Health Service Medical Supplies (Costs) Bill

Simon Burns Excerpts

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

[Sir Simon Burns (Chelmsford) (Con)]

As any constituency MP will know, the pressures on the NHS grow year in, year out, partly because of our ageing population and partly because of developments in medical procedures—advanced drugs that can help to overcome illness, to continue a patient’s recovery or to stabilise their condition. That is why it is a constant battle for the NHS to root out waste and increase efficiency in the delivery of patient care without compromising that care.

The Nicholson challenge, launched in 2010, sought to save £20 billion over the last Parliament. As my hon. Friend the Minister of State said at Health questions, the NHS managed to achieve £19.4 billion—not £19.4 billion of savings that then went back to the Treasury, but £19.4 billion that was reinvested in front-line services and the NHS.

At the same time, though, we have great pressure, as my right hon. Friend the Secretary of State alluded to during his comments, on the ever-increasing drugs bill. In England, the drugs bill was £15.2 billion in the last financial year—£11.2 billion on branded medicines and £4 billion on unbranded, generic medicines. That represents a 20% increase since 2010 and a 7% year-on-year increase. With an ever-increasing, ageing population, those figures will continue to go upwards in future years.

We also see more and more new drugs being developed to combat illness. How may illnesses that were killers even during our lifetimes can now be cured or stabilised because of research and the work of pharmaceutical companies in developing the drugs that provide those results? Anyone will accept that the research involved in developing the drugs to tackle illness and disease is phenomenally expensive for the companies involved and sometimes takes many years. Therefore, we have to have a balance. The pharmaceutical companies, which have to invest horrendous amounts of money to find a new drug—a new cure or stabilising medicine—for medical conditions, obviously have to benefit from the horrendously large investments they make, but that does not mean that that should be a licence for them to simply charge what they like, for as long as they like, for the largest profits possible. There is a median between the two situations.

That was highlighted by the Times investigation a few months ago, in which one saw some of the price increases made by pharmaceutical companies that had, in effect, a monopoly on a drug because there was no competition. Let me give one or two examples to show the scale of the problem. Between 2008 and 2016, the price per packet of hydrocortisone tablets rose from 70p to £85—a 12,000% increase. With certain antidepressant tablets, one sees a 2,600% increase. With certain tablets for insomnia, there was a 3,000% increase. Frankly, even if this is with a relatively small number of drugs, it is totally unacceptable and extremely difficult to justify.

I accept that the cost of drugs to the NHS is extremely complicated. As hon. Members will know, branded medicines are controlled through the voluntary pharmaceutical price regulation scheme, which was agreed from 2014 to 2019. For those companies that choose not to join the PPRS, the Government operate a statutory scheme for branded medicines. The PPRS is based on a payment mechanism whereby companies make payments back to the Department of Health based on their sales of branded medicines, whereas the statutory scheme operates on the basis of a cut to the published list price of branded medicines. As a result, the statutory scheme has delivered significantly lower savings for the NHS, and that is clearly not satisfactory.

I welcome the Bill as a means for the Government to secure better value for money for the NHS and taxpayers. The first important change it will introduce is to clarify the law to allow, beyond any doubt, for the power of the Secretary of State to require a payment mechanism in the statutory scheme to limit the cost of medicines. That clarification will enable the Secretary of State to combat the current situation, whereby manufacturers and suppliers are allowed to choose the scheme by which they are controlled. That has led to numerous companies being covered by the statutory scheme rather than the voluntary scheme, because the statutory scheme makes less effective savings to the NHS and thus benefits them disproportionately.

In effect, the Bill will allow the Government to require companies to reduce the price of an unbranded generic drug, even if the company is in the voluntary scheme. The Government intend to use that power to limit the price of unbranded generic medicines when competition in the market fails and companies charge the NHS unreasonably high prices for them, as highlighted by the investigation by The Times.

[Rob Marris]

According to the Library briefing, since the Bill’s publication the share price of Concordia International, which has been playing that game and owns AMCo, has gone down by 28%. That is good news.

--- Later in debate ---

[Sir Simon Burns]

I am grateful to the hon. Gentleman for sharing that information.

Equally important, the Bill will improve and enhance information collection so that we are better informed on a more consistent basis. That will ensure a better basis for assessing whether the supply chain as a whole, or a specific sector, provides value for money for the NHS. We cannot underestimate the importance of having more consistent, viable and useful information gathering, because information is power in so far as it helps to effect decisions and judgments. If one does not have consistent information collection or sufficient ranges of information, that leads to problems in rectifying issues where pharmaceutical companies are behaving not in the best interests of the NHS, but disproportionately in their own interests.

That is why the Bill’s impact and importance far outstrip the fact that it is modest in size, with only a few clauses. I am pleased not only that the Government have decided to take action, but that the Bill, subject to its Committee stage and to the consultation processes about which the Secretary of State has given assurances, commands the widespread support of Members on both sides of the House. I look forward to it reaching the statute book and, as the regulations are developed and the consultations ensure that we get it right, to it stopping some of the abuses that have cost the NHS so much. That needs to be done, however, without unfairly penalising the pharmaceutical companies, because, as I said earlier, they spend a considerable amount of time and a massive amount of money on developing drugs. For instance, in the past 30 years they have made considerable strides for patients with HIV/AIDS and improvements in care for cancer patients. I welcome the Bill.