Health Service Medical Supplies (Costs) Bill

Philippa Whitford Excerpts

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

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

Like the right hon. Member for Chelmsford (Sir Simon Burns), I pay tribute to some of the research and development that has been done by the pharmaceutical industry. Europe has become the biggest research network in the world, and the biggest beneficiary of that has been the United Kingdom, through Horizon 2020 funding, in collaboration with others, and the European Medicines Agency. As others have said, however, both of those are going to change, so the pharmaceutical industry in this country will be rather nervous and anxious about its future.

Obviously, every new drug that the industry discovers creates an additional cost pressure for the NHS, hence the reason for the pharmaceutical price regulation scheme, which has existed since the 1950s. The current scheme has been in existence since 2014 and has brought significant benefits, as the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), has said. In Scotland it directly funds our new medicines and rare diseases fund. Ours is not a cancer drugs fund, so it gives us greater flexibility to treat very rare diseases. The patient’s condition does not need to be cancer, so we are giving Sofosbuvir for hepatitis C and Everolimus for tuberous sclerosis.

It is necessary, however, to have some form of management over the cost pressure, so the Scottish Government and my colleagues welcome the way in which the Bill tidies up the situation by closing some of the loopholes faced by the NHS. We have heard in particular about those who have a monopoly over generic medicines, whereby companies that are part of the PPRS can charge what they like for them. There needs to be much greater alignment and it needs to apply to all drugs, not just all companies.

The Secretary of State also mentioned the collection of data. As someone who has worked in the NHS, I have to say that it has struggled with that, and I have concerns about how it will work across the entire NHS, the entire pharmaceutical industry and medical technology and other supplies. We need to make sure that data collection is relatively simple and straightforward, and I also hope that we will bring together and use data that have already been collected.

I speak as a representative of one of the devolved nations and it is important that our Government are able to access those data easily. The Bill states clearly that the data gathered will be shared with Scottish Ministers, but on what basis? Will it be down to Scottish and Welsh Ministers to request data when they want them, or will they have to wait for an annual return, which might not happen when they want it to happen?

The Secretary of State said that there had been consultation, but I hope that that will continue, because the devil will be in the detail when it comes to the extension to all medical supplies. Scotland already uses a lot of central procurement to keep costs down, so it is important that the Bill enables, rather than interferes with, that.

[Rob Marris]

The hon. Lady is making a powerful speech, as ever. May I pick her medical brains, as it were, on the question of medical supplies? They are defined by the National Health Service Act 2006 as

“surgical, dental and optical materials and equipment”.

Would she, as a clinician and a surgeon, include a CAT or an MRI scanner, as a piece of surgical equipment? It is certainly not dental or optical. It seems to me, as a layperson, albeit a lawyer, that it is not surgical equipment, but investigative equipment, and MRI scanners, as she and many other Members will know, start at about 2 million quid.

[Dr Whitford]

That is an area that needs to be looked at. A narrow definition that covers only blades and swabs and that does not take into account our hugely expensive infrastructure would not make sense. When we buy those kinds of machines in Scotland, we tend to consider central procurement and assessment, which opens up the potential for massive savings. A lot more work will have to be done in Committee and then in regulation to make the process function in the way that everyone wants it to function.

We need something much more radical. That aspiration may not happen with this Bill, so it will have to come later. Patients in the UK face a delay of about five years to access new medicines. If we compare cancer survival rates, we will see that we are often ahead when it comes to patients with early disease. We are one of the earliest nations doing population screening for breast cancer. However, we start to fall behind when it comes to people with more aggressive or advanced disease. I think that that is where our poorer outcomes and survival rates by comparison with European countries come from, because it is palpable on the ground. Part of that is sometimes the eye-watering initial prices of new drugs. Yes, we can set methods to try to control that, but a lot of those drugs do not get through the system introduced by the National Institute for Health and Care Excellence because they are expensive. In my interactions with some of the major pharmaceutical players since I have been in the House, I have discovered an appetite for a different way of doing it. Prices could be much lower but there could be a guaranteed number of patients before a drug became generic. We might need to look at risk sharing, because at the beginning we often do not know whether a drug will really be as good as it is cracked up to be. If the price starts, like some cancer drugs, at £100,000, we will struggle to get it through any of our pricing systems.

Something else we have to deal with is the question of how we expect pharmaceutical companies to make a profit on drugs that we never intend to use. We need new antibiotics, but any brand-new class of antibiotics—we have not had such a class for 30 years—will have to be left on the shelf. The existing system will simply not fund research for such a drug. While the Bill tidies up some of the issues that we face now, we need to do much more blue-skies thinking on equipment, drugs and the way in which we develop different things. Otherwise we will have interminable debates, such as those in which I have participated in Westminster Hall: in one debate, we say that we want more research on, for example, brain tumours, but the next week we have a debate on the fact that we cannot access a brand new drug that has been developed by the pharmaceutical industry in the UK.

[Jo Churchill (Bury St Edmunds) (Con)]

The hon. Lady is making an informed and impassioned speech. Does she agree that we are entering a new landscape, and some drugs that have been discovered can be used for multiple treatments for different cancers, or even for other diseases? We therefore need an even more flexible approach so that we can benefit from those drugs and optimise patient outcomes.

[Dr Whitford]

Absolutely. We have entered the realms of using immunotherapies such as Herceptin for cancer. Equally, in the mid-2000s, people went to court to try to access that drug, which halves the risk of metastatic disease—and we end up spending much more on patients with that stage of the disease. We give Sofosbuvir in Scotland for hepatitis C because it is almost curative, so we have fewer new hepatitis C patients. We need a much more rounded way of looking at the costs and benefits of new drugs. The genetic drugs that we are likely to use in future will be even more eye-wateringly expensive, but then again, they may have a bigger impact.

The Bill tidies up loopholes, but I have concerns about the involvement of the devolved Administrations in the design of the schemes, access to data and ensuring that the funding for PPRS, which we use for our new drugs fund, is maintained. There is a call for us to do something much bigger and much more blue skies in future.

--- Later in debate ---

[Norman Lamb (North Norfolk) (LD)]

This is an uncontroversial set of measures and I confirm my support for the Bill as it stands. The great strides in medical science over the past decade and beyond are obviously to be celebrated, with cutting-edge new treatments for life-threatening and life-shortening conditions, including a number of rare diseases and cancers, offering many people the hope of improved health, longer life and a quality of life that in the past would not have been possible. As well as the enormous benefits it brings to patients, the life sciences industry makes an incredibly valuable contribution to the UK, and it is only right that we acknowledge that today. However, there is an inevitable cost attached to the triumph of modern medicine, and the challenge is to ensure patient access to new treatments as quickly as possible, while ensuring value for money for the NHS.

The Bill seeks to address some of the shortcomings. It addresses clear abuses of the current system and I think that it will bring greater consistency to the existing arrangements for controlling the cost of medicines new and old. As I have said, I find myself in agreement with the proposals.

It is good that so many companies recognise their responsibility for keeping the branded medicines bill in check by signing up to the pharmaceutical price regulation scheme. Under the scheme, manufacturers pay a rebate to the Department of Health to cover expenditure on branded medicines above agreed limits. It is a responsible approach, helping to ensure that patients can benefit from access to novel drugs in a way that is sustainable for the taxpayer. However, I agree with the Secretary of State on the need to address the current disparity whereby the statutory medicines pricing scheme delivers lower savings than the voluntary scheme. Those differences are expected to widen, which is clearly not in keeping with the spirit of either arrangement, so it makes sense that they should be more closely aligned. As he said, we have to remove the incentive to shift from one scheme to another.

I particularly welcome the proposals to strengthen the authority of the Secretary of State to intervene where unbranded medicines are priced excessively. The NHS and patients benefit immensely from medicines, which were once available only at great public expense, becoming available far more cheaply after the patent expires and generic products come on to the market. We should recognise the great value that the competitive market brings, saving the NHS more than £13 billion every year, according to the British Generic Manufacturers Association, but we also know that the overall cost of generic items is increasing at a faster rate than branded items, and that there have been some outrageous increases, to which other hon. Members have referred, in the price of some individual generic drugs in recent years when there is only a single company producing that drug. It looks like a clear case of profiteering, where the NHS is being ripped off.

Let us be clear what the implications are when a particular company makes an excessive profit from increasing the price of a drug in that way. It means that other NHS patients, particularly those in more marginal areas that do not get the attention that they deserve, lose out. There is less money to spend on, for example, teenagers with mental health problems or learning disabilities. There is a price to be paid for that excessive profiteering. It is utterly unethical behaviour. I hope that the Competition and Markets Authority can find a way to take action against these companies, which appear to have constructed a business model to exploit the loophole.

As hon. Members have said, a number of generic medicines increased in price by more than 2,000% in the last decade. The most horrific example I have come across is a medicine that increased in price from £13.98 in 2005 to £632.96 in 2015, a rise of more than £600 per item dispensed. It is utterly despicable for any private company to think that it can do that. The Government are right to take action to end that outrageous practice.

Generics account for three quarters of prescription items dispensed in the community. In those cases where competition fails to deliver value for money, it is important that there are measures at our disposal to control prices and to tackle abuses that could place intolerable pressure on NHS budgets. It makes little sense that generic medicines can be controlled through the statutory scheme, but that the Government are currently prevented from stepping in when a company’s branded products are regulated through the PPRS. It seems clear that we should remove that anomaly. I should add that, in using these powers to introduce price controls, the Government should of course exercise caution and guard against any unintended consequences that may impact on the viability of smaller companies. I am sure that the Government will be alert to that.

The aims and provisions of the Bill are admirable, but it is only part of a much wider debate about how we can sustain access to groundbreaking new treatments when the NHS is in the middle of the longest financial squeeze in its history. One intervention from a Government Member on the Secretary of State drew attention to the fact that the total bill for drugs is rising at an unsustainable rate. The right hon. Member for Chelmsford (Sir Simon Burns) also raised this question, and we have to address that because the NHS will not be sustainable at the current rate of increase in cost.

It is no secret that the NHS has struggled to adapt to modern medicines, particularly those that carry a large budgetary impact. Both NICE and NHS England have had great difficulty in figuring out which medicines to approve and how those medicines are to be afforded and brought to patients. Recently, NHS England has delayed funding for the new hepatitis C treatment, so I was interested in the points made by the SNP representative, the hon. Member for Central Ayrshire (Dr Whitford).

We also have the ongoing and deeply unsavoury case of the PrEP, or pre-exposure prophylaxis treatment. Not only is NHS England taking its legal challenge to the bitter end to avoid having to pay for the drug, but there have been reports of it pitting patient groups against each other by saying that patients could miss out on vital treatments for cancer or rare diseases for children should PrEP be funded. We do not want to get into comparing the rights and interests of one group of patients against those of another in that way.

Earlier this month, NHS England and NICE launched a consultation on proposals to change the way some drugs are funded when there is a high cost involved. NHS England and clinical commissioning groups are legally required to fund drugs recommended by NICE as being clinically and cost-effective, normally within three months of the guidance being issued, barring unique circumstances. Under the new proposals, if NICE recommends a drug that will bring an estimated cost to the NHS above a certain amount—£20 million is the suggested figure—NHS England can go back to NICE and ask it for longer to roll out the medicine if it is unable to agree a lower price with the manufacturer. Surely that is precisely the opposite of what we ought to be trying to achieve as regards speedier access to new drugs that are coming on stream. Ignoring questions about how that somewhat arbitrary cost threshold was arrived at, there is a concern that this is a creeping step towards the rationing of approved treatments in the NHS. It seems to me to be an admission that the NHS cannot afford to pay even for the drugs that are found to be cost-effective by NICE; similar concerns have been raised by Nicholas Timmins, that highly respected observer who is a senior fellow at the King’s Fund.

The great worry is that opening up the debate on how quickly or slowly approved treatments can be adopted will put us on a slippery slope to a new discussion about whether approved treatments should be adopted at all, and at the very least UK patients will be further disadvantaged—the SNP spokesperson has already made the point that we compare very badly with other countries —and there will be more delays in getting access to new cost-effective treatments.

[Dr Philippa Whitford]

Does the right hon. Gentleman recognise that we are one of a tiny handful of OECD countries that allow that opening price to be set completely by the pharmaceutical industry and to be set as high as it likes?

[Norman Lamb]

I note that point. I suppose my overall point is that given the unsustainable increase in the total drugs bill and given the actions that NHS England and NICE appear now to be taking, it seems that we will be in a more difficult position in getting speedy access to new drugs that can be life-saving. The Government need to reflect on that. The hon. Member for Central Ayrshire made the point in her speech that this Bill tidies up things that have to be tidied up, but there is a much bigger debate about how on earth the NHS can afford vital treatments that in other countries patients are getting access to much sooner.

If we are approaching a situation in which we are unable to cope with new treatments that have been judged by an arm’s length expert body, NICE, to be clinically effective for patients and cost-effective for the NHS, it is yet more evidence that the NHS needs more resources, and I repeat again to the Minister—he will be sick of hearing me say it—that at some point the Government must recognise that they are simply drifting towards a crash with the NHS. We face an existential challenge that this evening’s debate has highlighted and that has to be confronted at some point. I urge the Government again to consider a cross-party approach so that we can ultimately achieve, in discussion with the public, a long-term and sustainable settlement for the NHS and care that recognises both this dramatic increase in the cost of drugs and that all our loved ones want to have access to those drugs in their hour of need.

We should also be mindful of the potential impact of Brexit on the life sciences industry and the additional challenges we face in keeping the NHS medicines bill under control. If trade between the UK and other EU countries becomes subject to customs duties, import VAT and border controls, thereby increasing costs to the life sciences industry, that might in turn drive up the costs of new medicines to the NHS, and impact on access for UK patients to the most innovative new treatments.

Finally, we also need to make sure that evaluation processes and methodologies are fit for purpose. Traditional appraisal methods and notions of cost-effectiveness are unsuitable for many modern medicines, especially for drugs of immense scientific innovation that target just a small number of patients, but the NHS has been slow to respond to that. The Cancer Drugs Fund is a case in point—established as a sticking plaster after a cluster of promising drugs were judged not to be cost-effective. While it is almost certainly the case that many of those treatments came with too high a price to be routinely funded, few would deny that they were being evaluated under outdated processes that could not fully capture their value. Many rare disease treatments suffer from the same problem.

Companies have a duty to ensure that their medicines are fairly priced, but NHS England and NICE also have a duty to make sure that their evaluation processes and decision-making criteria are fit for purpose, so that new medicines are given a fair hearing without some of the excessive delays we have seen in the recent past. We owe it to patients to make sure that happens.

I support this tidying-up measure and, in particular, the ending of the outrageous practice of a number of companies profiteering at the expense of NHS patients, but this debate has also raised a much bigger issue about how we in this country afford groundbreaking treatments that keep our loved ones alive.

--- Later in debate ---

[Jo Churchill (Bury St Edmunds) (Con)]

It is a pleasure to follow my hon. Friend the Member for Erewash (Maggie Throup).

We all know the background and I will not waste everybody’s time by going over it again. We know about the ageing population and about bearing down on the costs, to which my hon. Friend the Member for Salisbury (John Glen) and the right hon. Member for North Norfolk (Norman Lamb) alluded earlier. We know that advances in science are going faster than we can legislate. One of my local clinical commissioning groups, Ipswich and East Suffolk, suffered an exorbitant increase in Epanutin capsules two years ago and had to find another £600,000 in six months. Looking at drugs more widely, as my hon. Friend the Member for South Suffolk (James Cartlidge) mentioned earlier, not prescribing paracetamol in that particular CCG would save £1 million a year.

The measures in the Bill aim to manage the cost of drugs. The measure on efficient data collection, so that we start to have good decision making based on evidence, is also most welcome. Last autumn, the Secretary of State consulted publicly on how to address the problem of excessively priced unbranded generic medicines, and the industry and others fed back. They were glad of the dialogue. As I said, drug costs are unsustainable. A saving of some £90 million per health area was identified. My own CCG area could save £1 million per annum from unused repeat prescriptions. Nationally, it would mean that more than 12,000 more community nurses could be employed. We need to start making these decisions about where we want to be spending our money. With the pressure on social care, something alluded to by the right hon. Member for North Norfolk, these are decisions we are going to have to make as a Government and as patients.

The current system allows for some to be inside and others to be outside the system. That limits its robustness. It is for this reason that I support the Bill wholeheartedly. The system does not target those who do not play fair and we need to stamp down on them. It is better patient outcomes that I am passionate about. We all play a part, including the pharma industry, due in no small part to the unique infrastructure in this country. This industry is important to us. As my right hon. Friend the Member for Chelmsford (Sir Simon Burns), my hon. Friend the Member for South West Bedfordshire (Andrew Selous) and my right hon. Friend the Member for Cities of London and Westminster (Mark Field) have all alluded to, we need to be supportive of those companies that work positively for patients and engage in trying to find solutions. Indeed, the Association of the British Pharmaceutical Industry supports the Government increasing their powers where market failure has occurred. There is a balance to be had to ensure that new drugs are developed.

That brings me to the matter of repurposed and off-label drugs, those that have another use than that for which they were originally formulated, for example Everolimus, Rituximab, Cycloserine, Viagra and Thalidomide. As the hon. Member for Wolverhampton South West (Rob Marris) said, Thalidomide was originally developed for morning sickness. Lately, it has been found to be very beneficial for the treatment of some cancers and skin conditions. We need to understand new uses for approved drugs for the speediest of transitions from bench to bedside. As they have not gone through new trials, we need to be mindful that they are not new drugs; and just because the target is, for example, prostate cancer and not breast cancer, these drugs should still be costed accordingly.

[Dr Philippa Whitford]

I wonder whether the hon. Lady remembers the time we spent in the House last November debating the Off-patent Drugs Bill. I flagged up the concern that a doctor prescribing a drug with a licence for a use takes precedence over an off-patent drug that may actually be the same. With the sort of gaming we have seen, there is a real concern that drug companies will tweak a drug in the slightest manner and then start selling it to the NHS at hundreds and thousands of pounds, when in actual fact an off-patent drug would do the same job. That has still not been dealt with.

[Jo Churchill]

I thank the hon. Lady for making the point so succinctly. I am also grateful to the Secretary of State for his clarification and the comments that have been made about the medical technologies industry, which I believe needs looking at. I would be grateful if we could know whether the savings made are likely to be reinvested in patients, particularly given my position as chair of the all-party group on personalised medicine, and in the latest medicines and treatments.

The Bill is designed to stop individuals making vast sums of money and taking advantage of a loophole. I back the Government’s aim of value for money and fair prices for optimum patient outcomes. I am heartened by the cross-party support for the Bill and look forward to it making positive progress.

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

Philippa Whitford Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 8th November 2016 Public Bill Committees

[The Chair]

Thank you. A lot of people wish to ask questions, so I ask the witnesses to try to keep their answers a little shorter.

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

Q I would like to ask Mr Kennedy a couple of questions. Obviously, the Bill extends the National Health Service Act 2006 to medical supplies. As someone who comes from a surgical background, my concern is that the Medicines and Healthcare Products Regulatory Agency controls the quality of drugs, so there should not be a change in quality with price, but for medical supplies—I am just thinking of the surgical gloves I have interacted with—there is a huge range. If we are just pushing on price, do we have a mechanism that you are confident in to ensure we do not end up pushing down the quality of medical supplies—I mean some of the basic things?

Philip Kennedy: Yes. We get back to the question of what is the point of having a very broad and all-encompassing definition of a medical device with within the scope of what is proposed here. The data collection on all those items—whether specialised gloves that are used in a certain area or a routine glove on a ward—is overly onerous and does not achieve the end, so we are back to the central question. The issue of the safety and quality of devices is very much regulated by a CE mark. If a product has a CE mark, it has gone through the necessary quality and safety checks.

I believe that the addition of medical devices and any other items was relatively late in the consideration. In that regard, I wonder whether there has been a proper assessment of the impact that that would have. We would welcome further work on the potential impact. It is very clear for pharmaceuticals, but extremely unclear for medical devices.

[Dr Whitford]

Q Products may have passed a CE mark, but I am conscious that, when we tried different surgical gloves, there were some makes where you were going through two or three in an operation, which means your benefit in cost has gone.

The Bill is not just about data collection; it extends the provisions on enforcement of price control to Scotland and Northern Ireland. We already have central procurement, which has helped us control prices. This is one of my anxieties. Do you think both of those moves are reasonable?

Philip Kennedy: Again, we question why the scope is being widened to Scotland and Northern Ireland at this particular juncture, given that, as you said, existing mechanisms are already in place and are effective, in our view. The competitive market for surgical gloves—not to pick on that, but since you raise it, it is always one that is easy to understand—means that competitive tendering can put in a quality matrix, a price matrix and a delivery and service support matrix. None of that is possible by simply asking companies to take six years’ worth of product data and analysing crunch profitability. It does not move the intent forward in any way in terms of having to save costs.

[Dr Whitford]

Q Do you think there would have to be another body to take quality further, in the way the MHRA does with drugs, if this were going to come in, to avoid people going down to bare-minimum quality?

Philip Kennedy: As I say, we have an extremely productive dialogue with Lord Carter and the Department of Health on the forthcoming review of the procurement landscape. Huge efficiencies can be gained in restructuring that. We would prefer to look at that work in terms of assessing quality versus price, value, lifetime ownership and pathway design, as I mentioned earlier, where more significant savings could be realised for the NHS. Indeed, it would be good for industry to continue to develop products that have a higher quality threshold. Perhaps they cost more, but they would save significantly more than focusing on data that just look at existing product and existing price.

Medical device development is a very iterative process, unlike pharmaceuticals, which perhaps have a 25-year patent that protects something. One of our members has 80% of its revenues in products that only came to market in the last two years. That is where the efficiency, the quality and the cost-saving argument comes through. We surely want to encourage that as an economy.

[Julie Cooper (Burnley) (Lab)]

Q This question is probably to Mr Smith. Generic supplies to the NHS in the UK provide some of the cheapest medicines in the developed world. Do you think that the approach to control the cost of generics is the right one, given that it is a minority of individual items that have come to the public’s attention because profits have soared significantly?

Warwick Smith: I am on record as saying it is the least worst system in Europe. There is no perfect system. What we have found, comparing what we have in the UK and elsewhere in Europe, is that competition is a much better way of controlling price than intervention. We produce lower prices in the UK than in the rest of Europe. We have had an issue, as you say. I think fewer than 2% of our products have made the front page of The Times. We agree that there should be data available to investigate whether those prices have a justification or not, and intervention perhaps by the Secretary of State or, at the end of the day, by the competition authorities. However, for the majority of products, as the Secretary of State said on Second Reading, the system works extremely well. We have spent time trying to come up with better systems and we cannot.

--- Later in debate ---

[The Chair]

Can we move on?

[Dr Whitford]

Q I want to ask Dr Ridge and Mr Smith about a couple of things that I thought would be in the Bill but are not. One is repurposed off-patent drugs, which we have debated in the House before. There is a potential for their price to go up within the generic set-up. My concern is that, because they do not get relicensed, they will then be tweaked and suddenly sold back to the NHS for their new purpose at 10 grand a pop instead of 50p.

The other one is specials. I have been written to by the British Association of Dermatologists. Patients with particular skin conditions, such as some of the pretty distressing forms of psoriasis, require formulations to be made up. Again, there is quite a different system in Scotland, which uses an NHS producer to do that. In England, initially only one quote was required, which could be from a sister company, and the prices have turned pretty eye-watering. It estimates that some products cost eight times the price in England as in Scotland. Do you not think some of those things should be included in the Bill?

Dr Ridge: From an NHS England point of view, we, too, are concerned about specials and what appear to be excessive prices associated with certain specials. They are, of course, unlicensed medicines, which makes it a little bit more difficult in terms of being dealt with in the way I think is envisaged in the Bill. For example, I would have thought that the information-gathering powers will be relevant here, too, to ensure that we continue to get best value for money in this case for specials or for unlicensed medicines generally. I know that a team at the Department of Health are looking at that routinely—and more power to their elbow.

[Dr Whitford]

Q Is it not the case that, because the price is so ridiculous, the CCGs are not funding it, so the patients are not getting their ointments or cream or whatever?

Dr Ridge: There are CCGs that raise this with us, too, in terms of what appear to be outrageous prices associated with specials. It is something that needs to be addressed and I believe that the information powers will begin to do that in a way that is even more robust than the Department—

[Dr Whitford]

Q Would the information definitely apply to people who produce specials? That is not mentioned anywhere in the Bill.

Dr Ridge: I think so, but I look to others who might know better than me. It is certainly something that we feel needs to be addressed even more robustly. Whether the Bill is the right place or not is another matter altogether, I guess.

On the repurposed off-patent drugs, from my point of view, speaking in the role I do, I think that somehow we need to provide at least confidence to prescribers to be able to utilise medicines such as tamoxifen and others in a way that supports them in use in what would be an unlicensed purpose. Indeed, one of the things I have asked the regional medicines optimisation committees to do in due course is to give some thoughts about that, to support prescribers in that process. When they are repurposed and then come back at a higher cost, again, that is something I feel does need to be addressed. I agree with you.

Warwick Smith: I cannot help any more than Keith on specials. My instinct is that they would be included in the Bill, but they are not among my membership, so I have not taken any interest in that.

As far as repurposing is concerned, it is a term that sometimes gets used in two different ways. Dr Ridge mentioned tamoxifen, which I think was on Radio 4 this morning. We are working with the Department, NHS England and various charities to find ways to grant new indications on old licenses, so clinicians are comfortable about using medicines that were first licensed for different uses.

[Dr Whitford]

That was the basis of the Bill we debated last November.

Warwick Smith: And, frankly, that is happening. As we sit here today there are regular meetings going on. The problem is, if you ask a company to do the research work to prove that new use, it bears all the costs.

[Dr Whitford]

To be fair, it is not usually the company that finds the new use. Repurposes are nearly all academic and clinical discoveries rather than—

Warwick Smith: That is why they are working with charities to find a way to do this.

[The Chair]

We have got to get back to the Bill. We have got a number of issues that Members have indicated they wish to be called on and we have only got four or five minutes.

Warwick Smith: Very quickly, Chair, to finish Dr Whitford’s point, that is a good thing if we can make it work properly, and progress is being made. I absolutely agree that a change of a drug’s status to find a way of increasing its price with no clinical benefit is not something that should be supported. The Bill gives the powers properly to investigate changes like that and for the Secretary of State to take action. As I said earlier, we thought he had those powers. We signed up to his using those powers. I believe that he has used those powers, which we now discover he does not have.

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[Dr Davies]

Q We have received correspondence from an individual who takes liothyronine, as does one of my constituents who is affected by the current issues. He has pointed out that the company that manufactures that makes an excess profit of £50,000 a day as a result of the hike in prices. With that in mind, do you think that the proposed maximum fine, the penalty of £100,000 or £10,000 a day, is sufficient?

David Watson: I am not aware of the individual product. We support the Bill in so far as the Government need to be able to have the powers to step in where they spot that there have been price hikes that are not justified. It is entirely appropriate that the Department is able to question companies on why that price has gone up. If it has gone up unreasonably, it is entirely correct that they should reduce it. What I would say, though, is that the majority of branded medicines, for example, covered by the PPRS, have an affordability mechanism underneath them. For example, we repay under the PPRS the difference in NHS spend on medicines; so regardless of the list price, which is often quoted for medicines, very often there are significant deals being made underneath that with the NHS.

[Dr Whitford]

Q Obviously, one of the problems with the generics was companies that are in the PPRS but also producing generics, and the Bill looks at strengthening the statutory scheme and getting rid of this. Do you think that this is the right way go, to still have two systems, or do you think a single system such as a statutory scheme would have been more helpful?

David Watson: No, we think it is better overall to have a scheme that industry negotiates. So as for generics pricing, we agree that the loopholes should be closed and the Department should have the same powers that apply, regardless of which other scheme companies are in. As for branded medicines, I think we would say that we have had in this country a voluntary PPRS for a number of years. I think that it serves both sides very well. You also need a statutory back-up for companies that for some reason do not choose to be in the PPRS. So, by default, you end up with essentially two schemes on branded medicines, but we think that there are benefits to the taxpayer, to patients, to the industry, in having a voluntary scheme.

[Dr Whitford]

Q In the previous panel, the different ways PPRS functions in Scotland and in England was mentioned. Do you see advantages or disadvantages on either side of how that is done?

David Watson: The current PPRS is a five-year deal. This one has been very different from most previous deals, so it underwrites the growth in branded medicine spend with payments going back to the Department. The idea with those payments is that they are then apportioned to Scotland, to the health service in England, etc. So that mechanism has worked well. I think that the problem has been that, certainly in Scotland, as you know, it has gone into a specific purpose. In England, it has gone into general funding for the health service, and therefore it has not fundamentally achieved its purpose, which was to allow taking the cost question off the table, almost—being able to find the right use of medicines by essentially capping spend on them. Because that flow of money has not worked, I think that that part of its objective has not succeeded in England.

[Dr Whitford]

Q So you do not feel it is increasing access to new drugs in the way that was envisaged.

David Watson: That was the plan. I do not think it has achieved that. I think it could do. I agree with some of the comments that Dr Ridge made on this. It is quite complicated, for example, to imagine a big national medicines fund. I think that would have unintended consequences. I am not sure that is what the NHS wants. I think that there are other ways that we could address the real affordability challenge of new medicines, by finding a way to use this money through PPRS for the benefit of finding medicines for patients.

[Maggie Throup]

Q Currently, over-the-counter medicines are exempt from the proposals. Do you think that that is right, or do you think that if we do not actually include them in the proposals, we shall be sitting around this table again in a few years’ time, amending the legislation yet again? If you feel that they should be excluded, do you think that there are any other medicine groups that should be excluded or included in any other way?

David Watson: No, I think that the over-the-counter medicines exclusion is sensible. It is much easier for companies to report when they are not including over-the-counter sales. On your question about whether other medicines should be excluded, if we look at the intent of the Bill, which is to introduce a new payment mechanism for those companies that are in the statutory scheme, it was suggested in the previous panel that the problem with this is that companies are already agreeing deals with the NHS. I suspect that if we end up with a payment mechanism and deals with the NHS, there may be some reluctance to give the best deal possible to the NHS—if, at the same time, a payment is being made in addition to that. I think that may be one of the consequences of this.

--- Later in debate ---

[Jo Churchill]

Q Just as a small supplementary to that, having run businesses—I would imagine pharma is the same—is it not possible that when you drill down to that sort of level, an unintended consequence will be that where you perhaps support a drug to market by using one that has volume-based profit to it, you may unintentionally stop that development? My other worry is about the rare diseases and specialist cancer areas, where it is highly expensive to develop drugs. We all know that we are trying to close this loophole, and that is right—exploitation around that area is not good for the NHS or, ultimately, patients—but can you see any unintended consequences that you would like to flag before you go?

David Watson: Yes, we recognise that it is very difficult to put a specific cap on a price, because the requirements on a company to produce, discover and sometimes cross-subsidise some of their costs across their portfolio are quite complicated. If the UK system, it seems, wants to drive costs of some medicines down to the lowest possible mark then that is, of course, quite possible, but the consequence if we look at areas such as vaccines, though, is that we end up in a situation in which companies do not invest appropriately in the factories or quality, etc., and then there are potential gaps in the supply of those products. So what we would ask for here is that, when the Department is considering the circumstances in which it thinks the price is too high, it has a dialogue with that company to understand the reasons for the price and what may be going on underneath to ensure the continuity of supply of the product.

[Dr Whitford]

Q I want to ask Mr Watson about the issue that I raised with the previous panel about the repurposing of patent drugs and the concern that we did not pass a Bill to add those purposes to old licences, or to have a new system. What would the ABPI view be on trying to avoid that, for the new purpose, suddenly a pretty similar drug comes back at an eye-watering price?

David Watson: Again, I agree with that, and I understand quite often that medicines are repurposed, not necessarily by pharmaceutical companies, but by other research centres. Quite often, even in that scenario, those companies may expect a reasonable return on their effort to bring that product in, which might mean a price rise. Again, I would say that there has to be a balance between price rises to reward innovation and return on investment and those price rises that are clearly not justified.

[Dr Whitford]

Q Do you think that the Bill as it stands will deal with that, or do some of these more specialist areas need to be highlighted?

David Watson: I do not think that the Bill will perhaps ever be clear enough about the circumstances in which one price rise is right or wrong, but I think that we agree with the need for the Department to have adequate powers to go after those cases—though of course to do so it needs adequate resources as well. But we agree with the principle that the Department should be able to look at price.

[Andrew Selous]

Q I am tempted to have another go, because you used the phrase “reasonable return” in your answer to Dr Whitford. You would not give me a figure on that earlier. Are you prepared to say anything further on that?

David Watson: I could make up some figures, but companies, depending on their skill and their pipeline—

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

Philippa Whitford Excerpts

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

[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 ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[Julie Cooper]

I beg to move amendment 43, in clause 3, page 2, line 27, at end insert—

‘(2A) An amount calculated under subsection (2) may only be calculated using the same methodology as an amount payable by any member of a scheme made under Section 261 of the National Health Service Act 2006 (voluntary schemes for controlling the cost of health service medicines) is calculated.”

We support clause 3 in principle and the amendment aims to clarify that. Under the current system, following the National Health Service Act 2006, two schemes operate to control prices of medicines: the statutory scheme and the PPRS voluntary scheme. It is important to align those two schemes, because since 2014 there has been a significant movement of companies deciding to shift from the PPRS scheme to the statutory scheme to reduce the level of rebate payable. That has reduced savings to the NHS, so it requires urgent revision.

We agree with the principles of the Bill on ensuring that both schemes achieve the same level of savings and that the system is not open to abuse. We are concerned, however, that the Bill is not specific about how payments would be calculated under the statutory scheme. We agree with the Secretary of State that the purpose of the Bill is to clarify and modernise provisions to control the cost of health service medicines.

The amendment seeks to clarify beyond doubt that the Bill is in line with the stated aim of achieving equivalence between the two price-control schemes, by ensuring that under the statutory scheme members' rebates are calculated using the same methodology as for PPRS members. We commend the amendment, but will not push it to a Division. I am interested to hear the Minister’s comments.

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

[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.

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

Philippa Whitford Excerpts

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

[The Chair]

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

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

I want to raise a small, perhaps technical, issue on amendment 11, which it seems would insert the rules and definitions with respect to excepted persons for Scotland, Northern Ireland and Wales under a new subsection defining health service products for England. It seems out of place, and there is no definition of English excepted persons.

The amendment would insert new subsection (8A) into new section 264A, which clause 6 inserts into the National Health Service Act 2006. It seems out of place because the provision would deal with English health service products, then the definition of the excepted persons in the devolved nations, and then Scottish, Irish and Welsh health service products. It may just be a technical issue, but I wanted to raise it.

--- Later in debate ---

[The Chair]

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

[Dr Whitford]

My colleague will speak to that amendment.

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

It is a pleasure to serve under your chairmanship today, Mr Pritchard. I am somewhat reassured by many of the Minister’s comments, and I thank him for his explanations. Much of this stuff is technical, and I hope he sees amendment 48 in a similar light. I think it would improve and strengthen the measure.

The clause does not currently set out a mechanism for the disclosure of information to devolved Administrations or bodies. For example, how will the information be disclosed, and by what means? Will it be only the Secretary of State who can disclose? In short, will the devolved Administrations be able to get the information when they want and need it, so that it ties in with the figures and statistics they are seeing and they can see patterns? It is about flexibility.

The amendment is fairly straightforward and we think it would help to strengthen and improve the Bill. I hope that the Minister agrees. We would like him to clarify whether the Government intend to leave disclosure to the discretion of the Secretary of State, on an ad hoc basis. Otherwise, what would the terms of disclosure be?

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

[Dr Whitford]

I rise to echo some of the points raised. We have discussed a lot of issues around the decision to leave the EU, including the loss of the EMA. As well as possibly losing international and multinational pharmaceutical companies—particularly those from the London area, which have based themselves here because of the EMA—it is clear that drugs may end up going through a licensing process for the UK later than is currently the case. They are likely to go through the American market and then the EU market, which will still have 450 million people, and we are likely to slide down to be more like Canada and some other countries. This is a very unstable time for research, because of the loss of Horizon 2020 and the EMA, and for our pharmaceutical industry, which is a major player in the UK. It is incumbent upon Government to ensure that the Bill has no unintended consequences that exacerbate that.

--- Later in debate ---

[Dr Whitford]

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

The point of the new clause is to explore a particular problem with what the Minister referred to earlier as “specials”. They are unlicensed preparations, often topical medicines, often used for severe skin conditions such as hard-to-control psoriasis. The British Association of Dermatologists reports that patients in England, Wales and Northern Ireland are struggling to get them prescribed, because the costs have spiralled out of control.

In Scotland, until last September, three quotes had to be obtained and one of them had to be from an NHS manufacturer. That has been streamlined, and a single quote, provided it is from an NHS manufacturer, is now acceptable. The British Association of Dermatologists looked at the 12 top specials that its members prescribe and estimated that if an NHS manufacturer had been used, instead of £845,000, the cost would have been £162,000. The association also reported that several private manufacturers are keeping two price lists—one for Scotland and one for England—and some of the dermatology items in England are eight times the price in Scotland.

That is literally holding people to ransom, and the result, because CCGs are hard pressed for cash, is that they are not comfortable funding specials and GPs are not allowed to prescribe them. Anyone who has ever had a dermatological condition of any kind, or knows someone who has, knows how unpleasant and utterly dominating of one’s life it can be. It is awful that patients, in particular in England, are not able to access such medicines. The new clause is looking at whether specials will be covered and whether enough attention is to be paid to them. The number of patients is small—hence the top 12 still come to less than £1 million—but for those patients this is a major issue.

[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—

--- Later in debate ---

[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.

--- Later in debate ---

[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?

[Dr Whitford]

The phrase is the standard definition of specials. I cannot remember off the top of my head where exactly it comes from, but it is the recognised definition. It would not usually mean things such as homeopathic medicines. It is often things that are quite old and that have been around a long time that are not worth licensing, because they are not new and nobody will make any money out of them. We have a lot of products like that, but they are recognised within the practice of medicine. They are particularly common within dermatology, because of different topicals and the need to make different strengths of topical depending on the condition being treated.

I wanted to try to draw attention to this matter. The Minister has said that the Government have had the power all of this time and not used it. In part it is about bringing powers into line and creating consistency. I call on him to use those powers. Even though only a relatively small percentage of drugs are affected, the impact on patients from not being able to access them is significant. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 4

Review of extending provisions to repurposed off-patent drugs

‘(1) Within six months of the passing of this Act, the Secretary of State shall commission a review on whether the provisions of this Act shall extend to the regulation of the prices of repurposed off-patent drugs and shall lay the report of the review before the House of Commons.’—(Dr Whitford.)

Brought up, and read the First time.

[Dr Whitford]

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

The new clause seeks to explore one of the other anomalies that was challenged through a private Member’s Bill last November but unfortunately was talked out by the Minister at that time: repurposed off-patent drugs. Those are drugs designed for a particular use that, often during their use for that condition, contribute in relation to another condition.

Today, we have had considerable talk about the need to support pharmaceutical industries and encourage research and development, but the finding of a new purpose for a drug rarely comes from the pharmaceutical industry; it is usually done at a clinical or academic level through noticing patterns in clinical practice and following those up with trials. It is therefore not really something for which the pharmaceutical industry should receive a major award financially, although naturally if more of a company’s drugs sell and it is still producing them, it will see a benefit, which is totally fair enough.

One of the concerns is that, for a medic under the General Medical Council, there is a hierarchy of what we can prescribe, and at the top of that is licensed drugs for the purpose of the licence. Below that come repurposed drugs, which are therefore not licensed for that purpose. It is specifically stated that “they do the same” is not a sufficient excuse for using an off-patent generic drug.

With some of the drugs we have, new purposes are being discovered. Some statins can reduce brain atrophy in progressive multiple sclerosis. We have, as was referred to earlier, the use of bisphosphonates to prevent metastatic breast cancer and the use of tamoxifen to try to prevent breast cancer. That Bill was partly about trying to promote the use of those drugs, because they are off-patent and cheap, but one of the concerns among the medical profession is about a drug company buying a drug, tweaking it ever so slightly and then suddenly re-releasing it as a drug for multiple sclerosis at 10 grand a day instead of sixpence. What I do not see in this Bill is a recognition of the ability of people to come back and license a drug and totally change the price or to manufacture that drug simply as a generic with a massive price.

There was a case with the drug Lyrica, which is also known as pregabalin. The commonest use of that is for neuropathic pain: people who have had nerve damage from surgery or trauma and have difficult-to-control pain. The drug was originally designed for epilepsy, and Pfizer, which makes it, managed to get a court order saying that the patent on its use for neuropathic pain would continue to 2017 and that it would sue general practitioners who prescribed it as generic. That case has run for quite a long time, and I am proud to say that GPs basically ignored that order and have used the generic, but the advice of NHS England, which still sits on the website, says that GPs must prescribe Lyrica as Lyrica, which is obviously much more expensive. Therefore, over the last year GPs have had to be sitting out there exposed, open to the threat of litigation.

That is a real concern with repurposed drugs. That profit has been earned not by pharma’s research but by the research of other people usually in the public sphere: academics and in the NHS. Again, the new clause is to raise an issue that is not covered in the Bill and to see whether it has been considered at all by the Government.

[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.

Health Service Medical Supplies (Costs) Bill

Philippa Whitford Excerpts

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

[Keith Vaz]

In a little test tube! I carried my own blood to the laboratory, because it was the quickest way I could get a reading. Incidentally, from the look of him, my hon. Friend carries his blood very well. We want this innovation and research and development. The drugs companies should be able to plough back profits within the industry, and in the long run this innovation will make a great deal of difference.

When I went to New York for a meeting on Yemen, I stopped in at the diabetes centre of the Mount Sinai Hospital, and was told about the incredible innovation in diabetes in the US. I also went to see Mayor Bill de Blasio’s diabetes team. As Members will know, New York cut the level of sugar in soft drinks, as we are doing now, but the centre of its diabetes initiative is the lifestyle coach, not the GP.

As we look at these provisions, we see every opportunity for a cogent and coherent review that will particularly help—this is my main argument today—those with diabetes, but also others with similar problems connected with their illnesses. I urge the Minister, who I know has been extremely reasonable on this Bill, to look seriously at the new clause. If he cannot accept new clause 1 itself, will he at the very least give an undertaking from the Dispatch Box that the points embodied in it will be reported back to Parliament in a few months’ time?

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

Like the shadow Health Minister, we will not obstruct the Bill, because we support the basic aim to control prices in order to achieve a good return to the NHS from the drugs that it uses.

We also support in principle new clause 1. Six months might be a little early technically to bring things together, and there should not be just a single report because we will only see change over time. To look at the success of these actions, we need to see a price being controlled, and to spot when prices are sliding out of control. I would therefore suggest looking at the data and information on an annual basis and perhaps laying it before Parliament to show that the Bill’s aim is being achieved and that the concerns of the official Opposition are being allayed.

We support amendment 8 because it advocates the same approach that we have in Scotland. While the Cancer Drugs Fund in England is welcome and has clearly helped many patients, it is limited in the sense that if people do not have cancer they cannot access the medicines fund. That means that people with rare diseases are left somewhat abandoned. Frankly, if it were left solely to NHS England, those people would be left in the desert. It is important that significant money will be released, and the provision could gain support from the pharmaceutical industry if it sees that the money it is returning is enabling innovative medicines to come to the NHS earlier. Sometimes when we compare certain illnesses such as cancer, we find that the gap is in relation to people with more advanced diseases struggling to access the newest medicines. If the amendment helps to address that, we would support it.

The Scottish Medicines Consortium was reformed in 2014, and Scotland has now moved up from passing 53% of all applications to 77%, with a further review going ahead at the moment to see how to improve this further. The aim is not to avoid using drugs; the aim is to access them at a decent price. If the pharmaceutical industry is returning money to the NHS, it should enable earlier access.

Amendment 9 was tabled by SNP Members and we put it before the Public Bill Committee. It deals with clause 5, which extends a power that in fact already existed but was never used—to control the price of medical services and medical supplies as well as drugs. I am slightly disappointed that we did not manage to get this amendment adopted, so I raise again the issue of quality control and ask the Government to consult on it.

I know I spoke extensively in Committee about surgical gloves, but they provide a good example in that the range of quality is vast, and if poor quality gloves are used, there is likely to be extra cost to the NHS either when gloves have to be changed two or three times within one operation or more subtly if a surgeon is exposed to blood at the end of an operation from a tiny pinhole that was not visible. The same point applies to gowns and drapes. Taking off a gown that is meant to be protective and discovering that you are soaked to the skin in blood is a pretty unpleasant experience, and it obviously increases the risk to staff. The idea that surgeons are not exposed to diseases such as HIV or hepatitis B and C is naive. I knew colleagues over my career who suffered from those conditions, which they caught from patients. There is clearly a responsibility to staff and to patients to avoid any possibility of cross-contamination. I mentioned in Committee, too, some fairly cheap items such as gauze swabs, because if they are shedding threads, it can lead to intra-abdominal infection—something that we do not want. This amendment is about consultation and looking further at the mechanism.

--- Later in debate ---

[Rob Marris]

As hon. Members know, overall I welcome the Bill, which is broadly a socialist Bill. It reinforces price controls and profit controls on big pharma, when appropriate. I always like to encourage the Conservative party, sadly now in government, to come a little further down the socialist road. They claim to be the workers’ party, and that is good.

New clause 1, tabled and moved by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), is central to what we should be talking about in many spheres of public life—namely, evidence-based policy. All too often in this House—this applies to Governments of both colours—policy appears to be made on a political whim.

I remember in, I think, 2008 the then Leader of the House, the right hon. Member for Blackburn, Jack Straw, writing certainly to Labour MPs asking what we wanted in the Queen’s Speech that year—[Interruption.] We were in government, but perhaps he should have written to the right hon. Member for Chelmsford (Sir Simon Burns). I replied, because I believe in evidence-based policy, that in that year’s Queen Speech I wanted not a single piece of legislation. I said that after 10 years of a Labour Government, I wanted Parliament to spend a year on scrutiny, looking at the legislation that we had introduced over that period to see what had worked and what had not worked.

To my astonishment, the Leader of the House did not accept that proposal, as those who were Members then will recall, and we had another full legislative programme. Let me add, as an aside—if you will grant me a small bit of latitude, Madam Deputy Speaker—that by the end of the Labour Government I had stopped voting on crime Bills because we had had so many. Some of them—this may have happened under the previous Conservative Government—repealed parts of earlier crime Bills introduced by a Labour Government which had never been brought into force. That was extraordinary.

I urge the Minister to recognise that evidence-based policy making is encouraged by new clause 1. I hope that, in the context of innovation, which was so eloquently addressed by my right hon. Friend the Member for Leicester East (Keith Vaz), he will say a little about the way in which the National Institute for Health and Care Excellence operates.

As the Minister may know, there is an issue involving cystic fibrosis and the drug Orkambi, which NICE turned down owing to a lack of sufficient data. I understand that, because it is NICE’s job to weigh the evidence, such as it may be. The drug is registered for use in this country, but it is not available on the NHS. Since NICE decided that the cost-benefit analysis did not stack up, some long-term data from the United States, which I understand to be robust, has been made available. I gather, although I may be wrong, that NICE has not yet reviewed its decision on Orkamb, although the evidence from the United States suggests that in certain cases it can be extremely effective in treating cystic fibrosis. I hope that when we are discussing processes, innovation, efficiency and policy-based decision making, the Minister will say a little, not necessarily about Orkambi itself, but about the process whereby NICE might, in the light of new evidence, promptly—I stress the word “promptly”—review its decisions.

[Dr Philippa Whitford]

There is an additional issue. Drugs or treatments are being passed by NICE but not actually introduced. Either they are rationed and limited to a certain number of patients a month, as is the case with hepatitis C drugs, or the decisions are being left to clinical commissioning groups, which means that we are enshrining postcode prescribing instead of getting rid of it.

[Rob Marris]

I entirely agree with the hon. Lady, who, as ever, speaks with authority on these issues. I am a bit of a centraliser, because I do not like postcode lotteries. We will already have that in a cross-border sense—between England and Wales, Scotland and Northern Ireland—but it is a great deal worse when just some CCGs in England are making a drug available when it has been signed off by NICE as safe for use but it is not mandatorily available, and not every patient for whom it is medically appropriate can obtain it from every CCG. That sort of postcode lottery undermines the “national” part of the national health service, which is regrettable.

Amendment 8, tabled by my hon. Friend the Member for Burnley (Julie Cooper), would ring-fence savings made through the provisions of this Bill and earlier legislation so that the money thereby saved, or paid into the pot by a pharmaceutical company, can be retained for expenditure on medicines and medical supplies. I hope the Government will support that. All too often we hear that Governments do not like ring-fencing, and I understand why: it fetters their discretion. Earlier this afternoon, however, I asked the Secretary of State for Justice whether the education budgets devolved to prison governors would be ring-fenced, because I feared that a prison governor who was under other budgetary pressures might not spend the money on education and prison education would not improve as it needs to. I was greeted with a very welcome one-word answer, which was “Yes.” I hope that, in a slightly different context, the Minister can give the same assurance this afternoon, because this is an excellent amendment which clarifies a slight gap in the Bill.

As for amendment 9, about which the hon. Member for Central Ayrshire (Dr Whitford) spoke so eloquently, efficiency is of course important, but so is quality. I do not know whether the old saying “Penny wise and pound foolish” is used in Scotland—she is nodding—but it certainly is in my part of the west midlands. We have seen that time and time again with privatisations. When services are privatised they go to the lowest bidder, and what do we find? Either the service is not up to scratch, or, all too often—I think this happened when Circle ran Hinchinbrooke hospital—the companies go bust because they find that it is not as easy as they thought it would be to make a profit out of, in this case, the health service. That may happen to other suppliers as well. Quality matters, and the national health service is not a commercial organisation.

--- Later in debate ---

The hon. Member for Central Ayrshire (Dr Whitford) has supported this amendment, and while it is not for me to comment on the policies of the Scottish Government, we know that the NHS in Scotland has raised concerns that the new medicines fund, to which she referred, only funds medicines at the end of life or for rare diseases, meaning that funding for other areas is not getting the same priority.

[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.

--- 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.

--- Later in debate ---

I have a couple of remarks about amendment 10, which was tabled by the hon. Member for Central Ayrshire. New section 264B in clause 6 enables the Secretary of State to disclose the information that is collected to a range of bodies, including NHS England, special health authorities, NHS Digital, other Government Departments and the devolved Administrations. The Government have concerns about this amendment, as we are dealing with confidential and commercially sensitive information that can be used only for specific purposes. We are therefore reluctant to introduce a requirement to disclose information to, for example, any Government Department or NHS England. It is important that the Government can be trusted with the information that they collect, and that there are sufficient safeguards to ensure that it is treated as confidential or commercially sensitive.

[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.

--- Later in debate ---

[Dr Philippa Whitford]

I will open my remarks with thanks, because this is the first Bill that I have helped to take through the House, and I am therefore very grateful to you, Madam Deputy Speaker, the Chairs of the Public Bill Committee and all the staff who have worked on this, particularly those in the procedural hub; as a newbie, being able to go and ask them what happens next has been immensely helpful.

Obviously, we welcome the basic premise of the Bill, particularly clauses 1 to 4, which give the Secretary of State the power to control the price of drugs and avoid the excesses we have seen recently, as was highlighted in the article in The Times, particularly by those companies that are in the voluntary scheme but also produce generics, and therefore the price of those generics is not controlled. There are also those companies that have picked up drugs that have orphan status—they are no longer produced by anyone else—and basically robbed the NHS by increasing the price by many thousand per cent. That is just unacceptable.

When we accept relatively high prices for new drugs, we often excuse that on the basis of research and development. We need to realise that not all research and development is done by big pharmaceutical companies; they often collect drugs by buying small, spin-out companies from universities. With regard to generic or repurposed off-patent drugs, the R and D is usually done by clinicians within the NHS, or by academics in university departments. Companies have admitted in the past that they do not always price drugs in relation to their R and D costs; they sometimes do so simply by what they think the market will bear. We must not always allow them the excuse that they are spending huge amounts on R and D, because that is simply not always the case.

I tabled two new clauses in Committee. Now that the Secretary of State will have this power, I hope that the two issues raised by my new clauses will be dealt with. One is the issue of specials, which are simply hand-made preparations, usually an ointment for dermatological use. I arranged for the briefing from the British Association of Dermatologists, which highlighted companies that had a Scottish price list and an English price list, to be sent to the Minister. I therefore hope that those powers will be used. In Scotland it is done by using an NHS producer who makes the drug and therefore keeps the price down, rather than simply paying a pharmaceutical company or a pharmacy company, because the pharmacy with which the patient is dealing might have a mother or sister company and they are simply taking a very high price from them.

The other issue, which was raised last November, is that of repurposed off-patent drugs. As the shadow Minister explained at the time, an off-patent drug may be picked up by a new company and used for its new purpose, such as simvastatin for multiple sclerosis, but with the merest tweak it could be put out as if it is a new drug, and suddenly at a price that people cannot access. That also touches on the hierarchy whereby doctors must prescribe a licensed version before an unlicensed one. If a licensed drug came on the market that was actually just a version of an off-patent drug, doctors would be under pressure to prescribe it.

I understand that work has gone ahead since last year’s Bill, but I exhort the Minister, and through him the Secretary of State, to ensure that the powers given by this Bill are used in all these circumstances to ensure that prices are controlled. Otherwise, what happens is not a matter of expenditure to the NHS on its own, but usually that CCGs will not allow these drugs to be accessed, which is what is happening in the case of specials. We now have the powers. We welcome that, but hope that they will be used.

Health Service Medical Supplies (Costs) Bill

Philippa Whitford Excerpts

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

It is vital to ensure that we roll out novel medicines much faster. It is wholly unacceptable that many products that are routinely available in western Europe are not available in the UK within a reasonable timeframe. It is hardly surprising that healthcare outcomes for common forms of disease in this country lag behind those in countries such as France, Germany and the Netherlands. I hope that the Bill will go some way to ensuring that we spend our moneys as effectively as possible and will start to narrow that gap, but we must ensure that medicines are rolled out rapidly once they are approved by NICE on a cost-effectiveness basis.

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

I, too, welcome the principle of the Bill. We have discussed it in a lot of detail as it has gone through Parliament, and the legislative consent motion was passed by the Scottish Parliament last month. I welcome the fact that the Minister listened to our previous discussions, and I therefore welcome Lords amendment 1, which deals with specials—individually produced medicines, usually within dermatology. While the numbers involved may be small, the costs are often eye-watering. In Scotland, that process is controlled through a procurement method, but it was certainly clear that NHS England was simply being ripped off, and I am glad to see that that is being addressed.

I also welcome Lords amendment 6, which will bring in, as I suggested, a consultation on how to maintain the quality of products. We discussed surgical gloves as a perfect example. People talk about quality marks, but they are often simply manufacturing quality marks, not necessarily a mark of suitability for the task. The Medicines and Healthcare Products Regulatory Agency could be involved, or there could be some other process, but it is important that we do not drive down quality by trying to drive down price.

The main thing that we are discussing is the Government’s plan to disagree with Lords amendment 3, which would insert a new clause. The NICE board is today discussing this extra layer behind NICE. We are talking about drugs that NICE has already decided are cost-effective, and giving NHS England the ability to delay them further without negotiation. The amount of antivirals such as sofosbuvir for hepatitis C that hepatologists can prescribe is rationed, even though we know that the most important group to treat are those who are well—not those who are almost bed-bound or near the end of life with cirrhosis—because they are the ones out in society spreading hepatitis C to other people.

It is important to consider the delay, which has two aspects. The first relates to very expensive drugs, which are usually for rare diseases. Looking back, almost none of the drugs that have got through in recent years would pass the new limit. Secondly, the total of £20 million means that regardless of how effective a drug is, perhaps for a common disease, it would not get through. If someone comes up with a wonder drug for type 2 diabetes, it would hit the slowing mechanism if it cost more than £20 million because of the sheer number of people that we would be dealing with.

The hon. Member for Ellesmere Port and Neston (Justin Madders) mentioned the impact of our withdrawal from the European Medicines Agency, but while he focused on the impact on the pharmaceutical industry, the impact on the patient is much bigger. Drugs are launched in America and Europe due to the sheer scale of the market, and countries such as Canada and Australia wait longer. The UK will also wait a little longer because we will no longer be part of a market of 500 million people.

The UK may also be seen as a hostile market, because it takes three to five years for cancer drugs to get into the NHS. As other doctors in this place will know, our patients face a delay in accessing new drugs, and anyone who thinks otherwise is fooling themselves. Pharmaceutical companies will simply think, “Well, we’re not going to get into the NHS for five years, so let’s go and do Australia and Canada. We’ll come back and deal with the UK later.” That delay to licensing in the UK would be a real problem, and it would extend to Scotland, too, because at the moment licensing is a UK-wide process. The drugs would therefore not be available to us outside the European Medicines Agency.

This issue is also important to UK research. If we fall so far behind that we do not use what is considered standard treatment, we will not be able to take part in trials of standard plus new. There is an absolute need to control the cost of drugs, but perhaps we need different discussions with pharmaceutical companies about how drugs come on. We need something more radical than this to find the sweet spot between the companies getting a return on their money, the NHS controlling the cost and patients getting access.

We also need to think about realistic medicine. Not every patient even wants access to the newest chemotherapy, and perhaps we need some hard discussions, and to be much more open with patients about what a drug will and will not do.

Question put, That this House disagrees with Lords amendment 3.