Clause 217
Health and Social Care Bill
4:30 pm

Photo of Liz Kendall

Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

I beg to move amendment 665, in clause 217, page 189, line 16, leave out ‘desirability of promoting’ and insert ‘Commissioning Board’s duty to promote’.

Part 8 sets out the Government’s proposed changes to NICE—the National Institute for Health and Care Excellence, as it will be known—which give rise to a huge number of concerns. The fundamental reason why NICE was established was to take decisions on which drugs should or should not be available on the NHS. That responsibility will transfer to general practitioners. There is a huge range of concerns about that, which I shall discuss on clause stand part.

Clause 217 sets out NICE’s general duties. Subsection (1)(c) specifies that one such duty is

“the desirability of promoting innovation”.

Hon. Members may remember our discussions a mere few weeks ago—it may seem longer—about the NHS commissioning board arrangements in part 1, which give the board a clear duty to promote innovation. Under new section 13H of the National Health Service Act 2006, inserted by clause 19:

“The Board must, in the exercise of its functions, promote innovation in the provision of health services”.

Amendment 665 seeks to give NICE a stronger and clearer role in promoting innovation by giving it an essential duty to support the board in its role to do so.

I want the Minister to set out, because it is not entirely clear in the Bill, how NICE will promote innovation as part of its work in two key areas: first, in the production of its quality standards, in which it will set out the very best quality across health and social care; and secondly, in assessing new drugs and technology under the Government’s new value-based pricing?

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Nicky Morgan (Loughborough, Conservative)

I shall speak briefly about what the hon. Lady mentioned—the desirability of promoting innovation. I shall illustrate my point with an example from my constituency.

I recently visited a company called Dialog Devices, which is based at Loughborough university. It has developed a machine called a Padd, which ensures a non-invasive assessment of peripheral arterial disease to prevent heart disease and stroke. I am not asking the Minister to comment specifically on that; we have all realised during the course of our discussions that commenting on specific examples is not a good use of our time. However, the point that the company made was that the NHS is not only a provider, as we have discussed over a number of weeks, but a promoter of innovation—and it is, in fact, a consumer. If we want the NHS to achieve savings as part of the Nicholson challenge, embracing new medical technology and innovation will play an important part.

The chief executive of Dialog Devices told me that if the NHS does not invest in new and innovative products, its products go to the United States, where research programmes and money are available. Although the company has recently been given money to start clinical trials, it does not have any money for marketing and going out to GPs to talk to them about new products.

The reason why I have a problem with the hon. Lady’s amendment is that innovation needs to run right the way through the NHS. It is not for only the board or NICE; it should be for all levels, including GPs, who need to embrace new medical technologies, too. I hope that the Minister will confirm that the Government’s clear view is that it is essential for the NHS to embrace innovative products. Doing so would make it a world-leading health service for all medical conditions, and make it more efficient in meeting needs, given the economic legacy that we have been left by the previous Government.

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

There is unanimity of opinion about the desirability for and necessity of the benefits of innovation, and the importance of promoting it in the NHS. My hon. Friend is right that such innovation should run right through the health service.

It is worth sharing with the Committee the fact that the NHS chief executive has been asked to make a report by November this year, working in consultation with industry, academia and other interested parties to look at how the adoption and diffusion of innovations can be accelerated across the NHS. That report will inform the strategic approach to innovation in the modernised NHS put in place by the Bill.

I think there is agreement on the aim of driving innovation within the NHS, but the hon. Member for Leicester West is concerned about how the provision is formulated in respect of NICE. Although the intention is clear, the wording of the amendment would not have the desired effect. I will try to explain why and reassure  the hon. Lady about what I think is our shared purpose. The amendment appears to be based on a misreading of the Bill, which I am sure was not the intention, and I believe the issue has been raised previously by the Association of British Healthcare Industries. I will take this opportunity to clarify the situation and offer some assurances.

Clause 217 does not place a duty on NICE to consider whether innovation is desirable. Instead, it does something a lot stronger and places an explicit duty on NICE to have regard to the promotion of innovation, which is itself established as desirable, when carrying out its work. If the amendment were accepted, it would have the unintended consequence of restricting NICE’s duty in relation to innovation and the scope of the NHS commissioning board’s duty to promote innovation. NICE’s remit, as set out in the Bill, is broader than just NHS services. The Bill retains the remit that NICE was originally given in 2005 for public health, and extends its remit further to cover social care. Public health and social care would not normally be the responsibility of the NHS commissioning board, and it would be excluded from the duty if the legislation were constructed in that way.

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Grahame Morris (Easington, Labour)

Will the Minister clarify the point about the desirability of innovation and restricting the role of NICE? Is it envisaged that NICE would advise pharmaceutical companies, for example, on some issues? Would that be a potential conflict of interest?

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

The hon. Gentleman seeks to lead me down a tempting path, but if I go down it I will probably find myself in the hall of mirrors into which the Opposition regularly try to take us. I am not going to do that as it would probably be outside the scope of the clause.

Let me reassure the hon. Gentleman that the clause places an explicit duty on NICE to have regard to the promotion of innovation, which is established as desirable when carrying out its work. It is necessarily constructed in that way so as to include the full range of its remit, which comprises social care, health care and public health. The amendment would have the undesirable effect of narrowing that remit to the health system and excluding everything else. It would have a strange effect, which I hope I have explained to the satisfaction of members of the Committee.

It is our intention for NICE, along with other parts of the new architecture put in place by the Bill, to contribute in many ways to driving an agenda that promotes the greater use of innovation within public health, social care and the health service. Quality standards will be reviewed by NICE at regular intervals to take new developments and innovations into account. Again, that clearly links across. In terms of promoting innovation and assessing new drugs, with value-based pricing we will look to link more closely the price of a medicine to the value that it offers—taking into account aspects of the value, including therapeutic innovation and improvement.

I hope I have been able to reassure the hon. Member for Leicester West and persuade her that the amendment would not achieve what she wants. As currently drafted, the clause goes where she wants it to go, so I hope she will withdraw the amendment.

Photo of Liz Kendall

Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

I will respond to the Minister’s points, particularly the last point about value-based pricing that will specifically take into account the degree to which a new drug is considered to be innovative; in other words, a premium will be applied in some way if a drug is particularly innovative. I definitely do not want to stray outside the scope of the amendment, but one of the reasons why I tabled it was to probe how much value-based pricing will seek to promote innovation.

All I would say is that if more is paid for a drug because it is innovative, that will have a cost effect elsewhere; in other words, if more is paid for some drugs because they are seen to be particularly innovative, they meet previously unmet needs or they have wider societal benefits, it will cut a bit of the cake away from care elsewhere. These are not cost-free decisions. When one pays more for particular drugs, trade-offs will need to be made. I believe that innovation is important, but it has to be weighed against other issues, as I am sure the Minister knows.

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

Innovation can also lead to a more efficient use of resources. It is not a black and white issue, but a judgment in each case.

Photo of Liz Kendall

Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

I absolutely agree with that, but, as I shall come on to say in a little while, these are very difficult issues. We have one pot of money, and balancing the different objectives is a huge challenge. This was a probing amendment to try to assess the degree to which NICE will promote innovation. On that point, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

4:45 pm
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John Pugh (Southport, Liberal Democrat)

The clause is about the general duties of NICE, which have been an issue of appreciable public interest. I read it with some interest, hoping that the legislation would say what the general duties of NICE were. I read it several times, turned the book upside down, read it backwards and so on, but the clause does not actually do that. For once, the explanatory note is slightly more helpful. It states:

“This clause describes the matters that NICE must have regard to in developing its products”—

“products” is a strange word—and then gives a list of its current products, which include

“guidance on new and existing medicines,”

which is, of course, the familiar role of NICE, and other new roles that it has taken on such as

“guidance on treating and caring for people with specific diseases…and guidance on preventing ill health.”

We can add to that public health and other things as well.

I have two concerns that I hope the Minister will succeed in allaying. The first is about mission creep. I brought this up with the chairman of NICE at a meeting organised by an all-party group the other day. NICE started off, fundamentally, as an organisation for examining drugs on a value-for-money basis. Then it branched  further afield into physical and psychological therapies and now will take on social care, public health and who knows what else.

That raises a competence issue, because those of us who know anything at all about the NICE drug approval process will know that it sets a high standard of rigour—I have attended meetings at which NICE has actually been doing its stuff in committee—and has been very impressive. The process has often been slow, but it has been rigorous. Around the table are not only people who are expert on the drug but expert practitioners in the field and also patients who provide input. That led to a slightly bogus, quasi-mathematical process where things such as qualys—quality adjusted life years—were analysed. When a thing had enough qualys, the drug was considered to be value for money.

I was always a bit sceptical about that as a device for ensuring that a drug was suitable for widespread use in the NHS, but it has to be said that the process was diligent. There were all sorts of flaws: it was often slow, it was contentious at times, and it did not really differentiate between drugs that were universally of benefit to all patients with a condition, and drugs—such as Aricept, for example—which sometimes worked for some patients but not for others. So there were critics, and I am sure that every MP in the previous Parliament at some time or other would have written to their primary care trust about some judgment of NICE simply because a patient in their constituency had raised an issue about the non-availability of a particular drug.

However, with all its flaws, it has to be said that the people who were doing that specific job were clearly the best people one could pick to do it, even though they could not do it to everyone’s satisfaction. That was reflected in the fact that NICE, in that role, became internationally respected. Many people looked to the NICE model as the kind of thing that they should adopt in their own country.

When I use the expression “mission creep”, my concern is that NICE might go the same way as the Audit Commission. At one time, the Audit Commission had a good reputation as a decent set of accountants and bean counters, who told local authorities when they were going to over-spend. Then it started to branch into social care, talking about how local authorities should be politically run—all that kind of thing, as well.

To some extent, the Audit Commission devalued its currency, because it was clearly commenting on areas where it was not expert. It is clearly not the intention of the Government to have a body that cannot comment as an expert body; to perform its range of functions, that body is going to need a heck of a lot of experts. There will be other experts in the field doing similar jobs who will have a view that may differ, and therefore its authority may be questioned. Will the Minister assure me that we are not going in that direction?

My specific questions take us back to the fundamental gatekeeper role of NICE. Essentially, what was not approved by NICE, what did not pass the various quality tests, the NHS did not have to fund. It could choose to fund; individual PCTs certainly did fund things that were not NICE-approved. However, there was the function of a NICE judgment.

A NICE judgment meant that no person could go to their PCT with the absolute assurance that the PCT would regard that as the appropriate value-for-money  therapy for their ailment. When deciding whether an individual patient should get a drug—maybe because the patient had seen on the internet that the drug might be good for them or the pharmacist had persuaded them that the drug was the magic bullet to solve their problem—there was some good reason to say, “You can’t have this particular drug, or it would be inadvisable to have it.” That may not have been an overwhelming reason; it may have been contested.

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Grahame Morris (Easington, Labour)

On that specific point of assessment of treatments, was the whole rationale of the establishment of NICE not to address the issue of the postcode lottery—drugs and therapies being available in one part of the country and not another? Will these changes not turn the clock back and make that situation more likely?

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John Pugh (Southport, Liberal Democrat)

It did not altogether address the issue of the postcode lottery. In my own area, people came to see me saying that a drug was available in west Lancashire that was not available in Sefton, or that homeopathy was available in Liverpool and paid for, but not in Sefton. The postcode lottery still occurred but NICE tried to construct a set of principles for value-for-money treatments for particular ailments.

I am not sure whether we have completely eliminated that in the legislation. I am not clear about it, which is why I seek clarification. The absence of that makes the whole business of rationing care a little more difficult. If NICE is not doing it by saying, “This drug might have some effect but is simply not value for money within the NHS”, who will do it?

Presumably, doctors will have to do it, and make a decision themselves. Doctors have to face the patient in the surgery and say, “Actually, although you think this will work well, I do not think that we are prepared to fund it locally. We are not saying it has no effect; we are saying it does not represent value for money. It may have a minimal effect in its qualy impact, as it used to be described.”

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

We come later to amendment 670, an Opposition amendment to clause 221, where that issue will be debated. I suspect that the issue around the general powers is not where this is most appropriately dealt with. I want to ensure that I give a full response to my hon. Friend’s concerns.

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Jimmy Hood (Lanark and Hamilton East, Labour)

Order. I will decide what is in order in the stand part debate.

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John Pugh (Southport, Liberal Democrat)

We are talking about the general duties of NICE, so we may as well have the debate now, as I am seven eighths of the way through what I have to say. I do not think people would want me to repeat the same points. If doctors are making the decisions, the critical question we need to get straight is, “If my doctor will not give it to me, but I know that it is appropriate medicine for my ailment, can I join another practice and get it?” Can everybody do that when they are turned down by their doctor? If so, the implications for the NHS drugs budget are horrific. If that is not the case, presumably we are going to adopt a model in which if I go to see a doctor anywhere, but my consortium  will not pay for the drug, I simply do not get it, in which case my consortium again determines what I do or do not get. It is very important that that principle is made clear, because the scenario in which people can shop around for doctors in order to get the drugs that they want would have very damaging effects, if only on the health service budget.

Finally, Monitor’s role, if it is not to be a gatekeeper, is to offer quality standards. What concerns me is whether a quality standard can bring in value-for-money issues. In other words, a quality standard can say that such and such an ailment is best treated in this way, and the quality way to treat it is to use such and such a drug or therapy, rather than another that is simply a more expensive way of doing the same thing. If Monitor’s quality standards can involve the same value-for-money judgments as did its previous judgments, we are back in familiar territory, but if they do not, we are in the scenario, I think, in which people can shop around for whatever medicine they want.

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Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

I intended to bring up under a later clause some of the points that the hon. Gentleman has made, but as we are in it, we might as well go for it, if those are the appropriate parliamentary terms.

Photo of Jimmy Hood

Jimmy Hood (Lanark and Hamilton East, Labour)

Order. The hon. Lady should not take it upon herself to “go for it”, unless it is within the stand part debate on clause 217. I ask her to address her comments to the stand part debate on clause 217 and not to “go for it” by discussing anything that we might deal with in the future.

Photo of Liz Kendall

Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

I beg the Chair’s forgiveness for my possibly unparliamentary language. The hon. Member for Southport has discussed the general duties of NICE, so I feel that this is the appropriate place to discuss those issues. As he said, NICE was originally set up to take on the very tricky problem that health care systems have faced throughout the western developed world—with new and ever-more expensive drugs coming on-stream, how do we decide what is paid for out of, in our case, the public purse?

NICE is widely respected across the world for the work that it does. People might not necessarily think that if they read only certain newspapers or if they just accept the view that certain Ministers have expressed about the failures of the system. Of course improvements can be made, but other countries look to NICE and follow NICE. It was one of the previous Government’s great achievements. Much praise is due to my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), who took that step forward. He thought that it was a difficult thing to do, but he took a very bold step in launching NICE, of which I am very proud.

NICE’s role changes and its general duties change as a result of the Bill, but as I am sure that hon. Members will appreciate, the same issue remains—how do we decide which drugs should be paid for out of the public purse? The Bill changes who makes the decision. It goes from being the responsibility of a national body to being the responsibility of general practitioners and general practitioners commissioning consortia or whatever they are going to be called if amendments are introduced.

A number of organisations have raised serious concerns about the likely consequences of the change, and I would like to go through them, because I believe that hon. Members may be facing hard questions from their constituents as the process moves forward and we need to be aware of what they may be. I shall begin by quoting NICE’s response to the Government’s consultation on replacing the current system for setting prices in the NHS with a new value-based pricing system. NICE explicitly warns that that could increase the postcode lottery, and says:

“The tight fiscal environment in which the NHS will be operating over at least the next 4 years, together with the proposed arrangements for commissioning NHS services, will tend to increase rather than reduce the challenge of achieving consistent access to new treatments. We believe that there is a risk that patients and health professionals who want to use drugs made available under the new arrangements may find it difficult to do so unless the new arrangements retain powerful, national reference points”.

I just want to state those three key national things that NICE believes need to be in place, because simply changing the way in which a drug is valued or the price that is set on a drug does not automatically ensure access or uptake of that drug. That will be up to the commissioning consortia based on their available resources. I am sure that Ministers would not say this, but sometimes it is suggested that a new way of pricing drugs will automatically lead to their uptake. That is not the case. It is not the view of NICE and it is not the view of many pharmaceutical companies.

What NICE says is that clear steps have to take place at a national level to try to ensure that there is as small a postcode lottery as possible. The first step is a clear recommendation through NICE conducting a technology appraisal, which I think is what the hon. Member for Southport must have been sitting through.

5:00 pm
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Julian Sturdy (York Outer, Conservative)

Does the hon. Lady not accept that under the current system we are suffering postcode lotteries with PCTs?

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Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

There are variations, but more GP consortia will, as NICE says, make the situation far worse. If the hon. Gentleman will bear with me, I shall go on to explain why that situation is likely to get worse. It is not just NICE that says that; the BMA, the Royal College of General Practitioners and patient groups also have concerns. The current system is not perfect, but my concern is that the new system will make matters worse.

NICE believes that there should be a clear recommendation about that drug. Secondly, there must be what is called a funding direction. In other words, there must be a direction from NHS organisations—in this case, GP commissioning consortia—that indicates that the drug needs to be funded. Thirdly, NICE states that the NHS constitution gives a clear right for patients to have access to drugs recommended by NICE. I mention that because I have some concerns that that right may not be as strong as it should be.

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Grahame Morris (Easington, Labour)

Does my hon. Friend agree that although it is a prime duty of NICE to control costs, which is absolutely vital, it is also the role of NICE to counter-balance the powerful influences of the large  pharmaceutical companies? Perhaps the GP consortia will be far less able and equipped to stand up to them.

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Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

My hon. Friend makes a point I was about to come on to about GPs’ very real concerns. I shall quote Dr Clare Gerada from the Royal College of General Practitioners. In her interview with The Guardian on 10 November—I am sure Ministers will remember it—she raised real concerns that GPs will

“be exposed to lobbying by patients, patient groups and the pharma industry…At worst, the negative impact for GPs could be patients lobbying outside their front door, saying, ‘You’ve got a nice BMW car but you will not allow me to have this cytotoxic drug that will give me three more months of life’”.

That is a fair point. She says that making GPs “the new rationers” could ruin trust between doctors and patients. In another interview that she gave to Pulse magazine on 15 November she praises NICE’s role:

“NICE protects us. I am absolutely convinced it needs to be strengthened, not reduced. I am long enough in the tooth as a GP to have worked pre NICE. I know what postcode lotteries are about and I’m very concerned”.

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Jeremy Lefroy (Stafford, Conservative)

The hon. Lady makes the point that GPs are rationers, and I think that that argument has some merit, but does she not also agree that GPs have in effect been gatekeepers to the NHS almost since its inception? They therefore have some experience of that.

Photo of Liz Kendall

Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

To an extent, that is true. However, the hon. Gentleman will learn, either from his own constituents or from reading the newspapers, that there are questions about whether very expensive drugs should be made available. We must not forget that some GP consortia may cover very few patients—we have had this debate already. Just two or three patients with a need for very expensive drugs could push them into debt, and they will have to grapple with those issues. NICE provided some protection against that, but it could be faced locally a great deal. I think that these concerns are of a different order; they are very difficult, and I am concerned about how GPs will deal with them.

Some pharmaceutical companies welcome what they think value-based pricing might mean, but others have said something different. Richard Barker, the director general of the Association of the British Pharmaceutical Industry, says that value-based pricing should not be seen as some kind of magic bullet. On its own, negotiating a new value-based price will not necessarily improve access to new drugs and medicines. He is also concerned about returning to a postcode pricing system as each individual consortium will be free to make the decision about whether they have those drugs.

Perhaps I should ask the Minister about that. The Government have been exploring how to move forward on this by using the cancer drugs fund. They have explicitly recognised that it will take time to implement the value-based pricing system—I believe it will not be in place until 2014—and in the meantime they will set up a cancer drugs fund to provide access for the pressing and challenging issue of drugs for cancer patients. The Government say that

“the Cancer Drugs Fund is a key part of our wider plans to improve access to effective medicines”.

I have looked at how the fund is working in different regions. Hon. Members will know that at the moment it is being run at the regional level by strategic health authorities. I have struggled to get all the information together, and because I do not have that I will make no firm conclusions about how the system is running, but I will say that there are wide variations in how many oncology products are on the priority lists of strategic health authorities.

For example, NHS South Central has eight products on its priority list for funding from the cancer drugs fund, compared with 24 on the list for NHS North West. It is also using very different criteria to determine whether those drugs should be put on the list. If that is not done nationally there will be variations. In the cancer drugs fund, there are significant variations in the numbers and the criteria used. If that is already happening, what do we think is likely to happen when GP commissioning consortia make those decisions? I am doing my best with limited resources to establish why different criteria have been developed in different regions, why different numbers of drugs are included and how the different processes work. I hope that clear evidence and analysis will be presented to the House before decisions are made about the value-based pricing system. Clearly, there are many variations, and I am concerned that they will increase.

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Margot James (Stourbridge, Conservative)

I am concerned that an impression is being created that GPs will be left to interpret NICE guidance and get on with decision making in front of an individual patient. From my reading of the Bill, I do not think that that is the case. A GP will operate within the whole construct of a duty of quality that surrounds him or her via the outcomes framework. GPs and their commissioning groups must operate with a close regard to NICE advice and guidance. That advice and guidance will be much more far-reaching now that it goes beyond the evaluation of individual drugs. It will be a whole outcomes framework by disease and the various other interventions mentioned in the Bill.

Photo of Liz Kendall

Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

GPs must still decide whether to spend £80,000 on a drug for the patient in front of them. It does not change the difficulty of the decision. Nobody knows how the new value-based pricing system will work. The consultation has just closed. The new system is supposed to consider not only whether an individual will benefit clinically from the drug but whether wider society will benefit and whether the drug, technology or treatment fulfils unmet need. Those are broad and nebulous concepts that have not yet been pinned down. We are not sure how all of it will work, pharmaceutical companies are not sure how it will work and NICE is not sure how it will work.

Will NICE have a role in determining the value-based pricing system? We think that it will have a role in assessing drugs under the new system, but will it have a role in drawing that up? I say to the hon. Lady that the drug companies will not suddenly and miraculously start making complicated gene-based drugs cheaper as a result. GPs, not NICE, will have to make the decisions. I freely admit that when NICE has made decisions, not all PCTs have taken them up, but that is about money, and simply wishing it away will not work.

In conclusion, I would like the Minister to answer some questions in his response. First, it seems to me that NICE has two roles. One involves producing quality standards, which we know will cover not only the NHS and public health but, for the first time, social care. That could cover a huge range of different treatments and services, and will involve consulting many more organisations.

NICE’s second function will relate to the value-based pricing system. It will at least assess drugs under the system, and will possibly help to develop the system in the first place. As I said, that will be a complicated process—even more complex than NICE’s current focus on quality-adjusted life years. We must remember that NICE’s funding is being cut by 30%. That relates to the point made by the hon. Member for Southport about mission creep. NICE has a huge number of jobs and tasks to do. I am sure that it would never let its standards slip, as it holds those standards dear, but it has a big and complicated task.

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John Pugh (Southport, Liberal Democrat)

The hon. Lady mentioned a postcode lottery. I may have misunderstood the legislation, but one benefit of NICE rules is that no PCT at the moment can refuse to deliver a treatment that NICE recommends. There is a possibility of that happening with the Bill, because if we change the function of NICE there will not be approved standards in the same sense. That must produce a more uneven picture in terms of health outcomes.

5:15 pm
Photo of Liz Kendall

Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

I agree. That is my concern, and we will come to amendments on that. The requirement on health and social care bodies to deliver and implement the quality standards or implement the advice and guidance is weaker. Amendment 670 covers that. The requirements are far too weak, which we will discuss later. With that, I thank you, Mr Hood, for your patience.

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Debbie Abrahams (Oldham East and Saddleworth, Labour)

Some points I wanted to raise have been mentioned already but my other points follow on neatly from what has been said.

Subsection (1)(a) mentions “benefits and costs” in the general NICE duties. I would like the Minister’s reassurance that cost-benefit analysis will not be the only method used. Given the reduction in resources to NICE and, obviously, the breadth of work that has been added to it, as my hon. Friend mentioned, there might be a tendency to use quicker, less engaging processes. One of the real exceptions to how NICE undertakes its work is the quality and robustness of the range of evidence that it uses. As has been mentioned, it is well respected across international health systems.

I know how seductive numbers are and, over the past few years, there has been a tendency to try to look at and pin down evidence in quantitative form. I think that is a weakness. There are benefits to including social care in NICE’s remit, but there is a caveat in that it must use a broad range of methodologies to determine the effectiveness of different interventions.

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Owen Smith (Shadow Minister (Wales); Pontypridd, Labour)

I have said this on other clauses to the Bill, but in this clause and the other clauses that relate  to NICE there is a dearth of detail about what NICE will do. The clause repeatedly stipulates that most things will be sorted out in regulations. [ Interruption. ] The Minister shakes his head and looks exasperated, but I do not see how he could demur from that conclusion, because it says repeatedly in this clause and others that matters will be in the regulations. I do not think that it is illegitimate for the clauses to say that, because clearly NICE’s role is changing quite significantly. The reason for that change is the introduction of value-based pricing. We have a consultation on that, and it is entirely proper that the Government consider what comes out of the value-based pricing proposals before they determine how the final function and form of NICE will look.

The assumption in the value-based pricing proposals is very significant for NICE, because it will shift from being a body that provides independent advice to the NHS at arm’s length from the pharmaceutical companies on the nature and cost efficacy of a given medicine to being a price-setting body. That is the big change in play under value-based pricing. NICE will effectively be determining what it thinks the price ought to be for a medicine in this country, as opposed to the current situation, whereby a company sets the price and NICE suggests whether it is value for money, and therefore whether the NHS ought to pay it. That change raises many questions, which are relevant to the clause, about the general duties.

First, NICE has not previously done that sort of job. It has done the analysis to determine whether it thinks a medicine is cost-effective; it has certainly not then set a price. That is a very different skill set from the roles that NICE currently has. It has not engaged in price negotiation with the companies, which we assume, because it is not clear in the Bill, will be the next step. So, will the Minister clarify whether the value-based pricing system works? If NICE determines what it thinks the price ought to be, will it go on to negotiate the price or will the Department of Health do that? If it is NICE, is the Minister confident that it will both have the skills and be able to do that additional significant piece of work with a 30% cut to its budget? If it is the Department of Health, which bit of the Department will do it, because it has previously never done that, either?

My second point, far more importantly, is about the PCTs and the crucial role that they have played in the NICE process. The issue is twofold and it speaks in some respects to some of the matters that the hon. Member for Southport raised. One is that, under the current system, it is the PCTs that effectively, through their pharmaceutical committees, make decisions on medicines that are not NICE-approved, for which there is no guidance, and they make the decision as to whether that medicine is going to be made available to local patients. [Interruption.] I am obviously speaking to myself. I do not know why I am bothering.

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Jimmy Hood (Lanark and Hamilton East, Labour)

Order. The Chairman is listening, and I hope the rest of the Committee. I am delighted to see that the Minster is feeling better than he was this morning.

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Owen Smith (Shadow Minister (Wales); Pontypridd, Labour)

As am I, Mr Hood. I am delighted to see that he is looking considerably improved.

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Simon Burns (The Minister of State, Department of Health; Chelmsford, Conservative)

Oh, thank you.

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Owen Smith (Shadow Minister (Wales); Pontypridd, Labour)

He had a good lunch, I hope.

PCTs that are being abolished are clearly playing an important role in determining which medicines that were not NICE-approved would be funded and therefore that local GPs could prescribe. The second crucial role that they increasingly provided on behalf of the NHS was engaging in the single technology assessment and multiple technology assessments, offering advice and guidance to NICE on clinical practice, either in trials or post-licensing of medicines being used in the NHS. There is a question about who in the NHS will in future be able to provide that guidance to NICE, because PCTs have built up that expertise and it has effectively been managers and clinicians with managerial responsibility in PCTs who have done it. In the new system it may be that somebody is designated with that task in GP consortia, but that is not clear in the Bill and therefore I think that that is an open question.

The third question, which comes on to the substance of the comments made by the hon. Member for Southport, concerns whether the legislation makes it clear that the current process whereby the NHS is mandated to provide funding for NICE-approved medicines within three months of their launch will continue. That is the current mechanism that we have to drive from the centre the take-up of cost-effective, innovative medicines. It is not clear whether the Bill will continue the status quo. It says that it may do that under regulations, but I would be grateful if the Minister clarified whether that will continue. If it does not continue, presumably there is a risk that the postcode lottery will expand.

Even if the status quo does continue in respect of medicines that are not NICE-approved and where therefore there is local decision making, there is still an obvious risk that, in a more disaggregated, more autonomous NHS, there will be more postcode prescription, or more divergence in decisions. My hon. Friend the Member for Leicester West made that point in respect of the cancer drugs fund. That is the evidence that we need to suggest that that might be a danger under the new system.

If the status quo does apply and subsequently the regulations state that funding is mandatory—it will be provided by GP consortia in future, I presume—how do we square that with competition law? Will there not be problems whereby providers of alternative medicines feel that they ought to have been given a different crack of the whip when NICE made the assessment of their medicine versus another medicine? Some clinicians may feel that NICE has made the wrong decision. It opens up NICE decisions to judicial review under competition law and other legislation.

My final and most important point is about Wales. Wales is not mentioned in this part of the Bill. Scotland has a different system—it has the Scottish Medicines Consortium—for assessing medicines, and Wales has the All Wales Medicines Strategy Group. The reality, however, is that the AWSMG is a much less well-resourced and much smaller body, which is unable to provide the enormously powerful service that NICE does in assessing all medicines. If NICE guidance does not have a mandatory effect across the board, or if there is less NICE guidance,  because it is tied up with price negotiation, the AWSMG will have to pick up the tab and try to do that role for Wales. I will be interested to hear the Minister’s comments on that in particular.

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Jeremy Lefroy (Stafford, Conservative)

Subsection (1)(a) mentions

“the broad balance between the benefits and costs”,

and my question relates particularly to medicines where the benefits may be long term, but the costs may be immediate and high. That will become particularly important with drugs that are targeted at the progressive diseases of ageing, which will—I hope and pray—be coming on to the market over the next few years. We may see high up-front costs, which may create problems for drugs budgets, but long-term benefits.

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Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

Does the hon. Gentleman agree that it is not only what we would call traditional drugs that have long-term benefits? The vast majority of drug development is going towards new genetic and biotechnology-based drugs. One of the problems with traditional drugs is that they are the same for everybody. The genetically based, biotech drugs can help individuals to benefit, because of their genetic predisposition. That is the whole thrust of drug policy. For many of those drugs, the benefits may not be seen for many years, because they will be trying to prevent genetic predispositions from coming forward.

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Jeremy Lefroy (Stafford, Conservative)

The hon. Lady makes a good point, and those drugs, along with drugs targeted at ageing, are precisely the kind that I had in mind. Indeed, there was a good initiative under the previous Government on the financing of vaccines internationally, whereby money was effectively provided for vaccinations up front, so that children would be protected from the ravages of disease, and they would gain throughout their whole life. The cost of that was borne not in one year, but over several.

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Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

One of the issues that pharmaceutical companies and others have raised about the value-based pricing proposal is that they are not clear whether it covers vaccines. The hon. Gentleman makes an apt point in relation to not only other countries, but this country. They are not clear as to whether vaccines will be included under that system.

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Jeremy Lefroy (Stafford, Conservative)

I thank the hon. Lady for that intervention, but I just want to ask the Minister whether these things are being considered and whether there will be finance mechanisms that enable the up-front costs to be spread over several years to ensure that people can accrue such benefits, rather than the costs being borne in a single year and refused, because of the adverse consequences on budgets.

5:30 pm
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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

The debate has been useful, if only because it has allowed a number of misconceptions and misunderstandings to be dispelled—and quite a few were rehearsed by the Committee today.

As hon. Members said, NICE is recognised as the international leader in the evaluation of drugs and  health technologies. It will continue to have an important role in that context, including assessing the incremental therapeutic benefits of new medicines. We will implement our plans for value-based drug prices in 2014. I want to say more about that, so I shall take no interventions while answering the various questions that have been asked, although I am sure that hon. Members will be tempted.

The arrangements to be put in place from 2014 will ensure that NHS patients have consistent access to effective medicines wherever in England they live. That is one of our key objectives in designing the new value-based pricing system. We are considering further what specific arrangements should be put in place from 2014, when value-based pricing is implemented in the light of responses to the consultation.

Some of the comments on the consultation that the hon. Member for Leicester West shared with the Committee gave the impression that the Government had set up an Aunt Sally in the value-based pricing system, and that the comments were about specific proposals. Of course, the consultation made a big contribution to the early stages of an ongoing design process. We would expect that process to continue to engage with the stakeholders, many of whom have already contributed their questions, their concerns and their suggestions.

The Bill makes no specific provision for value-based pricing, not least because the policy detail is still under development following the recent consultation. If it appears that further legislation is required to implement the final arrangements for value-based pricing before 2014, we will have to consider the matter separately. That should not be taken to mean that we believe that it will be necessary; it simply means that we need to keep the option open, and that I am being as straightforward with the Committee as possible at this stage.

My hon. Friend the Member for Southport posed a question about mission creep, a subject that was touched upon by several hon. Members. General concern was expressed about whether it was appropriate and how it could be stopped. It is worth noting that reference was made to an inadequacy of detail about NICE in the Bill. We ought to consider the relevant pages of past legislation to see what detail they gave about NICE. For the benefit of the Committee, I am holding up some pages that make clear how much detail was included in previous legislation. That demonstrates that there is a difference in the level of detail: we have provided considerable detail in a number of the clauses that we shall be debating over the next few hours.

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Nicky Morgan (Loughborough, Conservative)

For the benefit of Hansard, perhaps I can clarify that the Minister held up some blank pages; there was nothing on them and no detail.

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

Those who follow our proceedings may have missed that nuance, but I am grateful to my hon. Friend for pointing it out.

This is the first time that NICE has been placed on a statutory footing. It is important to mark the fact and to note that the Government are prepared to establish it on that basis. I would like to develop my points a little further before—

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

In a second, and before I finish this point.

It means that the underpinning legislation is now open to far greater parliamentary scrutiny. NICE’s scope was increased to cover public health in 2005, but that would now require a change to primary legislation. My hon. Friend the Member for Southport seeks the opportunity for Members to scrutinise and to ask whether an extension of the remit is appropriate. He did that during his remarks. We have placed all that detail in the Bill for the first time, which means that further primary legislation would be required to make other changes to the remit.

I welcome the comments of the hon. Member for Leicester West on the social care remit extension. The change has been widely welcomed by the social care sector and beyond. We have had a running theme during our consideration of these clauses on the necessity of greater integration and collaboration across health and social care. That was very much the thinking that drove us to the conclusion that the remit should be extended in this way.

The hon. Member for Leicester West also asked about clause 217(1)(a), and whether there was a risk that it could lead to a narrowing of the types of tools used to assess costs and benefits. Again, that is a perfectly fair question, and I assure her that, no, that is not the intention of the wording in the clause. We intend to ensure that a wide range of tools is used. In respect of the social care remit in particular, there is much discussion with the sector about how we draw on various expertise, particularly with regard to quality standards.

I have covered the point about the level of detail.

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Kevin Barron (Rother Valley, Labour)

Is not the lack of detail in past legislation because NICE is a special health authority, and not the non-departmental public body that the Bill will create?

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

The answer is yes. I struggle to understand the point, because it is a special health authority and at the stroke of a pen, the Secretary of State could abolish it at his discretion. The Bill puts the body into statute—[ Interruption. ]

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Jimmy Hood (Lanark and Hamilton East, Labour)

Order. I know that it is getting late in the day, but hon. Members should calm down a bit.

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

I will try to calm down, Mr Hood; I am sorry. The Bill puts NICE’s future beyond doubt, and if there were a desire to change it, that could be challenged. I will give way to the hon. Lady who has been waving at me for some time.

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Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

Not waving, and never wavering. I am disappointed, but perhaps not surprised that the Minister attempted a cheap conjuror’s trick of holding up pieces of blank paper. I hope that he will acknowledge that in 2005 the then Secretary of State issued clear directions to the National Institute for Health and Clinical Excellence. If the hon. Member for Loughborough will look, I can point her to plenty of criteria, functions and issues that NICE must take into account. Opposition Members are raising serious issues, and I hope that the Minister will respond in a serious manner.

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

If the hon. Lady thinks that putting something in the Bill is not a serious matter, and that we should not draw attention to the fact that directions that are not subject to parliamentary scrutiny are a lower level of accountability than we are introducing, she is mistaken. Those who follow our proceedings might take note that she dismisses that so casually.

I shall try to deal with some other points. The hon. Member for Pontypridd asked about competition law. Monitor’s role applies only to services and not drugs, so his concern is not relevant. We have discussed that, and I urge him to reread some of our extensive discussions last week—they are a good read—when my right hon. Friend and fellow Minister was dealing with those matters.

On drugs funding, there has been and is a huge misunderstanding. Mandatory funding for certain drugs will apply to consortia in the same way as to PCTs. I want to be clear about that. Mandatory funding of certain drugs will apply to consortia in the same way as to PCTs. The hon. Gentleman asked what part of the Bill is relevant to that. It is clause 221, and we will discuss the matter further when we come to it. It provides a regulation-making power that we intend to use to give exactly the same effect as the directions in respect of money in the existing system.

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

In a moment. We need to update the underpinning directions, but the effect will be the same. I draw hon. Members’ attention to the fact that the specific part of clause 221 is subsection (8)(a).

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Owen Smith (Shadow Minister (Wales); Pontypridd, Labour)

I do not want to fall foul of you, Mr Hood, but the clause to which the Minister refers, clause 221(8)(a), is preceded by—

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Jimmy Hood (Lanark and Hamilton East, Labour)

Order. The Minister said that he would comment on that when we came to it. I hope that the hon. Gentleman will not take that as an invitation to comment on it before then.

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Owen Smith (Shadow Minister (Wales); Pontypridd, Labour)

I am grateful to you, Mr Hood. Of course, I bow to your judgment. In that case, my question is this. The Minister says that current mandatory funding procedures will apply to certain drugs in future. Given that NICE will not be doing its job of approving medicines in the same way, to which drugs will they apply?

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

If we are talking about the pre-2014 world prior to value-based pricing, we intend for the present policy position to continue. Consortia will be under the same obligations as PCTs in respect of paying for drugs recommended by NICE. I hope that I have put that point on the record as clearly as possible. When we get to clause 221, where we should deal with the issue—I hope that you will agree, Mr Hood—I will be happy to return with further clarification.

A common misunderstanding is that NICE has the power to ban the use of drugs in the NHS. The suggestion that that role will be removed is based on that misunderstanding of the true position. Far from banning drugs, NICE takes into account all the latest clinical evidence and published guidance on how a drug can  best be used in the NHS to improve patient outcomes and make best use of NHS resources. NHS bodies act in the light of that advice and normally make funds available for health care interventions recommended by NICE.

Given NICE’s expertise, it will continue to play an important role in any new system. We have just concluded the consultation on that new system, and the Committee has been a useful extension of that consultation. Members have aired numerous concerns that we must take into account. It would also be helpful if hon. Members cared to suggest further solutions. I am sure that they will, as we proceed with the design of the change in prices.

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Grahame Morris (Easington, Labour)

Notwithstanding the outcome of the consultation on the new value-based system for the pricing of branded medicines, does the Minister rule out ministerial involvement in the pricing of individual drugs and the directions issued to GP consortia?

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

I will not do that at this point. It is another path leading down to a certain place and I will not go down it, for the simple reason that we have just concluded a consultation, we are properly considering it and I do not want to pre-empt it and our judgments on it. That is what the hon. Gentleman is inviting me to do, but that would be wrong.

On the question about how value-based pricing will operate and whether it will operate at a local or a national level, that is another area in which misconceptions and misunderstandings have run wild. We did not state that in the recent consultation. We are considering the responses and how the system might best operate to meet our objectives, but we have not said specifically whether it will be local or national. We have asked questions and are in the early stages of design.

Our priority, as I said, is to give NHS patients better access to effective and innovative medicines. We intend to do so by reforming how companies are paid for NHS medicines and moving to a system of value-based pricing when the current pharmaceutical price regulation scheme expires at the end of 2013. The current system of drug pricing has provided stability over time, but it does not promote innovation or access to the extent that we are seeking. We need a much closer link between the price that the NHS pays for medicine and the value that it delivers.

On questions about other aspects, we want the arrangements to be in place from 2014 to ensure that NHS patients have consistent access to effective medicines. We are considering further specific arrangements that should be in place from 2014. That is the purpose of the consultation.

I have also been asked whether NICE will have a role in price setting. NICE will have an important role in any new system; that is the clear, unequivocal point. However, we have only recently finished the consultation, and the detail of how value-based pricing will operate is still being considered and worked through. We will continue to hold discussions with NICE, the industry and other interested parties as we take forward the design of the new system.

It has been suggested that NICE’s role is changing in a way adverse to the patient’s interests. Absolutely not—value-based pricing will be in place from 2014.  The Bill makes no provision for value-based pricing. As we develop the policy, we will consider whether any further legislation is necessary.

My hon. Friend the Member for Stafford asked about expensive drugs, and their up-front costs and long-term benefits. The answer is yes, as happens now.

I have saved the best for last—NICE in Wales. NICE is an England-only body, but Wales will have access to NICE products and may also contract independently with NICE for Wales-specific products. That is a devolved matter for Wales, which will be able to use the expertise of NICE, because it is well respected, under those contracting arrangements.

5:45 pm
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Owen Smith (Shadow Minister (Wales); Pontypridd, Labour)

I am grateful for that clarification. The Minister is entirely accurate in his description of the situation in legislation, but in the real world the All Wales Medicines Strategy Group and the NHS in Wales rely greatly on taking NICE guidance and applying and assessing it. In a world post value-based pricing, will NICE still provide that guidance or will its role be restricted to price setting and, in that case, will there be less NICE guidance in the public domain for the AWMSG to take advantage of?

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

I do not believe that there is any reason to suppose that that will be the outcome of the changes to value-based pricing. With that and my other answers, I hope I have reassured the Committee that the clause, which deals with the general purposes of NICE, should stand part of the Bill.

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Liz Kendall (Shadow Minister (Health); Leicester West, Labour)

I am grateful to the Minister for his reply. I do not think that he addressed one point that was raised by my right hon. Friend the Member for Rother Valley, but I am sorry if I missed it. Who will undertake the price negotiation—NICE or the Department of Health?

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Paul Burstow (The Minister of State, Department of Health; Sutton and Cheam, Liberal Democrat)

I refer the hon. Lady to the answer that I have already given. We are at the point in the consultation process where we have just received the responses, and we will consider and deliberate on them before we move to the next stage.

Question put and agreed to.

Clause 217 accordingly ordered to stand part of the Bill.