I beg to move, That the Bill be read a Second time.
This is a short and focused Bill which is vitally important not only for the NHS but for patients. NHS spending on medicines is second only to staffing costs. The Health and Social Care Information Centre—now NHS Digital—estimated that the NHS in England spent over £15.2 billion on medicines during 2015-16, a rise of nearly 20% since 2010-2011. With advances in science and our ageing population, those costs can only continue to grow.
Medicines are of course a vital part of patient care in the NHS, both in hospitals and in the community. Thanks to the research and development efforts of the life sciences industry—an industry which contributes £56 billion and tens of thousands of jobs to the UK economy every year—our understanding of diseases and the best way to treat them has improved dramatically over the past 20 years. Who would have thought for instance that UK work pioneering superconducting magnets would result in MRI scanners—scanners which would save hundreds of lives each year through the early detection of breast cancer—or that the remarkable research by our National Institute for Health Research into translational medicine would lead to scientific breakthroughs in areas such as gene therapy being taken from the lab to the clinic? In a six-year period this has led to 340 patents, generating over £80 million from intellectual property.
This Government are committed to ensuring that patients get access to innovative and cost-effective medicines as quickly as possible. I pay tribute to the work carried out by my hon. Friend George Freeman, who worked tirelessly in government to promote the life sciences industry, and who established the accelerated access review to provide clear recommendations on how the Government, the NHS and the industry can work together to ensure patients benefit from transformative new products much more quickly. That review was published today and is an excellent document which challenges everyone in the medicines system to up their game.
Our mission is to continue our progress in ensuring patients get rapid access to life-changing and cost-effective medicines. However, we also need to ensure that we are getting the best value for the NHS, which is why we have brought this Bill before the House.
The purpose of the Bill is to clarify and modernise provisions to control the cost of health service medicines and to ensure sales and purchase information can be appropriately collected and disclosed. These provisions will align the statutory and voluntary cost control mechanisms currently in existence, allow the Government to control the cost of excessively priced unbranded generic medicines, and ensure we have comprehensive data with which to reimburse people who dispense medicines. Taken together, these measures will enable us to secure better value for money for the NHS from its spend on medicines.
I congratulate my right hon. Friend on this effort. I recently received a written answer that last year GPs spent £85 million prescribing paracetamol. A packet of 500 mg paracetamol costs 19p in Asda, and I wonder whether this Bill will enable us to look those costs and whether such prescribing is appropriate.
I am grateful to my hon. Friend for raising that issue. Although the measures he mentions are not directly covered in this Bill, he reminds the House that the business of getting value for money from our drugs business is everyone’s business throughout the NHS. There is a huge amount of prescribing of medicines that is not strictly necessary. Indeed, we had further evidence of that from the Academy of Medical Royal Colleges this morning. My hon. Friend makes an extremely important point: this Bill is part of the effort to get better value for money from our medicines budget, but initiatives such the one he talks about are equally important.
Further to that question, I can see how the Bill will deal with the issue of debranding, and that is very welcome, but I understand there are three other areas of concern. There is the question of price delay, which the Competition and Markets Authority has been looking at, and there are the problems of tying and bundling and so-called loyalty schemes, all of which act to inflate the cost of medicines to the NHS artificially. Will the Bill also deal with those areas?
It will deal with some of those concerns, and we will listen to all the concerns raised by hon. Members during the progress of the Bill. On the particular issue the hon. Gentleman raises, the CMA is already investigating the behaviour of pharmaceutical companies in certain situations, but it has become clear to us that there is a particularly unethical and unacceptable practice of drugs companies getting control of generic drugs for which they command a monopoly position and then hiking the prices. There was one product whose price increased by 12,000% between 2008 and 2016, and if the price had stayed the same as before, the increase the NHS would have spent £58 million less. The Government’s conclusion is that the simplest and quickest way to sort this out is through new legislation, but I will happily take the hon. Gentleman’s other concerns offline and look into them further.
I welcome the provisions of the Bill that will close a loophole and deal with terrible examples of where the NHS is in effect exploited, but can my right hon. Friend point to the future in light of the suggestion that the drugs bill will increase to £20 billion by 2020—a much more significant increase than can be afforded under the projected expenditure in the NHS? What bigger measures need to be put in place for us to deal substantively with that bigger problem?
My hon. Friend is right in that we see demand for NHS services, which includes treatment and drugs, increasing by a total of around £30 billion over the next five-year period, which is a huge amount and certainly more than we as a country can afford without changing practice. That is why we are implementing a very challenging series of efficiency reforms designed to make sure that we can afford to continue current levels of NHS service on the £10 billion increase this Government are putting in. Part of that is indeed measures such as those in this Bill to control the drugs bill. My hon. Friend is also right that going forward over the next 25, rather than five, years we will be seeing the bigger issue of the accelerating pace of innovation in science. That provides great opportunities for the NHS, but potentially great pressures for the budget, and I am sure we will continue to discuss those issues extensively in this House.
What assessment has my right hon. Friend made of the impact this Bill might have on the parallel trade in pharmaceuticals, which he will know has both costs and benefits for the NHS and for patient care?
My hon. Friend obviously knows about these matters in a great deal of detail and should be reassured that this Bill should prevent people who are part of the current voluntary pharmaceutical price regulation scheme—PPRS—from parallel-importing through European subsidiaries, which currently under single market rules we are not able to do anything about. That loophole will be closed.
The first element of the Bill relates to controls on the cost of branded medicines. For many years the Government have had both statutory and voluntary arrangements in place with the pharmaceuticals industry to limit the overall cost of medicines to the NHS. Companies can choose to join either the voluntary scheme or the statutory scheme. Each voluntary scheme typically lasts for five years before a new scheme is negotiated.
The current voluntary scheme is the 2014 PPRS. The objectives of that agreement include keeping the branded health service medicines bill within affordable limits while supporting the availability and use of effective and innovative medicines. For industry, the PPRS provides companies with the certainty and backing they need to flourish both in the UK and in the global markets.
The current PPRS operates by requiring participating companies to make a payment to the Department of Health of a percentage of their NHS sales revenue when total sales exceed an agreed amount. So far the PPRS has resulted in £1.24 billion of payments, all of which have been reinvested back into the health service for the benefit of patients.
The early part of the Bill appears incredibly tortuous, because it relates to whether something is under the voluntary scheme or the statutory scheme and to switching back and forth between the two. Is that because we have a voluntary scheme which started in 2014 and will run until 2019, and the Government intend not to renew it? If the Government are minded to consider renewal in 2019, why have parallel schemes making the whole thing much more complex than it needed to be?
The hon. Gentleman makes an important point. It will be for this House and the Government to reflect prior to 2019 on whether it is worth carrying on with two schemes, which has been the arrangement for many years. Successive PPRS voluntary agreements have covered the vast majority of sales to the NHS and the statutory scheme has been a back-up for people who do not want to participate in the voluntary scheme. Recently, however, there has been an element of gaming the system whereby more and more firms have been moving from the voluntary scheme into the statutory scheme. The Bill will remove the incentives for them to switch between schemes and will make the benefits to the NHS essentially the same whichever scheme people choose. It will be for this House to reflect on and for the Government to consider whether the dual structure is right going forward.
Absolutely. The money comes back to the Department of Health and is invested in the NHS. Indeed, it would be wonderful if it was more than £1.24 billion, because there is an awful lot of need on the NHS frontline right now; the funds are much needed. Our concern is that companies have been exploiting the differences between the voluntary and statutory schemes, particularly the loophole, which the Bill seeks to close, that if companies have drugs in both schemes, we are unable to regulate at all the prices of the drugs that would ordinarily fall under the statutory scheme. That is why the Bill is so important.
Notwithstanding the Bill’s objectives, which I can see are admirable, does the Secretary of State accept that hundreds of millions of pounds could be saved in the drugs budget if there was better analysis of NHS prescription patterns? I have called before for the appointment of analytical pharmacists to look at the balance between prescription efficacy and cost and at trying to increase the use of biosimilars. Some of that £1.24 billion could be invested in that greater analysis.
Yes. My hon. Friend makes an important point. The third part of the Bill will provide for much better data collection to allow that analysis to take place. We are also seeking to break down the barriers between the pharmacy sector and general practice. During this Parliament, we will be financing 2,000 additional pharmacists to work in general practice so that we can learn exactly those sort of lessons.
Further to that important point about biosimilars, and in welcoming this legislation and the opportunity to create savings for the NHS, will the Secretary of State also address the long-standing issues around Lucentis and Avastin? George Freeman updated the House about the barriers in both domestic and European legislation that prevent the use of Avastin—it is not licensed for wet age-related macular degeneration—but the scale of savings could be so vast that there is a case for introducing measures in the Bill to allow for such issues to be addressed.
I am happy to look into that—some of my own constituents have been affected by that issue. I am not aware that there is scope to consider that important point in the Bill, but we should reflect on what we can do to deal with some of the anomalies in the drug licensing regime that lead to the unintended consequences that my hon. Friend talks about.
We have a statutory scheme for companies that are not in the PPRS that is based on a cut to the list price of products, rather than a payment mechanism on company sales. Since the introduction of the rebate mechanism in the PPRS, the volumes of drugs going through it have been lower than estimated. At the same time, the statutory scheme has delivered lower savings than predicted. The inequity between the two schemes has led to some companies making commercial decisions to divest products from the PPRS to the statutory scheme, further reducing the savings to the NHS.
Last year, the Government consulted on options to reform the statutory medicines pricing scheme by introducing a payment mechanism, in place of the statutory price cut, broadly similar to that which exists in the PPRS. Our clear intention was to put in place voluntary and statutory schemes that were broadly comparable in terms of savings. Of course, companies are free to decide which scheme to join and may move from one to the other depending on the other benefits they offer, but the savings to the NHS offered by both schemes should be broadly the same.
NHS respondents to the consultation supported our position, but the pharmaceutical industry queried whether the Government had the powers to introduce a statutory payment system. Following a review of our legislative powers, we concluded that amendments should be made to clarify the existing powers to make it clear that the Government do have the power to introduce a payment mechanism in the statutory scheme. The Bill does that by clarifying the provisions in the NHS Act 2006 to put it beyond doubt that the Government can introduce a payment mechanism in the statutory scheme. The Bill also amends the 2006 Act so that it contains essential provisions for enforcement action. Payments due under either a future voluntary or statutory scheme would be recoverable through the courts if necessary. That would include the power to recover payments due from any company that leaves one scheme to join the other.
The powers proposed in the Bill to control the cost of medicines are a modest addition to the powers already provided for in the 2006 Act to control the price of and profit associated with medicines used by the health service. The powers are necessary to ensure that the Government have the scope and flexibility to respond to changes in the commercial environment. The intended application of the powers will, of course, be set out in regulations. We will provide illustrative regulations to reassure the House that we will be fair and proportionate in exercising the powers.
I voted for the 2006 Act, but I have to say to the Secretary of State that profit controls are pretty draconian, particularly for a Conservative Government. The Government appear to be extending them when we have historically dealt with what society refracted through this House as excessive profits through taxation, such as the windfall tax on banks and so on. The Secretary of State now proposes to extend profit controls to a major part of the economy, which would no doubt be loved by the Leader of Her Majesty’s Opposition. To a socialist such as me, a Conservative Secretary of State doing that seems a bit counterintuitive. Could he say a bit more about why he is extending profit controls?
Our march on to the centre ground carries on apace. [Laughter.] In response to the hon. Gentleman’s fascinating point, I gently reassure him that our approach will be fair and proportionate. This is not about bringing in wide profit controls. It is important to say that we recognise—our view is shared across the House—the pharmaceutical industry’s incredibly important role in medical advances, and we want Britain to be its European centre of operations post-Brexit. Many Members have campaigned about dementia and we hope that we can get a cure—it could happen in this country—and we recognise that profits are what fund the research that makes such remarkable changes possible.
It is important, however, that we are able to see what profits are being generated from a company’s choice between the PPRS scheme and the statutory scheme as a clue to whether the company is being fair to the NHS, which is funded by taxpayers. That is why the Bill’s measures strike the right balance.
I hope that not only the Opposition but Government Members are reassured by those comments in response to Rob Marris. Will the Secretary of State take this opportunity to emphasise the great contribution that the pharmaceutical industry makes not only in this country but as a global player? As he says, the profit motive is important to ensuring the competition that allows for reform and the new drugs that will transform our lives and the lives of future generations.
I am happy to give that reassurance. As I said, this industry contributes £56 billion to the UK economy, with tens of thousands of jobs. When the Prime Minister talks about where she sees our competitive advantage, she talks, first, about financial services and life sciences is the very next industry she mentions. I completely agree with right my hon. Friend about its incredible importance, not just to this country but to the future of humanity. That is why we seek in this Bill to establish a fair relationship between the NHS, which we have to represent as we are funding it through the tax system, and the pharmaceutical industry. It is also fair to say that there have been times when some pharmaceutical companies’ practices have been disappointing, and because we want to make sure that that does not happen and that we can continue with a harmonious and productive relationship we are proposing this Bill to the House.
We agree that this is not about profit controls—about having a fair return for investment made—but about tackling an emerging business model that could almost be seen as profiteering.
My hon. Friend is right about that. The nice way of putting it is that we are closing a loophole. If one were being less polite, one might say that it is a shame we are having to do that. None the less, it is important to do what we are proposing to the House.
We recognise that it has been some time since the Government consulted on the options, and I wish to reassure hon. Members and those companies in the statutory scheme that we will consult further on the implementation of a payment mechanism in the statutory scheme, including the level of the payment mechanism, before the regulations come into force. We estimate that 17 companies would be affected by the introduction of a payment mechanism, with the 166 companies that are currently members of the PPRS not being affected. Our proposals would save health services across the UK an estimated £90 million per year.
The second key element of this Bill amends the 2006 Act to strengthen the Government’s powers to set prices of medicines where companies charge unreasonably high prices for unbranded generic medicines. We rely on competition in the market to keep the prices of these drugs down. That generally works well and has, in combination with high levels of generic prescribing, led to significant savings. However, we are aware of some instances where there is no competition to keep prices down, and companies have raised their prices to what looks like an unreasonable and unjustifiable level. As highlighted by the investigation conducted by The Times earlier this year, there are companies that appear to have made it their business model to purchase off-patent medicines for which there are no competitor products. They then exploit a monopoly position to raise prices. We cannot allow this practice to continue unchallenged. My Department has been working closely with the Competition and Markets Authority to alert it to any cases where there may be market abuse and provide evidence to support this, but we also need to tackle it within our framework for controlling the cost of medicines and close the loophole of de-branding medicines. Although the Government’s existing powers allow us to control the price of any health service medicine, they do not allow controls to be placed on unbranded generic medicines where companies are members of the voluntary PPRS scheme. Today, most companies have a mixed portfolio of branded medicines and unbranded generic medicines. For that reason, all the manufacturers of the unbranded generic medicines mentioned in the investigation by The Times are able to use their PPRS membership to avoid government control of their prices.
It should be said that that practice is not widespread, but a handful of companies appear to be exploiting our freedom of pricing for unbranded generic medicines where there is no competition in the market, leaving the NHS with no choice but to purchase the medicine at grossly inflated prices or to transfer patients to other medicines that are not always suitable. Alongside the Government, many in the industry would also like to see this inappropriate behaviour stamped out.
I cannot give the right hon. Gentleman that indication because, as he will know, the CMA operates completely independently, and I therefore do not know what its findings are going to be. Of course, I would support any action that it recommended. I do, however, think that this Bill can give us some security in the House that if the CMA is unable to find evidence in the specific cases it has before it, we will be able to take action as a Government, provided the House is willing to support the Bill.
We have made some assessments of those things, but, in essence, our concern is that, even without comparisons with what is happening in other countries, we are talking about totally unreasonable behaviour. I mentioned one example earlier, but I can give another of a medicine whose price increased by 3,600% between 2011 and 2016. I just do not think we can justify that. Given that we want to have strong, harmonious, positive relationships between the NHS and the pharmaceutical industry, we need to eliminate the possibility of that kind of behaviour happening in the future.
This Bill therefore amends the 2006 Act to allow the Government to control prices of these medicines, even when the manufacturer is a member of the voluntary PPRS scheme. We intend to use the power only where there is no competition in the market and companies are charging the NHS an unreasonably high price. We will engage with the industry representative body, which is also keen to address this practice, on how we will exercise this power.
The final element of the Bill will strengthen the Government’s powers to collect information on the costs of medicines, medical supplies and other related products from across the supply chain, from factory gate to those who supply medicines to patients. We currently collect information on the sale and purchases of medicines from various parts of the supply chain under a range of different arrangements and for a range of specific purposes. Some of these arrangements are voluntary, whereas others are statutory. The Bill will streamline the existing information requirements in the 2006 Act relating to controlling the cost of healthcare products. It will enable the Government to make regulations to require all those involved in the manufacture, distribution or supply of health service medicines, medical supplies or other related products to record, keep and provide at request information on sales and purchases. The use of this information would be for defined purposes: the reimbursement of community pharmacies and GPs, determining the value for money that the supply chain or products provide; and controlling the cost of medicines. This will enable the Government to put the current voluntary arrangements for data provision with manufacturers and wholesalers of unbranded generic medicines and manufactured specials on a statutory footing. As the arrangements are currently voluntary, they do not cover all products and companies, which limits the robustness of the reimbursement price setting mechanism.
A statutory footing for these data collections is important so that the Government can run a robust reimbursement system for community pharmacies. I know that some colleagues have raised concerns about the implications of our funding decisions for community pharmacies, and today I want to reassure the House that this Bill does not impact on those decisions, nor does it remove the requirement for consultation with the representative body of pharmacy contractors on their funding arrangements in the future. However, the information power will give us more data on which to base those discussions and decisions, rather than relying on data only available to us under voluntary schemes and arrangements. The information power would also enable the Government to obtain information from across the supply chain to assure themselves that the supply chain is, or parts of it are, delivering value for money for NHS patients and the taxpayer—we cannot do that with our existing fragmented data.
In this regard, will my right hon. Friend be giving consideration to asking pharmacies that can prepare their own medicines—aqueous cream and things—as tremendous sums could be saved for the NHS? Will he be considering that in the overall scheme of getting information on the medicines they are providing?
The information we collect might make it possible for us more robustly to analyse issues such as the one my hon. Friend rightly brings to the House’s attention. Even if it does not, we should consider the issue, and I am happy to write to her to see whether we can make more progress in that area.
I also wish to reassure the House about the application of the information power to the medical technology industry. More than 99% of the companies supplying medical technologies to the NHS are small and medium-sized enterprises. Their products may be less high profile than the latest cancer medicine, but they are no less innovative or vital for patients. We have no interest in placing additional burdens on those companies.
The 2006 Act already provides powers for the Government to require suppliers of medical technologies to keep and provide information on almost any aspect of their business. This Bill will clarify and modernise those powers, and I am committed to exercising them in a way that is fair and proportionate to companies, to the NHS and to taxpayers who rightly demand value for money from the supply chain. Companies are currently required to hold information on their income and sales for six years for tax purposes. We will work closely with industry to ensure that the requirement to keep and record data does not significantly increase this burden.
My officials have already been in discussion with all parties across the supply chain—for both medicines and medical devices—about these powers to ensure that their implementation is robust but proportionate. We will provide illustrative regulations to aid debate on these provisions. I also want to reassure colleagues that, following Royal Assent, a full and open consultation will take place on the regulations specifying the information requirements.
I thank Ministers and their officials in the devolved Administrations for their constructive input and engagement with my Department on the Bill. Although many of its provisions are reserved in relation to Scotland and Wales, some information requirements that currently apply to England only could also apply in the territories of the devolved Administrations.
We intend to propose amendments to the Bill to reflect the agreement between the Government and the devolved Administrations, so that information from wholesalers and manufacturers can be collected by the Government for the whole of the UK and shared with the devolved Administrations. That avoids the burden created by each country collecting the same information.
The Welsh Government have also asked me to enable them to obtain information from pharmacies and dispensing GPs—a power that the Scottish Government and the Northern Ireland Executive already have. The Government will therefore propose an amendment to the Bill to amend the NHS (Wales) Act 2000 so that Welsh Ministers can obtain information from pharmacies and dispensing GPs.
Medicines are a vital part of the treatment provided by our NHS. Robust cost control and information requirements are key tools to ensuring that NHS spending on medicines across the UK continues to be affordable. They also help to deliver better value for taxpayers and to free up resources, thereby supporting access to services and treatments. This Bill will ensure that there is a more level playing field between our medicines pricing schemes while ensuring that the decisions made by the Government are based on more accurate and robust information about medicines costs. It will be fairer for industry, fairer for pharmacies, fairer for the NHS, fairer for patients and fairer for taxpayers, and I commend it to the House.
I thank the Secretary of State for outlining the overarching principles of this Bill, which, as we have heard, seek to allow the NHS to better control the cost of medicines and to close some of the loopholes, which have been the subject of blatant abuses in recent years.
I also thank the Minister of State for taking the time to meet me and other hon. Members last week to set out what the Government were seeking to achieve with this Bill. I only hope that this increased appetite for state intervention in the market that we have on display will spread more widely across Government. As my hon. Friend Rob Marris said, this kind of approach used to be called Marxist, anti-business interventionism. I never thought that I would say this, but, having heard what the Secretary of State said today, I believe that he is now a fully fledged Corbynista.
In all seriousness, it is clear that the market is not serving the patient or the taxpayer as well as it could. As we have heard, expenditure on medicines is a significant and growing proportion of the NHS budget, standing at £15.2 billion in England in 2015-16, an increase of more than 20% since 2010-11. One can only imagine where we would be now if the whole of the NHS had seen such an increase during the same period.
The incredible advances in science that we have seen in recent decades, often led by companies here in Britain, mean that people in this country are living longer, healthier lives than ever before. Although we celebrate that, it is also right that we work hard to secure value for money for the NHS to ensure that as many patients as possible can benefit from medical advances.
May I declare an interest as a type 2 diabetic and chair of the all-party diabetes group? Ten per cent. of the expenditure of the NHS budget is on dealing with diabetes and complications related to it. Does my hon. Friend agree that there may well be a desire to prescribe more medicines, which will cost more, rather than providing diabetics with a structured education which, if appropriately used, can bring down the cost of diabetes to the health service? It is not just about pills.
I thank my right hon. Friend for his intervention and pay tribute to him for his great work on diabetes. It is a matter that he consistently raises in the House, and he is right to do so. Of course he is right that there are many ways in which the diabetes bill can be tackled, and some of the shocking statistics that I have seen on the level of take-up of education courses is something on which we can do much better.
We support the broad aims of the Bill and of what the Government are trying to achieve, but we have a number of concerns, which I hope the Minister will address when this debate is drawn to a close, both about what is in the Bill and about the Government’s policies more widely on access to treatments.
Historically, the technical mechanisms used by the NHS to control expenditure on medicine have not set the public’s imagination alight, but in June we were all appalled to read reports that a small number of companies were exploiting loopholes to hike up the cost of medicines. In the past few years, we have also seen headline after headline about one effective treatment or another being denied to patients in desperate need on the basis of cost. I will address each of those issues after briefly touching on the Government’s proposal to harmonise the statutory and voluntary schemes for price control and on the new reporting requirements.
As we have heard, there are currently two schemes for controlling pricing: the voluntary scheme, the pharmaceutical price regulation scheme, which applies to the vast majority of suppliers; and the statutory scheme, which, in 2014 covered around 6% of branded medicine sales in the UK.
The voluntary PPRS scheme is based on companies making payments back to the Department of Health based on their sales of branded medicines to the NHS. By contrast, the statutory scheme operates on the basis of a cut to the published prices of branded medicines. These different approaches appear to have produced different results. Since 2014, the statutory scheme has delivered significantly lower savings than those of the PPRS, partly as a result of companies either switching individual products or switching wholesale into the statutory scheme, which is one reason why we have seen a significant reduction in the level of the rebate. Therefore, we support the rationale behind aligning the two schemes, which will create a more level playing field between companies and also give us a better chance of delivering greater savings to the taxpayer.
However, as we have heard, this Bill extends beyond closely aligning the two schemes and adds a new provision, giving the Secretary of State the power to require all medicines manufacturers and suppliers to provide information relating to prices.
My hon. Friend will know—I am sure that we all know this—that there is a difference between the list price that is advertised and the price that the NHS actually pays. That is a very important point, and we have to be very careful that, in gaining all this information, we do actually bring down the cost for the NHS. Those companies may well charge other people higher amounts, and we need to put that in context.
My hon. Friend is absolutely right. That is one reason why we must tread carefully, and hear what regulations the Government produce for consultation.
Some of the measures did not form part of the initial consultation, and there is a feeling that they have been added to the Bill at the last minute. Given the damaging cuts to the community pharmacy sector that were announced only last week, there is an anxiety about what costs could be created by any additional administrative burden.
Does my hon. Friend agree that pharmacists often know their patients much better than over-stretched GPs? They can also advise on the prescription of appropriate cheaper drugs. Does he also agree that, instead of putting further pressure on the pharmacy sector, the Minister should be supporting it to reduce the burden on GPs and to help the NHS save money?
My hon. Friend is absolutely right. There was real concern about the announcement last week. From the surveys that have been taken, we know that approximately one in four people who currently use the pharmacist would go to their GP if they were unable to seek advice from the pharmacy. We know the pressure that GP surgeries, and indeed the NHS, are under. We will have to watch carefully the impact of these proposals, which I hope will not be as serious as a number of Members fear.
The impact assessment does not offer many clues. It states that the additional costs that could be incurred
“have not been quantified, as their magnitude will not be known until after consultation on subsequent regulations.”
We need to tread carefully. The Secretary of State is asking us to give him new powers before setting out exactly how he will use them. That is a far from perfect state of affairs. I hope that we will get some further clarity when the Bill reaches Committee.
The hon. Gentleman has been fair in his broad analysis of the problems that we face between the statutory and voluntary schemes. It is a salutary lesson that whenever a statutory scheme is put in place, it can easily be gamed by anyone in the industry. Is he encouraged by the fact that the Association of the British Pharmaceutical Industry supports the Government’s proposal and wants to work with the Secretary of State so that we can, hopefully, reach an agreement that will work for the future, rather than a draconian recommendation being issued by Richmond House?
I agree that it is important that we keep the dialogue open with industry. We are proud of what the pharmaceutical industry can deliver for this country. It is a world leader and we certainly do not want to throw the baby out with the bathwater.
The Government will be aware that concern has been expressed by the medical technology sector that medical supplies are to be brought within the scope of a regime designed ostensibly to tackle a problem in the pharmaceutical industry. The medical technology sector has expressed concern that the Bill’s measures will put additional burdens on that sector and could lead to higher costs overall for the NHS. We welcome the assurances given by the Secretary of State today that the 99% of businesses in this industry that are small or medium-sized will not be unduly troubled by onerous additional reporting requirements. We hope to discuss that in further detail.
The former Minister for Life Sciences reported in February 2016 that the estimated income in England from PPRS payments in 2016-17 would be £518 million. That is considerably less than the amount received in 2015, at a time when the overall drugs bill is increasing, so that tells us that the scheme is not going according to plan. The Government have stated that the measures would save the health service around £90 million a year, so let us consider what has been going on and whether this Bill can address the issues that have arisen.
One of the benefits we have heard about is that the Bill will help to close the loophole that I referred to earlier which has led to extortionate prices being charged for a number of generic medicines. This occurs, as we heard, when a small number of companies purchase off-patent drugs for which there are no competitor products or there is a dominant supplier. They then remove the brand name, which takes the drugs out of the current pricing controls, allowing the companies to hike up the costs by many hundreds or even thousands of per cent. It is clear that some of these companies have made this strategy a key part of their business model.
In the past few months we have seen this House expose some of the worst excesses of capitalism, from Mike Ashley and his employment practices at Sports Direct, to Philip Green, but there should be a special category of obloquy for those who make themselves extremely wealthy by using loopholes in the law to prey on the sick and vulnerable and to extract obscene profits from our health service. An investigation in The Times highlighted how a small number of companies including Amdipharm, Mercury, Auden Mckenzie and Atnahs raised the cost of medicines by £262 million a year through this practice.
When a US pharmaceutical company hiked the price of HIV medication, people across the world were united in their condemnation, but it is less well known that at the same time the price of over 200 medicines more than doubled in this country, with 32 rising by more than 1,000% and in one case, as we heard, an unbelievable increase of 12,500%. An indication of how central to the business plan of some companies this practice has become can be found just by looking at their websites. The company Amdipharm boasts that it was sold to a private equity company for £367 million and talks of acquiring and commercialising niche generic medicines. Another of these companies, Concordia International, which now owns both Amdipharm and Mercury, is quite open about the fact that it
“specializes in the acquisition, licensing and development of off-patent prescription medicines, which may be niche, hard-to-make products.”
This may sound like a noble pursuit, but we know that it can in fact be code for establishing and then abusing a dominant market position to the detriment of vulnerable patients and the taxpayer.
My hon. Friend speaks of the abuse of a dominant market position, and this Bill extends the powers of the Secretary of State effectively to confiscate profits, rather than acting through taxation. Does my hon. Friend agree that the same approach may be worth considering in the case of a company such as Google? It has 85% of the world mobile phone market for Android operating systems, and people use Google for 85% of the searches carried out in the United Kingdom. That is a dominant market position and there are questions about the tax paid by Google. Perhaps profit confiscation might be considered.
My hon. Friend tempts me a little way outside my brief. I note, though, that our health service is entering into partnerships with Google, so I hope that questions are being asked by Ministers about the taxation arrangements.
We know that the vast majority of the generics sector is well controlled by competition and delivers value for money to the taxpayer, and we welcome the extension of pricing controls where competition has failed. Is the Minister confident, however, that the steps taken in the Bill are adequate? We have seen, as my hon. Friend the Member for Wolverhampton South West mentioned, how adept international companies can be at moving figures around to avoid taxation, and we clearly want to ensure that the system that we develop is not vulnerable to the gaming that we have seen elsewhere. I do not think for a minute that given the vast sums of money at stake, the companies will just shrug their shoulders and take the hit if they can avoid it.
I was more than a little concerned when I read a section about this Bill in a Concordia investor presentation, which said that in the past the Department of Health
“would seek informal negotiations with manufacturers where it believed there were pricing issues. We believe this step will remain.”
The notion of informal talks with officials brings up uncomfortable memories of the sweetheart deals between multinationals and Her Majesty’s Revenue and Customs. Although I am happy for chains of communication to be open with such companies, can the Minister reassure us that in all cases prices will be regulated through a transparent, formal process and not through behind-the-scenes talks?
Where the advertising budgets of pharmaceutical companies dwarf their R&D budgets, is there not an argument for the Government to look again at the tax position of those companies, as well as at the price of their products?
We will not get very far with this Government on corporation tax. They have been going in a direction that we would not have chosen. They have decided on the measures in the Bill as the best way to control prices and we will see how they get on. Will the Minister confirm that if it becomes clear in a few years that we have opened up another set of loopholes, we can expect the Department to take the lead and to be proactive in its investigations, rather than relying on a team of journalists to expose the problem?
We know that in Scotland the rebate that has been generated has been used to create a dedicated fund to give patients access to new medicines. Will the Minister consider investigating similar models and ensuring that the benefits of the scheme are used for the purpose of improving our frankly poor record in allowing patients to benefit from new medicines? We accept that there will always be challenges in matching funding to new drugs, but there is at least a degree of logic in allowing savings made in the drugs bill to be reinvested to enable new products to reach patients more quickly.
We welcome today’s report by the Accelerated Access Review, which sets out an ambitious plan that could see patients accessing new lifesaving treatments up to four years sooner. We hope the Minister will take this opportunity to give financial backing to the aims of the review by committing to using future rebates from the pharmaceutical sector to improve access to treatments. I ask the Government to seriously consider this, as there are growing concerns about access to new drugs and treatments in this country, and particularly about the widening gulf between the UK’s record on developing new drugs and the ability of the NHS to ensure that all patients benefit sufficiently.
The “International Comparisons of Health Technology Assessment” report published in August by Breast Cancer Now and Prostate Cancer UK shows that NHS cancer patients in the UK are missing out on innovative treatments that are being made available in some comparable countries of similar wealth. This is at the same time as a number of medicines have been delisted by the Cancer Drugs Fund after it overspent its budget, and the failure to extend this scheme to innovative treatments as well as medication. There was a report in The BMJ in July entitled “A pill too hard to swallow: how the NHS is limiting access to high priced drugs”. It came to similar conclusions when looking at new antiviral drugs that held out a real prospect of eliminating hepatitis C but which were very expensive.
Does my hon. Friend agree that we have to be careful not to discourage drug companies from doing research, particularly into those rarer illnesses, because they would not see a financial return?
My hon. Friend is absolutely right. We must be careful of the law of unintended consequences with this piece of legislation. Commercial decisions will be taken on investment if the return is not sufficiently high, so we have to get the balance right between encouraging investment and getting value for money for the taxpayer.
The BMJ report showed how NHS England, having been unable to budget for broad access to the drugs I mentioned, sought to alter the outcome of the National Institute for Health and Care Excellence process and, when it failed, defied NICE’s authority by rationing access to those drugs. There was also widespread controversy over attempts by NHS England to avoid funding anti-HIV pre-exposure prophylaxis by passing on responsibility to local authorities at the same time as cutting the public health budget allocated to councils. If we are to strive to create a level playing field for drugs companies, we should look to do the same for patients and their ability to access treatments.
Labour established NICE to speed up the introduction of clinically proven and cost-effective new medicines and procedures. An order was made by Parliament in 2001 to mandate the funding of healthcare interventions approved by NICE through its technical appraisal process. They were intended to be available to patients three months after publication of the appraisal. However, subsequent orders have chipped away at that, culminating in the current consultation by NICE and NHS England, which will again potentially delay or deny access to important treatments. Therefore, as well as looking at ring-fencing the payments received under this scheme, will the Minister look more widely at access to medicines? Successive studies have demonstrated that there is relatively low take-up of new medicines by the UK compared with other high-income countries. Not only does that let patients down, but it could impact on the future of the pharmaceutical industry in the UK, particularly given the sector’s concerns about the relatively small value of sales in the UK, compared with other countries, and given the uncertainty surrounding the future of the European Medicines Agency following our decision to leave the European Union.
I am sure Ministers are aware of the concerns that have been raised about that and of the need to ensure that the country is still seen as a leader in the research sector. The Prime Minster has said:
“It is hard to think of an industry of greater strategic importance to Britain than its pharmaceutical industry”,
and the Opposition agree, but we cannot be complacent about the state of UK pharma, particularly as investment decisions are often made by parent companies based in other parts of the world. I hope the Minister will take seriously the interrelationship between decisions about access to treatments and the future of pharmaceutical research and development in the UK, particularly when we know that other countries across Europe are using the current uncertainty as a result of Brexit to eye up opportunities to steal a march on our own industry.
To conclude, the Opposition support the broad aims of the Bill and what the Government seek to achieve in terms of better controlling the cost of medicines. In Committee, we will seek to explore in more detail the new information powers and the details of the impact of those new powers on the supply chain. We will also continue to hold the Government to account and ensure that patients are able to access the best available treatments without any unnecessary delay.
As any constituency MP will know, the pressures on the NHS grow year in, year out, partly because of our ageing population and partly because of developments in medical procedures—advanced drugs that can help to overcome illness, to continue a patient’s recovery or to stabilise their condition. That is why it is a constant battle for the NHS to root out waste and increase efficiency in the delivery of patient care without compromising that care.
The Nicholson challenge, launched in 2010, sought to save £20 billion over the last Parliament. As my hon. Friend the Minister of State said at Health questions, the NHS managed to achieve £19.4 billion—not £19.4 billion of savings that then went back to the Treasury, but £19.4 billion that was reinvested in front-line services and the NHS.
At the same time, though, we have great pressure, as my right hon. Friend the Secretary of State alluded to during his comments, on the ever-increasing drugs bill. In England, the drugs bill was £15.2 billion in the last financial year—£11.2 billion on branded medicines and £4 billion on unbranded, generic medicines. That represents a 20% increase since 2010 and a 7% year-on-year increase. With an ever-increasing, ageing population, those figures will continue to go upwards in future years.
We also see more and more new drugs being developed to combat illness. How may illnesses that were killers even during our lifetimes can now be cured or stabilised because of research and the work of pharmaceutical companies in developing the drugs that provide those results? Anyone will accept that the research involved in developing the drugs to tackle illness and disease is phenomenally expensive for the companies involved and sometimes takes many years. Therefore, we have to have a balance. The pharmaceutical companies, which have to invest horrendous amounts of money to find a new drug—a new cure or stabilising medicine—for medical conditions, obviously have to benefit from the horrendously large investments they make, but that does not mean that that should be a licence for them to simply charge what they like, for as long as they like, for the largest profits possible. There is a median between the two situations.
That was highlighted by the Times investigation a few months ago, in which one saw some of the price increases made by pharmaceutical companies that had, in effect, a monopoly on a drug because there was no competition. Let me give one or two examples to show the scale of the problem. Between 2008 and 2016, the price per packet of hydrocortisone tablets rose from 70p to £85—a 12,000% increase. With certain antidepressant tablets, one sees a 2,600% increase. With certain tablets for insomnia, there was a 3,000% increase. Frankly, even if this is with a relatively small number of drugs, it is totally unacceptable and extremely difficult to justify.
I accept that the cost of drugs to the NHS is extremely complicated. As hon. Members will know, branded medicines are controlled through the voluntary pharmaceutical price regulation scheme, which was agreed from 2014 to 2019. For those companies that choose not to join the PPRS, the Government operate a statutory scheme for branded medicines. The PPRS is based on a payment mechanism whereby companies make payments back to the Department of Health based on their sales of branded medicines, whereas the statutory scheme operates on the basis of a cut to the published list price of branded medicines. As a result, the statutory scheme has delivered significantly lower savings for the NHS, and that is clearly not satisfactory.
I welcome the Bill as a means for the Government to secure better value for money for the NHS and taxpayers. The first important change it will introduce is to clarify the law to allow, beyond any doubt, for the power of the Secretary of State to require a payment mechanism in the statutory scheme to limit the cost of medicines. That clarification will enable the Secretary of State to combat the current situation, whereby manufacturers and suppliers are allowed to choose the scheme by which they are controlled. That has led to numerous companies being covered by the statutory scheme rather than the voluntary scheme, because the statutory scheme makes less effective savings to the NHS and thus benefits them disproportionately.
In effect, the Bill will allow the Government to require companies to reduce the price of an unbranded generic drug, even if the company is in the voluntary scheme. The Government intend to use that power to limit the price of unbranded generic medicines when competition in the market fails and companies charge the NHS unreasonably high prices for them, as highlighted by the investigation by The Times.
According to the Library briefing, since the Bill’s publication the share price of Concordia International, which has been playing that game and owns AMCo, has gone down by 28%. That is good news.
I am grateful to the hon. Gentleman for sharing that information.
Equally important, the Bill will improve and enhance information collection so that we are better informed on a more consistent basis. That will ensure a better basis for assessing whether the supply chain as a whole, or a specific sector, provides value for money for the NHS. We cannot underestimate the importance of having more consistent, viable and useful information gathering, because information is power in so far as it helps to effect decisions and judgments. If one does not have consistent information collection or sufficient ranges of information, that leads to problems in rectifying issues where pharmaceutical companies are behaving not in the best interests of the NHS, but disproportionately in their own interests.
That is why the Bill’s impact and importance far outstrip the fact that it is modest in size, with only a few clauses. I am pleased not only that the Government have decided to take action, but that the Bill, subject to its Committee stage and to the consultation processes about which the Secretary of State has given assurances, commands the widespread support of Members on both sides of the House. I look forward to it reaching the statute book and, as the regulations are developed and the consultations ensure that we get it right, to it stopping some of the abuses that have cost the NHS so much. That needs to be done, however, without unfairly penalising the pharmaceutical companies, because, as I said earlier, they spend a considerable amount of time and a massive amount of money on developing drugs. For instance, in the past 30 years they have made considerable strides for patients with HIV/AIDS and improvements in care for cancer patients. I welcome the Bill.
Like Sir Simon Burns, I pay tribute to some of the research and development that has been done by the pharmaceutical industry. Europe has become the biggest research network in the world, and the biggest beneficiary of that has been the United Kingdom, through Horizon 2020 funding, in collaboration with others, and the European Medicines Agency. As others have said, however, both of those are going to change, so the pharmaceutical industry in this country will be rather nervous and anxious about its future.
Obviously, every new drug that the industry discovers creates an additional cost pressure for the NHS, hence the reason for the pharmaceutical price regulation scheme, which has existed since the 1950s. The current scheme has been in existence since 2014 and has brought significant benefits, as the shadow Minister, Justin Madders, has said. In Scotland it directly funds our new medicines and rare diseases fund. Ours is not a cancer drugs fund, so it gives us greater flexibility to treat very rare diseases. The patient’s condition does not need to be cancer, so we are giving Sofosbuvir for hepatitis C and Everolimus for tuberous sclerosis.
It is necessary, however, to have some form of management over the cost pressure, so the Scottish Government and my colleagues welcome the way in which the Bill tidies up the situation by closing some of the loopholes faced by the NHS. We have heard in particular about those who have a monopoly over generic medicines, whereby companies that are part of the PPRS can charge what they like for them. There needs to be much greater alignment and it needs to apply to all drugs, not just all companies.
The Secretary of State also mentioned the collection of data. As someone who has worked in the NHS, I have to say that it has struggled with that, and I have concerns about how it will work across the entire NHS, the entire pharmaceutical industry and medical technology and other supplies. We need to make sure that data collection is relatively simple and straightforward, and I also hope that we will bring together and use data that have already been collected.
I speak as a representative of one of the devolved nations and it is important that our Government are able to access those data easily. The Bill states clearly that the data gathered will be shared with Scottish Ministers, but on what basis? Will it be down to Scottish and Welsh Ministers to request data when they want them, or will they have to wait for an annual return, which might not happen when they want it to happen?
The Secretary of State said that there had been consultation, but I hope that that will continue, because the devil will be in the detail when it comes to the extension to all medical supplies. Scotland already uses a lot of central procurement to keep costs down, so it is important that the Bill enables, rather than interferes with, that.
The hon. Lady is making a powerful speech, as ever. May I pick her medical brains, as it were, on the question of medical supplies? They are defined by the National Health Service Act 2006 as
“surgical, dental and optical materials and equipment”.
Would she, as a clinician and a surgeon, include a CAT or an MRI scanner, as a piece of surgical equipment? It is certainly not dental or optical. It seems to me, as a layperson, albeit a lawyer, that it is not surgical equipment, but investigative equipment, and MRI scanners, as she and many other Members will know, start at about 2 million quid.
That is an area that needs to be looked at. A narrow definition that covers only blades and swabs and that does not take into account our hugely expensive infrastructure would not make sense. When we buy those kinds of machines in Scotland, we tend to consider central procurement and assessment, which opens up the potential for massive savings. A lot more work will have to be done in Committee and then in regulation to make the process function in the way that everyone wants it to function.
We need something much more radical. That aspiration may not happen with this Bill, so it will have to come later. Patients in the UK face a delay of about five years to access new medicines. If we compare cancer survival rates, we will see that we are often ahead when it comes to patients with early disease. We are one of the earliest nations doing population screening for breast cancer. However, we start to fall behind when it comes to people with more aggressive or advanced disease. I think that that is where our poorer outcomes and survival rates in comparison with European countries come from, because it is palpable on the ground. Part of that is sometimes the eye-watering initial prices of new drugs. Yes, we can set methods to try to control that, but a lot of those drugs do not get through the system introduced by the National Institute for Health and Care Excellence because they are expensive. In my interactions with some of the major pharmaceutical players since I have been in the House, I have discovered an appetite for a different way of doing it. Prices could be much lower but there could be a guaranteed number of patients before a drug became generic. We might need to look at risk sharing, because at the beginning we often do not know whether a drug will really be as good as it is cracked up to be. If the price starts, like some cancer drugs, at £100,000, we will struggle to get it through any of our pricing systems.
Something else we have to deal with is the question of how we expect pharmaceutical companies to make a profit on drugs that we never intend to use. We need new antibiotics, but any brand-new class of antibiotics—we have not had such a class for 30 years—will have to be left on the shelf. The existing system will simply not fund research for such a drug. While the Bill tidies up some of the issues that we face now, we need to do much more blue-skies thinking on equipment, drugs and the way in which we develop different things. Otherwise we will have interminable debates, such as those in which I have participated in Westminster Hall: in one debate, we say that we want more research on, for example, brain tumours, but the next week we have a debate on the fact that we cannot access a brand new drug that has been developed by the pharmaceutical industry in the UK.
The hon. Lady is making an informed and impassioned speech. Does she agree that we are entering a new landscape, and some drugs that have been discovered can be used for multiple treatments for different cancers, or even for other diseases? We therefore need an even more flexible approach so that we can benefit from those drugs and optimise patient outcomes.
Absolutely. We have entered the realms of using immunotherapies such as Herceptin for cancer. Equally, in the mid-2000s, people went to court to try to access that drug, which halves the risk of metastatic disease—and we end up spending much more on patients with that stage of the disease. We give Sofosbuvir in Scotland for hepatitis C because it is almost curative, so we have fewer new hepatitis C patients. We need a much more rounded way of looking at the costs and benefits of new drugs. The genetic drugs that we are likely to use in future will be even more eye-wateringly expensive, but then again, they may have a bigger impact.
The Bill tidies up loopholes, but I have concerns about the involvement of the devolved Administrations in the design of the schemes, access to data and ensuring that the funding for PPRS, which we use for our new drugs fund, is maintained. There is a call for us to do something much bigger and much more blue skies in future.
It is a pleasure to follow the extremely well informed speech given by Dr Whitford. I hope that Ministers will continue to study what happens in Scotland, as they do elsewhere around the world so that we can share information and copy best practice, whether in Scotland or elsewhere. I am aware of Scotland’s fine medical tradition and what it contributes to the United Kingdom.
I pay tribute to The Times for the investigation that it began on
The hon. Gentleman is extolling the work that The Times did in a series of articles this June. May I remind him and the House that in discussing the earlier adoption of drugs, we should bear in mind the work that The Times did in the 1960s to uncover thalidomide as a terrible drug. It was never licensed in the USA because of concerns that testing was not adequate. Yes, we want things to go to market earlier when that is possible, but we have to be extremely careful.
If memory serves, it was a team of investigative journalists from The Sunday Times that focused on that issue. However, the hon. Gentleman is right: we should pause and reflect, and be thankful for the tremendous tradition of British investigative journalism, which helps us and is our ally in Parliament. It is important to put that on the record. What The Times did contributed to the Secretary of State launching the Competition and Markets Authority inquiry. I am pleased that that happened.
A number of speakers have made a valid point, with which I strongly agree, that it is absolutely vital that we continue to have a strong pharmaceutical industry in the UK. In the months before she was appointed, the Prime Minister said:
“It is hard to think of an industry of greater strategic importance to Britain” than the pharmaceutical industry, and she was absolutely right. The briefing from the House of Commons Library says that the output of the pharmaceutical industry in 2015 was £12.7 billion, which amounts to 8% of the UK’s entire manufacturing output. Let us look at one or two of the larger players.
GlaxoSmithKline is active in more than 150 markets around the world, and has 110,000 employees globally. It has 80 manufacturing sites, and it is the largest vaccines business in the world. Of particular significance is the fact that it conducts all its research in two research hubs: one in Philadelphia and the other in Stevenage in the United Kingdom, where a number of my constituents are proud to work. AstraZeneca is another large pharmaceutical company that is active in the UK. It has 6,700 UK employees, and supports a further 35,000 jobs in the UK. It operates across seven sites, including one in Luton, close to my constituency. Again, a number of my constituents are rightly proud to work there.
As the Secretary of State said, the medicines bill for NHS England, at £15.2 billion in 2015-16, is the second largest cost for the organisation, after staff costs, so it is absolutely vital that we secure value for money in this huge area of spend. It is a concern that the CMA has spoken of “excessive and unfair prices” and has referred to companies that have “abused a dominant position”. There have been incidences of no competition or insufficient competition, so it is right that the Government have stepped in to deal with the issue. That touches on a broader philosophical point. We had a brief exchange on this earlier. In a response to me only a couple of days ago on the morality of business behaviour, the Prime Minister wrote:
“we need to ensure that the free market has an ethical basis”.
I absolutely agree.
The Library briefing for the debate looks at the top 11 medicine price increases, ranging from ascorbic acid, with an eye-watering 1,012% price rise, right up to Doxepin, which had a 5,281% price rise. In some cases—if some of the ingredients and some of the raw material for a particular drug are suddenly in short supply—a price increase such as that may be justified, but the Department knows that, in the majority of cases, there is no valid reason for the huge increases. That is why the Government have, properly, acted. Therefore, I welcome the Bill’s powers to reduce prices, to impose price controls and, importantly, to gather information. However, I have a couple of questions for my hon. Friend the Minister on gathering information.
Getting information is vital, and I am pleased that the Government have included measures in the Bill to obtain complete information. Is the Minister satisfied that there is sufficient analytical ability in his Department to really know what is going on? I ask that for this reason. I have had the huge privilege of working with members of the senior civil service in a different Department in the past two years, but sometimes we expect civil servants to have a range of skills that it is not fair of us to expect them to have. Is there the necessary commercial expertise in his Department to really work out what is going on with the additional information that he and his officials will have at their fingertips? Is there a scheme for secondments between pharmaceutical businesses and the Department of Health, so that his officials really know how the market works and any particular games that might be played? That is important.
I am aware that one permanent secretary in post at the moment had a secondment earlier in his civil service career to Diageo, but it is important that the Minister and the permanent secretary ensure that there is that capability in their Department. If it is not there, I hope that he and the ministerial team will take steps to ensure that it is. I say that because, if we look at some of the emails that came into the public domain as a result of the investigation by The Times—some were brought to light through freedom of information requests—it seems that there was not quite the level of serious analysis, probing and inquiry that we would all, including the Minister, have liked to see.
The Government have introduced the Bill because they care passionately about the future of our NHS. They will do everything necessary to protect it and that very much includes getting value for money from the drugs that the NHS pays for. On the Conservative Benches, we value and care about the role of the free market. We know that it is the greatest economic mechanism in the history of mankind for creating wealth and for relieving poverty. It is because we care about it that we will act to reform where that is necessary, whether that be in the interests of the NHS or any other part of our country.
This is an uncontroversial set of measures and I confirm my support for the Bill as it stands. The great strides in medical science over the past decade and beyond are obviously to be celebrated, with cutting-edge new treatments for life-threatening and life-shortening conditions, including a number of rare diseases and cancers, offering many people the hope of improved health, longer life and a quality of life that in the past would not have been possible. As well as the enormous benefits it brings to patients, the life sciences industry makes an incredibly valuable contribution to the UK, and it is only right that we acknowledge that today. However, there is an inevitable cost attached to the triumph of modern medicine, and the challenge is to ensure patient access to new treatments as quickly as possible, while ensuring value for money for the NHS.
The Bill seeks to address some of the shortcomings. It addresses clear abuses of the current system and I think that it will bring greater consistency to the existing arrangements for controlling the cost of medicines new and old. As I have said, I find myself in agreement with the proposals.
It is good that so many companies recognise their responsibility for keeping the branded medicines bill in check by signing up to the pharmaceutical price regulation scheme. Under the scheme, manufacturers pay a rebate to the Department of Health to cover expenditure on branded medicines above agreed limits. It is a responsible approach, helping to ensure that patients can benefit from access to novel drugs in a way that is sustainable for the taxpayer. However, I agree with the Secretary of State on the need to address the current disparity whereby the statutory medicines pricing scheme delivers lower savings than the voluntary scheme. Those differences are expected to widen, which is clearly not in keeping with the spirit of either arrangement, so it makes sense that they should be more closely aligned. As he said, we have to remove the incentive to shift from one scheme to another.
I particularly welcome the proposals to strengthen the authority of the Secretary of State to intervene where unbranded medicines are priced excessively. The NHS and patients benefit immensely from medicines, which were once available only at high public expense, becoming available far more cheaply after the patent expires and generic products come on to the market. We should recognise the great value that the competitive market brings, saving the NHS more than £13 billion every year, according to the British Generic Manufacturers Association, but we also know that the overall cost of generic items is increasing at a faster rate than branded items, and that there have been some outrageous increases, to which other hon. Members have referred, in the price of some individual generic drugs in recent years when there is only a single company producing that drug. It looks like a clear case of profiteering, where the NHS is being ripped off.
Let us be clear what the implications are when a particular company makes an excessive profit from increasing the price of a drug in that way. It means that other NHS patients, particularly those in more marginal areas that do not get the attention that they deserve, lose out. There is less money to spend, for example, on teenagers with mental health problems or learning disabilities. There is a price to be paid for that excessive profiteering. It is utterly unethical behaviour. I hope that the Competition and Markets Authority can find a way to take action against these companies, which appear to have constructed a business model to exploit the loophole.
As hon. Members have said, a number of generic medicines increased in price by more than 2,000% in the last decade. The most horrific example I have come across is a medicine that increased in price from £13.98 in 2005 to £632.96 in 2015, a rise of more than £600 per item dispensed. It is utterly despicable for any private company to think that it can do that. The Government are right to take action to end that outrageous practice.
Generics account for three quarters of prescription items dispensed in the community. In those cases where competition fails to deliver value for money, it is important that there are measures at our disposal to control prices and to tackle abuses that could place intolerable pressure on NHS budgets. It makes little sense that generic medicines can be controlled through the statutory scheme, but that the Government are currently prevented from stepping in when a company’s branded products are regulated through the PPRS. It seems clear that we should remove that anomaly. I should add that, in using these powers to introduce price controls, the Government should of course exercise caution and guard against any unintended consequences that may impact on the viability of smaller companies. I am sure that the Government will be alert to that.
The aims and provisions of the Bill are admirable, but it is only part of a much wider debate about how we can sustain access to groundbreaking new treatments when the NHS is in the middle of the longest financial squeeze in its history. One intervention from a Government Member on the Secretary of State drew attention to the fact that the total bill for drugs is rising at an unsustainable rate. Sir Simon Burns also raised this question, and we have to address that because the NHS will not be sustainable at the current rate of increase in cost.
It is no secret that the NHS has struggled to adapt to modern medicines, particularly those that carry a large budgetary impact. Both NICE and NHS England have had great difficulty in figuring out which medicines to approve and how those medicines are to be afforded and brought to patients. Recently, NHS England has delayed funding for the new hepatitis C treatment, so I was interested in the points made by the SNP representative, Dr Whitford.
We also have the ongoing and deeply unsavoury case of the PrEP, or pre-exposure prophylaxis treatment. Not only is NHS England taking its legal challenge to the bitter end to avoid having to pay for the drug, there have been reports of it pitting patient groups against each other by saying that patients could miss out on vital treatments for cancer or rare diseases for children should PrEP be funded. We do not want to get into comparing the rights and interests of one group of patients against those of another in that way.
Earlier this month, NHS England and NICE launched a consultation on proposals to change the way some drugs are funded when there is a high cost involved. NHS England and clinical commissioning groups are legally required to fund drugs recommended by NICE as being clinically and cost-effective, normally within three months of the guidance being issued barring unique circumstances. Under the new proposals, if NICE recommends a drug that will bring an estimated cost to the NHS above a certain amount—£20 million is the suggested figure—NHS England can go back to NICE and ask it for longer to roll out the medicine if it is unable to agree a lower price with the manufacturer. Surely that is precisely the opposite of what we ought to be trying to achieve as regards speedier access to new drugs that are coming on stream. Ignoring questions about how that somewhat arbitrary cost threshold was arrived at, there is a concern that this is a creeping step towards the rationing of approved treatments in the NHS. It seems to me to be an admission that the NHS cannot afford to pay even for the drugs that are found to be cost-effective by NICE; similar concerns have been raised by Nicholas Timmins, that highly respected observer who is a senior fellow at the King’s Fund.
The great worry is that opening up the debate on how quickly or slowly approved treatments can be adopted will put us on a slippery slope to a new discussion about whether approved treatments should be adopted at all, and at the very least UK patients will be further disadvantaged—the SNP spokesperson has already made the point that we compare very badly with other countries —and there will be more delays in getting access to new cost-effective treatments.
Does the right hon. Gentleman recognise that we are one of a tiny handful of OECD countries that allow that opening price to be set completely by the pharmaceutical industry and to be set as high as it likes?
I note that point. I suppose my overall point is that given the unsustainable increase in the total drugs bill and given the actions that NHS England and NICE appear now to be taking, it seems that we will be in a more difficult position in getting speedy access to new drugs that can be life-saving. The Government need to reflect on that. The hon. Member for Central Ayrshire made the point in her speech that this Bill tidies up things that have to be tidied up, but there is a much bigger debate about how on earth the NHS can afford vital treatments that in other countries patients are getting access to much sooner.
If we are approaching a situation in which we are unable to cope with new treatments that have been judged by an arm’s length expert body, NICE, to be clinically effective for patients and cost-effective for the NHS, it is yet more evidence that the NHS needs more resources, and I repeat again to the Minister—he will be sick of hearing me say it—that at some point the Government must recognise that they are simply drifting towards a crash with the NHS. We face an existential challenge that this evening’s debate has highlighted and that has to be confronted at some point. I urge the Government again to consider a cross-party approach so that we can ultimately achieve, in discussion with the public, a long-term and sustainable settlement for the NHS and care that recognises both this dramatic increase in the cost of drugs and that all our loved ones want to have access to those drugs in their hour of need.
We should also be mindful of the potential impact of Brexit on the life sciences industry and the additional challenges we face in keeping the NHS medicines bill under control. If trade between the UK and other EU countries becomes subject to customs duties, import VAT and border controls, thereby increasing costs to the life sciences industry, that might in turn drive up the costs of new medicines to the NHS, and impact on access for UK patients to the most innovative new treatments.
Finally, we also need to make sure that evaluation processes and methodologies are fit for purpose. Traditional appraisal methods and notions of cost-effectiveness are unsuitable for many modern medicines, especially for drugs of immense scientific innovation that target just a small number of patients, but the NHS has been slow to respond to that. The Cancer Drugs Fund is a case in point—established as a sticking plaster after a cluster of promising drugs were judged not to be cost-effective. While it is almost certainly the case that many of those treatments came with too high a price to be routinely funded, few would deny that they were being evaluated under outdated processes that could not fully capture their value. Many rare disease treatments suffer from the same problem.
Companies have a duty to ensure that their medicines are fairly priced, but NHS England and NICE also have a duty to make sure that their evaluation processes and decision-making criteria are fit for purpose, so that new medicines are given a fair hearing without some of the excessive delays we have seen in the recent past. We owe it to patients to make sure that happens.
I support this tidying-up measure and, in particular, the ending of the outrageous practice of a number of companies profiteering at the expense of NHS patients, but this debate has also raised a much bigger issue about how we in this country afford groundbreaking treatments that keep our loved ones alive.
It is a pleasure to speak in support of the Bill, which affects my constituents in north Wales as it applies UK-wide. It is an example of the Government responding reasonably quickly to issues that have been brought to their attention, and they deserve some credit for that.
My principal reason for supporting the Bill relates to the vast increase in the costs of certain off-patent drugs, as we have heard today, and its impact. I first had contact with constituents in June about a loophole in existing regulations resulting in some old generics being hiked up in price by up to 12,000% over the course of eight years. This followed the investigation in The Times in which 50 drugs were identified as costing the NHS about £262 million a year. To put that into perspective, it is equivalent to 7,000 junior doctors. I believe that there have not been similar price increases in mainland Europe, interestingly, which tends to suggest that we have some failures in our regulations. We also discussed this matter in the Health Committee and we saw evidence of correspondence that had highlighted it for at least one year.
We should not refer just to costs, of course. There are also big impacts on patients when their drugs are withdrawn. That issue hit home when I met a constituent, Eira Roche, at one of my constituency surgeries in the summer. She has given me permission to talk about her story. She was diagnosed with hypothyroidism—an underactive thyroid—in 2006. She had the typical symptoms of weight gain, thinning hair and brittle nails. She was tired all the time, she had pain all over and she had a low mood. She was prescribed T4—thyroxine—which is the usual treatment in such circumstances. She was also given a cocktail of other drugs, because the T4 simply did not work. She was on quite strong medication for an extended period.
Eira saw her endocrinologist at Glan Clwyd hospital in my constituency in 2014, and he started her on a drug called T3—liothyronine—which she describes as an absolute revelation. In fact, she said that she was so much better than for years: her brain fog lifted and her energy levels soared. When she tried to reduce the dose of the drug, she found that her symptoms began to return and she had to have some time off work. She is now a teaching assistant and caretaker at Ysgol Bodfari.
The drug Eira is taking, liothyronine, was acquired from GlaxoSmithKline in 1992 by Mercury Pharma, which is now part of AMCo. To put the costs into perspective, a packet of the drug cost £34.65 in 2011, but this year the cost is £258.20, which is a 645% increase. Shockingly enough, that increase is relatively insignificant compared with some other examples, but it is still quite significant. I understand that drugs costing £3.4 million a year in 2010 now cost the NHS over £20 million a year.
My local health board, Betsi Cadwaladr University Health Board, is understandably concerned, as are other parts of the NHS in the UK, and it has looked at withdrawing the drug. That makes Eira feel very anxious. She is worried about the impact on her colleagues if she is unable to work, and about the impact on her pupils with special educational needs and other needs. She also has two children of her own. The Department of Health has asked the Competition and Markets Authority to investigate this issue. That may or may not result in a good outcome, but it is not a sustainable way forward: it will not close the loophole or stop the same thing happening again. That is one reason why we need this Bill.
The generics market is generally competitive, with fair prices for all. I believe it accounts for £4 billion of the £15.2 billion spent by the NHS on drugs per annum. However, the £4 billion figure represents a 20% rise during the past five years. There is a statutory system, which can in theory control the prices of both branded and generic drugs, but there is the loophole I have mentioned.
The loophole involves old generics that are usually available via one manufacturer or supplier that also happens to market branded drugs and is a member of the voluntary pharmaceutical price regulation scheme in relation to them. Their membership of the PPRS means that, under existing legislation, they cannot currently be subject to the statutory scheme, even for their generic drugs. There are concerns that this loophole has been actively exploited by some. Indeed, it has been a deliberate business model to purchase off-patent medicines for which there are no competitor manufacturers—in other words, where there is no competition. Hon. Members might ask why other drug companies have not sought to manufacture such drugs if they are sold in such large quantities. Introducing new competition is not always feasible, however, because of the time it takes to obtain a rival licence from the Medicines and Healthcare Products Regulatory Agency, and because the size of the market is often small once such medications are produced and the manufacturing process is often difficult.
I support a change in the primary legislation—the National Health Service Act 2006—to allow the Government to consult on and bring forward the enforcement of statutory controls on all generic drugs to require companies, if necessary, to reduce the price of the drugs or to impose other controls. This amounts to an extension of the existing deterrent powers that Secretary of State has not yet used to direct the prices of drugs that already fall under the statutory scheme. Assuming the Bill receives Royal Assent early in 2017, we would need investigations and discussions with the companies concerned where issues have been raised. It is important to be fair not only to the taxpayer, but to such companies. If not, there remains the ultimate risk that such products are taken off market.
Where does that leave my constituent, Eira? I am sure she is hoping that the Bill will go through. She will be looking to the CMA to come forward with some good news. She may be tempted to purchase the liothyronine from abroad or online. Interim prescriptions to allow patients like her to continue to receive her prescription need to be considered. If the Government feel that the drugs can be acquired at a much better rate—from abroad, for instance—such people would very much appreciate assistance in doing so. For everyone, the routine and systematic monitoring of drug costs will clearly be important.
I will briefly mention the two other principal elements of the Bill. The first is the proposed change to the statutory scheme. In autumn 2015, the Secretary of State issued a statutory consultation on strengthening the statutory scheme. The Bill proposes to bring the statutory scheme in line with the voluntary 2014 PPRS for all manufacturers or suppliers that are not PPRS members. There are 166 companies currently represented in the PPRA, and £8 billion is currently spent through that mechanism. Interestingly, £647 million is brought back to the taxpayer each year when the agreed cap is exceeded. There are just 17 companies in the statutory scheme, through which £l billion is spent. There is evidence of companies switching from the voluntary to the statutory scheme for financial reasons, meaning that there is a £88 million annual loss to the taxpayer. It should be borne in mind that these companies are mostly small and non-UK domiciled ones.
Changes to the statutory scheme will require companies to make payments back to the Department of Health based on their level of sales to the NHS—this can be in addition to other mechanisms—whereas the existing statutory scheme operates via a cut to the published list price, which is currently set at 15%. The existing statutory scheme therefore brings in less money, but also results in inequity to companies, risks to supply and uncertainty of financial outcomes for complex reasons that, fortunately for hon. Members, I will not go into. The Bill also proposes new penalties for non-compliance and for the recovery of payments owed through the courts. Ultimately, the Bill creates a more level playing field between companies in the two schemes. It merely extends what is in place for the vast majority of companies, so it is not in any way unreasonable. I do not believe there should be major concerns with regard to the impact on research and investment.
The other element of the Bill involves information powers. The Bill brings together the information requirements for NHS medicines and other supplies in one place in the 2006 Act. It will enable the Government to make regulations to obtain information on the sales and purchases of medicines and other medical supplies from all parts of the supply chain—from the manufacturer to distribution to the pharmacy—for defined purposes. This will improve the data that inform reimbursement arrangements for community pharmacies and GP practices. We hope that it will help to ensure value for money for the NHS.
These are positive proposals, but it is important that they are not overbearing on the companies concerned. In particular, I want to make the case for medical technology and devices businesses, which have not been subject to such data collection in the past. The Secretary of State has given us some reassurances about that today, but we need to recognise that a large proportion of them—99%, I think—are small or medium-sized enterprises, so we need to work with the industry to develop appropriate regulations. We need to avoid onerous and certainly routine data collection beyond what is already required by Her Majesty’s Revenue and Customs.
In summary, I support the principles of the Bill—in fact, the Association of the British Pharmaceutical Industry largely supports the Bill as well—but the detail will be subject to consultation during 2017. I look forward to scrutinising the progress of the Bill over the coming months.
It is a pleasure to follow my hon. Friend Dr Davies and to hear many of the points he made. He spoke of the NHS spending £262 million a year on 50 drugs; that is actually £262 million extra that we are spending on those drugs courtesy of the greatly increased prices. That really brings home the problems here and why the Bill needs its Second Reading.
As many hon. Members have already focused on a range of issues, I will focus in particular on generic drugs and some of the huge price increases we have seen. It is right to say—and this was perhaps touched by the Secretary of State in response to the intervention by Rob Marris—that it is not unreasonable for a pharmaceutical company to make a profit in exchange for investment in developing a new drug and bringing it to market. But that is what our patent system is for. The patent is there to protect for a period of time the ability of the company to charge a reasonable price to reflect the risk it took in its investment.
The key point is that the drugs we are considering are now out of patent. The company has had a reasonable period of time to make its investment back. The issue is that there is only a very limited supply of them. It is only right that we deal with what is an emerging business model. There can be no two ways about it. Some of the names on the list of companies, such as AMCo and Atnahs, seem consistently to have unusually high increases in prices, in the thousands of per cent. It is clear that a business model is developing to take advantage of a loophole in the legislation and ultimately not to make a profit but to profiteer, at the expense of the NHS and people who need those treatments. I am sure we can all think of instances where drug company lobbying points to patients who are unable to get treatment; this is exactly the sort of thing that means people cannot get treatment.
It was highlighted earlier that it is slightly ironic that here we are, as Conservatives and under a Conservative Government, arguing for price controls. But this is not about intervening in a market but about intervening to deal with market failure, where the normal procedures of competition are not producing a fair or reasonable outcome either for the NHS or for the patients on whose behalf we are providing products.
I went to see the amazing work being done on brain tumour research at Plymouth University recently—the skills and the groundbreaking research that will bring real benefits. But that is not the business model of the companies the Bill deals with. Their model is to look for a drug that needs to be prescribed and has only one supply, then buy it, get hold of the supply and jack the price up. That is nothing to do with delivering new and innovative products. The Bill is therefore very welcome, as it looks to intervene in that situation.
It is also right that to be able to tackle the problem we need information. Let us be blunt; if a company is looking to put its product price up by 12,000% it is not going to be particularly co-operative with an inquiry into whether that is fair, so it is right that the Secretary of State will have powers to require that more information be supplied.
That is good to know.
We have seen work the Government have done in other sectors, for example, on information in the energy sector. The Bill deals with a particularly unique practice, where there is, in effect, only one customer, the NHS, and only one supplier. I am struggling to think of many other industries where that is replicated. That is why these price rises are so disgraceful. This industry is about profiteering from illness and pain. There is nothing else like that.
May I suggest another industry it might be worth looking at, where this situation obtains, namely the defence supply industry—not all of it, but parts of it?
I thank the hon. Gentleman for that intervention. As a member of the Public Accounts Committee I have spent plenty of time looking through examples of defence procurement that went wrong. The Minister might be new to the Department of Health but he certainly is not new to defence procurement. It is noticeable that much of what now makes its way to the PAC for a review of what went wrong concerns legacy issues—for example, the military flying contract—rather than modern procurement. But I am conscious that with Mr Deputy Speaker in the Chair I need to get back to the price of drugs for the NHS.
Looking through the evidence it is clear that the current system of regulation is not effective. Companies can, in effect, put their branded products into the voluntary scheme and use that as a way of jacking up costs for their generic products. That is just not right. As other Members have touched on, we are facing demands and pressures on the NHS. I have no problem with companies that give a good service charging a fair price and making a fair return on their investment.
That is clearly not what is going on with this business model. We can see numerous examples, in particular in the chart put together by the House of Commons Library, which shows increases of thousands of per cent. across a number of products. It is impossible to believe that such increases are going on for any of the input materials for those products. As we have said, this is flagrant racketeering and profiteering at the expense of patients and of people in pain. Even if the drug is still provided, that money should have been spent on other NHS services.
I am therefore pleased at the almost unanimity breaking out in the House on the proposals. They will clearly need to be discussed in more detail in Committee. But it is the right time for the Bill. It is not about tackling fair and legitimate profits but about getting rid of profiteering, which is why it has my full support.
It is a pleasure to be called to speak and to follow my hon. Friend Kevin Foster.
From what I understand, the Bill will close the loopholes and gaps that so obviously exist in the current powers attributed to the Secretary of State; hon. Members who have spoken before me highlighted many of those. The measures are important, to ensure that we have value for the taxpayer across the medicines budget, but I take issue with the inclusion of medical supplies and “other related products” in clause 6. The clause introduces a new information power for the Secretary of State. Although I welcome that in principle, I fear it may prove quite onerous for the many small and medium-sized enterprises that supply on this side of the business and dominate the medical supplies industry.
I am sure that much of the required information is already collated by each company, but it is important that it can be transmitted easily and in a timely fashion. I listened carefully to the Secretary of State. He implied that he does not want these measures to be burdensome, but I seek the Minister’s assurance on that. As my hon. Friend Andrew Selous highlighted, the ability to use the data effectively is also important. There is no point in collecting lots of data and not being able to use them.
Coupling those two points together, does the hon. Lady agree that it might be advisable for the Government to look at some sort of threshold—say, a turnover threshold for a company—below which the information would not have to be supplied or might instead be supplied to a lesser extent or in a lesser quantity? That would address the issue of how onerous the requirement might be, but could also address the issue of whether the Government have the capacity to crunch the figures thereby generated.
The hon. Gentleman makes a very good point. There is already a cut-off for some of the data collection of, I think, a turnover of £5 million. Perhaps we could have clarification on that.
What concerns me more is who will define what is classified as medical supplies and other related products. As Rob Marris alluded to earlier, how long is that piece of string? Proposed new section 264C to the National Health Service Act 2006, which is inserted by clause 6 and supplements proposed new sections 264A and 264B of that Act, requires the Secretary of State—I quote from the explanatory notes to the Bill—
“to consult any body (such as the Association of the British Pharmaceutical Industry) which appears to the Secretary of State to represent manufacturers, distributors and suppliers of health service medicines, medical supplies or other related products required for the purposes of the health service in England or the United Kingdom before making any regulations under section 264A or 264B.”
That is quite a mouthful.
If the definition of “medical supplies” is unclear, how will the Secretary of State know who to consult? He indicated that he has already had discussions with medicine and medical devices suppliers, but I fear that there might be many more product areas out there that have been missed out of the initial discussions. I therefore ask the Secretary of State to provide clear guidance on what he understands as
“medical supplies and other related products”.
For example, do they include in vitro diagnostic products? This is an area of medical supplies with which I am very familiar. If they include IVDs, will he agree to consult the British In Vitro Diagnostics Association, the trade association that represents this industry across the UK? This is an important area of the life sciences industry, with nearly 900 million pathology tests performed every year and approximately 70% of every clinical decision being made using some form of IVD. If they are to be included in the Bill, it needs to be around the table to participate.
I conclude by saying that in general terms I am in favour of the Bill, as it will ensure good value for money for the taxpayer and, ultimately, the patient. At the end of the day, we need to be thinking about the patient. Clarification is required on various parts of the Bill, but I am sure that that will be sorted out in Committee, and I am happy to support it.
It is a pleasure to follow my hon. Friend Maggie Throup.
We all know the background and I will not waste everybody’s time by going over it again. We know about the ageing population and about bearing down on the costs, to which my hon. Friend John Glen and Norman Lamb alluded earlier. We know that advances in science are going faster than we can legislate. One of my local clinical commissioning groups, Ipswich and East Suffolk, suffered an exorbitant increase in Epanutin capsules two years ago and had to find another £600,000 in six months. Looking at drugs more widely, as my hon. Friend James Cartlidge mentioned earlier, not prescribing paracetamol in that particular CCG would save £1 million a year.
The measures in the Bill aim to manage the cost of drugs. The measure on efficient data collection, so that we start to have good decision-making based on evidence, is also most welcome. Last autumn, the Secretary of State consulted publicly on how to address the problem of excessively priced unbranded generic medicines, and the industry and others fed back. They were glad of the dialogue. As I said, drug costs are unsustainable. A saving of some £90 million per health area was identified. My own CCG area could save £1 million per annum from unused repeat prescriptions. Nationally, it would mean that more than 12,000 more community nurses could be employed. We need to start making these decisions about where we want to be spending our money. With the pressure on social care, something alluded to by the right hon. Member for North Norfolk, these are decisions we are going to have to make as a Government and as patients.
The current system allows for some to be inside and others to be outside the system. That limits its robustness. It is for this reason that I support the Bill wholeheartedly. The system does not target those who do not play fair and we need to stamp down on them. It is better patient outcomes that I am passionate about. We all play a part, including the pharma industry, due in no small part to the unique infrastructure in this country. This industry is important to us. As my right hon. Friend Sir Simon Burns, my hon. Friend Andrew Selous and my right hon. Friend Mark Field have all alluded to, we need to be supportive of those companies that work positively for patients and engage in trying to find solutions. Indeed, the Association of the British Pharmaceutical Industry supports the Government increasing their powers where market failure has occurred. There is a balance to be had to ensure that new drugs are developed.
That brings me to the matter of repurposed and off-label drugs, those that have another use than that for which they were originally formulated, for example Everolimus, Rituximab, Cycloserine, Viagra and Thalidomide. As Rob Marris said, Thalidomide was originally developed for morning sickness. Latterly, it has been found to be very beneficial for the treatment of some cancers and skin conditions. We need to understand new uses for approved drugs for the speediest of transitions from bench to bedside. As they have not gone through new trials, we need to be mindful that they are not new drugs; and just because the target is, for example, prostate cancer and not breast cancer, these drugs should still be costed accordingly.
I wonder whether the hon. Lady remembers the time we spent in the House last November debating the Off-patent Drugs Bill. I flagged up the concern that a doctor prescribing a drug with a licence for a use takes precedence over an off-patent drug that may actually be the same. With the sort of gaming we have seen, there is a real concern that drug companies will tweak a drug in the slightest manner and then start selling it to the NHS at hundreds and thousands of pounds, when in actual fact an off-patent drug would do the same job. That has still not been dealt with.
I thank the hon. Lady for making the point so succinctly. I am also grateful to the Secretary of State for his clarification and the comments that have been made about the medical technologies industry, which I believe needs looking at. I would be grateful if we could know whether the savings made are likely to be reinvested in patients, particularly given my position as chair of the all-party group on personalised medicine, and into the latest medicines and treatments.
The Bill is designed to stop individuals making vast sums of money and taking advantage of a loophole. I back the Government’s aim of value for money and fair prices for optimum patient outcomes. I am heartened by the cross-party support for the Bill and look forward to it making positive progress.
I thank all Members who have made contributions to the debate. We find ourselves in a situation where we have some time available, which is amazing.
Let me refer to the interventions we heard in the early part of the debate, because a range of interesting points have been raised. Dr Wollaston made the point that the Bill provides the opportunity to look at drugs that have not been licensed, such as Lucentis and Avastin, which is not licensed for age-related macular degeneration but is so needed by that group of people. I was pleased to hear the Secretary of State say that he would look at that.
My hon. Friend Rob Marris, in a number of amusing interventions, talked about policy on profit control of the pharma sector and found that the Conservative party is marching on to the centre ground—or has perhaps gone past the centre ground.
My right hon. Friend Keith Vaz talked about the proportion of the NHS budget spent on dealing with diabetes. He was concerned about the increase in the drugs bill and suggested the use of structured interventions, not just more drugs, because such a large proportion of the NHS budget is being spent on diabetes.
My hon. Friend Mark Tami made the important point that we need to ensure the measures in the Bill do not act as a disincentive for pharma companies to conduct research into rarer conditions. I think that hon. Members who have contributed know we are walking the line in terms of making savings but making sure there are not disincentives.
Sir Simon Burns welcomed the Bill. He talked about our ageing population—we returned to that with our last speaker—and the increasing drugs bill. He talked about the importance of new drugs, but also the need to deal with unacceptable profiteering, something referred to by a number of Members.
Dr Whitford talked about the UK having the biggest research network in the world. She talked about change and the fact that the pharma companies would be nervous and anxious. She welcomed the tidying up aspect of the Bill and I think the general view of Members in all parts of the House was to welcome that. Like a number of hon. Members, she talked about not just enabling the management of cost pressures but doing something more radical. That has been a real flavour of the debate: using this as an opportunity to do something different. I agree with her concerns about the data collection aspects of the Bill and I will say more about that. I also agree that we need to do something more radical. She talked about tackling the five-year delay to access new medicines and rightly pointed out that that is probably where our poorer survival rates are coming from.
Andrew Selous commended The Times for investigating this issue. He also talked about the information powers and questioned whether the Department of Health had the analytical ability to use the data being gathered. That is an important question. If new data needs to be gathered, what are we going to do with it?
Norman Lamb acknowledged the value of the competitive market, but talked about the sometimes outrageous increases in the price of generic drugs—and we have heard some staggering examples today. He gave the example of a rise of £600 per item dispensed in one particular case, and he hopes, as other hon. Members do, that the Competition and Markets Authority will take action. That has been a key theme in tonight’s debate.
The right hon. Gentleman also talked about not wanting to pit the needs and interests of some patients who need drugs such as PrEP against those who need other drugs. I agree, and I do not think that we should go there in our debate. He spoke about the slippery slope when we get into debating whether to delay adopting even approved treatments. In his view, that provides more evidence that the NHS needs more resources.
Dr Davies talked about the impact on his constituent of a drug prescribed to her that helps her to work and increases her energy levels, the cost of which has increased by 645%. We must maintain a focus on the impact on individuals of the decisions that we make. She has found a drug that suits her, and it would be dreadful for her if it were withdrawn. The hon. Gentleman also talked about the difficulties of introducing new competition into the market. His constituent is hoping that the Bill goes through, as are many others here tonight, and wants action on competition and markets. Let us all hope this goes through.
Kevin Foster talked about intervention to deal with market failure. In his view, we need to separate out the companies that are doing good research, such as the brain tumour research that he has recently seen, and those that have nothing to do with producing new and innovative products, but are just making money.
I would like to cite for my hon. Friend and the House the Library briefing, which shows that it is not exactly as cut and dried as Kevin Foster seemed to think. It tells us that the Competition and Markets Authority took action against pharmaceutical companies with regards to generic pricing, and that GlaxoSmithKline and a number of other companies were fined £45 million when it was found that payments had been made in order to prevent the antidepressant medication, Paroxetine, being offered on the generics market. GSK is a great pharma company for coming up with new drugs, but it crossed the line in this case, according to the Library briefing, so it is not always either/or when it comes to these pharma companies.
No, but I think the hon. Member for Torbay was talking about companies that are not doing any research, but just buying up generic products and profiteering from them. There has been general condemnation of those sort of companies on all sides.
I want to be clear about this point. I think the shadow Minister would probably agree that certain names keep on popping up, particularly in The Times investigation, of companies that seem to be regularly involved in some of the most eye-watering price increases and involved in the mixed model. This Bill is about tackling anyone else who might be thinking of following that kind of business model as a way of exploiting the NHS for money.
Very much so.
Jo Churchill welcomed the Bill and talked about the fact that individual CCGs could save £1 million on unused repeat prescriptions. A number of different forms of savings could clearly be made. She talked about the pressure on social care, and I join her in my concern about that. The right hon. Member for Chelmsford spoke earlier about an ageing population and the need for drugs, but older people also do not want to be isolated. It is worrying that 16,000 cases of malnutrition were found last year with an average age of 64 among those cases. People need social care, and I hope that the new Chancellor will listen and bring forward funding for social care in the autumn statement, because people need more than drugs.
As my hon. Friend Justin Madders made clear earlier, Labour supports the broad aims of the Bill and what the Government are seeking to achieve—better control of the cost of medicines. However, as my hon. Friend also outlined, we have a number of concerns, and I hope that the Minister will address them in his closing speech.
As well as taking the understandable measures to collect pharmaceutical data and manage costs, the Bill also introduces provisions to manage the purchase of other medical supplies. I was glad to hear the Secretary of State raise in his opening speech the issue of the impact on the medical supply sector, but I have heard concerns expressed that the medical technology sector sees the new information measures as “onerous”. Maggie Throup mentioned that, too. There is a concern that measures in the Bill fail to take into account the unique characteristics of medical devices and the medical device industry. I hope that they will start to be taken into account as the Bill progresses. There is seen to be a danger that the measures will put additional burdens on that sector and the NHS, and lead to higher costs. I hope that that is not the Government’s intention; it would be ludicrous if costs were increased by a Bill that is designed to manage them.
We need to bear it in mind that the medical technology industry employs around 89,000 people in the UK, has an annual turnover of over £17 billion and has seen employment growth of around 11% in recent years. Some 99% of the UK’s 3,310 medical technology firms are SMEs, with 85% of them having a turnover of less than £5 million. The cap levels at which data could be collected were mentioned earlier. We should bear it in mind that we are talking about an awful lot of small companies.
The Bill imposes a regulatory burden on all companies in the supply chain. The reporting requirements will affect all firms producing medical supplies, including the very small organisations. The issues we have extensively discussed on pharmaceutical pricing bear no relation to the price of other medical supplies. The example of a particular type of product was mentioned earlier, but they are or seem to be treated the same way in the Bill.
On the scale of the burden being imposed, the Government’s impact assessment is not much help. It says:
“The main costs will be on manufacturers, wholesalers and dispensers. These costs have not been quantified, as their magnitude will not be known until after consultation on subsequent regulations.”
Measures seem to have been bolted on to this Bill, as Members have mentioned, at the last minute, but because they could have a negative impact on the medical technology sector, we need to be very aware of them. The new information powers proposed by the Government are being put forward at a time when manufacturing firms are going through the uncertainty surrounding this country’s leaving the EU. These measures can only add to that uncertainty. As I said, 99% of the medical technology firms are SMEs, with 85% of them having a turnover of less than £5 million.
Notes on the financial implications of the Bill put forward a curious position that “no policies will be directly implemented as a result of these changes. Their implementation would require additional future changes to secondary legislation and additional Impact Assessments to assess their cost effectiveness.”
Ministers are asking us to change primary legislation to give the Government new information powers, but the details and impact of those new powers on the supply chain will emerge only in future. That level of uncertainty is unacceptable, and we will seek to amend the relevant clauses in Committee if we feel that this still needs to be resolved.
Importantly, the information powers will also impact on dispensing GPs and pharmacists. I note that the BMA was not represented at the workshop held by the Department of Health on the information powers. We wait to hear, but I would find it unusual if our hard-pressed dispensing GPs would welcome the additional work required of them to provide and disclose information to the Government.
The other part of the supply chain affected by the new information powers will be pharmacists. The Government have just imposed punitive cuts on pharmacists, which we discussed in the House last week. I am still deeply concerned about those cuts. Ministers do not seem to understand what they are doing to the sector. On Friday, an independent community pharmacist in my constituency told me that he estimated that the Government cuts would cost him £86,000 a year, and that he envisaged an average cut of £60,000 for many pharmacies. That will certainly mean staff cuts, but it also means potential bankruptcies for the pharmacies that will be hardest hit.
In relation to that, and the new information powers that the Bill imposes, Pharmacy Voice told me that
“small volume pharmacies are the hardest hit by the proposals and many face a funding cut of around 20% in 2017/18 from the imposition of cuts announced…They do not have teams of administrative staff who can respond to demands for information, and the likelihood is that the NHS would insist on information being provided in a specific format.
It could be information that they do not currently analyse. For example, when a pharmacy buys stock for dispensing, it may also include purchases of medicines for sale over the counter. The overall discount the pharmacy gets on the order is not allocated to each item, and pharmacies could not provide the actual price paid per item.”
On behalf of the pharmacists that it represents, Pharmacy Voice wants to ensure that the cost of meeting the Government’s information requirements is fully funded by the NHS. It feels that the imposition of cuts has already jeopardised the future of the pharmacy sector, and that of small pharmacy businesses in particular. Can the Minister assure me that the cost of the information that must be gathered under the new information powers will not impose an additional burden on pharmacists?
The Labour Opposition support the broad aims of the Bill and the measures to control the costs of medicines, but, as I said earlier, we are concerned about the information powers that the Government want to take, which are considered to be “onerous” by the medical supplies sector. We want to be reassured that they are not. The work and the costs involved could deal yet another blow to the pharmacy sector, which, as I have said, is still counting the costs of the Government’s imposition of funding cuts amounting to 12% for the rest of this year and over 7% next year. We will table amendments in Committee relating to the work and the costs involved in information-gathering.
We also ask Ministers to give serious consideration to using all future rebates from the pharmaceutical sector to improve access to treatments for patients. A number of Members have referred to the need to examine that much bigger issue of access to drugs and treatments, and I hope that Ministers will take the opportunity to do so as the Bill progresses.
What a great pleasure it is, Mr Deputy Speaker, to stand before you after this important debate, with a little time in which to satisfy as many Members as I can, while recognising that the Committee stage will begin shortly and we shall then have an opportunity to discuss points with which I cannot deal today. I thank everyone who has taken part in the debate. We have heard a number of excellent contributions, some of which showed a surprising knowledge of the intricacies of pharmaceutical pricing but were none the less very welcome.
The Bill deals with a treasured national institution, our national health service, and with the need to secure the best possible value for the taxpayer. Medicines represent the second largest cost to the NHS, after staff, and it is important that we do not pay over the odds. The level of interest and the quality of the contributions that we have heard today have shown how important that is to all Members. I find it refreshing that a debate involving the NHS should feature the degree of consensus that has erupted across the House today. I am led to believe that—as has been pointed out by other Members—this is a relatively unusual occurrence, so I shall enjoy it for as long as I can.
The debate reinforces the principles of securing the best possible value for the NHS, making decisions on the basis of good-quality information, and supporting this country’s innovative pharmaceutical industry, to which several Members have referred. Those are principles on which we can all agree. However, the debate has raised a number of other issues, some of which I hope to clarify for the benefit of Members who have commented on them. In one of her closing comments, Barbara Keeley sought to link last week’s announcements about community pharmacy funding with the Bill. I can reassure her that there is no link whatsoever between the Bill’s provisions on information collection and the announcement about decisions on community pharmacy funding. The funding changes will come into effect in December and are not reliant on any of the provisions in the Bill, and the provisions in the Bill will not change those decisions.
Perhaps I was not clear enough, but I was not making that point. I was making the point that the cuts imposed by the Government will mean that some community pharmacies—the smaller ones; the independent ones—will not have the necessary staff. If the Government are imposing a new information-gathering requirement, who will carry out that task? As I said, there may be staff cuts amounting to between £60,000 and £80,000, and people will simply not be able to absorb a new requirement.
Just to reassure the hon. Lady, I can tell her that the establishment cost for each pharmacy is currently £25,000, and there will be a reduction in that cost rather than a much larger cost. She must be referring to companies that have several establishments, rather than to individual ones. I will touch on the points that she has raised about information gathering in a moment.
We have heard a number of allegations during the debate, starting with those made by Justin Madders, who I am sure will be joining us shortly, that the Conservative party appears to have broken out in a rash of Corbynism. I can assure the hon. Gentleman categorically that that is not the case. What we are seeking to do through the Bill is address points, which have been made by hon. Members on both sides of the House, about the potential for exploitative pricing, particularly of unbranded generics that are of low volume, in circumstances where there is no competition from an alternative supplier in the market. I believe that there is considerable agreement on that across the House.
I welcome the support for the Bill from the Labour Front Bench, from the Front Bench of the Scottish National party and from the Liberal Democrat spokesman, Norman Lamb. They all support the principles behind the Bill. I look forward to what I hope will be a rapid conclusion to proceedings on this short Bill in Committee. Doubtless hon. Members will be raising important points in Committee, but I am sure that we will continue to have constructive contributions throughout.
The hon. Member for Ellesmere Port and Neston mentioned difficulties of access and funding for new medicines. These points were also raised by Dr Whitford. The NHS is investing in innovative medicine and, in the first year of the current voluntary scheme, medicines covered by the innovation scorecard saw an increase of more than 18% compared with growth of about 5% in medicines not on the scorecard. That illustrates that we are prepared to fund patients’ use of innovative medicines under the existing scheme. However, we recognise the need to continue to ensure patient access to new medicines. That is why my right hon. Friend the Secretary of State referred earlier to the accelerated access review, which was announced earlier today. That will accelerate the speed at which 21st-century innovation in medicine and medical technologies can be taken up by patients and their families through the NHS. That will present a real advantage—bringing forward innovations from pharmaceutical companies, not only in this country, and driving them through for use in the NHS.
A number of hon. Members have referred to the investigative work of The Times in helping to highlight the problems with unbranded generics. I would like to add our welcome to the investigation that was undertaken by those journalists, but gently to point out that the Government were already aware of some of the problems. Indeed, we published a consultation in December last year raising that issue, and I think it was partly in the light of that that The Times decided to do its work. I do not wish to decry that work in any way, however. It was clearly helpful.
We have referred cases to the Competitions and Markets Authority, as Rob Marris mentioned. The CMA has imposed fines in one case, as he said, and it is expecting to reach a final decision on another in the coming months. Two more cases were opened in March and April this year. We are looking to refer examples of bad practice to the relevant authorities when we come across them.
The hon. Member for Central Ayrshire asked how the data collection would work. That point was also raised by other hon. Members. We already collect significant data from the supply chain for medicines under the voluntary scheme and the statutory scheme. We collect data from manufacturers and wholesalers of generics, and from pharmacies themselves. As part of developing the regulations, and of the consultation that will take place before we introduce the scheme, we are looking to identify as many automated data collection solutions as possible, in order to minimise the burden to which the hon. Member for Worsley and Eccles South referred. In particular, we recognise that some of the medical products companies are small companies, and we want to make their burden as light as possible.
The hon. Member for Central Ayrshire referred to the devolved Administrations and how we will work with them. Our intention is that they would be able to access data not on a timing of our choosing, but as they require, and that, again, will be undertaken in a manner that we hope to capture in a memorandum of understanding so that there is clarity between each Administration and ourselves as to how that will work.
The right hon. Member for North Norfolk asked in particular about how we intend to control the medicines bill overall, and a number of Members have mentioned that. The cost of medicines across the NHS are rising quite rapidly. That is a concern, and it gets to the heart of why we have sought to introduce this legislation.
We are looking in the first place to align the statutory and the voluntary cost control schemes for the supply of medicine. At present, companies may decide to join either scheme depending on the other benefits they perceive in the schemes, but we believe that the financial benefit to the NHS of each scheme should be the same. Our proposals will put beyond doubt the Government’s powers to amend the statutory scheme to achieve this objective, which the impact assessment has indicated should save the taxpayer some £90 million a year. Draft regulations of these provisions will be available at the Committee stage.
The second element of the Bill strengthens the Government’s powers to set prices of medicines where companies charge unreasonably high prices for unbranded generic medicines. In most cases, competition works well to keep prices down. However, when it does not, and when companies are making excessive profits, the Government should be able to take action. This Bill closes a current loophole in the legislative framework. We are all agreed across the House that we cannot allow profiteering at the expense of the NHS.
Thirdly, the Bill will strengthen the Government’s powers to collect information on the costs of medicines, medical supplies and other related products from across the supply chain. Putting existing voluntary provision of information regarding medicines on a statutory footing will enable the Government to set more accurately and fairly the reimbursement arrangements for community pharmacies and dispensing GPs. In addition, the power will provide vital data to underpin the reformed statutory scheme for controlling medicine pricing, and will give us more evidence about whether companies are making excessive profits at the expense of the NHS.
I want to reiterate what my right hon. Friend the Secretary of State said in his opening remarks to assure the House about the impact of the information powers on the medical technologies industry. It may surprise Members, and in particular Opposition Members, that the powers to require information from suppliers already exists in section 260 of the National Health Service Act 2006—[Interruption.]—which the hon. Member for Wolverhampton South West says from a sedentary position he remembers bringing into effect, but we think that those enforcement powers are draconian and wish to make them more proportionate. The Government have never in fact used the powers under the 2006 Act, and we want to marry powers for information gathering with those we will have for medicines, so that there is no confusion in future about which information regime applies.
First, may I say in passing that it does not sound very draconian if the powers have never been enforced? Section 260 of the 2006 Act refers to medical supplies and defines them, as I said earlier, as
“surgical, dental and optical materials and equipment”.
Will the Minister look at that definition, because it seems to me that it is not as wide as many people think, and therefore there is a way to get around it if certain technological companies wish to do so, such as the manufacturers of MRI scanners, which I do not think is the intention of the House. Will he look at that definition?
I think the hon. Gentleman may be making a pitch to the Committee of Selection and I would be delighted to see him committing his considerable intellect to this topic. I think we will spend much of our discussion refining the definitions of what information is appropriate and how it will be gathered.
The Government intend to table amendments to the Bill to reflect how the information-power provisions will apply in the devolved Administrations. The amendments will ensure that the Government can collect information that relates to devolved purposes and share it—with appropriate safeguards relating to confidentiality—with the devolved Administrations, enabling them to use the information for their own purposes. To avoid duplication, we have agreed with the devolved Administrations that the Government will collect information from manufacturers and wholesalers for the whole of the UK while each country will collect information from the pharmacies and GPs in their territories.
The degree of consensus and the support that we have received from across the House, for which my colleagues and I are extremely appreciative, has made this a remarkable debate. Medicines are a vital part of the treatments provided by our NHS. Robust cost control and data requirements are key tools to ensure that NHS spending on medicines across the UK continues to be affordable while delivering better value for taxpayers and freeing up resources, which supports access to services and treatments. The Bill will ensure a more level playing field for our medicine pricing schemes while ensuring that Government decisions are based on more accurate, robust information on medicine costs. This will be fairer for industry, for pharmacies and for the NHS, patients and the taxpayer. I am pleased to commend this Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.