I must apologise for the length of the reply. Much interest has in recent years been focussed upon the relationship of the pharmaceutical industry with the National Health Service. The Service looks to the industry to meet its essential needs for drugs and takes a large part of those produced for the home market. The Government must be able to satisfy themselves and the country that the needs are being met effectively, that the ways in which new products are developed and brought to notice for use in the Service are sound and well justified, and that the prices it pays are fair and reasonable.
At the same time, the Government recognise the importance of maintaining an efficient and progressive industry, with a valuable export market. My right hon. Friend the Secretary of State for Scotland and I have concluded that the time has come for a full and impartial inquiry into the way in which these aims are being and should be fulfilled and we have, therefore, decided to set up a committee of inquiry with the following terms of reference:
To examine the relationship of the pharmaceutical industry in Great Britain with the National Health Service, having regard to the structure of the industry, to the commercial policies of the firms comprising it, to pricing and sales promotion practices, to the effects of patents and to the relevance and value of research; and to make recommendations.
The names of the chairman and other members will be announced as soon as possible.
I thank my right hon. Friend for that reply, which will obviously be the first step in getting to grips with the £100 million that the National Health Service spends on drugs each year. Will the terms of reference include the right of the committee to examine not only the British drug industry, but also its relations with the American drug industry? Will it be able to examine the patent laws, including Sections 41 and 46 of the Patents Act? Will it also be permitted to look into the application of Section 41 in relation to general practice as well as to hospital service? Will it be able to examine the retail distribution of drugs, particularly the dispensing service?
I think that it would be impossible to look at British pharmaceutical companies which are subsidiaries to American pharmaceutical companies without looking at the relationship between the two. Certainly, patents come within the purview of the committee—they are specially mentioned in the terms of reference—and the use of Section 41 and 46 of the Patents Act will be relevant. It would not, I think, be within the function of the committee to look into the retail distribution or the dispensing of drugs.
As it is not apparent from the terms of reference, can the right hon. Gentleman make it clear that the review will consider not only the relationship of the pharmaceutical industry with the Health Service, but also the wider aspect of the valuable export trade done by the industry? Will the review cover the overriding by the Ministry of patent protection, which the industry fears may hinder its research investment programme?
As the right hon. Gentleman is, quite properly, anxious to reduce the price of drugs in this country, will the review also cover an inquiry into the effect of the surcharge on imported durgs?
I have answered questions about the surcharge before. The effect on the cost of the Health Service is very small indeed and I do not think that that aspect should come within the function of the committee. Certainly, the committee will be able to look at the industry's export contribution. I mentioned exports in my main Answer.
As I told my hon. Friend the Member for Willesden, West (Mr. Pavitt), all aspects of the patent law will be relevant and will come within the purview of the Committee. I particularly mentioned Section 46 which is the Section of the Act which permits the purchase of patented drugs for the service of the Crown.
Is my right hon. Friend aware that the appointment of the committee will be welcomed by every doctor who is trying to economise in prescribing drugs and to overcome the advertisements and sales pressure from private drug firms? Will my right hon. Friend also bear in mind that today I was invited to a wine tasting evening by a private drug firm in order to try to persuade me to prescribe its drugs?
I am grateful to my hon. Friend. The terms of reference specifically include pricing and sales promotion practices, into which category the invitation to my hon. Friend might well fall.
Will the right hon. Gentleman look again at the question of looking into the retail section of the industry? That section has many difficulties at present and the attitude of many local medical executive councils towards it needs to be examined. If he cannot include it in the main inquiry, will he set up a subsidiary inquiry to do so?
I can only repeat that do not think that this aspect is appropriate to the new committee. I am aware that there are some difficulties and I will certainly look into them but not, I think, through the medium of the committee.
Is my right hon. Friend aware that he will receive support from everyone in his own support of the right hon. Member for Wolverhampton, South-West (Mr. Powell), who first used Section 46 in trying to find out why we were paying nine times the amount for certain imported drugs as was being charged by the same companies in Switzerland and Italy? Exports are very important to us, but is my right hon. Friend aware that many American companies do not give full export franchise from this country?
Will the committee also carefully examine the difference between basic and development research and the limited amount of basic research that is going on in this country?
My hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) can be assured that all these matters will be considered by the committee. Perhaps I should add that the setting up of this committee has been welcomed by the industry, with which there have been informal consultations.
Will the committee receive practical suggestions from people outside the industry at all levels? Is the right hon. Gentleman aware that, for a very long time, practical suggestions put to his Department seem to have been largely ignored? Is he further aware that a few practical women, making a few practical suggestions on policy, might get much further than all the committees in the world?
The committee may well ask for evidence to be supplied to it by the Health Departments and may also think it right to invite contributions from any person or organisation interested. The hon. Lady's offer is now on the record for the committee to read.