National Health Service (Pharmacists)

– in the House of Commons at 12:00 am on 12th November 1970.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hawkins.]

10.0 p.m.

Photo of Miss Mervyn Pike Miss Mervyn Pike , Melton

My purpose in raising this subject is to draw attention to the assertions made in a recent television broadcast by the B.B.C.'s "Twenty-four Hours", on 23rd October, a programme which I did not have the opportunity to see in full, and in the Sunday Times Magazine of 26th October, 1970. These assertions concern the substitution of drugs under the National Health Service. My anxieties in this matter are fourfold. I do not speak as an expert on this subject but more as a member of the general public who is concerned with the matter. I am reflecting a good deal of anxiety on the part of a great many of my constituents and, I think, those of other hon. Members.

In the Sunday Times Magazine, it is asserted that a number of retail chemists in Britain are systematically defrauding the National Health Service of considerable sums of money, perhaps as much as £1 million a year. One million pounds a year is a large sum. If this is anywhere near true, it is a sum of money that we could well do with in the National Health Service at present.

I do not believe all that I hear and I do not accept everything uncritically. Nevertheless this assertion has been made responsibly, and apart from the implications for the National Health Service itself, it has serious legal implications as regards fraud.

My second anxiety is that the drug substituted has probably never been properly tested and in some cases may be seriously substandard. It may well jeopardise the patient's medical treatment.

My third anxiety is that this racket, if it exists, undoubtedly allows certain entrepreneurs who are imitating or substituting drugs to make very large profits at public expense which in themselves must be a temptation to the growth of this practice.

The most important anxiety that I have on this score is that these allegations will undoubtedly have a very serious effect on the good name of retail chemists in general. I think it will be particularly harmful to the small retail chemist. These are the people I want to see protected as much as possible. They will probably suffer most by this sort of assertion.

Being human, when I get a prescription I think, "Oh dear, I hope it is all right." Only yesterday, when picking up a prescription in a small chemist's shop in London, the person in front of me said to the dispenser, "Well, I hope this is all right. I hope this is not a substitute." That might be all right when passing the time of day, but it can only do damage to pharmacists in general. It is essential that this assertion should be looked at properly. It is in the interests of the chemists, possibly even more than the interests of the general public, the customers, that this situation should not only be fully investigated but that adequate safeguards should be built into the system to enable these fraudulent practices to be rooted out.

I shall not spend the time of the Minister and of the House by spelling out the different ways in which this fraud can be practised. There is ample evidence in the Sunday Times Magazine and in the large volume of letters I have received on this subject, and very simple evidence of how it can be done.

Simply, a doctor can prescribe a brand name product, and the chemist can then dispense a cheap imitation or substitute of the drug to the patient. The chemist can then claim from the National Health Service the full cost of the brand name drug, thus making a vastly increased profit.

An example is given in the Sunday Times Magazine about Librium. In my view, there is far too much Librium dispensed and taken at present—but that is a side issue. The article points out: In practical terms this means that a patient whose doctor prescribes Librium may take the prescription to her local chemist and be given green and black capsules that do not contain Librium. They may contain an appropriate chemical, and it may be present in the right quantity. However, if the doctor has written the name "Librium", the chemist is defrauding the National Health Service when he dispenses anything else, because the imitation capsule almost certainly will not have been submitted to the Committee on Safety of Drugs, nor will it have received any official approval.

The chemist receiving payment for each prescription, under arrangements which take account both of his professional services and the cost of the medicines supplied, receives a fixed sum of 2s. 6d., on top of which he is paid the full cost of the ingredients, plus about 10 per cent. for his expenses. For a prescription of 100 Librium capsules, the Pricing Bureau would credit him 25s. Of that sum, 4s. 6d. would be estimated to cover his profit and professional fee, and the remainder would be a straightforward reimbursement of the cost of the Librium capsules. If the chemist dispensed counterfeit capsules for which he paid only 10s., clearly his profit would be 15s. So there is a temptation, and we must look at it.

The first evidence of large scale fraud appears to have come to light as early as 1964. My hon. Friend is not responsible for what happened then, of course, but no doubt there is a note of this in his Department. Since that time, companies have been convicted of marketing copied and inferior drugs. Some of them have been sued in the civil courts by major international drug companies for the infringement of patents and the like.

Obviously, where these substances have been sold, almost certainly they have been given to patients. In addition, I am sure that my hon. Friend is aware of the case which arose at Redhill Hospital out of incidents which took place between 1967 and 1968.

The author of the Sunday Times article approached the Ministry of Health at the end of 1969 or the beginning of this year with evidence of this fraud. The Ministry, therefore, has had ample time to consider these assertions. In view of that, I would like my hon. Friend to tell the House what steps have been taken by his Department to investigate the matter and what further steps it proposes to take in an effort to meet this very serious problem. Can he also say what consultations, if any, are taking place to ensure that the controls governing the importation of drugs are adequate? Obviously the importation of the drugs has a bearing on any malpractice taking place.

There must be a closer inspection and control at the point of sale, with much heavier penalties imposed on what I believe to be the small minority of retail chemists failing to comply with the terms of their contracts with the National Health Service and the ethical code of their profession. In my view, these controls should apply also to dispensing doctors, who are subject to the same temptations but not, at present, to the inspection and control to which a pharmacist has to submit.

I must stress again that I do not seek to criticise the work done in the way of inspection under the present system. The inspectors of the Pharmaceutical Society do an extremely good job. I am told that they visit every pharmacy at 18 month intervals and that there are between 12,000 and 13,000 pharmacies, of which 11,000 are in England and Wales. According to the Report of the Department of Health for 1969, action was found necessary with regard to only 49 samples. It does not indicate what were the faults but, as only one case was referred to the society, it is not unreasonable to assume that it was the only case involving some kind of misconduct.

It is quite in order for a pharmacist to buy his drugs from any source, if they are prescribed under official or generic names and not proprietary names, provided that they meet the required standards. The testing standards apply only to drugs. They do not extend to special tests for pharmacists who may be suspected of deliberate fraud, though the Society's inspectors are experienced in the trade and no doubt have a keen nose for smelling out this sort of malpractice. Nevertheless, it is not easy for them at the present time to find out those people who are deliberately trying to defraud the Health Service, and it may well be that a reserve power to test prescriptions, or something of that sort, would be a far better and a far closer control.

As I say, my anxiety is that these controls should be made as tight as possible. My anxiety is that the public should be reassured that these matters are being fully investigated by the Ministry of Health. My anxiety is that the good name of the pharmacists should be protected and that the interests of the general public are properly safeguarded as well, and that the much-needed money for the National Health Service is not fraudulently diverted in this way.

10.10 p.m.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I am very glad my hon. Friend the Member for Melton (Miss Pike) has raised this subject on the Adjournment and has raised it in the way that she has, because, as she suggests, this gives us an opportunity to clear away some of the misconceptions which have been created by the recent television broadcast and the Sunday Times Magazine article.

I think that my reply to her really falls under three quite separate heads. The first is the question: what set of rules ought my Department to use in settling the rates of reimbursement for chemists? The next question is: are those rules being abused? The third and most important question, quite apart from the question of reimbursement and the question whether the dispensing chemists or the wholesalers or the manufacturers are being paid too much or too little, is: is the patient geting a proper pharmaceutical service? I will deal with this central question first.

From the evidence available from the National Health Service drug testing scheme, which I will describe presently to my hon. Friend, and the few complaints received from patients, it would appear that the unauthorised substitution of drugs and the dispensing of substandard drugs is very rare. From the inquiries I have made, the allegations and pictures of genuine and substitute tablets which were published on 25th October—my hon. Friend and I have both seen the same publication—do not appear to have led to an influx of doubtful prescriptions from patients and their doctors for investigation, which might have been expected from the publication of this article, if the substitution of drugs is widespread.

My right hon. Friend the Secretary of State nevertheless views with concern the serious allegations which have been made in the article entitled "The Great Drug Fraud" in the Sunday Times Magazine of 25th October, and he has referred the article to the Attorney-General, who has asked the Director of Public Prosecutions to consider whether investigations are justified and, if so, to arrange for these to be undertaken.

A pharmacist who substitutes any drug for that prescribed by the doctor or dispenses substandard medicine would be in breach of his statutory National Health Service terms of service and may well be guilty of a serious professional offence as well. Under his terms of service, any drug or preparation dispensed under the National Health Service by a chemist must, if included in the Drug Tariff issued by my Department or in the British National Formulary, British Pharmacopoeia or British Pharmaceutical Codex, comply with the standard or formula specified in those publications. If no standard or formula is so specified, the grade or quality of the drug or preparation must not be lower than that ordinarily used for medicinal purposes.

The National Health Service executive councils with which the chemists are in contract are responsible under Regulation 25 of the National Health Service (General Medical and Pharmaceutical Services) Regulations 1966 for making schemes for securing a proper pharmaceutical service. These include a scheme for testing the quality and checking the amount of the drugs and appliances supplied by chemists.

Under these schemes, which were revised in 1966, inspectors of the Pharmaceutical Society, as agents of executive councils, call at chemists' shops without warning. My hon. Friend spoke of this; perhaps I might elaborate on it. In England and Wales in 1969 they took about 5,500 samples of drugs already dispensed which were on the counter, as it were, awaiting collection by the patient. Executive councils send these samples to public analysts for analysis and, where necessary on receipt of the analysts' certificates, refer cases to their pharmaceutical service committees for investigation. These committees also investigate allegations made by patients about faults in dispensing.

Out of all the samples taken in 1969 less than 1 per cent. warranted reference to a pharmaceutical service committee, and my hon. Friend will be glad to learn that of 49 breaches of terms of service—which is the figure she quoted—found by executive councils in England and Wales in 1969, most related only to unintentional and harmless minor errors. In only 12 cases was it considered appropriate to withhold a sum of money from the chemist's remuneration. Only three cases of alleged unauthorised substitution have come before executive councils from all sources of evidence in the last few years. These three cases, all of which have I think been mentioned in the pharmaceutical press at different times in the last two years, constitute three of the five specific allegations of abuse included in the Sunday Times article.

In the most serious cases an executive council might also decide to make representations to the National Health Service tribunal that the continued inclusion of a chemist in its National Health Service list was prejudicial to the efficiency of the service.

Reference of a case to the National Health Service tribunal may, however, be superfluous in the light of the serious view which the Pharmaceutical Society takes of unauthorised substitution of drugs. Its ethical code provides that: A pharmacist who has accepted a prescription for dispensing will dispense the prescription exactly in accordance with the prescriber's wishes and, in particular, will not (except with the approval of the prescriber or in an emergency) substitute any other product for a specifically named product even if the pharmacist believes that the therapeutic effect and quality of the other product is identical". Evidence of substitution submitted to the Society is first considered by the Society's ethical committee, which, if it is reliable evidence, refers the case to the disciplinary committee, the so-called Statutory Committee. In one of these rare cases, which was heard a week before publication of the Sunday Times article, following a finding by a National Health Service executive council earlier in the year, the committee ordered that, subject to the appeal procedure, the name of the pharmacist concerned should be removed from the Register of Pharmaceutical Chemists. Any pharmacist who engages in unauthorised substitution thus risks the loss of his livelihood.

Any profession can have its black-sheep, but I would like to take this opportunity to go on record as saying that I am satisfied that the pharmaceutical profession as a whole works with the most scrupulous care in the service of the patient, and the long-standing public confidence in chemists, large and small, metropolitan and high street, is well founded.

Now I reach my second question. Are we using the right rules in fixing reimbursement rates? I should perhaps first remind my hon. Friend of how the rates are fixed. Ever since National Health Insurance days the payments made to chemists for each prescription have included, in addition to remuneration, the reimbursement of what is called the "net ingredient cost"; this is a fixed sum calculated on rules set out in the Drug Tariff but intended to correspond closely with the average wholesale cost to chemists of the drug or drugs provided. The actual calculation of the net ingredient cost is carried out by the pricing offices to which chemists send their prescriptions monthly.

As regards drugs available in nonproprietary form, there is a free and competitive market, and my Department has generally no difficulty in finding a fair price to put into the Drug Tariff, by averaging the prices of the main wholesalers, which by the operation of a competitive market are normally very close together. Where the doctor has prescribed a proprietary preparation, again there is no difficulty, though for a different reason. There is only one wholesale price for each proprietary preparation, and this obviously is the price which the chemist must be repaid.

There is a third small but important group of drugs—about 20 or so—which have become standard preparations, in the pharmaceutical sense; they have probably been available for several years, but are, in fact, still available in this country only in the form of proprietary products manufactured under brand names. If a doctor writes a prescription for such a drug, using the official name, or generic name as my hon. Friend would say, and there are two proprietary brands on the market, both conforming to the fairly rigorous specifications which the pharmacopoeia and other authorities have laid down for official preparations, the chemist can supply either of them; he does not have to indicate which. But for the purposes of the Drug Tariff my Department assumes that he will supply the cheapest product generally available, and prices based on the prices of this cheapest product are therefore set out in the Drug Tariff as the appropriate rates of reimbursement.

My third main question was whether the operation of these rules at the present time is in practice enabling chemists to make an undue profit on drugs along the lines of the figures set out in the Sunday Times article. This sort of allegation about undue profits conceals two very different questions, and some observers do not distinguish quite clearly enough between them. The first is whether chemists are dispensing prescriptions illegally or improperly, and so making an undue profit. The second is whether, owing to some oversight by my Department, chemists who are dispensing prescriptions quite legally, honestly and properly are making a profit on the net ingredient cost which my Department does not intend them to make. I will deal with these alternatives separately.

Taking the first question of illegal or improper profit from the reimbursement arrangements—this is where public misgiving lies—that is, a profit obtained by not dispensing the prescription properly: this is really a hazard common to all walks of life. I have already explained that a chemist who supplies anything but the exact brand ordered is not merely committing a financial offence, but also probably committing both a very serious professional offence and a breach of his National Health Service terms of service. He does so as a calculated risk with heavy penalties, including possible complete loss of livelihood as the prospect of discovery. To suggest, as some do, that the remedy for this hazard might be that the chemist should endorse the prescription to show what he had done is a little like saying that somebody who has committed robbery with violence should be urged to declare his income from that source in his tax return.

My Department's concern in these cases is not to stop the pretty minor element of financial loss involved, but to stop the occurrence altogether by the means which I have already described.

I turn therefore to the second aspect of my final question: whether ordinary pharmacistts who are doing their job properly are nevertheless making uncovenanted profits because rules are laxly operated?

I first make quite clear that there is nothing wrong or dishonest or, indeed, even undesirable about the mere fact that chemists sometimes buy drugs—good and wholesome drugs—at prices below those in the Drug Tariff. They also sometimes have to buy drugs at prices above Drug Tariff prices. This happens both with proprietary and with nonproprietary products, and in the long run I am sure the Health Service gains from the freedom which enables the individual chemist to use his own expertise as a buyer. It introduces a limited but desirable element of price competition which would not be present if we simply reimbused the cost that the pharmacist says that he has paid.

The Hinchliffe Report, in dealing with a slightly different problem—the problem of discounts—made a comment on this general point in 1959: There is clearly nothing wrong in pharmacists buying at less than the Drug Tariff rates. In fact, they should be encouraged to do so. But those responsible for administering the pharmaceutical service should surely have sufficient business acumen to ensure that the taxpayer shares in some of the savings which could be made. The Committee's point here was later met by a special sample inquiry designed to ascertain exactly what chemists were actually paying for both proprietary and non-proprietary drugs, and our present arrangements include a special discount scheme which takes account of the results of that inquiry and is designed to ensure that overall, taking losses and gains together, chemists' reimbursement payments do no more than balance the relevant wholesale costs. Our discount scheme makes sure that the discount that they may obtain by their methods of buying is shared with the Department. Should a later inquiry show that subsequent changes in buying patterns have upset this balance in either direction we would expect to adjust the discount scheme upwards or downwards as necessary.

Thus, I think that my hon. Friend can be satisfied that there is nothing lax about the operation of our system of reimbursement overall. The challenge posed by the Hinchliffe Committee, in the passage which I have just quoted, has been fully met.

But I should again say a special word about the fairly limited number of cases where a chemist is faced with a choice of two or more proprietary brands to dispense against a prescription which asks for the drug only by its official or generic name. As I said earlier, here the rule is to pay the chemist on the assumption that he has dispensed the cheapest product that is generally available. I should add that with these rates, as with all the Drug Tariff, we consult the chemists' own representatives before deciding the rates to go in the tariff. On the face of it, this is a good rule—at least for the taxpayer.

Some difficulties arise here, however, and I do not want to belittle them, even though the scope is pretty limited. The difficulty lies, in effect, in the phrase "generally available". A wholesaler may offer a cheap preparation to chemists in one part of the country only. Since it is not "generally available" in the understood sense of that term it will not be taken as the basis of the reimbursement price; so chemists in that particular part of the country who buy the product will not get an uncovenanted profit. But this is not a very serious or widespread problem and it tends to adjust itself.

In the time which remains I should like to mentioned the question of imports, to which my hon. Friend referred. There is control over the importation and manufacture of a limited class of goods under the Therapeutic Substances Act. In addition, the pharmacist exercises his judgment about his sources of supply in accordance with professional obligations and obligations under his terms of service, which I have described.

The Medicines Act, 1968, includes provision for the licensing for sale of imported medicinal products. This part of the 1968 Act is not yet in operation, but preparatory work is going forward, including consultation with those likely to be affected. The Act enables conditions regarding quality to be imposed under the licensing system.

I hope that my hon. Friend feels that we have explored the subject sufficiently deeply to restore justified confidence in the work of chemists in the British Pharmaceutical Service.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.