine—is value for money, then because that cost-benefit analysis has taken place, the drug should be freely available to clinicians to prescribe in medically appropriate cases. However, we are hearing quite a lot of stories, particularly about the prophylactic HIV drug or hepatitis C drugs, of when that is not the case. In other words, NICE says that a drug is value for money, but clinicians are blocked from prescribing it, even when they think it would be medically efficacious for their patient. Why is that?

[Mr Dunne]

From time to time, local circumstances may mean that clinicians do not have access to the drugs. They may be newly innovated, and given the scale of the NHS in this country, not all clinicians will get the information they need to provide new drugs as rapidly as some patients may like. It can take time to introduce a new drug, as the hon. Gentleman will understand. I recognise that it is the role of clinicians to prescribe in the best interests of their patients, and I know that local or national commissioning policies or technology assessments by NICE will mean that in some cases patients are unable to access the treatment that their clinician has recommended, but it is important to recognise that local and national scrutiny and the independent assessments of NICE are essential to promote evidence-based prescribing, protect patients and secure value for money. Undermining that system of checks and balances, as I am afraid the amendment tabled by the hon. Member for Burnley would, could endanger patients and result in significant variation in prescribing practices. I ask her to withdraw the amendment, since she has indicated that she does not intend to press it to a vote.

[Julie Cooper]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Dunne]

Clause 1 will amend the powers relating to voluntary schemes in section 261 of the National Health Service Act 2006. The voluntary scheme referred to in that section is the pharmaceutical price regulation scheme. Although the scheme itself is voluntary, there are statutory powers that can be used in relation to its operation. Other than with respect to the entry and exit mechanisms, the Government do not currently use those powers for the 2014 PPRS, but we wish to retain the option of making regulations or directions with respect to those powers in future. The Government do not intend the amendments to the 2006 Act to affect the operation of the current 2014 voluntary scheme.

The amendments to the 2006 Act will put it beyond doubt that the Secretary of State’s existing powers can apply for the purposes of operating a voluntary scheme that includes only a payment system. They are part of our policy to align the powers relating to voluntary and statutory schemes, which we will come on to when we consider later clauses of the Bill. They will also ensure that when a company leaves the voluntary scheme, it is still able to make payments covering the period in which it was a member. That will clarify the requirements and ensure that there will be no loophole that companies can exploit to avoid making payments that are due after they have left the scheme.

It may also be helpful if I clarify a point that arose on Second Reading. In response to a question from my hon. Friend the Member for South West Wiltshire (Dr Murrison), the Secretary of State inadvertently indicated that the Bill would prevent companies that are part of the current voluntary pharmaceutical price regulation scheme from parallel importing of medicines. I would like to clarify that statement, because it did not completely accurately reflect our intent. Parallel imports made in accordance with the EU single market rules are a legitimate part of the medicines market, and the Government have no intention of taking action to prevent such trade. The Bill does not exclude the possibility of parallel import prices being controlled; they could be covered through regulation at a later date if the evidence warranted action. I hope that helps the Committee in its consideration. I commend the clause to the Committee.

[The Chair]

I thank the Minister for correcting the record.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Power to control prices

Question proposed, That the clause stand part of the Bill.

[Mr Dunne]

Clause 2 will amend the power to control prices in section 262 of the National Health Service Act 2006. That section already allows the Secretary of State to limit the price of any health service medicines except when the manufacturer or supplier is in the voluntary scheme, the PPRS. Section 266 of the 2006 Act allows the prices of health service medicines to be controlled by way of regulation or directions. Clause 2’s amendments to the 2006 Act will enable us to address unreasonably high-priced unbranded generic medicines. Most manufacturers of unbranded generic medicines are members of the PPRS for their branded medicines, and we therefore cannot currently limit the prices of their unbranded generic medicines if they charge excessive prices. We rely on competition in the market to keep the prices of those medicines down. It generally works well and, in combination with high levels of generic prescribing, has led to significant savings for the NHS.

I am grateful for the contributions made on Second Reading by almost everyone who spoke. The intent behind the clause was widely recognised across the House as appropriate and desirable. Members were aware from their own experience, and particularly from a Times article in the summer, that in some instances where there has been no competition to keep prices down, a small number of companies have raised their prices to what look like unreasonable and unjustifiable levels.

There are some clear examples of price increases. The most egregious was one product whose price increased by 12,000% between 2008 and 2016. If the price had stayed the same, the NHS would have spent £58 million less on that medicine last year alone. Another medicine increased in price by 3,600% between 2011 and 2016; the NHS would have spent £2.1 million less on that single medicine had the price stayed the same.

[Justin Madders]

I am grateful for the Minister’s explanation. As he said, we support the broad thrust of the aims behind the clause. Has he engaged in any research or discussions with the developers to understand the reason for those rapid price rises?

[Mr Dunne]

We have had discussions with the trade association for the generic manufacturers. The trade association, which gave evidence to the Committee on a day when I was, unfortunately, not able to attend, made it clear that the generic medicine producers industry as a whole thinks it appropriate that we take this action. We are grateful for that support. Discussions are under way through other bodies. In particular, the Competition and Markets Authority has indicated that it is in discussions with some companies, one of which voluntarily issued a press release last month to tell the market that the Competition and Markets Authority is investigating it.

[Justin Madders]

What I was trying to elicit was whether anything had been put forward to explain any specific price increases. We are concerned that the clause will have the unintended consequence of limiting supply.

[Mr Dunne]

We are anxious to ensure that we do not inadvertently introduce a regime that might cause difficulty when there might be a valid reason for increasing a drug’s price significantly. That was the justification in the past for not addressing the issue, because abuses were seen to be pretty isolated. However, in the past two or three years, the prices of more drugs have risen seemingly unjustifiably. That is the justification for introducing these measures.

I recognise that there may be occasions when a manufacturer incurs some additional costs: for instance, if a production run or line has finished and the manufacturer must start a new line or restart an old one, that would lead to a justifiable price increase. The clause allows us to take action where we suspect a price has risen excessively. The rest of the Bill provides opportunities for the Department to gain information about the cost of supplies, which allows us to get a better handle on when we think an increase has been unjustifiable, and identify that more rapidly. [Interruption.] Does the hon. Member for Wolverhampton South West want to intervene, or is he just poised in an energetic way?

[Rob Marris]

I am always ready.

[Mr Dunne]

Then I will continue.

Certain companies appear to have made it their business model to buy the marketing authorisations for medicines without any patents outstanding. They then de-brand the medicines and abuse the existing freedom of pricing for unbranded generic medicines. Although the practice is not widespread, it must be addressed, which is the reason for the clause.

Currently, our only recourse is to refer such cases to the Competition and Markets Authority, as I mentioned. When the CMA investigates, we must wait for the outcome, and in the meantime the NHS continues to have to pay high prices. The Department consulted on the issue as part of the consultation on the statutory scheme that was launched in December 2015. The Department has been working closely with the Competition and Markets Authority and has referred cases to it. The CMA is about to issue a decision in a case on a high-priced unbranded generic medicine. As I have just said, it has also recently opened another investigation.

The powers under section 262 of the 2006 Act to limit prices of health service medicines can be exercised through directions or regulations. The Government’s intent is to work with directions, which will enable us to limit the price of a specific medicine from a specific manufacturer. The Government are obliged to consult the industry representative body when we want to direct the price of a medicine. In the case of high-priced generics it would be the representative body of the unbranded industry—currently the British Generic Manufacturers Association, which appeared before the Committee last week.

The Government would of course also engage with the company involved before issuing a direction that limited the price of a medicine. As I have indicated, there may be good reasons for a price increase, and it is important that the Government understand the reason behind a price increase before issuing a direction. As I said, the new information powers will help us with that.

My officials have initiated talks with the unbranded generic medicines industry representative body and the CMA to explore how in practice we would determine what should be considered a reasonable price. Any decision by the CMA in the cases that I highlighted earlier could help set a useful precedent. I can reassure the Committee that companies charging unreasonably high prices for unbranded generic medicines is not a common practice. The Government do not intend to use the power where competition in the market for unbranded generic medicines is working. However, the Government need the right legislative tool to be able to address unreasonably high prices of unbranded generic medicines. The clause will give us that tool, and I ask the Committee to agree to it.

[Dr Whitford]

Basically, we welcome the measures in clause 2 to try to close the specific loophole whereby companies that are part of the PPRS voluntary scheme and that also produce generic medicines are able to increase the prices of generic medicines. However, the Minister talked about the British Generic Manufacturers Association—largely companies that focus on generic medicines—which would be more to do with clause 3. My understanding is that the change will close the specific loophole relating to large pharmaceutical companies that also produce generic medicines, rather than companies that focus only on generic medicines, which we will come on to in clause 3. We welcome the closing of that loophole, but those two things are quite different and we should therefore not conflate them. It is not the competition authority that would tackle them. That is much more related to purely generic companies.

[Mr Dunne]

We will obviously come on to clause 3 shortly. The primary intent behind clause 3 is to modernise the statutory scheme, rather than to address the difference between one type of company that produces only generics and another that produces generics and branded medicines. I am not sure that I agree with the hon. Lady’s distinction.

[Dr Whitford]

My point is just that what the Minister has described applies more to clause 3, on companies that produce purely generic medicines, so the attempt would be to strengthen the statutory scheme that they might be part of. It is the production of generics by the group of companies under the PPRS scheme, the big pharmaceutical companies, that is getting under the wire. That is covered by clause 2(2). The Minister was talking about the Competition and Markets Authority and the British Generic Manufacturers Association, and I think clause 3 is more relevant to that. Clause 2 is more of a surgical change, which we absolutely support.

[The Chair]

The Minister can respond either now or later.

[Mr Dunne]

I am grateful for your guidance, Mr Pritchard —I will respond now. The current statutory scheme does not capture generics, so amendments to the statutory scheme to allow generics to be brought into it are appropriate. If I am giving the Committee information that covers two clauses, rather than just one, I hope that is helpful.

--- Later in debate ---

[Dr Whitford]

One issue arises because the statutory scheme was based on prices in December 2013. The further on in time we are, the less proportional the return. Whether it is the same or a similar mechanism, we should avoid having a price rebate to the NHS stuck in time, which might be five years ago, and does not reflect the actual costs of the drugs.

[Mr Dunne]

The voluntary schemes are introduced and refreshed every five years. The current scheme was negotiated in 2014, so we are two years into that. One reason for having a time limit on the scheme, from the Government and NHS perspective, is that companies like to find ways during the course of time to adjust their commercial behaviour for their benefit. Having the opportunity to renegotiate the voluntary scheme every few years enables us to try to avoid the circumstances referred to by the hon. Lady.

[Dr Whitford]

If I could clarify, the voluntary scheme runs for five years but what I was talking about, with regard to clause 3, is the statutory scheme and the price rebate related to a requirement for a percentage reduction from the price in December 2013. That is how the rebate in the statutory scheme is defined. The further one gets away from that date point, the less one gains. It is the statutory scheme I am talking about rather than the voluntary one.

[Mr Dunne]

My understanding is that under the statutory scheme, the percentage applies based on sales achieved in the previous year. Therefore, the percentage reduction that we seek for the statutory scheme can be adjusted year by year. That is the intent of what we seek to do. I will seek further inspiration to ensure that I have exactly addressed the point that the hon. Lady makes.

Amendment 43 would have the effect of linking the payment mechanisms of the statutory and voluntary schemes. I understand why that might appear a desirable objective, so I understand the intention behind the amendment. We think there is merit in aligning the two schemes in some respects. However, to require them to be the same is inappropriate, because it removes some flexibility that the Government have, and from which the NHS benefits, in being able to negotiate the voluntary scheme on a periodic basis. The voluntary scheme has other aspects beyond pure price. Aligning the two in what will become a statutory scheme would restrict the scope for the two schemes to operate in a complementary manner.

The voluntary scheme is a matter for negotiation with industry on a periodic basis. As such, there is scope to include a range of measures. Those measures may change with each iteration of the scheme, to reflect the priorities of each side at the time of renegotiation. To illustrate that, the current voluntary scheme includes a range of provisions developed through negotiation with industry that sit alongside the payment mechanism. That includes price modulation, which enables companies to put prices up and down as long as the overall effect across their portfolio is neutral. That may have benefits for them, not only for their sales to the NHS but in the pricing references used by selling to the NHS in jurisdictions in other countries. That is of potential commercial value to companies, which may be willing to accept a higher payment percentage as a result—in other words, a higher discount to the NHS.

There are also provisions on the uptake of new medicines by the NHS, such as making NICE-approved medicines available within 90 days of a NICE decision. We are keen to encourage that. By contrast, the statutory scheme is intended to be a more straightforward approach. As such, the payment percentage applied may be slightly different from that applied to any voluntary scheme, in order to achieve a broadly similar level of savings once all elements of the schemes are taken into account.

As we heard in oral evidence last week, the freedom to negotiate the voluntary scheme is greatly valued by both industry and Government. We intend that any future voluntary scheme should be established through such negotiation, but linking the payment mechanisms would inevitably restrict that flexibility and freedom for both sides. In addition, while the Government welcome the collaborative approach of a voluntary scheme, we cannot guarantee that Government will always want two schemes in future. The amendment would constrain the Government’s discretion to run a single scheme if they and the House thought it best to do so. For those reasons, I urge the hon. Member for Burnley to withdraw her amendment.

[Julie Cooper]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Dunne]

The clause amends the provisions relating to statutory schemes in section 263 of the National Health Service Act 2006, which describes the purposes for which the Secretary of State can make statutory schemes. The amendments make it clear that a statutory scheme may require companies to make payments to the Government, based on their health service sales. For those companies not in the voluntary scheme, the Government operate a statutory scheme. That is currently based on a cut to the list price of products, rather than a payment mechanism on company sales, as in the voluntary scheme. The cut to the list price has delivered fewer savings to date than the payment mechanism under the voluntary scheme.

[Dr Whitford]

That was the point I was trying to make earlier. One is a percentage return on sales and profits, and the other is a cut in price. The further we are from the time set, which was December 2013, the less value we have from that in proportion to current prices.

[Mr Dunne]

I am grateful to the hon. Lady for making that clear to the Committee. The different approaches to price control between the voluntary and statutory schemes have led to some companies making commercial decisions to divest products from the voluntary scheme and sell them through the statutory scheme, thereby reducing the effectiveness of the voluntary scheme and savings to the NHS. The introduction of a payment mechanism in the statutory scheme would save the health services across the UK an estimated £90 million a year, as set out in the impact assessment.

In response to the Government’s consultation on introducing a payment mechanism in the statutory scheme, the pharmaceutical industry queried whether the Government had the powers to introduce a statutory payment system. The clause clarifies the existing powers to make it clear that the Government have the power to introduce a payment mechanism in the statutory scheme. The ability to make the statutory scheme by way of regulations rather than setting out the detail in primary legislation provides us with the flexibility to respond to changes in the wider economy, the medicines market and patient needs. We have provided illustrative regulations to support scrutiny of this delegated power.

The clause makes a further amendment to section 263 of the National Health Service Act 2006. Currently, the power to make a statutory scheme cannot be applied to members of a voluntary scheme, which means that if the Government introduced a statutory scheme for unbranded generic medicines—although we have no current plans to do so—we would be unable to apply the scheme to manufacturers of unbranded generic medicines that have a mixed portfolio of branded and unbranded generic medicines, and are members of the voluntary scheme. The clause therefore amends the Act in such a way that the power to make a statutory scheme cannot be applied to products covered by the voluntary scheme rather than member companies of the voluntary schemes.

The Government’s view is that, for the most part, competition works well to keep down the price of unbranded generic medicines. Should that situation change, this amendment would enable the Government to use their clause 2 powers to take action beyond individual products or companies. I hope that is clear to the Committee. If so, I ask the Committee to agree that clause 3 should stand part of the Bill.

[Rob Marris]

What a pleasure to appear before you for the first time, Mr Pritchard. As you know, my mother is one of your constituents and was quite a frequent correspondent. She is now in quite frail health so I suspect that you have not heard from her recently, but I thank you for your courtesy in your replies to her over the years. It is a particular pleasure to appear opposite a fellow west midlands MP, the Minister, who represents Ludlow, the constituency in which my mother used to live. She is still in the same house, but the constituency boundaries have changed.

[Mr Dunne]

She may move back again.

[Rob Marris]

Indeed. I very much welcome clause 3 because it is to do with extending the statutory scheme. The helpful library briefing cites the Department of Health consultation from December 2015, which points out:

“In 2014 the statutory scheme covered around 6% of branded medicines sales in the UK”,

in contrast to the voluntary scheme, which covered about 75%. Those are the relative sizes of the schemes.

The Minister said—forgive me that this is not an exact quote, but I do not write that fast—that one of the effects of the clause 3 changes will be to broaden the statutory scheme to cover companies that have a mixed portfolio of branded and unbranded drugs, and are members of the voluntary scheme. As he pointed out, the clause clarifies the power of the Secretary of State to make the statutory scheme—something that was debated or contested by some companies.

In particular, I welcome the clause philosophically or ideologically because it amends section 263 of the National Health Service Act 2006—a Labour Act for which I voted proudly. Section 263(1) of that Act provides the Secretary of State with the power to make a statutory scheme for the purposes of “limiting the prices” or, as in section 263(1)(b) “limiting the profits”. This is something of a damascene conversion for this Government.

I hope, Mr Pritchard, that you will give me a bit of latitude, as I am about to read a quotation from this morning’s edition of The Times. An article entitled “Energy companies face caps on ‘rip-off’ tariffs” says:

“Measures designed to cap the household energy bills of millions of British families on ‘rip-off’ standard variable tariffs are being considered by ministers.”

I think we heard about that in my party’s manifesto at the general election; there has been a damascene conversion by the Government. That article also says:

“Greg Clark, the business and energy secretary, said: ‘I have made clear to the big firms that they must treat customers properly or be made to do so.’”

--- Later in debate ---

[The Chair]

If the Minister is in Churchillian mode—I do not take a view on that; I am completely neutral as Chair—that is something I have always wanted to see. In fact, we have two Churchills in the debate, as Members will recognise. That is probably a first, which is great.

[Mr Dunne]

Thank you very much indeed, Mr Pritchard. I hope I am not going to disappoint you, given that build-up.

As ever, I am delighted to see the hon. Member for Wolverhampton South West, who is almost my parliamentary neighbour and with whom I served on countless Finance Bill Committees when he was previously in this place. He always entertained the Committee with his interventions, some of which were occasionally on the subject of the Bill, rather like on this occasion. He has craved your indulgence, Mr Pritchard, and I am glad that you allowed him to point out what I am going to take a stage further, if you will indulge me a little.

The Conservative party is the party of the working man in Britain in 2016. As the hon. Gentleman may have heard, because he is a keen student of these things and because the Conservative party conference was held in Birmingham this year, which is not too far from his constituency, the Home Secretary made it clear that she regards the Conservative party as the party of the consumer in 2016. I will take that one step further.

[Rob Marris]

Do you mean the Prime Minister?

[Mr Dunne]

No, I mean the Home Secretary.

We believe that competition is the best way to drive prices of medicines down for the NHS, and generally speaking that works well. In the case of the specific unbranded generics where there is a single supplier, we have seen that there is an opportunity for market abuse, and I agree with my hon. Friend the Member for South West Bedfordshire that the clauses are designed to use the device of price controls to avoid excess profit abuse by individuals in British companies, which we have seen.

I gently remind the hon. Member for Wolverhampton South West that successive Governments since 1957, including the Government whom he proudly supported for many years, had price controls in place for the cost of medicines.

[Dr Whitford]

The Minister was obviously not happy with the amendment on aligning the two schemes, but he talks about a mechanism of price control under clause 4. Will he give us even the broad principle of what he thinks the price control mechanism in the statutory scheme will be?

[Mr Dunne]

The mechanism in the statutory scheme will be to allow the discount to be changed periodically. That will be determined through consultation with industry in the same way as applies in the voluntary scheme.

[Dr Whitford]

To clarify, therefore will the situation continue to be that the statutory scheme is based on a price reduction as opposed to a percentage above a mark being returned to the NHS, as in the voluntary scheme? Will it be a similar mechanism to what we have today?

[Mr Dunne]

I believe that that is the case, but if I have misunderstood the hon. Lady’s question I shall clarify that later in the sitting, if I may. Our intention is to consult on the matter, so the precise mechanism has not yet been finalised; hence there is some uncertainty.

[Rob Marris]

On the detail, while the Minister is pondering, we talked about the date of December 2013 for the 15% price reduction—the questioning of the hon. Member for Central Ayrshire particularly related to that—but I understand that medicines launched after that date are not in the statutory scheme.

At some point—perhaps later in the sitting—will the Minister clarify whether the Government intend that medicines launched after December 2013 could be in the statutory scheme? Might it be altered in that way to encompass that possibility?

[Mr Dunne]

Companies are free to join the voluntary scheme. If they choose not to, but they want to sell unbranded generics into the NHS, they will be caught within the statutory scheme. The statutory scheme is the default scheme under which unbranded generics are sold into the NHS. It will pick up new unbranded generics as they come forward, unless their manufacturers are in the voluntary scheme and choose to have them dealt with through it.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Enforcement

Question proposed, That the clause stand part of the Bill.

[Mr Dunne]

The clause amends sections 265 and 266 of the 2006 Act in relation to enforcement. It ensures that the existing enforcement provisions in the Act apply to the contravention of any of the new powers in clauses 1, 2, 3 and 5. The maximum penalties are a single penalty of £100,000 or £10,000 per day for the duration of the contravention. The Secretary of State has the power under the 2006 Act to increase or further increase, by order, those maximum penalties.

The clause also ensures that provision can be made in regulations for companies to appeal any enforcement decisions under the new information powers in clause 6. That simply extends the possibility of appealing any enforcement decision under the information powers. Furthermore, clause 4 clarifies the fact that payments or penalties can be recovered as a civil debt through the courts.

In light of the Secretary of State’s flexibility to amend the penalty amounts in future, I hope the Committee will recognise that the proposed penalties are appropriate, but in the event they are deemed not to be appropriate, there is sufficient flexibility in the clause to allow the Government of the day to amend the penalties to whatever they deem appropriate.

On that basis, I ask the Committee to agree that the clause stand part of the Bill.

[Rob Marris]

Will the Minister—if not now, later—give other examples of where a Secretary of State has such apparently wide-ranging powers to set a penalty? In any judicial system there is often discretion among the judiciary as to the penalty imposed on a wrongdoer, but this is not a judicial system. It is a quasi-judicial system, at best. The Government seem to be taking broad powers, and it may be that Governments, including Governments under which I served, have done so in the past, but I cannot think of any examples.

I hope the Minister can provide clarity, because the Secretary of State will be able to exercise the new powers not only by making regulations—such regulations, of course, would come before the House—but by giving directions, which is a much more elastic and broader term. A little clarity on that would be helpful.

[Mr Dunne]

I can help the hon. Gentleman directly with a specific example. The Secretary of State already has those powers under the 2006 Act, which the hon. Gentleman’s Government enacted.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

Control of maximum price of other medical supplies

[Dr Whitford]

I beg to move amendment 47, in clause 5, page 3, line 39, at end insert—

‘(7) Before making regulations under Clause 5 the Secretary of State must conduct a consultation on the potential effect of this clause on the maintenance of quality of those medical supplies, and seek representations from manufactures, suppliers and distributors of medical supplies as part of the consultation.”.

This is a probing amendment on an issue of concern. The Secretary of State has obviously had powers since 2006, and perhaps earlier, to seek to control the price of medical supplies. That power has not really been utilised, and neither have the informatics of that. When controlling the price of drugs, the quality of those drugs is controlled by the Medicines and Healthcare Products Regulatory Agency so that pushing down the price does not result in loss of quality.

My concern is that, beyond a kitemark or a CE mark, we do not have anything in the United Kingdom that controls quality, particularly of consumables such as swabs and gloves. As a surgeon for 30-odd years, I can tell the Committee that the range in quality of things such as surgical gloves can be immense. A surgeon might use two or three pairs of gloves during an operation. If there is a leak in those gloves that is not visible, it might be only when the surgeon washes their hands afterwards that they see they have blood on their finger, which means that staff are exposed to blood contamination. Poor-quality swabs might result in thread or fluff coming off inside a patient, which can contribute to sepsis. There is no quality controller specific to medical supplies, so if we just drive down the price, we may drive down the quality.

We use a lot of central procurement in Scotland, and NHS National Procurement has helped us to control our prices for everything from consumables through to major machine purchases, which is already saving money for the NHS in Scotland. If there were a reduction in quality, our concern is that it would be UK-wide. It would be something that producers were doing, which would in turn undermine what the devolved Government were trying to do. Procurement remains devolved, but if the quality started to drop overall, that would affect all the devolved health services, as well as NHS England.

The amendment calls for consultation and for consideration of some form of quality regulation or control that would mean those items having to be way above the very basic CE level, at a point considered high enough quality for NHS use.

[Justin Madders]

I support the hon. Lady’s amendment. She spoke with great personal experience, which we all appreciate, about the importance of maintaining the quality and reliability of products in the NHS. Over the weekend, there were reports of the vast sums paid out by the NHS in clinical negligence costs. I am sure we all agree that that money would be better spent on patient care. Of course, many of those claims are down to human error, or to events that were in some other way avoidable. However, one obvious example of an area where we need to be reassured that the Bill will not have unintended consequences is infection control. About 300,000 people a year—about one in every 16 patients—get an infection while being cared for in the NHS. That causes additional suffering, inconvenience and, sometimes, serious illness or death. It also has a wider impact on the NHS, because patients with hospital-acquired infections spend two and a half times longer in hospital than uninfected patients, on average: they are usually admitted for approximately 11 days.

As well as the devastating impact on the patients affected, there is a significant financial impact on the NHS. I have referred to the costs incurred from clinical negligence claims. The most recent reliable estimate of costs from infections, which appeared in the Plowman report, put the figure at £1 billion a year. According to Professor Briggs’s report “Getting It Right First Time”, if someone gets an infection from an orthopaedic operation, it costs the NHS an extra £100,000 to put it right. We need to be confident that the Bill poses no risk of any reduction in quality, but we would have been more confident about that if there had been a proper consultation on that element in the first place.

[Mr Dunne]

Rather unusually, I start by thanking the hon. Lady for proposing the amendment. She has raised an issue for which we have considerable sympathy. She touched on the way in which medical products are procured in Scotland. I can confirm that we are looking to introduce more centralised purchasing across the NHS under the efficiency proposals made by Lord Carter in the other place. One of the areas of focus was the variability, in purchasing terms, of standard commodity items. She mentioned surgical gloves—I will not go into detail on those with her, because she has obviously used them considerably more than I can conceive of and is therefore very experienced when it comes to the variability not just in price but in quality of such commodity products. We are looking to introduce closer central purchasing—I think 12 items are currently being trialled or introduced in parts of NHS England.

We recognise that, as currently drafted, the Bill does not explicitly state in relation to section 260 that the Government are obliged to consult industry. I am aware that the 2006 Act, in relation to controlling the cost of medicines, does explicitly state that there is an obligation on the Government to consult. The hon. Lady’s amendment is appropriate in its intent. I invite her to withdraw it at this stage, but I undertake to work with her. My officials will consider how to amend the amendment to give it the effect that she seeks, but in a way that works in the context of the Bill. There are technical drafting issues with the amendment that mean that it would give us some unintended difficulties. That is the Government’s position on the amendment; I hope she is happy with that.

The hon. Lady referred to the effect of any pricing controls for medical supplies on the maintenance of those products’ quality. I can assure the Committee that the Government will take into account all relevant factors, including any concerns raised by industry about the quality of medical supplies, when making and consulting on price controls if they were to apply to medical supplies. The Government would not be in favour of putting any of those many factors in the Bill, because it may unnecessarily constrain the conduct of future Governments or the NHS.

[Dr Whitford]

If there is a move to more central procurement, will the Minister consider some form of quality control regulation or power at that point, so that central procurement is not just driven to accept the lowest price and there is some safety mechanism, in the same way we have the MHRA for drugs?

[Mr Dunne]

We will consult with industry on the impact of the Bill on medical supplies. Although I am not going to give the hon. Lady an absolute assurance that we can introduce a threshold for quality, which is quite hard to prescribe given the immense variety of supplies we are talking about, there is a clear intent that, if we are centralising procurement of equipment, that equipment has to meet a quality threshold in order to be acceptable to the clinician. I understand the point she makes. The intent is not to buy substandard equipment to treat patients, but to remove variability in pricing for the same equipment depending on different purchasers, which is inappropriate and means effectively the taxpayer is the funder of all these different entities.

[Rob Marris]

rose—

[Mr Dunne]

I think the hon. Gentleman is looking to intervene—or is he stretching again?

[Rob Marris]

I urge the Minister to have a greater familiarity with the quality of surgical gloves, which are great for delivering leaflets. They give a bit of weather protection. You don’t have to lick your finger to get the next leaflet, you don’t get letterbox knuckle, and—best of all—the dog gets latex, not flesh.

[Mr Dunne]

Again the hon. Gentleman strays, but not too far beyond his brief, because surgical gloves have been raised now by three members of the Committee. I am grateful for that tip. With the onset of winter weather, that could be quite useful for those of us who will be going to Sleaford and North Hykeham over the next few weeks to leaflet. I will take it upon myself to bring a box of surgical gloves when I visit.

With your indulgence, Mr Pritchard, I will take this opportunity to pick up the points made by the hon. Member for Central Ayrshire about the way the statutory scheme is intended to operate. To be crystal clear, clause 2 relates to unbranded generics and allows us to make regulations and directions to specific companies, while clause 3 relates currently only to branded medicines but could, if we wanted it to, also relate to unbranded medicines in future. The statutory scheme will be used where a company is not a member of the voluntary scheme, as I indicated to the hon. Member for Wolverhampton South West. The statutory scheme is intended to operate through setting a percentage of sales to be paid to the Government. Details of the scheme’s operation will be set out in regulations. A draft of the illustrative regulations is available to the Committee.

I will revert to the hon. Lady’s amendment 47. The Government do not currently control prices of medical supplies. As was referred to earlier, the MHRA is responsible for the safety, efficacy and quality of medical supplies. That provides some check of quality in relation to not only medicines but medical supplies.

[Rob Marris]

The Minister has lost me there. It is probably my ignorance, but I thought he just said that the Government do not currently control the cost of medical supplies. If that is what he said, is that because they do not use the power they already have under section 260(1) of a 10-year-old Act?

[Mr Dunne]

Yes, I think that is the correct answer. We do have those powers under the 2006 Act, but they have not been used, partly because generally speaking medical supplies is a competitive market. We have not seen the kind of abusive price behaviour that we are trying to address elsewhere in the Bill.

[Dr Whitford]

Will the Minister give way?

[Mr Dunne]

I am about to conclude but I will happily give way.

[Dr Whitford]

I would like to clarify the reason for introducing this, if there has not been a problem in the market, as we have seen with the price hikes in generics, and it is much harder to do. Why are the Government extending a power they have had for 10 years but never used?

[Mr Dunne]

In essence, we are trying to bring the regimes for medical supplies and drugs into the same environment, so that we are able in future to use the powers, which we are introducing for the first time for drugs, for medical supplies on the same basis, so that we do not have to treat one thing under one Act and the other under another. I hope that is clear.

[Justin Madders]

I am sorry to push this point, but are there any examples? We obviously have clear examples, for example, in the pharmaceutical sector. Is there anything in the supplies sector that would be equivalent?

[Mr Dunne]

I am not aware of any particular examples of medical supplies that we are concerned about at this point. However, I am sure that, if there are people outside watching who have good examples, they will let the Committee know before we conclude our deliberations.

Reverting to the hon. Lady’s amendment 47, we understand the intent behind it. We are not fully convinced that the current drafting would have precisely the effect that she is hoping. I invite her to work with me and my officials between now and Report. The Government will be happy to consider how we could best introduce the requirement to consult in relation to section 260. On that basis, I invite her to withdraw the amendment.

[Dr Whitford]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Dunne]

Clause 5 amends section 260 of the 2006 Act, which enables the Secretary of State to control the maximum prices of medical supplies other than health service medicines. As we have just discussed, the Government have powers to control prices of medical supplies and we are not currently using those powers. It is important that we continue to have those powers, should we decide it is necessary to control prices of medical supplies in the event of market abuse.

With an increasing spend on healthcare products, the Government need the tools to be able to control prices, if there is any indication that medical suppliers do not provide value for money to the NHS and the taxpayer. The measures would ensure that the same enforcement and territorial extent provisions apply to controlling the cost of medical supplies and health service medicines.

Existing enforcement provisions in relation to medical supplies are draconian compared with those for medicines. Currently, a contravention or a failure to comply is in fact a criminal offence in relation to medical supplies, whereas it is not in relation to medicines. We are aligning the enforcement provisions to those for medicines and making them much more proportionate. That is done through clause 7, through consequential amendments. On that basis, I ask the Committee to agree that clause 5 stand part of the Bill.

[Rob Marris]

May I again congratulate the Government? This appears to be the only piece of criminal legislation I have ever heard of that apparently has a 100% deterrence rate. That is, the Government have the power to penalise a course of action and, as far as the Government are aware, no company is pursuing such a course of action, meaning that Government do not have to exercise their powers, criminal or otherwise. What a great piece of legislation passed by the Labour Government in 2006.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mark Spencer.)

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

Philip Dunne Excerpts

Committee Debate: 3rd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[The Minister of State, Department of Health (Mr Philip Dunne)]

I beg to move amendment 1, in clause 6, page 4, line 4, at end insert—

“( ) References in this section to a UK producer are to a person who—

(a) manufacturers, distributes or supplies any UK health service products, and

(b) is not an excepted person.”

This amendment is linked to amendments 2 to 16 and 19 to 35. It provides a definition of the term “UK producer” to be used in sections 264A to 265 of the National Health Service Act 2006.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 2 to 19.

Amendment 48, in clause 6, page 5, line 41, at end insert—

“(1A) Information provided by virtue of section 264A must be disclosed by the Secretary of State to any person listed in subsection (1) at that person’s request.”

Government amendments 20 to 36 and 38.

[Mr Dunne]

I apologise to the Committee for introducing quite so many amendments at this stage of our deliberations. As I explained in our pre-meeting before we went into line-by-line scrutiny, the amendments were tabled entirely to reflect the request from the devolved Administrations, with which we entirely agree, on how they want to apply this power in their territories. As a result of things beyond the control of the Committee, including elections in the devolved Administrations this spring, the European Union referendum and the summer recess, all of which interfered with the normal process of discussion between the Department and the devolved Administrations, we were not able to get instructions from them before the introduction of the Bill, which is why the amendments have only now been tabled.

I recognise that this is a large number of amendments, but they are all driving at the same objective. Some of the information requirements in the Bill that apply to England only could also apply to the territories of the devolved Administrations. The Government amendments therefore reflect the instructions of the devolved Administrations in that area. We have had constructive discussions with each Administration, and we have agreed that the UK Government will collect information from wholesalers and manufacturers for the whole of the UK. It would not make sense for each nation to collect its own information from wholesalers and manufacturers, because that would lead to duplication of effort to no apparent purpose. We have also agreed that each nation will collect information from its own pharmacies and GPs, to the extent that that is requested.

Amendments 1 to 36 and 38 therefore enable the Secretary of State to collect information from UK producers for devolved purposes, with the exception of pharmacies and GPs in the devolved territories. The amendments will enable the Secretary of State to share the information with the devolved Administrations and other bodies in the devolved Administrations, and enable them all to use the information for devolved purposes: reimbursement of pharmacies and GPs; and to assess value for money in relation to the supplies. I hope that the Committee will therefore accept those Government amendments.

While I am on my feet, I take the opportunity to clarify again the comments I made towards the end of our previous sitting, to ensure that they are properly on the record. They related to the distinctions between clauses 2 and 3. The Bill, as everyone in Committee knows, is concerned with the cost of health service medicines. We negotiated a voluntary scheme with industry that controls the cost of branded health service medicines. Any company that has branded medicines in its portfolio and chooses not to be a member of the voluntary scheme will automatically become a member of the statutory scheme.

The existing statutory scheme, which also applies only to branded health service medicines, is based on a price-cut mechanism. The Bill makes it clear that the Secretary of State may make regulations for a statutory scheme that is based on a payment mechanism, whereby a percentage of sales income is paid to the Government. Illustrative regulations, to which I referred this morning, and which include the payment mechanism alongside a price-freeze mechanism, have been provided to Committee members. Even though the Bill would not prevent us from applying the statutory scheme to unbranded generic medicines, that is not the Government’s current intent.

I have some comments to make on Opposition amendment 48. Perhaps you would like me to do that after the amendment has been spoken to, Mr Pritchard.

[The Chair]

I think later would be helpful, thank you, Minister.

--- Later in debate ---

[Mr Dunne]

I am grateful to the hon. Lady for raising that issue. If we have time during the sitting, I shall respond more formally to her.

[The Chair]

I am sure that the hon. Lady knows, but if she wants to speak to amendment 48 now, she can do so.

--- Later in debate ---

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

I want to comment generally on the Minister’s amendments. I agree that it would have been helpful if they had been published earlier, but reasons why that was not possible have been given, and the Committee will be pleased to hear that I do not intend to go through each of them. I take the Minister’s assurances that there has been extensive dialogue with the devolved Administrations. I intend to direct my remarks not so much at those Administrations that have been taking responsibility for their health service for some time, but at those areas in England where they have embarked upon ambitious devolution arrangements that encompass health—Manchester is the most obvious and probably most advanced example. It is not at all clear to me how, if at all, the Bill will impact on them.

The Greater Manchester area has now been given a delegated budget of £6 billion per annum. I am sure that people there have made various representations about how that is short of the figure that they need, and a significant proportion of the annual budget will certainly be spent on pharmaceutical costs. Would it not be reasonable for the relevant proportion of the rebate to be returned to Manchester and such areas in the same manner as the initial funding is devolved down to them? Simon Wootton, who was the chief operating officer at the North Manchester clinical commissioning group, said that we have not had the PPRS money back into the local NHS in North Manchester.

I am not aware of any specific agreements as part of the devolution settlement for Greater Manchester, and nothing is in the Bill, so I would be grateful if the Minister, when he responds, set out whether there have been any discussions with local representatives in Manchester on the issue, and whether his intention is to ensure that, in common with other devolved Administrations, appropriate arrangements are put in place for the relevant proportion of the rebate to be paid directly to them.

[Mr Dunne]

First, in relation to amendment 11 and what the hon. Member for Central Ayrshire said, I think she made a perfectly reasonable point. As a lay reader of parliamentary drafting, if I may say so, it would be easy to be perplexed by the sequencing that she highlighted and brought to the attention of the Committee. I am advised, however, that the purpose of the amendment is to ensure that the UK Government collect information from English pharmacies and GP practices, but not from pharmacies in the areas of the devolved Administrations. Therefore, the reference to “Excepted person” includes pharmacies and GP practices in the devolved Administrations, but specifically does not include those in England, because their information is already collected by the UK Government. The terminology relates to where the GPs and pharmacies are and who is doing the collecting. I hope that helps.

[Dr Whitford]

I understand that, but I could not find reference to that in the National Health Service Act 2006, and I thought that the aim was to bring everything together in this Bill, so it seemed odd that there was no mention of English excepted persons. That is fine—that information is already being collected—but the Bill still separates the definition of English health service products from the definition of the health service products of the devolved nations. It seems an odd place to insert the amendment; it seems it is being attached to the definition of English health service products.

I totally accept that I am a complete novice, so there may be something I am not understanding, but to me, reading it logically, it does not seem to make total sense, and I thought that the aim of the Bill was to bring all the powers into one place. It seemed odd for there to be no definition of English excepted persons, even from an old Act, because what is happening here is that different things are being brought from the 2006 Act and from the Scotland Act 1978 into one place.

[Mr Dunne]

I thank the hon. Lady for that clarification. I hope that inspiration will arrive before I sit down.

To address the specific point made by the hon. Member for Ellesmere Port and Neston on devolution to Manchester, it is an interesting idea, which reflects some of the challenges arising from the increasing use of devolution of powers across our country. I can see why he might seek to secure a carve-out of income for Manchester. I would say, “Nice try”, but at present the funding arrangements for Manchester and other devolved areas in England are agreed via NHS England. That applies to the totality of funding available for health provision within the Manchester area, so the allocation already includes income derived from the voluntary scheme, and it will not be ring-fenced as a subset of the funds, because there chaos would lie.

[Justin Madders]

I appreciate that the Minister is not going to embark on a new area of debate and dialogue with Greater Manchester on this point, but will he advise whether future allocations intend to deal with the increased income from the rebate that is anticipated as a result of the Bill?

[Mr Dunne]

Each year, when NHS England agrees its commissioning budgets and tariffs with providers, an allocation is made. That is based on the overall sum received by NHS England. Increases in revenues that derive from the Bill will help to swell that pot relatively modestly, although every penny counts, and that will therefore be taken into account when determining allocations to all CCGs, including those in Manchester.

I will give the Government’s response in relation to amendment 48; I do not have many comments to make. I sincerely hope that, before I reach the end of these remarks, I will be able to address the further point, on English exclusion, made by the hon. Member for Central Ayrshire.

Proposed new section 264B in clause 6 enables the Secretary of State to disclose the information collected to a range of bodies, which includes Government bodies such as NHS England, special health authorities, NHS Digital, other Departments and the devolved Administrations. It also enables the Secretary of State to prescribe representative bodies, or other persons in prescribed regulations, to whom he can disclose information in the future. For example, that might include certain information going to trade associations or other bodies that it might be appropriate to provide information to in future, with respect to the operations of the Bill.

The effect of the amendment tabled by the hon. Members for Central Ayrshire and for Linlithgow and East Falkirk would be that any of those bodies could in future access any information that the Government have collected. We do not believe that it would be right for representative bodies to be able to access information that the Secretary of State collects, primarily for purposes of commercial confidentiality. There are examples in other legislation in which we have taken specific steps to protect commercially sensitive information. I am not suggesting that one company would directly get access to information on another company’s profitability, but third-party advisers, for example, might get access to that information.

We do not want to provide opportunities for risking breaches of commercial confidentiality, because that would undermine confidence in the information gathering for all the companies, which includes major multinational companies. We think that the amendment might open us up to criticism from the major suppliers that there was greater risk of that intervention, which we would not want to see.

[Dr Whitford]

If the Minister looks at our amendment, which is incredibly short, he will see that all it says is “at that person’s request.” We do not want to widen the list in any way at all; we are not looking to add to the list. All we are saying is that, if it is accepted that a devolved Government should be able to access this information, it should be at the request of that devolved Government. It should not be, “We will tell you every April how you’re doing.” If a devolved country sees a pattern emerging, it should be able to say, “Can we request our data?” The issue is that data are to be collected centrally but not belong to the devolved nations to which they pertain. We are not trying to add anyone; we are just trying to give the devolved countries the power to request.

[Mr Dunne]

I completely understand that that is the intent of the hon. Lady’s amendment, and I think I have another way of addressing it, which I am now going to come on to. We think it entirely appropriate that at some point the devolved Administration might wish to change their information requirements. They might wish to add requests for information that they are not initially getting, which is a reasonable request.

We think that the right way to address that, rather than putting something in the Bill that might inadvertently allow other representative bodies access to information—I am sure the hon. Lady agrees that that might not be appropriate—is for a memorandum of understanding to be agreed between the Department of Health and each of the devolved Administrations that would allow requests for information to be submitted and dealt with in a manner agreeable to both parties. In the consultation process that will follow, we intend to enter into a memorandum of understanding that will include the procedures for requesting and sharing information.

I assure the Committee that the Government intend to continue to work constructively with the devolved Administrations to ensure that they have access to the relevant information collected in a format convenient to both sides, so that we do not end up with special data sets that are hard for an Administration to create because the data are not readily available from the information provided. Aside from that, we would honour the reasonable requests of any devolved Administration to be able to get access to the data, which I acknowledge the Administration may not own if the information has been gathered by the Department of Health.

On that basis, I hope that the hon. Lady and the hon. Member for Linlithgow and East Falkirk will not press their amendment.

[The Chair]

If the SNP Front-Bench spokespersons want to press the amendment to a vote, that will happen later, but it would be helpful to the flow of the proceedings if they confirmed now whether they intended to do so.

[The Chair]

I am grateful to the hon. Gentleman.

Amendment 1 agreed to.

Amendments made: 2, in clause 6, page 4, line 5, leave out from “any” to “to” in line 6 and insert “UK producer”.

This amendment is linked to amendments 1, 3 to 16 and 19 to 35. It allows regulations to require the provision of information by a person who manufactures, distributes or supplies Welsh health service products, Scottish health service products or Northern Ireland health service products.

Amendment 3, in clause 6, page 4, line 19, at end insert—

“(d) the determination of the payments to be made to any persons who provide primary medical services under Part 4 of the National Health Service (Wales) Act 2006;

(e) the determination of the remuneration to be paid to any persons who provide pharmaceutical services under Part 7 of that Act;

(f) the consideration by the Welsh Ministers of whether—

(i) adequate supplies of Welsh health service products are available, and

(ii) the terms on which those products are available represent value for money;

(g) the determination of the payments to be made to any persons who provide primary medical services under section 2C(1) of the National Health Service (Scotland) Act 1978 (“the 1978 Act”);

(h) the determination of the remuneration to be paid to any persons who provide pharmaceutical care services under section 2CA(1) of the 1978 Act;

(i) the consideration by the Scottish Ministers of whether—

(i) adequate supplies of Scottish health service products are available, and

(ii) the terms on which those products are available represent value for money;

(j) the determination of the remuneration to be paid to any persons who provide primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14));

(k) the consideration by a Northern Ireland department of whether—

(i) adequate supplies of Northern Ireland health service products are available, and

(ii) the terms on which those products are available represent value for money;

(l) the exercise by the Secretary of State of any powers under sections 260 to 264 and 265;

(m) the operation of a voluntary scheme.”.

This amendment is linked to amendments 1, 2, 4 to 16 and 19 to 35. It sets out the purposes for which a person may be required to record and provide information to the Secretary of State by virtue of regulations under section 264A(1) of the National Health Service Act 2006.

Amendment 4, in clause 6, page 4, leave out lines 20 to 29.

This amendment is linked to amendments 1 to 3, 5 to 16 and 19 to 35. It removes subsections (3) and (4) of section 264A of the National Health Service Act 2006 because the provision made by those subsections now appears in amendment 3.

Amendment 5, in clause 6, page 4, line 30, leave out

“an English producer or other”

and insert “a”.

This amendment is linked to amendments 1 to 4, 6 to 16 and 19 to 35. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 6, in clause 6, page 4, line 33, leave out from “for” to end of line 35 and insert “UK health service products”.

This amendment is linked to amendments 1 to 5, 7 to 16 and 19 to 35. It is a consequential amendment. A reference to English health service products is no longer needed as those products will fall within the definition of “UK health service products” inserted by amendment 14.

Amendment 7, in clause 6, page 4, line 38, leave out “the” and insert “UK health service”.

This amendment is linked to amendments 1 to 6, 8 to 16 and 19 to 35. It is a consequential amendment.

Amendment 8, in clause 6, page 4, line 41, leave out “the” and insert “UK health service”.

This amendment is linked to amendments 1 to 7, 9 to 16 and 19 to 35. It is a consequential amendment.

Amendment 9, in clause 6, page 4, line 43, leave out second “the” and insert “UK health service”.

This amendment is linked to amendments 1 to 8, 10 to 16 and 19 to 35. It is a consequential amendment.

Amendment 10, in clause 6, page 5, line 1, leave out from “whether” to “health” in line 2 and insert

“they are UK health service products and, if so, which of the following they are—

(i) English health service products;

(ii) Welsh health service products;

(iii) Scottish health service products;

(iv) Northern Ireland”.

This amendment is linked to amendments 1 to 9, 11 to 16 and 19 to 35. It is a consequential amendment. It enables regulations to require a UK producer to provide information about products for verifying whether they are Welsh, Scottish or Northern Ireland health service products.

Amendment 11, in clause 6, page 5, line 14, at end insert—

“(8A) “Excepted person” means any of the following—

(a) a person who provides primary medical services under Part 4 of the National Health Service (Wales) Act 2006;

(b) a person who provides pharmaceutical services under Part 7 of that Act;

(c) a person who provides primary medical services under section 2C(1) of the 1978 Act;

(d) a person who provides pharmaceutical care services under section 2CA(1) of the 1978 Act;

(e) a person who provides primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14)).”.

This amendment is linked to amendments 1 to 10, 12 to 16 and 19 to 35. It lists the persons who are excepted from being a “UK producer” for the purposes of the definition inserted by amendment 1.

Amendment 12, in clause 6, page 5, line 15, at end insert—

“( ) “Northern Ireland health service products” means any medicinal products used to any extent for the purposes of health care provided by virtue of the Health and Social Care (Reform) Act (Northern Ireland) 2009 and any other medical supplies, or other related products, required for the purposes of health care provided by virtue of that Act.”.

This amendment is linked to amendments 1 to 11, 13 to 16 and 19 to 35. It provides a definition of “Northern Ireland health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 13, in clause 6, page 5, line 15, at end insert—

“( ) “Scottish health service products” means any medicinal products used to any extent for the purposes of the health service within the meaning of the 1978 Act and any other medical supplies, or other related products, required for the purposes of that health service.”.

This amendment is linked to amendments 1 to 12, 14 to 16 and 19 to 35. It provides a definition of “Scottish health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 14, in clause 6, page 5, leave out lines 16 to 26 and insert—

“( ) “UK health service products” means any English health service products, Welsh health service products, Scottish health service products or Northern Ireland health service products.”.

This amendment is linked to amendments 1 to 13, 15, 16 and 19 to 35. It provides a definition of “UK health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 15, in clause 6, page 5, line 26, at end insert—

“( ) “Welsh health service products” means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) of the National Health Service (Wales) Act 2006 and any other medical supplies, or other related products, required for the purposes of that health service.”

This amendment is linked to amendments 1 to 14, 16 and 19 to 35. It provides a definition of “Welsh health service products” for the purposes of section 264A of the National Health Service Act 2006.

Amendment 16, in clause 6, page 5, line 26, at end insert—

“( ) Until the coming into force of the repeal of section 27 of the 1978 Act by schedule 3 to the Smoking, Health and Social Care (Scotland) Act 2005 the references in subsections (2)(h) and (8A)(d) to pharmaceutical care services under section 2CA(1) of the 1978 Act are to be read as references to pharmaceutical services under section 27(1) of that Act.”.

This amendment is linked to amendments 1 to 15 and 19 to 35. It makes transitional provision in relation to references to pharmaceutical care services under section 2CA(1) of the National Health Service (Scotland) Act 1978.

Amendment 17, in clause 6, page 5, line 35, at end insert—

“(fa) the Common Services Agency for the Scottish Health Service constituted under section 10 of the 1978 Act;”.

This amendment adds the Common Services Agency for the Scottish Health Service to the persons listed in section 264B(1) of the National Health Service Act 2006. This means that information provided by virtue of section 264A of that Act may be disclosed to that Agency.

Amendment 18, in clause 6, page 5, line 36, at end insert—

“(ga) the Regional Business Services Organisation established under section 14 of the Health and Social Care (Reform) Act (Northern Ireland) 2009;”.

This amendment adds the Regional Business Services Organisation to the persons listed in section 264B(1) of the National Health Service Act 2006. This means that information provided by virtue of section 264A of that Act may be disclosed to that Organisation.

Amendment 19, in clause 6, page 5, line 40, leave out “English producers or other”.

This amendment is linked to amendments 1 to 16 and 20 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 20, in clause 6, page 5, line 46, at end insert “(subject to subsection (4))”.

This amendment is linked to amendments 1 to 16, 19 and 21 to 35. It flags the provision made by amendment 29.

Amendment 21, in clause 6, page 6, line 4, leave out “or (4)” and insert

“(a) to (c), (l) or (m)”.

This amendment is linked to amendments 1 to 16, 19, 20 and 22 to 35. It is consequential on amendments 3 and 4.

Amendment 22, in clause 6, page 6, line 8, leave out “or (4)” and insert

“(a) to (c), (l) or (m)”.

This amendment is linked to amendments 1 to 16, 19 to 21 and 23 to 35. It is consequential on amendments 3 and 4.

Amendment 23, in clause 6, page 6, line 11, leave out “to (g)”.

This amendment is linked to amendments 1 to 16, 19 to 22 and 24 to 35. It is consequential on amendments 25 and 26.

Amendment 24, in clause 6, page 6, line 12, leave out

“either of the matters specified in section 264A(4)”

and insert

“any of the matters specified in section 264A(2)(d) to (f), (l) or (m)”.

This amendment is linked to amendments 1 to 16, 19 to 23 and 25 to 35. It is consequential on amendments 3 and 4.

Amendment 25, in clause 6, page 6, line 13, at end insert—

“(ca) in relation to a person falling within subsection (1)(f) or (fa), the purpose is that of exercising functions connected with any of the matters specified in section 264A(2)(g) to (i), (l) or (m);”.

This amendment is linked to amendments 1 to 17, 19 to 24 and 26 to 35. It is consequential on amendments 3, 4 and 17.

Amendment 26, in clause 6, page 6, line 13, at end insert—

“(cb) in relation to a person falling within subsection (1)(g) or (ga), the purpose is that of exercising functions connected with any of the matters specified in section 264A(2)(j) to (m);”.

This amendment is linked to amendments 1 to 16, 18 to 25 and 27 to 35. It is consequential on amendments 3, 4 and 18.

Amendment 27, in clause 6, page 6, line 17, leave out “(c)” and insert “(cb)”.

This amendment is linked to amendments 1 to 16, 19 to 26 and 28 to 35. It is mainly consequential on amendments 25 and 26.

Amendment 28, in clause 6, page 6, line 20, leave out “or (4)”.

This amendment is linked to amendments 1 to 16, 19 to 27 and 29 to 35. It is consequential on amendments 3 and 4.

Amendment 29, in clause 6, page 6, line 20, at end insert—

“(4) The Welsh Ministers may disclose any confidential or commercially sensitive information disclosed to them under subsection (1) to any of the following persons—

(a) a Local Health Board or other person appointed under section 88(3)(b) of the National Health Service (Wales) Act 2006 to exercise the functions of a determining authority under Part 7 of that Act;

(b) a National Health Service trust established under section 18 of the National Health Service (Wales) Act 2006;

(c) any person who provides services to the Welsh Ministers or to any person falling within paragraph (a) or (b).

(5) A person to whom any confidential or commercially sensitive information is disclosed under subsection (4) may not—

(a) use the information for any purpose other than the purpose of exercising functions connected with any of the matters specified in section 264A(2)(d) to (f), (l) or (m), or

(b) disclose the information to another person.”.

This amendment is linked to amendments 1 to 16, 19 to 28 and 30 to 35. It allows the Welsh Ministers to disclose information to other persons including Local Health Boards, National Health Service trusts and persons providing services to those persons.

Amendment 30, in clause 6, page 6, line 24, leave out “English producers or other”.—(Mr Dunne.)

This amendment is linked to amendments 1 to 16, 19 to 29 and 31 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Question proposed, That the clause, as amended, stand part of the Bill.

[Mr Dunne]

Before I go into the clause as a whole, I would like to respond in further detail to the hon. Member for Central Ayrshire about excepted persons. Clause 6 will add a new section to the National Health Service Act 2006. It brings together information collection practices, both statutory and voluntary. The Secretary of State collects information from a sample group in England from time to time, but not from GPs and pharmacies in the devolved Administrations. Therefore, the definition of “excepted persons” covers those persons whom the Secretary of State does not intend to collect information from directly, because he would be relying on the devolved Administrations to do so. The terminology used in proposed new section 264B is new; it is not based on the 2006 Act, which the hon. Lady has read so diligently. I thank her for bringing the matter to the Committee’s attention and I hope that that explanation meets her concern.

[Dr Whitford]

To clarify, is there a rational reason for the positioning of the section as between English health service products and the other health service products? I am sorry if, as a novice, I am creating extra work.

[Mr Dunne]

I think that is to do with parliamentary drafting on which I stand to become an expert; I look forward to seeing whether there is a clear explanation for that, which I can give to the hon. Lady as we debate the clause.

The clause enables the Secretary of State to make regulations that require any person who manufactures, distributes or supplies health service products, which includes health service medicines, medical supplies and other related products, to keep, record and provide on request information on prices and costs.

The clause brings together and consolidates existing information requirements related to controlling the costs of health service medicines, as well as medical supplies, in one place in the Act, as we discussed this morning. It also allows the information to be used for the purposes set out in the clause.

The clause also expands and strengthens our information collection. It enables the Government to make regulations to put current voluntary information provision arrangements on a statutory footing. For example, we collect information from manufacturers and wholesalers of unbranded generic medicines and specials to inform reimbursement arrangements for community pharmacies. The Bill will enable us to make regulations to get information on more products and from more companies. That is necessary to ensure that reimbursement prices for pharmacies reflect market prices of the whole market, rather than just of those companies that currently supply data to us. As in any industry, there are new market entrants and participants leave the market; this is a dynamic market and we need the flexibility to bring in new products from new companies.

The clause will also enable the Government to collect information to assure us that adequate supplies of health service products are available, and that the terms on which they are available represent value for money. If we were to have concerns about the supply chain or parts of it, or about specific products, we could obtain information from companies in the supply chain to assure us that the products, or the supply chain, provided value for money to the NHS and the taxpayer. Although the Government are generally not the purchaser of health service products, they do pay for them and therefore transparency and value for money of the supply chain are important. For example, if we were to consider limiting the price of a high-priced generic, the power to obtain information would be crucial to determine whether excess profits were being made. We could obtain information from a manufacturer, which would help us to determine whether the price it was charging the NHS was unreasonably high. That information would also inform our decision on what the right price should be.

The purposes for which the Government can collect information are limited and involve three areas: cost and pricing schemes, reimbursement of pharmacies and GPs, and assessing value for money. The clause provides the Secretary of State with the power to request any information for the purposes set out in the Bill. It also provides an indicative list of the type of information that the Secretary of State may request. Most of the types of information listed are already collected by the Government under statutory or voluntary arrangements.

The clause will also enable the Government to share information with a range of bodies, including Ministers in the devolved Administrations, the NHS, other Departments and persons providing services to those prescribed bodies.

[Rob Marris]

In the Minister’s helpful letter to the hon. Member for Vale of Clwyd, sent yesterday, he said:

“At this moment the Government does not foresee any routine collections for those involved in the manufacture, distribution or supply of medical supplies”.

I just understood the Minister to say—he will correct me if I misunderstood—that in certain non-routine circumstances in relation to medical supplies, the Government may wish to have information. I understand that, but I must say to him that that might create a problem for those medical suppliers that are not routinely supplying information, but feel that they still have to keep all the information as outlined in the clause just in case a little way down the road the Government decide that the circumstances are exceptional. Will he clarify that?

[Mr Dunne]

I am grateful to the hon. Gentleman for raising some of the practical requirements of collecting and retaining data. Particularly in relation to medical supplies, where we have this power already but have not exercised it, I can understand a potential anxiety that we may be changing the basis on which companies are requested to retain information. We will be consulting industry on the regulations, and a draft is available in the pack. Our intent is not to add to the burden, particularly on small companies, of retaining extra data that may never be called upon.

We will use the consultation to try to be as pragmatic as possible but, in the event of information becoming apparent to us within a reasonable period, we may wish to be able to go back and look at the data. The natural place to start the data gathering is the information that companies are obliged to retain for other Government purposes, such as HMRC requirements to retain information for six years. That will be our starting point in identifying the duration, the type of information and the manner of retention. We are not, in the first instance, looking to add an additional burden.

During the consultation, we may decide that there is some information that is routinely kept by companies that supply the NHS that it would be desirable for them to continue retaining for the same period but, as I stand here today, I do not have examples. I am sure an ingenious mind could come up with a devilishly clever example of information that would be useful, but I hope the hon. Gentleman will not be tempted by me to do so.

[Maggie Throup (Erewash) (Con)]

The Minister says that he will continue to consult industry bodies, and there are some obvious bodies that I am sure he will have around the table. Can he reassure us that it will not just be the large bodies and that he will invite some of the smaller trade organisations to the consultation, too?

[Mr Dunne]

Yes. I am grateful to my hon. Friend for that intervention. We intend to consult the trade associations that we have already been consulting. As I said to the hon. Member for Wolverhampton South West, we do not intend to add unduly burdensome information requirements. One issue that we have agreed to consider in the consultation is the suggested size of business that should be capable of providing information. We have an SME definition in the regulations that is not precisely the same as other SME definitions elsewhere across Government, and we need to consider that carefully in the consultation so that we are not unduly burdening small companies.

Having said that, there are examples of pharmaceutical providers that may be large companies in other countries but are supplying through a UK subsidiary or a non-UK EU subsidiary that maintains a very small number of employees in this country, that therefore may fall within the more widely used SME definition but that nevertheless is a relatively large supplier of pharmaceutical products to the UK. There is a balance to be struck in ensuring that the universe of companies that we ask to retain data is big enough to capture reasonably large suppliers, even if technically those suppliers may fall within an SME definition.

[The Chair]

Order. The TV cameras are broadcasting this debate live, and I am sure the public want to see more of the Minister than our colleagues. It would be good if he faced inwards.

--- Later in debate ---

[Mr Dunne]

Mr Pritchard, your alertness to the media never leaves the forefront of your mind. I am grateful to you for drawing to my attention the fact that others are potentially listening to our proceedings.

It will be a public consultation, so companies that feel they have an interest will have every opportunity to participate. We have already engaged with a wide range of industry bodies in both medical supplies and medicines to draft the regulations.

Fortunately, inspiration has arrived to address the persistent comment from the hon. Member for Central Ayrshire about drafting. I hope that what I am about to say will satisfy her. She referred to amendment 11, which we have agreed. The Bill currently refers to purposes that are England-only and those that are reserved. The amendments refer to purposes that are England-only, Welsh-only, Scottish-only, Northern Irish-only and reserved. It is therefore necessary to make a distinction between products supplied to the health services in each of the different nations. If that leads to some disorder in how the measure has been written, I can but apologise to the hon. Lady. She has done a good service to the Committee in pointing that out, but that is as far as I am able to go on the matter today.

Clause 6 enables the Government to share information with representative bodies providing services, in addition to the bodies I have referred to. It restricts the use of information that is confidential or commercially sensitive to the defined purposes in the Bill. That is deliberate. It is important to provide commercial suppliers to the NHS with some confidence that any information they supply which may be commercially sensitive—of course, margin information is commercially sensitive—will not be capable of being disseminated beyond the prescribed bodies. The clause also enables the Government to prescribe in regulations representative bodies with which they may share information. In the illustrative regulations, we have prescribed a number of those bodies. There is also the possibility to prescribe other persons in regulations in due course, should suitable bodies emerge.

The illustrative regulations that the Government have provided to help the Committee scrutinise the clause demonstrate our intentions in this area. The regulations distinguish between routine collection and non-routine collection of information. Routine collections mostly include information that we are already collecting under voluntary arrangements. On a non-routine basis, we would collect information to satisfy ourselves that the supply chain provides value for money. We do that at present through sampling collections from time to time, particularly among the smaller providers and pharmacies. We will consult with stakeholders to determine whether the obligation to keep and record information will be any more burdensome than the existing obligation to keep these data for tax purposes, as I have said.

Committee members will see that we have made provision for SMEs in the illustrative regulations, which I touched on in response to my hon. Friend the Member for Erewash. For the purposes of the illustrative information regulations, SMEs can, where appropriate, provide the Government with the information requested by providing us with invoices. That is how we currently collect information from pharmacies, which we believe places a proportionate and modest burden on them.

The clause covers medical supplies and other related products, streamlines existing provisions for medical supplies and aligns them with those for medicines. Medical supplies and other related products are wide-ranging, and there are tens of thousands of items. In regulations, the Government will prescribe for which medical supplies information is required to be kept, recorded and provided on request.

The illustrative regulations set out the type of products that may be affected. The Government will consult publicly on that. The Government have tabled amendments to the clause to reflect the instructions of the devolved Administrations in this area. The Department already collects a considerable amount of information from across the supply chain. The clause streamlines existing statutory requirements, puts existing voluntary arrangements on a statutory footing and strengthens the collections. It also enables the Department to use the information collected for multiple but defined purposes. If hon. Members are satisfied with my explanation, I ask the Committee to accept that clause 6 stand part of the Bill.

Question put and agreed to.

Clause 6, as amended, accordingly ordered to stand part of the Bill.

Clause 7

Consequential amendments

Amendments made: 31, in clause 7, page 6, line 32, at end insert—

“(A1) Omit the following provisions of the National Health Service (Scotland) Act 1978—

(a) section 49 (control of maximum prices for medical supplies other than health service medicines), and

(b) Schedule 10 (additional provisions as to control of maximum prices for medical supplies other than health service medicines).”

This amendment is linked to amendments 1 to 16, 19 to 30, 32 to 35 and 38. The provision made by section 49 of, and Schedule 10 to, the National Health Service (Scotland) Act 1978 is superseded by the provision made in the amendments.

Amendment 32, in clause 7, page 7, line 7, leave out “English producers and other”.

This amendment is linked to amendments 1 to 16, 19 to 31 and 33 to 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 33, in clause 7, page 7, line 11, leave out “an English producer or other” and insert “a”.

This amendment is linked to amendments 1 to 16, 19 to 32 and 34 and 35. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 34, in clause 7, page 7, line 17, leave out “English producers or other”.

This amendment is linked to amendments 1 to 16, 19 to 33 and 35. It is a consequential amendment. A reference to English producers is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Amendment 35, in clause 7, page 7, line 20, leave out ““English producer” and “other UK producer” are” and insert ““UK producer” is”.—(Mr Dunne.)

This amendment is linked to amendments 1 to 16 and 19 to 34. It is a consequential amendment. A reference to an English producer is no longer needed as an English producer will fall within the definition of “UK producer” inserted by amendment 1.

Question proposed, That the clause, as amended, stand part of the Bill.

[Mr Dunne]

You will be pleased to hear, Mr Pritchard, that I have nothing to add in the clause 7 stand part debate, and I commend the clause to the Committee.

[Rob Marris]

I hope the Minister does have a bit more to add. Clause 7 is very much the twin, or the other side of the coin, of clause 6. Clause 6 introduces big changes to the information supply regime, which we have just discussed. Clause 7 is getting rid of bits of the hitherto existing supply regime—not all of it, but bits. I want to probe him a little bit on that.

On page 7 of the Bill, clause 7(16) states:

“In Schedule 22 (provisions in relation to section 260) omit paragraphs 2 to 11.”

Schedule 22, paragraphs 2 to 11, of the National Health Service Act 2006 is about enforcement. I am probing the Minister, given our discussion this morning when I said, in relation to some parts of the Bill and this area of human endeavour, that it was the only area I am aware of where a criminal penalty regime appeared to have been 100% successful and there had been no such prosecutions—intimating, although not proving, that that wrongdoing had been dissuaded by the legislation. We then come to clause 7, and the enforcement regulations and regime are altered. I want to be reassured by the Minister that the alterations do not weaken the enforcement regime. I am applying the Marris test to it; I cannot read absolutely every word of the 2006 Act, which I was involved in 10 years ago and runs to 258 pages—I will not do that—but what is being removed is a whole lot longer than what is being substituted in. That may be a welcome shortening, clarification and simplification of the law, or it may be a weakening of enforcement. I hope that the Minister can elucidate to the Committee, in broad terms, whether it is the former or the latter.

[Mr Dunne]

I am astonished that the hon. Gentleman does not have complete recall of everything that was involved in the 2006 Act, given the assiduous way in which he approaches legislative scrutiny. Accepting that uncharacteristic lapse in his memory, I should perhaps have said that the subsections in clause 7 merely bring forward the relevant consequential amendments, following on from the earlier clauses, to the National Health Service Act.

This morning, we discussed the one material change in enforcement that we are introducing through the Bill: reducing the criminal penalty currently available under the 2006 Act for bad practice uncovered in the supply of medical supplies, so that it is in line with the enforcement regime for medicines. To that extent, if the threat of criminal sanction were—as hinted at by the hon. Gentleman—the primary reason for the lack of convictions of a criminal nature for the supply of medical supplies, he might have a legitimate concern that we are watering down an enforcement regime that had worked so effectively that there had been no prosecutions. I would gently say to him that, as far as I am aware, not only have there been no convictions, but there have been few if any—I hesitate to say none, because I might not be able to prove that—prosecutions under those sections in the 2006 Act against suppliers of medical supplies. That is as much because it has not been brought to the attention of the Department that there is abusive pricing behaviour happening in the medical supplies marketplace. For that reason, there have been no prosecutions and, therefore, no convictions. That is why we think it appropriate to remove the criminal sanction, so we may bring it into conformity with enforcement actions for medicines.

To put it in ideological terms, this is part of reducing the burden on business, because the power has proved to be one that is unnecessary for the Government to have—the power to introduce a criminal enforcement regime has not been used since its introduction by the hon. Gentleman in 2006.

[Rob Marris]

I understand what the Minister is saying. I am not in any way suggesting that the overwhelming majority of medical suppliers are on the straight and narrow only because they know what the penalties would be for going off the straight and narrow. However, he needs to be a little careful about the direction of his argument, because—I think he would agree, but he can say if he does not—if crime in the United Kingdom fell to zero, I would not suggest getting rid of all police officers. I would say, “They are doing a fantastic job and it’s great that we have all these law-abiding citizens. Let’s just encourage them to carry on being law-abiding by making it clear that there are enforcement mechanisms and penalties for not being so.” That is the philosophical, if not ideological, approach.

[Mr Dunne]

I agree with the hon. Gentleman. Neither he nor I is suggesting that there is cause and effect here in the element of the enforcement penalty element—

[Rob Marris]

I don’t know.

[Mr Dunne]

Well, we do not believe so. What we do believe is that it is more important for us to have a consistent approach to enforcement when it comes to any future breaches or alleged breaches in respect of supply to the NHS. Frankly, it will be easier for the NHS to manage and easier for the industry supplying us to operate if they are all operating within the same enforcement regime. Therefore, I commend the clause to the Committee.

Question put and agreed to.

Clause 7, as amended, accordingly ordered to stand part of the Bill.

Clause 8

Extent

Amendments made: 36, in clause 8, page 7, line 29, at beginning insert “Subject as follows,”.

This amendment is linked to amendments 37 and 38.

Amendment 37, in clause 8, page 7, line 29, at end insert—

“( ) Section (Provision of information to Welsh Ministers) extends to England and Wales only.”

This amendment is linked to amendments 36 and NC1. Its effect is that the provision made by NC1 will extend to England and Wales only.

Amendment 38, in clause 8, page 7, line 29, at end insert—

“( ) Section 7(A1) extends to Scotland only.”—(Mr Dunne.)

This amendment is linked to amendments 31 and 36. Its effect is that the provision made by amendment 31 will extend to Scotland only.

Question proposed, That the clause, as amended, stand part of the Bill.

[Mr Dunne]

This clause is the shortest in the Bill and it confirms the extent of the Bill as covering England and Wales, Scotland and Northern Ireland. I am sure we can all reach common accord in supporting the clause.

Question put and agreed to.

Clause 8, as amended, accordingly ordered to stand part of the Bill.

Clause 9

Commencement

Amendments made: 39, in clause 9, page 7, line 32, at end insert—

“( ) Section (Provision of information to Welsh Ministers) comes into force on such day as the Welsh Ministers may by order appoint.”.

This amendment is linked to amendments 40 to 42 and NC1. It makes provision for the Welsh Ministers to bring clause (Provision of information to Welsh Ministers) into force.

Amendment 40, in clause 9, page 7, line 35, at beginning insert “An order or”.

This amendment is linked to amendments 39, 41, 42 and NC1.

Amendment 41, in clause 9, page 7, line 38, at beginning insert “An order or”.

This amendment is linked to amendments 39, 40, 42 and NC1.

Amendment 42, in clause 9, page 7, line 38, after “section” insert “is or”.—(Mr Dunne.)

This amendment is linked to amendments 39 to 41 and NC1.

Question proposed, That the clause, as amended, stand part of the Bill.

[Mr Dunne]

Briefly, clause 9 deals with the commencement of the Bill and ensures that clauses 1 to 8 come into force as determined by regulations. As I have indicated, there will be a public consultation on the regulations. It is the Government’s intent that that consultation take place over the winter and it will conclude to enable the Bill to receive Royal Assent, following its passage through the House of Lords, by the end of the current Parliament.

[Rob Marris]

That is half of what I wanted to know—the Bill will have Royal Assent by then. Will the Minister say when it might come into force, pursuant to clause 9(2)?

[Mr Dunne]

The Department’s intent is for it to come into force as soon as is practicable. The timetable for their lordships’ House in determining legislation is way above my pay grade and, I would suggest, the hon. Gentleman’s. We are therefore in the hands of the parliamentary authorities, but it is certainly our hope and expectation that, with effect from 1 April, the regulations— [Interruption.] I am seeking inspiration from the Department.

[The Chair]

I think the Committee will allow that.

[Mr Dunne]

I have had some extremely expert inspiration. In the event that their lordships choose to amend the Bill during its passage, it would be inappropriate to consult on the regulations finally until the Bill emerged from the other place. The consultation will therefore start as soon as we have Royal Assent, and the implementation of the proposals is therefore expected in the autumn.

Question put and agreed to.

Clause 9, as amended, accordingly ordered to stand part of the Bill.

Clause 10 ordered to stand part of the Bill.

New Clause 1

Provision of information to Welsh Ministers

“After section 201 of the National Health Service (Wales) Act 2006 insert—

“Provision of information about medical supplies etc

201A Provision of information by persons providing primary medical services or pharmaceutical services

(1) Regulations may make provision requiring any Part 4 provider or Part 7 provider to—

(a) record and keep information, or information of a description, specified in the regulations, and

(b) provide that information to the Welsh Ministers.

(2) Information, or a description of information, may not be specified in the regulations by virtue of subsection (1) unless the Welsh Ministers consider that the information may be required for the purpose of enabling or facilitating any of the following—

(a) the determination of the payments to be made to any Part 4 providers;

(b) the determination of the remuneration to be paid to any Part 7 providers;

(c) the consideration by the Welsh Ministers of whether—

(i) adequate supplies of health service products are available, and

(ii) the terms on which those products are available represent value for money.

(3) The information which the Welsh Ministers may require from a Part 4 provider or Part 7 provider by virtue of this section includes the following—

(a) the price charged or paid by the provider for health service products;

(b) the price paid by the provider for delivery or other services in connection with health service products;

(c) the discounts or rebates or other payments given or received by the provider in connection with the supply of health service products;

(d) the revenue or profits accrued to the provider in connection with the supply of health service products;

(e) such information about medicinal products, other medical supplies or other related products as is necessary to verify whether or not they are health service products.

(4) Regulations under this section may require information to be provided in such form and manner, and at such time or within such period, as may be prescribed.

(5) Regulations under this section may provide for a person who contravenes any provision of the regulations to be liable to pay a penalty to the Welsh Ministers.

(6) If regulations under this section make provision by virtue of subsection (5) they must include provision conferring on Part 4 providers and Part 7 providers a right of appeal against a decision of the Welsh Ministers to impose a penalty.

(7) The provision of information by virtue of this section does not breach—

(a) any obligation of confidence owed by the person providing it, or

(b) any other restriction on the provision of information (however imposed).

(8) In this section—

“health service products” means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) and any other medical supplies, or other related products, required for the purposes of that health service;

“medical supplies” includes surgical, dental and optical materials and equipment;

“medicinal product” has the meaning given by section 130 of the Medicines Act 1968;

“Part 4 provider” means a person who provides primary medical services under Part 4;

“Part 7 provider” means a person who provides pharmaceutical services under Part 7.

201B Disclosure of information

(1) Information provided by virtue of section 201A may be disclosed by the Welsh Ministers to any prescribed person or person of a prescribed description.

(2) A person to whom any confidential or commercially sensitive information is disclosed under subsection (1) may not—

(a) use the information for a purpose other than a purpose specified in section 201A(2), or

(b) disclose the information to another person.

201C Sections 201A and 201B: supplementary

(1) Before making regulations under section 201A or 201B the Welsh Ministers must consult any body which appears to the Welsh Ministers appropriate to represent Part 4 providers or Part 7 providers.

(2) Nothing in section 201A or 201B requires information to be provided, or authorises information to be disclosed or used, in contravention of the Data Protection Act 1998.

(3) Nothing in section 201A or 201B affects any duties, obligations or powers to require or authorise information to be provided, disclosed or used which exist apart from that section.””.—(Mr Dunne.)

This new clause is linked to amendments 36, 37 and 39 to 42. Inserted after clause 6, the new clause allows Welsh Ministers to require the provision of information by providers of primary medical or pharmaceutical services under Part 4 or 7 of the National Health Service (Wales) Act 2006.

Brought up, read the First and Second time, and added to the Bill.

New Clause 2

Reporting requirements of the Secretary of State

“(1) Within 12 months of this Act coming into force, the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act and must lay a copy of the report before Parliament.

(2) The report under subsection (1) shall include an assessment of the impact of the use of the Secretary of State’s powers on—

(a) the availability and cost of medicines and other medical supplies to the health service and the terms upon which they are made available;

(b) research and development;

(c) the NHS’s duty to promote innovation.

(3) Subsequent to the publication of the report in subsection (1), as soon as is reasonably practicable after the end of each financial year the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act during the preceding financial year and the impact of the use of those powers on the matters under subsection (2), and must lay a copy of the report before Parliament.”.—(Justin Madders.)

This new clause would place a duty upon the Secretary of State to place a report before Parliament on an annual basis on the impact of the Act on the pricing and availability of medicines and other medical supplies, research and development and the NHS’s legal duty to promote innovation.

Brought up, and read the First time.

[Justin Madders]

I beg to move, That the clause be read a Second time.

As is explained in the explanatory note, the new clause would put a duty on the Secretary of State to place before Parliament an annual report on the impact of the Act and, in particular, on the pricing and availability of medicines and other medical supplies, research and development, and the NHS’s legal duty to promote innovation. I think we all agree that there are examples of unreasonable behaviour, but there may be occasions when there is a difference of opinion as to what amounts to unreasonable pricing practices, not least between the producers and the NHS.

We would be more assured if the consultation on the regulations had been completed by this stage. We are obviously not going to be in a position to know what that consultation has to say for some considerable time, so we believe the implementation of such a requirement would allow Parliament to scrutinise the impact of the legislation.

There has been some unease in the sector about the impact of the legislation and there is a certain amount of uncertainty, particularly around the future of the European Medicines Agency and the medium-term implications of Brexit not only for that agency, but for the research and development sector and the pharmaceutical industry as a whole.

We are one of the foremost countries in the world for drugs development, and our share of sales of the top 100 prescription medicines is 14%. The UK pharma industry employs 73,000 people, with very high-quality jobs in academia and science, but we cannot be complacent about the state of UK pharma, particularly as investment decisions are often made by parent companies in other parts of the world. That concern is compounded by the small volume of sales in the UK compared with other countries. We face increasing competition from emerging economies for R and D investment, with rapid growth in areas such as Brazil and China. That is not a new problem.

A report for the Secretary of State for Health by Professor Sir Mike Richards in 2010 on the extent and causes of international variations in drug usage explored levels of medicines uptake for 14 categories of drug in 14 high-income countries during 2008-09. The study showed that the UK ranked eighth out of the 14 countries. A follow-up study by the Office of Health Economics updated the quantitative analyses and ranked the UK ninth across all the medicines studied.

Apart from disadvantaging patients, the relatively low take-up of new medicines may put at threat R and D investment in the UK. We need some assurance on that and an ability to monitor and engage with the Government on it. We know many other countries are queuing up to take the European Medicines Agency off our hands, and there are real concerns about the knock-on impact of that.

The impact assessment for the Bill says there will be a reduction in revenue for the pharma sector, unsurprisingly. It also says:

“Reduced pharmaceutical company revenues are also expected to lead to a reduction in investment in research and development… and consequent losses of spill-over benefits for the UK economy, valued at £1.0m pa.”

While we agree that it is vital that those who abuse the system to drive obscene profits for themselves are dealt with, we do not wish to find the UK becoming a less attractive place for research and investment because other countries have made themselves more attractive.

We ask that the report become an annual feature of the Secretary of State’s duties to ensure that we can judge the effectiveness of the Bill. The converse point is that if we continue to see price increases, we want to be assured that the regulations are effective in driving best value for the NHS.

--- Later in debate ---

[Mr Dunne]

I thank the hon. Member for Ellesmere Port and Neston for raising the issue of reporting requirements, which is very important. I will come on to explain what is currently proposed through regulation. The hon. Gentleman and the hon. Member for Central Ayrshire mentioned the risks to investment in this country for our critical life sciences and pharma industries, which is a legitimate concern that the Government share. Irrespective of the manner in which Brexit takes place, it is important that we maintain the UK as a vibrant centre for such investment. We are aware of concerns from industry about the wider landscape, including Brexit, but the Bill is about getting value for money for the NHS and the taxpayer. It is just one element of the action that the Government are taking in the field of medicine and life sciences. Key industry stakeholders have indicated their support for many of the provisions in the Bill, as we heard in last week’s oral evidence session, and for the broad principles of aligning the voluntary and statutory schemes and taking action against those companies that have made unjustified price hikes.

Separate from the Bill, the Government are taking action to secure the UK’s future as an attractive place for the life sciences sector. We are clear in our commitment to life sciences, and to building a long-term partnership with industry. As an example, I draw Members’ attention to the accelerated access review, which made recommendations on reforms to accelerate access to innovative medicines and medical technologies for NHS patients. The Government and our partners are considering those recommendations, and we will respond in due course. We want to make the UK the best place in the world to design, develop and deploy life sciences products. We do not believe that the Bill will have any material impact on that effort, other than the minor impact noted in the impact assessment, which was referred to by the hon. Gentleman.

I point Committee members to the illustrative regulations for both the statutory scheme and the information provisions. First, the final regulation—regulation 32 on page 16 of the draft regulations—refers to the publishing of an annual report on the impact of the regulations. I think that is what the new clause is calling for, but it is already intended in the regulations. Secondly, the final regulation of the information provisions—regulation 14 on page 8—refers to the publication of a review of the information requirements we are proposing.

I accept that reporting is an important principle, but we believe that setting out the requirement to do so in primary legislation is too restrictive. It is expected that, over time, both the statutory scheme and the information requirements will be amended through their respective regulations to reflect changing circumstances. It is essential that the review and reporting arrangements can be similarly flexible so that they remain appropriate to the schemes in operation. Were the new clause introduced as the hon. Gentleman proposes, there would be a lot of prescription in primary legislation. Given the pressures on legislative time, we do not believe that that is the right way to do it.

I reassure Opposition Members that our illustrative regulations require an annual review to set out the scheme’s objectives, and to assess the extent to which our objectives have been achieved and whether they remain appropriate. Those requirements will be tested through the consultation on the regulations. We will of course take account of the views expressed. Much of the information provided to the Secretary of State will be commercially confidential. I am sure that suppliers have every confidence that the Government will maintain that confidentiality in anything they publish, but I want to take this opportunity to reinforce that principle.

[Rob Marris]

If the draft regulations are to pass into legislation as currently drafted, I congratulate the Government on the annual review in draft regulation 32 and its Doppelgänger in draft regulation 14. They are excellent, because they actually talk about assessing the effectiveness, or otherwise, of a particular piece of legislation. That is often sorely lacking in this place, so I offer my congratulations.

[Mr Dunne]

Rare praise indeed from the hon. Gentleman. That is definitely going to go down in the annals of the Wolverhampton Echo, which I am sure will attribute an appropriate front page to that praise for the Government from the Member of Parliament.

To revert to where I had got to, I am sure hon. Members appreciate that there is clearly a limit to the level of detail we are able to publish, and I am sure that hon. Members appreciate that. Any information that we publish will be at a consolidated level, protecting suppliers’ confidentiality, which I have touched on several times, but will allow the Secretary of State to be clear on the basis of the conclusions to his review. We will, of course, be able to use supporting information to evidence our conclusions.

Turning for a moment to the detail of the proposed new clause, while the requirements set out in it reflect the duties placed on the Secretary of State in the Bill, I must be clear that the content of such a report should not be restricted. It must be able to address key issues arising during the course of the year, in the case of the annual report, and during the seven-year duration of the information regulations, in the event that such implications might have an impact on the operation of the schemes. Flexibility is at the heart of our proposals to address the issue through regulations. It would not be appropriate for such a report to address matters relating to the NHS duty to promote innovation. That is the one point of more substantive difference that we have with the drafting proposed by the hon. Member for Ellesmere Port and Neston.

We have already discussed the Government’s position on innovation. We are very clear that we are for it, as is the hon. Gentleman. However, we do not think it is appropriate to link measures in the Bill to that issue, which is a wholly different and much more wide-ranging issue than the narrower one of pricing and the cost of the medicines and medical supplies.

[Julie Cooper (Burnley) (Lab)]

Does the Minister agree that there is a direct connection between control of the price of medicines and innovation, and that, if we do not achieve the correct balance, pharmaceutical companies will lack the motivation to invest in the extensive research and development that we all want to see?

[Mr Dunne]

I do not actually agree that there is a direct link. There is no question but that, in order to stimulate continued investment in R and D, it is appropriate for the industry to see a stable marketplace in a country as significant and important as the UK, and throughout the nations of the UK, for medicines and medical supplies. We are a large market. We spend more than £15 billion a year on pharmaceutical products, and we are also acknowledged by those companies to be a reference market for many other countries that do not have such a large or well-organised supply chain as we do. I accept that, in principle, it might be rather different if this were an emergent market.

Individual drugs are emerging through R and D programmes, but I do not think that is the same as the measures we are introducing, which are primarily designed to limit excessive abuses of pricing position, in which a company may be a monopoly supplier, in the case of the unbranded generics. For the branded products, we have a long-established procedure for recognising the recovery of R and D costs through the pricing mechanisms, and while we may not like paying for some of those branded products at the rate that we have to, we recognise that it is a competitive marketplace and, because of the cost of innovation—the cost of conducting clinical trials and so on—it is necessary to stimulate that innovation to ensure that those companies make a reasonable profit.

Promoting innovation is a high priority, not only for the Government and the NHS but for many other stakeholders in the industry. In our view, it would not be possible to quantify the contribution of the schemes in the Bill to that endeavour, for the reasons I have discussed. Trying to assess the impact on innovation is a much wider endeavour that does not just rely on price. For those reasons, I urge members of the Committee to reject the new clause.

[Justin Madders]

I hear the Minister, but I have to say that I respectfully disagree with some of what he said. I think there is a direct connection between the effects of the Bill and the impact on research and innovation. That is what the impact assessment clearly states. I feel that having draft regulations that have not yet been consulted on is not an adequate substitute for the assurances that we are seeking.

[Mr Dunne]

I am grateful to the hon. Gentleman for letting me intervene. We are not saying ourselves that there is no such direct relationship between innovation and the cost of drugs; we are taking evidence from a report on “Key Factors in Attracting Internationally Mobile Investments by the Research-Based Pharmaceutical Industry”, which was undertaken by NERA Economic Consulting, and from a publication specifically on the voluntary scheme by the Office of Fair Trading. Both those documents date from 2007, when the hon. Gentleman’s party was in office. The impact assessment, as he pointed out, refers to an impact of £1 million, which needs to be set against the benefit of close to £90 million that the high-value generic clauses impact. We therefore think, relatively speaking, that it is not significant.

[Justin Madders]

We will have to see whether those figures and estimates become reality, in particular in the light of the fact that the industry has not yet seen the regulations proposed. The approach is a wider one, based not only on the impact on research and development but on the continued duty of the NHS to promote innovation and the way in which the powers will affect the availability and cost of medicines and medical supplies. I will press this to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Mr Dunne]

Again, I am grateful to the hon. Lady for drawing the Committee’s attention to the issue. I confirm, for the benefit of the Committee, what the specials are—she has characterised them well.

From our perspective, unlicensed medicines or specials can be manufactured or imported to meet a patient’s individual needs when no licensed product is available. By their nature, specials are bespoke, and costs need to be balanced against the availability of treatment for an individual. I am aware of concerns that some specials, especially those not listed in the drug tariff, are not being prescribed because of their cost—the hon. Lady highlighted those for dermatological treatment. It must be recognised, however, that with specials, because of their bespoke nature, there are few if any economies of scale and they can be expensive to manufacture.

Under section 262 of the 2006 Act, the Government have the power to limit the price of any health service medicine, as long as the manufacturer is not in the voluntary scheme. Manufacturers or importers of specials are generally not in the voluntary scheme. Specials are health service medicines and we can therefore limit their prices. At the moment, the Government do not use their power to control the prices of specials. The hon. Lady gave an example, without naming the product, of a significant price differential between Scotland and England; if she is willing to write me a note after the Committee, I am interested in exploring why we have chosen not to take advantage of the power that we already have in that case, because on the face of it, it would appear to be an example of where the power perhaps ought to be used.

[Dr Whitford]

While there are not major economies of scale, if national health manufacturers are used, it is possible at least on a regional basis to pool some together. As things are at the moment, a pharmacy can simply approach its sister or mother company and ask for a price, which creates a vested interest in making the price high. I think that things can be done, which seem to be working in Scotland, so they are worth trying.

[Mr Dunne]

Again, I am grateful to the hon. Lady—

[The Chair]

Order. We have a Division in the House, so I will suspend the sitting. If there is one vote, may I ask Members not to take longer than 15 minutes to return and, for every subsequent vote, no more than 10 minutes? The Committee will sit after 15 minutes.

--- Later in debate ---

On resuming—

[Mr Dunne]

As we broke—literally, I was saved by the bell—I was describing how setting prices as suggested by the new clause could have unintended consequences. We are concerned that it may lead to manufacturers stopping the production of some specials if they are no longer profitable and patients facing adverse consequences.

By setting reimbursement prices in the drug tariff in primary care, the Government encourage pharmacy contractors to source specials as cheaply as possibly, which in turn creates competition in the market and, as a result, reimbursement prices decrease. For those specials not listed in the drug tariff, pharmacy contractors have no incentive to lower the list price. Currently, less than 1% of the total expenditure on medicines in primary care is on specials. Nevertheless, I believe those products, like all other products destined for the health service, should provide value for money to the NHS and the taxpayer. The information power in the Bill will help the Government to determine whether the products provide value for money and the illustrative regulations include an obligation to review those provisions.

The new clause would require the Secretary of State to commission a review of the adequacy of existing powers to control prices of specials, including the enactment and enforcement of those powers. The Government keep their power to control prices under review all the time; it was a review of those powers that led to the Bill in the first place. The Government believe that we have sufficient powers to limit the prices of specials if need be. The hon. Member for Central Ayrshire appears to have evidence of specials being priced to Scotland materially more advantageously than to England. If she would be willing to make that information available to us, we would be delighted to consider it.

[Dr Whitford]

I wonder whether the Government have given any consideration to having NHS manufacturers provide these products or to including some of the topical specials in the drug tariff, so that the price is kept down. Otherwise, despite the Bill, these drugs will be left outside its provisions. They are going to be too expensive and patients will suffer from that.

[Mr Dunne]

For the reasons that I have said, we have the power to look at the pricing of the specials already and we have not had evidence that the pricing has been abusive. We already have that power. We will keep prices and specific drugs under review. The best way to take that forward is to leave the powers as they are and not to proceed with the new clause, but to invite hon. Members to highlight specific examples that they are aware of.

[Rob Marris]

The Minister says that the Government have the power. He may well be right, but for us lay people these are quite complex issues. The power to which he adverted is section 262 of the 2006 Act, which, as far as I can see, is not amended by clause 7 of the Bill. As I understand it, section 262 continues unamended. Section 262(2) says:

“The powers conferred by this section are not exercisable at any time in relation to a manufacturer or supplier to whom at that time a voluntary scheme applies.”

This may well be my ignorance when it comes to topical medicines, specials and so on. Perhaps all specials are produced by manufacturers or suppliers that are not in the voluntary scheme. I can see the possibility. If the Minister can confirm that, I will see that section 262 does not apply.

[Mr Dunne]

The hon. Gentleman has again surprised me by apparently not being as attentive as usual to the comments that I made earlier. I said while introducing the new clause that manufacturers or importers of specials are generally not in the voluntary scheme. There may be some exceptions, but by and large, they are not. Therefore, we are in a position to limit the price of specials, but as a rule we have not adopted that power.

[Rob Marris]

That is helpful of the Minister, but it still confuses me a bit, and I hope that he can help to elucidate. He said that manufacturers and suppliers are not generally in the scheme; that is the adverb that he used a moment ago. That suggests to me that some of them might be, and would therefore not be subject to the section 262 price controls, which he prays in aid when he says, as I understood him to say to the hon. Member for Central Ayrshire, “Nice try, but no cigar. We’re not going to accept this.” One reason that he gave—not the only reason—was that we already have the power. The adverb “generally” suggests to me that in relation to some companies, we do not.

[Mr Dunne]

But this applies to all companies in the voluntary scheme. There is no particular difference between a special and a non-special. If a company is supplying products in the voluntary scheme, it is in the voluntary scheme. Therefore, it is at the negotiating table when it comes to considering the circumstances in which it supplies those products. If the company is in the scheme, that includes the specials.

[Rob Marris]

I thank the Minister; that is helpful. He is on top of his brief, as ever, and needed no inspiration to tell me that. It is helpful. The power does exist. I would like to ask the hon. Member for Central Ayrshire, because she has considerable expertise in the field. My expertise, such as it is, is as a lawyer. I see in her new clause the words

“ unlicensed medicinal products for human use”.

She may be able to tell me, because it is her new clause and she may have been looking at this issue. Where in the 2006 Act, or indeed in the Bill, although I think not, can we find what that phrase means? It may well be understood by medics—the topicals, the specials and so on—but it may not be understood by judges, for example. Can she help me on that when she winds up this debate? Otherwise, it seems to me as a layperson that the phrase

“ unlicensed medicinal products for human use”

could cover homeopathic so-called remedies. I do not think that the Secretary of State should be reviewing the pricing of homeopathic remedies.

To make my position clear, I think that homeopathy is bad science and a load of nonsense except for the placebo effect, but I use it as an example of unlicensed products that claim to be medicinal. I suspect that the hon. Member for Central Ayrshire would agree with my broad characterisation of homeopathic so-called medicines, apart from the placebo effect. What does that phrase in her new clause mean, and is it defined anywhere in law, or is it so obvious to medics that they and everybody in the pharmaceuticals business know what it means?

--- Later in debate ---

[Mr Dunne]

I am grateful to the hon. Lady for raising this issue by tabling her new clause, because it gives us an opportunity to discuss an issue of considerable interest across the House. I am delighted to be able to inform the Committee that we do not believe we need to review whether the Bill’s provisions should be extended to repurposed off-patent drugs, because they will apply to those drugs whether they are licensed branded medicines or generic medicines. The new clause is therefore not necessary, because those drugs are already included.

Any licensed branded medicines that are developed may be included in either the voluntary or statutory scheme and be subject to all the provisions of those schemes. Unbranded generic medicines are subject to competition in the market, which keeps prices competitive and secures value for money. As we know, and have already debated today, there are examples of unscrupulous companies making unjustified price hikes for unbranded generic medicines when there is no competition in the market. As we have said, both today and on Second Reading, the Bill provides the Secretary of State with powers to intervene in such cases, in addition to the powers that the Competition and Markets Authority can exercise.

Having once again explained the specifics of how repurposed medicines will be affected by the Bill’s provisions, it might be helpful if I outline for the Committee some of the progress that has recently been made in supporting repurposing. For the reasons the hon. Lady identified, repurposing has benefits for patients in allowing drugs to be introduced as quickly as possible to provide alternative treatments to those originally intended by their manufacturers, where there is robust clinical evidence for new uses of existing medicines. Since November last year, a range of organisations have come together to work collaboratively to examine the issues at play in drug repurposing and to develop positive ways of handling those issues to ensure that patients benefit from robust research outcomes.

Officials in the Department have been working on the issue with the Association of Medical Research Charities and many of its members, as well as with NHS England, NICE, the publishers of the “British National Formulary” and the Medicines and Healthcare Products Regulatory Agency. All are committed to taking non-legislative measures to make sure that there is a clear and accessible pathway to ensuring that robust evidence showing new uses for existing drugs can be brought more systematically into clinical practice to benefit patients. That working group has made significant progress, and I would like to thank the organisations that have come together in a true spirit of co-operation to achieve rapid progress.

The General Medical Council has provided better advice for doctors about prescribing drugs outside their licensed indications, when that is clinically indicated. The “British National Formulary” has introduced new processes to ensure that information about repurposed drugs is captured more systematically and is therefore much more readily available for the clinical prescribers whom the hon. Lady referred to as the people at the forefront of this innovation. The Committee has heard from Dr Keith Ridge about the role that regional medicines optimisation committees will be asked to take in supporting prescribers to take up and use new evidence, particularly about unlicensed medicine use. Significant work has also been done on the development of a pathway that maps the routes from research result into clinical practice, which will help researchers and clinicians ensure safe and timely implementation.

NICE has published more than 50 evidence summaries for unlicensed and off-label uses of medicines. Although I said I did not want to go into detail, there are a couple of examples that the hon. Lady will be familiar with but other members of the Committee might be less so. NICE has made recommendations and guidelines on the use of tamoxifen to prevent familial breast cancer, and on the use of antidepressants—selective serotonin reuptake inhibitors—to treat irritable bowel syndrome.

I hope that with that explanation, hon. Members will agree not only that repurposed medicines are included within the Bill’s provisions, but that robust action is being taken by the Department and across the medical establishment to support repurposing for the benefit of patients. I ask the hon. Lady to withdraw her new clause.

[Dr Whitford]

I welcome the Minister’s explanation of what has been happening behind the scenes since the Off-patent Drugs Bill last year. The Bill Committee, of which I was a member, had a lot of discussion about the need to have a system for recognising the drugs, giving doctors and other prescribers the reassurance they needed to use them, and using the “British National Formulary” as a tool. We have heard nothing for a long time, so I really welcome the update that the issue is being taken forward. Prescribers are not all doctors now, and it is important that everyone who prescribes has the reassurance of knowing that they can safely prescribe and not be open either to making an error or to litigation. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 5

Extending price control to other medical supplies

‘In section 260(5) of the National Health Service Act 2006, after first “includes” insert “, but is not limited to, investigative,”’—(Rob Marris.)

This new clause is to ensure that the Bill’s provisions on price control apply to other capital equipment such as MRI scanners by including such items within the definition of “medical supplies”.

Brought up, and read the First time.

[Rob Marris]

I beg to move, That the clause be read a Second time.

I am glad that the Committee has generously left me sufficient time to deal with the new clause, which involves a tweak in the wording of the Bill. Clause 6 inserts section 264A into the 2006 Act, and section 264A(9) states:

“‘Medical supplies’ is to be read in accordance with section 260(5)”

of that Act. There is a synopsis of the subsection in paragraph 66 on page 14 of the explanatory notes, which hon. Members may have in front of them.

Page 162 of the 2006 Act states, in section 260(5):

“In this section and Schedule 22—

‘medical supplies’ includes surgical, dental and optical materials and equipment…and ‘equipment’ includes any machinery, apparatus or appliance whether fixed or not, and any vehicle.”

That definition is fairly clear but not sufficiently wide, hence my new clause, which would clarify it. Regarding medical supplies, there are, to my mind, three adjectives there qualifying two nouns, the three adjectives being “surgical”, “dental” and “optical”, and the two nouns being “materials” and “equipment”. There is considerable NHS expenditure on equipment—and materials, but particularly on equipment—that is not, as I understand it, surgical, dental or optical. A particularly expensive form of such equipment, as I outline in the explanatory note, which is helpfully on the amendment paper, is MRI scanners. They vary, obviously, but in round terms they cost about £2 million a throw and the NHS, understandably, has an awful lot of them—they are a magnificent diagnostic tool. There may well be other pieces of equipment that are perhaps not quite as expensive but which would not come under the rubric of surgical, dental or optical.

It seems, therefore, that there is a gap in the 2006 Act, and the new clause, which I am sure the Government will accept, is intended to plug that gap by indicating that those three adjectives are descriptive of the two nouns, but other adjectives could also be applied. For example, “investigative” is included in the new clause. The new clause would therefore simply ensure that there is no misunderstanding of the intent of section 260(5) of the 2006 Act. It is a helpful clarification to the Government.

[Mr Dunne]

I am sure that you share, Mr Pritchard, my pleasure that the Committee has had the benefit of the hon. Gentleman’s forensic scrutiny and his particular facility for not only the English language but its parliamentary use. If we had not had a new clause tabled by him we would have all gone away deeply disappointed. I am grateful to him for taking such trouble to table the new clause and to explain its intent.

I can assure the hon. Gentleman and the Committee that MRI scanners, by way of example, and all other investigative medical supplies are covered by the current definition of “medical supplies” in the 2006 Act. When looking at the definitions in the first draft of the Bill, I had a concern that we were describing products too widely. My concern was not that we would exclude specialist medical equipment but that we might include other materials used in the construction of buildings used by the health service—for example, bricks—as an object for price control, which clearly is not the intent. We looked carefully at the definitions, which is why I can say with some confidence that the hon. Gentleman’s new clause is unnecessary.

I will explain that more specifically. Section 260 of the 2006 Act makes it clear that “medical supplies” should be read in the context of medical supplies required for the purposes of the health service. That excludes all medical supplies not destined for the health service. MRI scanners clearly are destined for and used in the health service. Secondly, section 260 provides examples of products that would be included by the term “medical supplies” and does not limit it to those products.

The Government consider that the current definition of “medical supplies” already includes the examples given by the hon. Gentleman and other investigative products and that there is no need to make the proposed amendment. We are concerned that by including further examples and trying to provide a definition that meets the hon. Gentleman’s intent, we might inadvertently find ourselves excluding other things that are in fact included within the more general description of medical supplies. The current definition is sufficiently broad to cover all medical supplies required for the purpose of the health service. Notwithstanding the hon. Gentleman’s enthusiasm, I encourage him to withdraw the new clause.

[Rob Marris]

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Question proposed, That the Chair do report the Bill, as amended, to the House.

[Mr Dunne]

We are now at the conclusion of our deliberations. Thank you very much indeed, Mr Pritchard, for using your new-found experience in chairing Bill Committees to such good effect. You have conducted our affairs in a characteristically skilful way, and I am grateful to you, the Clerks and the Doorkeepers for managing the Divisions. I am grateful to the Front-Bench spokesmen from both the official Opposition and the SNP, as well as to all Back Benchers who have contributed to our deliberations. We have given this short Bill adequate and appropriate scrutiny, and I hope it will proceed to consideration on Report, where it will get continued consensual support across the House, which is, frankly, a joy to participate in.

[Justin Madders]

I echo the Minister’s words of thanks, including to you, Mr Pritchard, for the sensitive way you have handled our discussions. We have made good time today, while enabling everyone to contribute who wished to. I am grateful to the Minister for his clarification on a number of points. There are issues we will have to continue to discuss, but in the main he has been able to put our mind at rest on a number of issues. I also thank the SNP Members for their contributions, as well as all Back Benchers.

Health Service Medical Supplies (Costs) Bill

Philip Dunne Excerpts

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

[Rob Marris]

Medical supplies in this part of the Bill seem to be to do with physical equipment. But, again, what is equipment? We can refer to the definitions, which state:

‘medical supplies’ includes surgical, dental and optical materials and equipment”.

Drugs are dealt with elsewhere in the legislation.

I think the Minister has got the point, but I will repeat it very briefly. He is seeking clarification for the Wales legislation through amendment 7 when I understood him to say that he did not think such clarification was needed for the same definition contained in the legislation pertaining to England. I would like him to explain that apparent anomaly. If it is not an anomaly, perhaps he could tell the House that he is going to clarify the definition as it relates to England in the later stages of this Bill.

[The Minister of State, Department of Health (Mr Philip Dunne)]

I rise to speak to the new clause, the Government amendments and all other amendments tabled on Report. I want to start by expressing my gratitude to the Opposition Front-Bench spokesmen, who both confirmed their intent to continue in the spirit of constructive dialogue we have had thus far in our consideration of the Bill. I am pleased that they support the Bill’s objectives, and I will seek to respond to their amendments.

Hon. Members will recall that we debated at length in Committee the issue raised in new clause 1. I want to take this opportunity to provide some additional reassurance that this is an important issue for the Government. We have already included in the illustrative regulations for both the statutory scheme, in regulation 32, and the information regulations, in regulation 14, an annual review of the regulations and a requirement to publish our report of each review. These annual reviews go further than the specific single review proposed by the hon. Member for Ellesmere Port and Neston (Justin Madders) in new clause 1, the effect of which would require the Government to only undertake a single review within six months of the Act coming into force.

We accept that reporting is an important principle. However, setting out the requirements in primary legislation is too restrictive. We believe that the proposed single review within the first six months of the Act coming into force would provide an insufficient timeframe in which to assess the impact of the provisions, whereas the annual reviews we have set out in the illustrative regulations in effect place a duty on the Government to review both the statutory scheme and the information regulations to ensure their effectiveness, and to do so every year. Of course these provisions will be subject to consultation as part of the wider consultation on the regulations.

Over time we expect that both the statutory scheme and the information requirements will be amended through their respective regulations to reflect changing circumstances. It is essential that the review and reporting arrangements are able to be similarly flexible so that they remain appropriate to the schemes in operation.

The hon. Member for Ellesmere Port and Neston asked whether objectives should be set out before the regulations come into force. As I have said, the Government will consult on regulations before they come into force. The objectives of the regulations will be explored in the consultation and set out in the Government response to that consultation. I hope that addresses his point.

The illustrative regulations require an annual review to set out the objectives of the scheme, assess the extent to which they have been achieved, and assess whether they remain appropriate. These requirements will be tested through the consultation on the regulations, and we will of course take account of those views.

[Rob Marris]

First, I say again that I am very grateful to the Government for publishing the illustrative draft regulations to help us debate the Bill. Let us consider the provision of information in connection with the draft health service products regulations 2017. Regulation 14(2)(a) states that the report must in particular

“set out the objectives intended to be achieved by these Regulations”,

and then regulation 14(2)(b) says it must

“assess the extent to which these objectives are achieved.”

It seems a bit odd to say that in one review we are going to set out the objective and then decide whether the objective has been achieved or not. That seems, temporally, to be a bit wrong.

[Mr Dunne]

As I have indicated, we intend to undertake these reviews every year. It will probably be impossible to assess in the first review whether the objectives have been achieved—there might be some ability to assess it—but in subsequent iterations we will be able to look back and see how well they have been achieved.

I notice that the right hon. Member for Leicester East (Keith Vaz) is heading for the exit—[Interruption.] He has now resumed his seat. This is not specifically the right point in my speech to pick up on the points he has raised, but I would like to respond to his characteristically constructive contribution on the subject of diabetes. He is the chair of the all-party group on diabetes, and he might recall that I used to be the vice-chair of that group, as I have family members with type 1 and type 2 diabetes. I have considerable sympathy with the points that he made about the importance of adequate advice for individuals who might be unaware that they have diabetes. He also talked about the importance of adopting innovation through NHS treatment of the condition. We share that objective, and nothing in the Bill will do anything other than to continue to encourage innovation. I will be making further remarks, perhaps when the right hon. Gentleman is not with us, on the subject of innovation, but I just wanted him to be aware that I had taken his points on board. He might be disappointed by my conclusion on the specific amendment, but I shall go on to explain how his point is being addressed in other ways.

Returning to new clause 1 and the question of regulations, I wish to make a further point. Much of the information provided to the Secretary of State will be commercially confidential. We touched on this in Committee. I am sure that suppliers have every confidence that the Government will maintain that confidentiality in anything we publish, but it is important to reinforce the principle. This means that there is a limit to the level of detail we are able to publish, and I am sure that the hon. Member for Ellesmere Port and Neston will appreciate the commercial sensitivity reasons involved. Any information we do publish will be at a consolidated level, protecting suppliers’ confidentiality but allowing the Secretary of State to be clear on the basis of the conclusions of his review. We will of course be able to use supporting information to evidence our conclusions.

Turning to the detail of the new clause, its requirements reflect the duties placed on the Secretary of State in the Bill, but I must be clear that the content of such a report should not be restricted and must be able to address the key issues arising during the year that may affect the operation of the schemes. The other significant element of the new clause, which I have touched on in response to the right hon. Member for Leicester East, was discussed at length in Committee. This was the question of whether it would be appropriate for such a report to address matters relating to the NHS duty to promote innovation.

The Government’s position is clear that it is not appropriate to link the measures in the Bill, which relate purely to the cost of medicines and medical supplies, to the NHS duty to promote innovation. Promoting innovation is a high priority not only for the Government and the NHS but for many other stakeholders. Promotion of innovation quite properly requires action across many different fronts, and it would not be possible to quantify the contribution of the schemes in the Bill to that endeavour in any meaningful way. The NHS is already doing great work to promote innovation, and I would like to draw hon. Members’ attention to the latest data from the innovation scorecard, a quarterly data publication showing the uptake of innovative drugs and medical technologies following NICE approval in England. This is now a nationally published statistic.

The hon. Member for Wolverhampton South West (Rob Marris) asked specifically about this in his remarks. I can tell him that the latest publication, on 12 October this year, shows that the rate of uptake for 85 medicines recommended by NICE is increasing, that 77% of those medicines had positive growth uptake between March 2015 and March 2016, and that 54% of the 85 medicines had a growth uptake greater than 10%. These data are made available on a quarterly basis, and hon. Members can follow their progress through the official national statistics.

The Government are taking broader action to secure the UK’s future as an attractive place for the life sciences sector, particularly in the light of the EU referendum and the consequent Brexit. We are clear in our commitment to the life sciences, and to building a long-term partnership with industry. The hon. Member for Wolverhampton South West also asked me to address the question of the NICE process and whether this takes evidence into account. He also asked about the process for the subsequent review of previous decisions. This is a continuous process. It does not happen for every drug all the time, but there is a routine procedure under which, on the basis of new evidence, NICE will look again at a decision and decide whether to uphold or amend it. That procedure could allow drugs that had previously not been approved to become approved on the basis of new evidence, and NICE will look at evidence from wherever it comes. I hope that that reassures the hon. Gentleman.

--- Later in debate ---

[Dr Philippa Whitford]

indicated dissent.

[Mr Dunne]

The hon. Lady is shaking her head. That is my information, but if that is not the case, perhaps she would like to enlighten me further.

[Dr Whitford]

It is a new medicines and rare diseases fund, and it includes orphan, ultra-orphan and end of life, but it is not only about end of life.

[Mr Dunne]

No, it is not only for end of life, but also for rare diseases. That was my understanding, but I stand corrected. However, my main point is that it should be for clinicians to decide what is spent across the range of activity. If money is ring-fenced into a specific fund for new medicines, that might not always be the right clinical decision.

[Dr Whitford]

Does the Minister accept that it is a slightly bizarre public relations thing to have a medicines fund that is only for cancer, ruling out people with other life-threatening illnesses? That is the case here in England.

[Mr Dunne]

The new cancer drugs fund was set up specifically to provide funds to deal with one of the most common causes of mortality in the country, and was a priority of the previous Government; I will not go into the reasons for that.

Returning to amendment 8, it was suggested that what happens to the receipts is not clear, but all income generated by the voluntary and statutory schemes is reinvested in the NHS. Estimates of income from the pharmaceutical payment regulation scheme are part of the baseline used in the Department’s spending review model. The model was used to calculate the funding increase that the NHS sought at the time of the 2015 spending review, and it helped to secure the £10 billion of real-terms funding over the course of this Parliament. The income from the voluntary and statutory schemes can and does fluctuate; that is the biggest problem with ring-fencing, which could bring risks in this area. For example, the annual income from the PPRS has varied between £310 million and £839 million in a full financial year in England, so there is the potential for the income that it generates to vary widely, which could disadvantage patients by making treatment dependent on income from a pricing scheme with unsteady income generation.

[Rob Marris]

I understand where the Minister is going with that, but I want to caution him. He spoke earlier about flexibility—my word, not his—and his example was that a clinical commissioning group or a medical body might want to spend some of this money on staffing. Owing to the fluctuation to which he refers, however, spending funds on staffing is probably not a good idea.

--- Later in debate ---

[Mr Dunne]

I am grateful to the hon. Gentleman for his advice, but I am afraid that I do not think it is relevant to my point about the fluctuation in income coming from the scheme. It is relevant in relation to whether NICE or politicians make such decisions. They need to be made by clinicians.

[Dr Philippa Whitford]

rose—

[Mr Dunne]

I will give way, but then I will make some progress.

[Dr Whitford]

I thank the Minister for kindly giving way. The cancer drugs fund has a budget of some £350 million, so if he is saying that the money that can be retrieved varies from £300 million to over £800 million, that would allow for the expansion of a new medicines fund.

[Mr Dunne]

It might if the move was always in the same direction. My concern is that the amount could decline between one year and the next; it may not always go up—certainly not up in a straight line.

Separately from the Bill, the Government are taking action to secure the UK’s future as an attractive place for the life sciences sector and to support faster patient access to medical innovations. I have already touched on the recently published accelerated access review, which sets out ways to increase the speed at which 21st-century innovations in medicines, medical technologies and digital products get to NHS patients and their families. The review’s recommendations included bringing together organisations from across the system in an accelerated access partnership, and creating a strategic commercial unit within NHS England that can work with industry to develop commercial access arrangements. We are considering those recommendations with partners and will respond in due course.

NHS England and NICE are jointly consulting on several proposed changes to NICE standard technology appraisals and highly specialised technology appraisals, including around speeding up the appraisal process. The Department of Health continues to work closely with NHS England and other stakeholders to improve uptake of new medicines. A key element of that is the innovation scorecard that I have already referenced. With those comments about our concerns about what is proposed in amendment 8, I ask the hon. Member for Burnley (Julie Cooper) not to press her amendment.

Turning to amendment 9, tabled by the hon. Member for Central Ayrshire, the Government recognise that section 260 of the National Health Service Act 2006 does not explicitly state that the Government are obliged to consult industry. However, I am aware that the Act does explicitly state that there is an obligation on the Government to consult when it comes to controlling the cost of medicines. A similar amendment was tabled by the hon. Lady in Committee. I want to reiterate that I am happy to consider with her how we could best introduce a general requirement to consult industry in section 260. Indeed, my officials have been in discussions with her, and I am grateful for her time and constructive comments.

I note the hon. Lady’s reference to the effect of any pricing controls for medical supplies on maintaining the quality of those supplies. I assure her that the Government would take into account all relevant factors, including any concerns raised by industry about the quality of medical supplies, when making and consulting on any price controls for medical supplies. The Government would not however be in favour of putting one of those many factors in the Bill.

The Medicines and Healthcare Products Regulatory Agency is responsible for the safety, efficacy and quality of medical supplies, and the Bill will not change that. The MHRA has assured me that any use of the price control powers in the Bill would not affect any of the quality or safety requirements that must be met before medical supplies can be placed on the market.

The hon. Lady referred to the procurement system in Scotland; I assure her that the Government are committed to improving procurement across the NHS. She will be well aware of the Carter report, which concluded that there is considerable variation in the value that trusts extract from their expenditure on goods and medical supplies. NHS Supply Chain is working hard to deliver procurement efficiencies, to meet recommendations to increase price transparency, to lower costs, and to reduce the number of products and suppliers used across the NHS to deliver economies of scale. The hon. Lady referred to 600,000 products, but it has had success in reducing the range in the catalogue down to 315,000 to help NHS organisations purchase products more efficiently. It continues to work to reduce that number. I am aware of similar work in Scotland. In England, we are using the Carter review to deliver that.

While I understand the intent behind the hon. Lady’s amendment, I am not fully convinced that, as drafted, it would have the desired effect. If she will continue to work with me and my officials, the Government would be happy to consider, while the Bill is in the other place, how we could best introduce the requirement to consult into section 260. On that basis, I invite her not to press her amendment for now.

[Rob Marris]

rose—

[Mr Dunne]

I am afraid that I must press on to cover the Government amendments.

Government amendments 1 to 5 address a possible loophole in the Bill. Clause 6 amends the National Health Service Act 2006 to give the Secretary of State the power to make regulations to obtain information from any UK producer that is not an excepted person. A “UK producer” is defined in the Bill as anyone involved in the manufacture, distribution or supply of health service medicines, medical supplies and other related products required for the purposes of the health services in the United Kingdom. An “excepted person” is defined in the Bill as any person providing pharmacy or GP services for the health services in Scotland, Wales and Northern Ireland. The purpose of these provisions was to reflect the agreement with the devolved Administrations that, for devolved purposes, they would collect information from pharmacies and GP practices in their nation. However, there may be circumstances in which a company supplies products in the devolved Administrations and also in England, and could claim that the provision, as drafted, would allow it to become an excepted person, because it was operating in the devolved Administrations. That is clearly not the intent of the Bill, so we have proposed these amendments to address this loophole.

Government amendment 6 is a minor consequential amendment that was unintentionally omitted when the Government tabled amendments in Committee. The amendment relates to clause 6, which provides the Secretary of State with the power to disclose information to the list of bodies set out in proposed new section 264B. The amendment clarifies that the list of people to whom the Secretary of State can disclose information includes those persons providing services to the Regional Business Services Organisation in Northern Ireland; it had previously been omitted. I hope that hon. Members will accept these amendments.

--- Later in debate ---

[Dr Philippa Whitford]

rose—

[Mr Dunne]

I would like to conclude this point for the hon. Lady, as I hope it will satisfy her. Her concern is about how the Government will behave in response to requests from devolved Administrations; we recognise that we need to give reassurance to the devolved Administrations that, in the light of the constructive conversations we have already had with them, they will have full access to all relevant data that the Government collect. We are quite happy to do that. We have indicated that we will enter into a memorandum of understanding, which will be discussed and agreed with the devolved Administrations. Those discussions will cover whether they have automatic access to this information—in real time, or in some other format—and whether that is done through giving them direct access to the systems, or by forwarding the data that we collect, immediately on request. We need to get into the detail of that in discussion on the memorandum of understanding, rather than committing that to the Bill at this stage. On that basis, I hope that the hon. Lady will not press her amendment to a vote.

[Dr Whitford]

I welcome the Minister’s comments, and I am happy not to press the amendment if we can reach the point of a clear memorandum of understanding. I just point out that all my amendment does is to say that the groups listed by the Bill should be able to ask for data on request; it does not add anyone else. I understand that my attempt at the amendment in Committee included groups that it should not have, but that has been corrected. This amendment does not spread confidential information any more widely.

[Mr Dunne]

I am grateful to the hon. Lady for that clarification. I think this is best addressed through a memorandum of understanding, rather than in primary legislation, in case we need to adjust the memorandum in subsequent years.

Finally, I wish to address Government amendment 7, which provides a definition of “equipment”. The hon. Member for Wolverhampton South West took us through the drafting on the definition of “medical supplies”. The amendment gives a definition of “equipment” in the National Health Service (Wales) Act 2006 to ensure consistency with the National Health Service Act 2006. “Equipment” is defined as including

“any machinery, apparatus or appliance, whether fixed or not, and any vehicle”.

When taken in tandem with the common definition of “medical supplies”, the definition is broad enough to capture any medical supplies on the market, from bandages to MRI scanners. The point of distinction was not so much the definition of “medical supplies” as the definition of “equipment”, which is a subset of the medical supplies definition. I hope, therefore, that hon. Members will accept the amendment.

I have spoken at length on these amendments. I hope I have made my position clear, that Opposition Members will not press their amendments to a vote, and that the House will accept the Government amendments.

[Justin Madders]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Clause 6

Provision of information to Secretary of State and disclosure

Amendments made: 1, page 4, line 12, leave out from “products,” to end of line 13.

This amendment is linked to amendments 2 to 5. It is directly consequential on amendment 4.

Amendment 2, page 4, line 17, at end insert—

“(subject to subsection (6A)).”

This amendment is linked to amendments 1 and 3 to 5. It flags that the provision made by section 264A(2)(a) and (b) of the National Health Service Act 2006 is subject to the provision made by amendment 3.

Amendment 3, page 5, line 47, at end insert—

“(6A) Regulations under this section may not do any of the following—

(a) require any person who provides primary medical services under Part 4 of the National Health Service (Wales) Act 2006, or any person who provides pharmaceutical services under Part 7 of that Act, to record, keep or provide information relating to any Welsh health service products which are supplied by the person in providing the services in question;

(b) require any person who provides primary medical services under section 2C(1) of the 1978 Act, or any person who provides pharmaceutical care services under section 2CA(1) of that Act, to record, keep or provide information relating to any Scottish health service products which are supplied by the person in providing the services in question;

(c) require any person who provides primary medical services or pharmaceutical services under Part 2 or 6 of the Health and Personal Social Services (Northern Ireland) Order 1972 (S.I. 1972/1265 (N.I. 14)) to record, keep or provide information relating to Northern Ireland health service products which are supplied by the person in providing the services in question.”

This amendment is linked to amendments 1, 2, 4 and 5. It ensures that regulations under section 264A of the National Health Service Act 2006 may not require the persons specified to record, keep or provide the information specified.

Amendment 4, page 6, leave out lines 3 to 15.

This amendment is linked to amendments 1 to 3 and 5. It is consequential on the new provision made by amendment 3.

Amendment 5, page 6, line 36, leave out “(8)(d)” and insert “(6A)(b)”.

This amendment is linked to amendments 1 to 4. It is a consequential amendment.

Amendment 6, page 7, line 8, leave out “(h)” and insert “(i)”.—(Mr Dunne.)

This amendment makes a change which is consequential on the amendments made in Committee. The effect is to allow the Secretary of State to disclose information to a person who provides services to the Regional Business Services Organisation in Northern Ireland.

Clause 7

Provision of information to Welsh Ministers and disclosure

Amendment made: 7, page 9, line 38, at end insert—

“(and for this purpose ‘equipment’ includes any machinery, apparatus or appliance, whether fixed or not, and any vehicle).”— (Mr Dunne.)

This amendment provides a definition of “equipment“ for the purposes of the definition of “medical supplies” in section 201A(8) of the National Health Service (Wales) Act 2006.

Third Reading

[Mr Dunne]

I beg to move, That the Bill be now read a Third time.

As we have already discussed today, it has been a pleasure to take this short, albeit technical, Bill through the House with such a wide degree of consensus from all participating parties.

We have had a very constructive debate. Points have been raised by hon. Members from both sides of the House through amendments and in debate, and we have sought to take them on board. We will look to take some of them forward as the Bill moves to the other place.

I thank Opposition Members for their contributions. They include the hon. Members for Ellesmere Port and Neston (Justin Madders), for Burnley (Julie Cooper), who is just about in her place, and for Central Ayrshire (Dr Whitford), who leads for the Scottish National party. We have had some strong contributions from Back Benchers, including the hon. Member for Wolverhampton South West (Rob Marris), who served on the Committee in his usual diligent fashion, and the right hon. Member for Leicester East (Keith Vaz). We have also had contributions from Government Members. In particular, I thank my hon. Friends the Members for Peterborough (Mr Jackson) and for Torbay (Kevin Foster), who was active in Committee. I also thank my Parliamentary Private Secretary, my hon. Friend the Member for Halesowen and Rowley Regis (James Morris), and the Whips on both sides of the House.

More than £15.2 billion has been spent on medicines in the most recent full year—an increase of nearly 20% since 2010-11 and of over 7% since last year. The purpose of the Bill is to close loopholes to ensure that the NHS secures as much value for money as it can from this very significant spending on pharmaceutical and medical products. We are looking to clarify and modernise provisions to control the cost of national health service medicines and to ensure that sales and purchase information can be appropriately collected and disclosed.

Briefly, the Bill puts it beyond doubt that the Secretary of State can require companies in the statutory scheme to make payments to control the cost of NHS medicines. That is expected to save the health service across the UK some £90 million a year.

Secondly, the Bill would enable the Secretary of State to require companies to reduce the price of an unbranded generic medicine, or to impose other controls on that company’s unbranded generic medicine, even if the company is in the voluntary scheme—currently the 2014 pharmaceutical price regulation scheme—for its branded medicines.

Members will recall the examples raised on Second Reading and in Committee of companies charging the NHS unreasonably high prices for unbranded generic medicines. Without competition, companies have raised prices totally unreasonably—in the most extreme case by as much as 12,000%. Companies can do that because we rely on competition to keep prices of unbranded generic medicines down. Although that generally works well, the Government need the tools to be able to address the situation in which a small number of companies are exploiting the NHS, patients and the taxpayer by raising prices when there is no competition.

Thirdly, the Bill enables the Secretary of State to make regulations to obtain information on sales and purchases of health service products from all parts of the supply chain, from manufacturer to pharmacy, for defined purposes. These purposes are reimbursement of community pharmacies and GPs, determining the value for money that the supply chain or products provide, and schemes to control the costs or prices of medicines. By bringing these requirements together, the Bill streamlines and clarifies all the relevant requirements currently in place, providing a statutory footing for them all. This includes the existing statutory requirements already in the NHS Act 2006, and those agreements that currently have a voluntary basis only.

In Committee, the Government tabled a number of important amendments to reflect the views and requests of the devolved Administrations on how they want to apply the information power in their territories. We tabled the amendments following constructive discussions that resulted in agreement that the UK Government will collect information from wholesalers and manufacturers for the whole of the UK. It would not make sense for each nation to collect its own information from wholesalers and manufacturers, which would lead to duplication of effort and unnecessarily increase costs across the system.

We have also agreed that each nation will collect information from its own pharmacies and GPs. The devolved Administrations will have full access to all the information that the Government collect. I have committed to develop a memorandum of understanding to underpin these arrangements, and my officials are working closely on that with officials in the devolved Administrations.

To ensure that the Bill makes the Government’s intentions absolutely clear, we tabled a small number of minor and technical amendments on Report to close a potential loophole that would have enabled some companies not to provide us with any information if they also provided pharmacy or GP services to the devolved health services.

This is a relatively small Bill, technical in nature, which has received considerable support from across the House, for which I am extremely grateful. The Bill will help to secure better value for money for the NHS from its spending on medicines, while ensuring that the decisions made by the Government are based on more accurate and robust information.

I thank you, Madam Deputy Speaker, for presiding over today’s debates. I also thank the members of the Panel of Chairs, especially my hon. Friend and neighbour, the Member for Telford—

[Rob Marris]

The Wrekin.

[Mr Dunne]

I stand corrected—my hon. Friend the Member for The Wrekin (Mark Pritchard), under whose chairmanship I served for the first time. Finally, I thank the parliamentary Clerks and counsel, Hansard and the Doorkeepers for helping us to bring the Bill to its conclusion today.

Health Service Medical Supplies (Costs) Bill

Philip Dunne Excerpts

Ping Pong: House of Commons
Wednesday 15th March 2017 Commons Chamber

[The Minister of State, Department of Health (Mr Philip Dunne)]

I beg to move, That this House disagrees with Lords amendment 3.

[Madam Deputy Speaker]

With this it will be convenient to discuss Lords amendments 1, 2 and 4 to 24.

[Mr Dunne]

I remind the House of the importance of this Bill. NHS spending on medicines is second only to staffing costs. The NHS in England spent more than £15 billion on medicines during 2015-16, a rise of nearly 20% since 2010-11. With advances in science and our ageing population, the costs will only continue to grow.

The UK has a lot to be proud of: we have a world-class science base and an excellent reputation for the quality and rigour of our clinical trials and the data they produce. 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. The Government are deeply committed to supporting it to flourish and, in doing so, to provide jobs and transform the health of the nation.

In the 2016 autumn statement, an additional £4 billion of investment in research and development was announced, specifically targeted at industry-academia collaboration. We expect the life sciences industry to be a substantial beneficiary. That comes on top of measures such as the patent box and the R and D tax credits that the Government have introduced to encourage investment from innovative businesses.

That determined action is reaping rewards. The UK ranks top among the major European economies for foreign direct investment projects in life sciences. Last month, the Danish drugs company Novo Nordisk announced a new £115 million investment in a science research centre in Oxford. That comes on top of an additional investment of £275 million announced by GSK last June and AstraZeneca reaffirming its commitment to a £390 million investment to establish headquarters and a research centre in Cambridge—it is good to see the hon. Member for Cambridge (Daniel Zeichner) in his place. Looking ahead, Professor Sir John Bell, the regius professor of medicine at Oxford, has agreed to lead the development of a new life sciences strategy for the long-term success of UK.

At the same time, it is important that we secure better value for money for the NHS from its growing spend on medicines and other medical supplies. I remind the House that, overall, the Bill will do three things. First, it will enable us broadly to align our statutory scheme for the control of prices of branded medicines with our voluntary scheme, by introducing the possibility of a payment percentage for the statutory scheme. That could deliver £90 million of savings annually for the NHS. Secondly, the Bill will give us stronger powers to set the prices of unbranded generic medicines if companies charge unwarranted prices in the absence of competition.

Thirdly, the Bill will give us stronger powers to require companies in the supply chain for medicines, medical supplies and other related products to provide us with information. We will use that information to operate our pricing schemes, to reimburse community pharmacies for the products they dispense and to assure ourselves that the supply chain of specific products provides value for money for the NHS and the taxpayer.

During the Bill’s passage through the other place, the Government tabled 23 amendments, following debate and discussion in this House and with peers. I firmly believe that those amendments make it a better Bill. However, I will start with Lords amendment 3 and set out the reasons why it does not improve the Bill.

Lords amendment 3 would introduce a duty on the Government, in exercising their functions to control costs, to have “full regard” to the need to

“promote and support a growing life sciences sector”

and the need to ensure that patients have access to new medicines. The amendment would undermine one of the core purposes of the Bill by hindering the ability of the Government to put effective cost controls in place. Controlling the prices of medicines cannot, in itself, promote the interests of the life sciences sector and deliver growth. Having such a requirement in legislation could encourage companies to bring legal challenges where the cost controls have not, in themselves, promoted growth in the life sciences industry. That could significantly hinder the Government’s ability to exercise their powers to control costs effectively.

For example, if the Government were to take action to control the price of an unbranded generic medicine, because it was clear that the company was exploiting the NHS—several examples of that have been raised throughout the Bill’s passage through this House—it could be argued that that action did not promote the life sciences sector, because every generic drugs manufacturer could argue that it is a life sciences company. Nevertheless, that would, of course, be the right thing to do for the NHS, for patients and for taxpayers. Lords amendment 3 would enable companies to challenge any action by the Government to control costs by arguing that proper regard had not been paid to supporting a growing life sciences industry. The amendment would therefore make it more difficult to control costs, including where companies seek to exploit the NHS over and above the interests of patients, clinicians and taxpayers.

I say gently to those on the Labour Benches that it is ironic that they talk tough on the pharma companies, which they claim in other forums routinely seek to exploit the NHS, when today they are arguing the cause of the industry by supporting an amendment that would provide it with a legal stick with which to challenge the NHS when it seeks to control the costs of drugs, some of which, as they acknowledge, are exorbitantly priced. I therefore have to ask the hon. Member for Ellesmere Port and Neston (Justin Madders): whose side is Labour on?

The Government are seriously concerned that Lords amendment 3 has the potential to impact negatively on our ability to control costs. I do not expect that that was the aim of well-intentioned Members in the other place. I hope both Houses agree that it would be damaging to the NHS if, on every occasion that the Government deem it necessary to use their powers to control costs, the Government could be challenged for failing to give full regard to promoting the interests of life sciences companies.

The second part of Lords amendment 3 requires the Secretary of State to have full regard to the need for NHS patients to benefit from swift access to innovative medicines that have been recommended by the National Institute for Health and Care Excellence through its technology appraisals. However, NHS commissioners are already legally required to fund drugs and other treatments recommended in NICE technology appraisal guidance, normally within three months of final guidance. The Secretary of State’s power to control costs is a completely separate process. Therefore, this part of the amendment would not achieve anything.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The Minister is of course absolutely right on the primacy of NICE in this matter, but today the NICE board will be imposing a budget threshold of £20 million a year, which would have the effect of at least delaying or possibly preventing the roll-out of new medicines. Does he share my concerns, particularly in relation to cancer drugs?

[Mr Dunne]

My hon. Friend is right to point out that NICE is considering today in its board meeting thresholds for the introduction of new medicines. What I would not do, however, is share his concern that it will necessarily lead to delay in their take-up. In essence, it will provide NHS England with greater commercial flexibility to negotiate with drugs companies that propose to introduce a drug that may cost more than £20 million in a full year. It will give NHS England more time to negotiate a lower price with the pharma company. That should not, in and of itself, lead to either delay or less take-up.

I am aware of the concerns, expressed by my hon. Friend, other Members and some charities in a national newspaper today, about the joint NICE and NHS England consultation on the proposed changes to the appraisal and adoption of new technologies. There have been suggestions by Opposition Members that this is rationing of NICE-approved medicines. I assure the House that that is not the case. Patients will continue to have the right to NICE-recommended drugs, as enshrined in the NHS constitution. The proposals are intended to ensure that patients benefit from even faster access to the most cost-effective treatments, while addressing issues of affordability as well as effectiveness.

Let me be very clear: Lords amendment 3 would not impact on the proposals; the NHS will continue to fund a product approved by NICE, in line with NICE recommendations. I also remind Members that NICE and NHS England are making the changes to address concerns about the affordability of high-cost new drugs and other technologies that were raised by the Public Accounts Committee, which is chaired by the hon. Member for Hackney South and Shoreditch (Meg Hillier).

I have read the suggestion by the Opposition that the NICE and NHS England proposals would be contrary to our intent to increase the uptake of new medicines. As I said to my hon. Friend the Member for South West Wiltshire (Dr Murrison), that is false. In reality, last year saw spend on medicines grow more quickly than in any of the past 10 years, as we seek to secure rapid access to new medicines for patients.

Access to medicines is primarily dependent on clinicians’ choices about what is best for their patients. Clinicians need to be aware of new medicines and persuaded that they may be a better option for their individual patients, taking into account other conditions each patient may have and other medicines they are taking. We need to change the culture and behaviour of those clinicians who may be reluctant to use innovative medicines, and legislation is not the right way to effect behaviour change in the NHS.

[Bob Stewart (Beckenham) (Con)]

I want to ask a layman’s question: if NICE approves a drug, is the NHS necessarily required to buy it?

[Mr Dunne]

The short answer is yes, it is. That is set out in the NHS constitution. The measures considered by the NICE board today provide some additional flexibility for NHS England in its handling of negotiations with the drugs companies over the introduction of new technology.

Let me conclude on amendment 3 by saying that the Government strongly believe that it would have a negative impact on the Government’s ability to operate price controls, so I ask Members to disagree with it.

I will deal briefly with the other amendments. Lords amendments 1 and 2 and amendments 4 to 24 were made in the other place. They are all amendments that the Government brought forward, having worked constructively with parliamentarians on improving the Bill.

Amendments 1 and 2 relate to the remuneration for persons providing pharmaceutical services in England and Wales respectively. The amendments provide for new regulation-making powers in respect of special medicinal products. These are unlicensed medicines that can be manufactured or imported to meet a patient’s individual needs when no licensed product is available.

The unique nature of specials—the hon. Member for Central Ayrshire (Dr Whitford) mentioned them during our consideration in this place—and their manufacturing arrangements mean that we need to do more to ensure that the prices paid by the NHS represent value for money for all these products. These amendments would enable England and Wales to develop options that will secure improved value for money—for example, by using a quotes system that has been trialled in Scotland, but there are also other options. We will consult the community pharmacy representative body on how best to take this forward.

Amendments 4 to 7 introduce a consultation requirement on the Government with regards to medical supplies. Again, the hon. Member for Central Ayrshire helpfully pointed out that such a requirement was in place for medicines, but not for medical supplies. I thank her for engaging with me and my officials, which has helped to improve the Bill.

The Government have listened to concerns in the House of Lords and in this House about the Government’s power to control the prices of medical supplies. These amendments would ensure that the first order to control the price of any medical supply would be subject to the affirmative procedure, giving both Houses an opportunity to discuss that order.

Amendments 8 and 9 and 15 to 17 are amendments to the information powers in the Bill. Responding to concerns from industry about the potential burdens of the proposed information power, they introduce an additional hurdle for the Government to obtain information by requiring them to issue an information notice whenever they require companies to provide cost information related to individual products, which can be appealed by the company concerned.

[John Redwood (Wokingham) (Con)]

One problem in coming to a fair price for a new drug—we want to reward the company for its innovation, but without being ripped off—is knowing what kind of production run or demand there might be for it. Is there any way that the NHS could get better at forecasting what its volume might be, as that might drive the price down?

[Mr Dunne]

As ever, my right hon. Friend, who is a champion of market solutions to some of these tricky problems, lights on an important point. We need to be better at trying to predict the take-up of medicines. Of course, until a new medicine has been introduced, it is very difficult to assess that, because it requires clinicians to get behind the product and to choose to prescribe it. He is absolutely right that we need to look at the way in which we model in order to have a negotiation with the pharmaceutical company that ensures that we build in as good a volume as we are expecting to maximise our prospects of getting the best price.

Let me return to Lords amendments 8, 9 and 15 to 17. When the Government ask a company to provide straightforward information about prices and other transaction costs or overall costs, there is no need for an information notice. The rationale is that there could be a significant burden on companies to provide product-level cost information. Any such request should be made only in exceptional circumstances—for example, in order to set the price of an unbranded generic medicine, when the Government would need insight into the costs and profits associated with the specific product.