I beg to move amendment 218, in clause 242, page 216, line 37, after ‘that’, insert ‘—() ’.

With this it will be convenient to discuss Government amendments 219 and 220.

The amendments deal with failure, which we talked about earlier in relation to the Secretary of State’s intervention powers. They make it clear that the Secretary of State has powers to intervene to exercise  functions where there has been a significant failure. Again, this is part of ensuring that the Secretary of State’s overarching duties concerning a comprehensive service, and his accountability to Parliament for delivering that, are secured.

Mr Gale, would it be in order for us to discuss clause stand part at the same time, given that there is only one group of amendments?

Yes, certainly.

I am grateful for that, Mr Gale. I want to speak to the amendments, because they are important, and the Minister will be surprised to learn that I support them. They try to bring some clarity to a clause that, quite frankly, in the original Bill—I do not think that we had time to reach it—was a bit of a sword of Damocles, to say the least. The National Institute for Health and Clinical Excellence has been operating for more than 10 years. This clause is headed:

“Failure by NICE to discharge any of its functions”.

That is hardly a vote of confidence in an organisation that has been in existence for more than 10 years.

NICE will be given a lot more work under clause 231, which we have not debated this time around, which introduces quality standards. We were told at the first sitting of oral evidence for the original Bill—I think these figures are correct—that NICE had worked through some seven quality standards so far and there was an expectation that it would work through about 150 more, which would pass down to commissioning consortia and providers to be used for the commissioning and provision of national health services. At the time, I related that to Joseph Stalin, but the Secretary of State did not agree. The quality standards will certainly have cost implications, not only for NICE in the time that it takes to work through all 150 of them but for the national health service as a whole. Costs are an issue, as we have said.

It worries me that the clause as unamended is a bit draconian, to say the least, in what it could do to NICE, which has had a level of independence from politicians for some 10 years. It has not always worked properly, and I could give the Committee my views about that. At least Government amendment 220 ensures that the Secretary of State would have to be a little bit transparent about why he was taking action against NICE, in as much as he would have to publish his reasons for doing so. Government amendment 219 also clarifies in subsection (1)(b) that the Secretary of State may take action against NICE if it

“is failing or has failed properly to discharge any of its functions” only if “the failure is significant.” The original wording was simply

“to discharge any of its functions,” and few institutions do that entirely to people’s satisfaction. I am pleased that the amendment now states that the failure must be significant. We could debate what that means, and perhaps the Minister will tell us in his reply exactly what is meant by significant.

One of the reasons why I wanted to speak is that during the previous Parliament I chaired the Health Committee. In 2007-08, we reported on the National  Institute for Health and Clinical Excellence, which was effectively nine years on rather than 10. One of the things we discovered was the issue of political interference with NICE. We took evidence, and two instances were brought to our attention regarding what was deemed political interference.

“During the inquiry witnesses expressed concern that health ministers had undermined the work of NICE. We were given two examples. The first involved the risk-sharing agreement established to allow NHS patients access to treatments for MS”, which some Members may remember.

“The second involved the breast cancer drug”

—which I do not think I can pronounce—

“trastuzumab”.

Herceptin was its common name, so I think we will stick to that as that my Yorkshire accent can handle it a little better.

“NICE evaluated beta interferon and glatiramer acetate for MS in 2001. In 2002, it did not recommend the treatments as neither was judged to be cost-effective. A public outcry followed. Witnesses believed that as a result of the outcry the Department of Health sought a way to make the drug available despite the NICE recommendation. The Department came to an agreement with manufacturers of the drugs whereby the drug could be used in the NHS as part of a 10-year trial. It was agreed that if the drug was less effective than £36,000 per QALY, industry would recompense the NHS.”

We are now nearing the end of those 10 years. I have recently had correspondence from a pharmaceutical company that wants to chat to me about how it has worked out. The agreement said that the NHS would pay only if the treatment was effective with patients. There is still a big issue around that. The report did not endorse it at the time; we were quite sceptical and we were not sure whether, in the end event, barristers or clinicians would decide whether it was effective.

My right hon. Friend has raised a very important issue, because the model that is being used, where the drugs company shares the costs according to patients’ benefits, is the model upon which the Government wants to base the entire future funding of drugs. It is value-based pricing. Understanding whether that works in practice is absolutely critical.

My hon. Friend is right; that is exactly what we are talking about. I do not want to be diverted, but when we were taking evidence in that particular inquiry, the Office of Fair Trading published a report and there were major issues. We will see what happens with the two horses the Government are going to ride. On the one hand we will have value-based pricing for new medicines, but on the other we will have the Pharmaceutical Price Regulation Scheme for others. I do not know how it will balance out, but we do not have time to debate it as it is not relevant to the clause.

Does my right hon. Friend agree that another issue pertinent to the Bill, which we cannot discuss because the Government have not brought it forward, is what NICE’s role will be in respect of value-based pricing? Somebody must still determine the cost benefits of medicines. Indeed, somebody must negotiate with pharmaceutical companies over price; we assume that that will be NICE. Will that be one of the duties it will have to discharge in future?

Perhaps that is the case—

Order. The right hon. Gentleman knows what I am going to say. I know that he has huge expertise in this field and he is widely respected for it, but we really must concentrate on the clause. This is not an opportunity to discuss the whole past, present and future of NICE.

I agree entirely, and I will not be diverted at all, but clause 242 has major implications for NICE and the work that it does. The clause does not focus only on quality standards; it is about NICE’s overall work. NICE is doing some brilliant work and has done so for many years.

Our second evidence session on political interference revealed the witness’s concern about the role of the then Secretary of State role in the availability of Herceptin. My hon. Friend the Member for Leicester West will know that, because the then Secretary of State was her predecessor in her constituency. In November 2005, North Stoke primary care trust reversed its earlier decision to refuse the drug to a patient with early-stage breast cancer after the then Secretary of State announced that she was “very concerned”. She called a meeting with PCT officials and asked them to consider assessing the receptor status of their patients on the assumption that if the drug became available it could be licensed quickly.

I remember that well. Herceptin had not been assessed by NICE, or licensed for use in early-stage breast cancer, but evidence of the drug’s efficacy for that type of cancer had been published on the manufacturer’s investor website. The patient had threatened to take the PCT to the High Court to contest its original decision not to allow her access to the drug, and shortly afterwards the Department asked NICE to examine the drug early. In evidence to the Select Committee, Professor Mike Richards, the national cancer director, said that that was “a political decision”. When Professor Rawlins of NICE gave evidence, he stated:

“The scientific basis for Herceptin being effective and safe in early cancer had not been demonstrated...Added to which, at that stage the company had not even made an approach to the regulatory authorities, it had not made an application, so it was a surprising remark from a Secretary of State.”

It was indeed.

On the day that that happened, there was a big rally by one of the big breast cancer charities in Westminster Hall, and I went over there. It was an effective lobby, and someone from south Yorkshire with early-stage breast cancer was there. I said that we will have to see how things develop, but the then Secretary of State moved on. Presumably she had been pleasing the crowd, but pleasing the crowd is sometimes dangerous, and that is what happened on that day. The consequence was that NICE felt that it had been the victim of political interference in its duty, which it believed was independent of politicians. It thought it was its duty to look at things in a proper way.

During that inquiry, we questioned the then Minister of State, my right hon. Friend the Member for Bristol South (Dawn Primarolo), who is now a Deputy Speaker, about political interference in NICE’s work. She said:

“I would absolutely stress that it is not the role for ministers to contradict, override or directly seek to influence a process where NICE are already engaged in consideration.”

She added:

“NICE’s final guidance will be final.”

We said:

“We note that it is not the role for Ministers to directly or indirectly seek to influence the NICE decision-making process.”

That is on the public record, and was published in reports at the time. The previous Government did not argue against it, which was embarrassing. There were two instances and in one there was certainly direct action by a Minister to destabilise NICE and to attack its independence. As we have not had the opportunity to discuss the clause earlier, that needs to be said, and I would like the Minister to respond, because even with the amendment, which I am happy to support, I would like to know exactly what role this and any other Government will have with regard to NICE when the Bill is enacted. NICE has done some brilliant work over the past 10 years, and it is a great pity for large parts of the national health service that, for whatever reason, quite a lot of what it says is not mandatory, so it is not implemented. It would have been better for the NHS and patients if it had been.

It seems that we are moving into an era in which quality standards issued by NICE will be the norm for commissioners and providers. In those circumstances, we must make sure that there will be no political interference for any reason if we are going to accept even this amended clause. I would be interested to see what the Minister has to say, because I genuinely believe that institutions like NICE are here for the good of patients in particular and its independence should be defended at all costs.

I have a quick question for the Minister about the clause. In the previous Committee, we touched on the question of whether guidance is just that, or whether there will be more compulsion for practitioners and CCGs to accept it. Will it be considered a failure to discharge their functions if CCGs do not apply guidance, ignore it or make up their own? There is clear guidance about cataract surgery, for example, which is being ignored, because there is a need to stretch the money allocated to PCTs at the moment. Will there be more compulsion to follow guidance from NICE?

I shall answer that point first. The question we are debating in this clause is whether there is a significant failure by NICE. The hon. Lady’s question is about the way in which a clinical commissioning group behaves with regard to advice that it receives.

They do interrelate.

They do, but not through this clause. They interrelate through the function of the NHS commissioning board, which we discussed earlier. It is through both the authorisation and assessment processes, and the use of clinical guidance, that we have those mechanisms in place to deal with those particular concerns.

The right hon. Gentleman rehearses some powerful concerns about lessons that need to be drawn from past experiences. We have tried to incorporate those into the way in which, for the first time, we enshrine in statute  the independence of NICE. It is worth reminding ourselves that at the moment NICE is a special health authority. It is not the fully independent entity that it will become as a result of the Bill being enacted. It is a special health authority that was created, if you like, at the whim of a Secretary of State and could simply be disposed of by a Secretary of State through a negative resolution. As a result of this Bill, it will require full parliamentary scrutiny and approval for any further changes of the sort that could have been undertaken so easily in the past.

It is also worth stressing that alongside the power to intervene where there is significant failure—I will come on to what “significant” means in a moment—there is a duty on the Secretary of State to operate in a way that maximises and facilitates autonomy in the system. We want to see that particularly in regard to bodies such as NICE. The right hon. Gentleman referred to Professor Mike Richards and his continuing role as the national clinical director for cancer services. I would like to take the opportunity today—not least because it is his birthday—to pay tribute to him for the work that he does and wish him many happy returns on his 60th birthday. I have not had a chance to put that on the record in any other way. He may not thank me for sharing his age with the Committee, however.

He does not look it.

I agree. We were also asked about value-based pricing. That took the debate beyond the confines of the clause, but I want to share this information. The Government have been consulting on proposals on the new value-based approach to pricing branded medicines. We began the consultation in December, it closed on 17 March and we expect to publish our response shortly. There will be ample opportunity to study it and, hopefully, take it into account in our debates on Report.

I said that I would speak about the word “significant”. The courts have taken the approach of interpreting expressions using the term “significant” in the context of the underlying philosophy of the legislation in which the expression is used. There are a couple of cases where this has been explored. There is the Pedley case of 2009. There is also a quote from the case Re A (children) (care proceedings: threshold criteria) CA 2009. In essence, courts will look first at the definition in a dictionary, and they will then set that in the context of the Bill. In this case they will, I am sure, look at issues of autonomy as against the Secretary of State’s evidenced judgment about whether there has been a significant failure.

That means that if NICE does not recommend an important drug or recommends a drug that is controversial, the Secretary of State has no power to intervene. NICE is an independent body and must be allowed to issue guidance free from political interference. In making its recommendations, NICE takes into account all the latest clinical evidence and issues final guidance on the use of a drug only after careful consideration of that evidence and wide consultation with stakeholders. I hope that that reassures the right hon. Gentleman.

The right hon. Gentleman is right to rehearse the fact that there is a process in relation to quality standards. We say that there will be a library of up to 150, and the National Quality Board is working to commission those  from NICE. I hope that I have addressed the concerns of hon. Members and that the clause will stand part of the Bill.

Amendment 218 agreed to.

Amendments made: 219, in clause 242, page 216, line 39, at end insert ‘, and

() the failure is significant.’.

Amendment 220, in clause 242, page 217, line 8, at end insert—

‘( ) Where the Secretary of State exercises a power under subsection (1) or (3), the Secretary of State must publish reasons for doing so.’.—(Paul Burstow.)

Clause 242, as amended, ordered to stand part of the Bill.