Health Service Medical Supplies (Costs) Bill (Third sitting)

Justin Madders Excerpts

Committee Debate: 3rd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I want to comment generally on the Minister’s amendments. I agree that it would have been helpful if they had been published earlier, but reasons why that was not possible have been given, and the Committee will be pleased to hear that I do not intend to go through each of them. I take the Minister’s assurances that there has been extensive dialogue with the devolved Administrations. I intend to direct my remarks not so much at those Administrations that have been taking responsibility for their health service for some time, but at those areas in England where they have embarked upon ambitious devolution arrangements that encompass health—Manchester is the most obvious and probably most advanced example. It is not at all clear to me how, if at all, the Bill will impact on them.

The Greater Manchester area has now been given a delegated budget of £6 billion per annum. I am sure that people there have made various representations about how that is short of the figure that they need, and a significant proportion of the annual budget will certainly be spent on pharmaceutical costs. Would it not be reasonable for the relevant proportion of the rebate to be returned to Manchester and such areas in the same manner as the initial funding is devolved down to them? Simon Wootton, who was the chief operating officer at the North Manchester clinical commissioning group, said that we have not had the PPRS money back into the local NHS in North Manchester.

I am not aware of any specific agreements as part of the devolution settlement for Greater Manchester, and nothing is in the Bill, so I would be grateful if the Minister, when he responds, set out whether there have been any discussions with local representatives in Manchester on the issue, and whether his intention is to ensure that, in common with other devolved Administrations, appropriate arrangements are put in place for the relevant proportion of the rebate to be paid directly to them.

[Mr Dunne]

First, in relation to amendment 11 and what the hon. Member for Central Ayrshire said, I think she made a perfectly reasonable point. As a lay reader of parliamentary drafting, if I may say so, it would be easy to be perplexed by the sequencing that she highlighted and brought to the attention of the Committee. I am advised, however, that the purpose of the amendment is to ensure that the UK Government collect information from English pharmacies and GP practices, but not from pharmacies in the areas of the devolved Administrations. Therefore, the reference to “Excepted person” includes pharmacies and GP practices in the devolved Administrations, but specifically does not include those in England, because their information is already collected by the UK Government. The terminology relates to where the GPs and pharmacies are and who is doing the collecting. I hope that helps.

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[Justin Madders]

I appreciate that the Minister is not going to embark on a new area of debate and dialogue with Greater Manchester on this point, but will he advise whether future allocations intend to deal with the increased income from the rebate that is anticipated as a result of the Bill?

[Mr Dunne]

Each year, when NHS England agrees its commissioning budgets and tariffs with providers, an allocation is made. That is based on the overall sum received by NHS England. Increases in revenues that derive from the Bill will help to swell that pot relatively modestly, although every penny counts, and that will therefore be taken into account when determining allocations to all CCGs, including those in Manchester.

I will give the Government’s response in relation to amendment 48; I do not have many comments to make. I sincerely hope that, before I reach the end of these remarks, I will be able to address the further point, on English exclusion, made by the hon. Member for Central Ayrshire.

Proposed new section 264B in clause 6 enables the Secretary of State to disclose the information collected to a range of bodies, which includes Government bodies such as NHS England, special health authorities, NHS Digital, other Departments and the devolved Administrations. It also enables the Secretary of State to prescribe representative bodies, or other persons in prescribed regulations, to whom he can disclose information in the future. For example, that might include certain information going to trade associations or other bodies that it might be appropriate to provide information to in future, with respect to the operations of the Bill.

The effect of the amendment tabled by the hon. Members for Central Ayrshire and for Linlithgow and East Falkirk would be that any of those bodies could in future access any information that the Government have collected. We do not believe that it would be right for representative bodies to be able to access information that the Secretary of State collects, primarily for purposes of commercial confidentiality. There are examples in other legislation in which we have taken specific steps to protect commercially sensitive information. I am not suggesting that one company would directly get access to information on another company’s profitability, but third-party advisers, for example, might get access to that information.

We do not want to provide opportunities for risking breaches of commercial confidentiality, because that would undermine confidence in the information gathering for all the companies, which includes major multinational companies. We think that the amendment might open us up to criticism from the major suppliers that there was greater risk of that intervention, which we would not want to see.

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[Mr Dunne]

I have had some extremely expert inspiration. In the event that their lordships choose to amend the Bill during its passage, it would be inappropriate to consult on the regulations finally until the Bill emerged from the other place. The consultation will therefore start as soon as we have Royal Assent, and the implementation of the proposals is therefore expected in the autumn.

Question put and agreed to.

Clause 9, as amended, accordingly ordered to stand part of the Bill.

Clause 10 ordered to stand part of the Bill.

New Clause 1

Provision of information to Welsh Ministers

“After section 201 of the National Health Service (Wales) Act 2006 insert—

“Provision of information about medical supplies etc

201A Provision of information by persons providing primary medical services or pharmaceutical services

(1) Regulations may make provision requiring any Part 4 provider or Part 7 provider to—

(a) record and keep information, or information of a description, specified in the regulations, and

(b) provide that information to the Welsh Ministers.

(2) Information, or a description of information, may not be specified in the regulations by virtue of subsection (1) unless the Welsh Ministers consider that the information may be required for the purpose of enabling or facilitating any of the following—

(a) the determination of the payments to be made to any Part 4 providers;

(b) the determination of the remuneration to be paid to any Part 7 providers;

(c) the consideration by the Welsh Ministers of whether—

(i) adequate supplies of health service products are available, and

(ii) the terms on which those products are available represent value for money.

(3) The information which the Welsh Ministers may require from a Part 4 provider or Part 7 provider by virtue of this section includes the following—

(a) the price charged or paid by the provider for health service products;

(b) the price paid by the provider for delivery or other services in connection with health service products;

(c) the discounts or rebates or other payments given or received by the provider in connection with the supply of health service products;

(d) the revenue or profits accrued to the provider in connection with the supply of health service products;

(e) such information about medicinal products, other medical supplies or other related products as is necessary to verify whether or not they are health service products.

(4) Regulations under this section may require information to be provided in such form and manner, and at such time or within such period, as may be prescribed.

(5) Regulations under this section may provide for a person who contravenes any provision of the regulations to be liable to pay a penalty to the Welsh Ministers.

(6) If regulations under this section make provision by virtue of subsection (5) they must include provision conferring on Part 4 providers and Part 7 providers a right of appeal against a decision of the Welsh Ministers to impose a penalty.

(7) The provision of information by virtue of this section does not breach—

(a) any obligation of confidence owed by the person providing it, or

(b) any other restriction on the provision of information (however imposed).

(8) In this section—

“health service products” means any medicinal products used to any extent for the purposes of the health service continued under section 1(1) and any other medical supplies, or other related products, required for the purposes of that health service;

“medical supplies” includes surgical, dental and optical materials and equipment;

“medicinal product” has the meaning given by section 130 of the Medicines Act 1968;

“Part 4 provider” means a person who provides primary medical services under Part 4;

“Part 7 provider” means a person who provides pharmaceutical services under Part 7.

201B Disclosure of information

(1) Information provided by virtue of section 201A may be disclosed by the Welsh Ministers to any prescribed person or person of a prescribed description.

(2) A person to whom any confidential or commercially sensitive information is disclosed under subsection (1) may not—

(a) use the information for a purpose other than a purpose specified in section 201A(2), or

(b) disclose the information to another person.

201C Sections 201A and 201B: supplementary

(1) Before making regulations under section 201A or 201B the Welsh Ministers must consult any body which appears to the Welsh Ministers appropriate to represent Part 4 providers or Part 7 providers.

(2) Nothing in section 201A or 201B requires information to be provided, or authorises information to be disclosed or used, in contravention of the Data Protection Act 1998.

(3) Nothing in section 201A or 201B affects any duties, obligations or powers to require or authorise information to be provided, disclosed or used which exist apart from that section.””.—(Mr Dunne.)

This new clause is linked to amendments 36, 37 and 39 to 42. Inserted after clause 6, the new clause allows Welsh Ministers to require the provision of information by providers of primary medical or pharmaceutical services under Part 4 or 7 of the National Health Service (Wales) Act 2006.

Brought up, read the First and Second time, and added to the Bill.

New Clause 2

Reporting requirements of the Secretary of State

“(1) Within 12 months of this Act coming into force, the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act and must lay a copy of the report before Parliament.

(2) The report under subsection (1) shall include an assessment of the impact of the use of the Secretary of State’s powers on—

(a) the availability and cost of medicines and other medical supplies to the health service and the terms upon which they are made available;

(b) research and development;

(c) the NHS’s duty to promote innovation.

(3) Subsequent to the publication of the report in subsection (1), as soon as is reasonably practicable after the end of each financial year the Secretary of State must prepare and publish a report on the use of the Secretary of State’s powers under this Act during the preceding financial year and the impact of the use of those powers on the matters under subsection (2), and must lay a copy of the report before Parliament.”.—(Justin Madders.)

This new clause would place a duty upon the Secretary of State to place a report before Parliament on an annual basis on the impact of the Act on the pricing and availability of medicines and other medical supplies, research and development and the NHS’s legal duty to promote innovation.

Brought up, and read the First time.

[Justin Madders]

I beg to move, That the clause be read a Second time.

As is explained in the explanatory note, the new clause would put a duty on the Secretary of State to place before Parliament an annual report on the impact of the Act and, in particular, on the pricing and availability of medicines and other medical supplies, research and development, and the NHS’s legal duty to promote innovation. I think we all agree that there are examples of unreasonable behaviour, but there may be occasions when there is a difference of opinion as to what amounts to unreasonable pricing practices, not least between the producers and the NHS.

We would be more assured if the consultation on the regulations had been completed by this stage. We are obviously not going to be in a position to know what that consultation has to say for some considerable time, so we believe the implementation of such a requirement would allow Parliament to scrutinise the impact of the legislation.

There has been some unease in the sector about the impact of the legislation and there is a certain amount of uncertainty, particularly around the future of the European Medicines Agency and the medium-term implications of Brexit not only for that agency, but for the research and development sector and the pharmaceutical industry as a whole.

We are one of the foremost countries in the world for drugs development, and our share of sales of the top 100 prescription medicines is 14%. The UK pharma industry employs 73,000 people, with very high-quality jobs in academia and science, but we cannot be complacent about the state of UK pharma, particularly as investment decisions are often made by parent companies in other parts of the world. That concern is compounded by the small volume of sales in the UK compared with other countries. We face increasing competition from emerging economies for R and D investment, with rapid growth in areas such as Brazil and China. That is not a new problem.

A report for the Secretary of State for Health by Professor Sir Mike Richards in 2010 on the extent and causes of international variations in drug usage explored levels of medicines uptake for 14 categories of drug in 14 high-income countries during 2008-09. The study showed that the UK ranked eighth out of the 14 countries. A follow-up study by the Office of Health Economics updated the quantitative analyses and ranked the UK ninth across all the medicines studied.

Apart from disadvantaging patients, the relatively low take-up of new medicines may put at threat R and D investment in the UK. We need some assurance on that and an ability to monitor and engage with the Government on it. We know many other countries are queuing up to take the European Medicines Agency off our hands, and there are real concerns about the knock-on impact of that.

The impact assessment for the Bill says there will be a reduction in revenue for the pharma sector, unsurprisingly. It also says:

“Reduced pharmaceutical company revenues are also expected to lead to a reduction in investment in research and development… and consequent losses of spill-over benefits for the UK economy, valued at £1.0m pa.”

While we agree that it is vital that those who abuse the system to drive obscene profits for themselves are dealt with, we do not wish to find the UK becoming a less attractive place for research and investment because other countries have made themselves more attractive.

We ask that the report become an annual feature of the Secretary of State’s duties to ensure that we can judge the effectiveness of the Bill. The converse point is that if we continue to see price increases, we want to be assured that the regulations are effective in driving best value for the NHS.

[Dr Whitford]

I rise to echo some of the points raised. We have discussed a lot of issues around the decision to leave the EU, including the loss of the EMA. As well as possibly losing international and multinational pharmaceutical companies—particularly those from the London area, which have based themselves here because of the EMA—it is clear that drugs may end up going through a licensing process for the UK later than is currently the case. They are likely to go through the American market and then the EU market, which will still have 450 million people, and we are likely to slide down to be more like Canada and some other countries. This is a very unstable time for research, because of the loss of Horizon 2020 and the EMA, and for our pharmaceutical industry, which is a major player in the UK. It is incumbent upon Government to ensure that the Bill has no unintended consequences that exacerbate that.

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[Mr Dunne]

I do not actually agree that there is a direct link. There is no question but that, in order to stimulate continued investment in R and D, it is appropriate for the industry to see a stable marketplace in a country as significant and important as the UK, and throughout the nations of the UK, for medicines and medical supplies. We are a large market. We spend more than £15 billion a year on pharmaceutical products, and we are also acknowledged by those companies to be a reference market for many other countries that do not have such a large or well-organised supply chain as we do. I accept that, in principle, it might be rather different if this were an emergent market.

Individual drugs are emerging through R and D programmes, but I do not think that is the same as the measures we are introducing, which are primarily designed to limit excessive abuses of pricing position, in which a company may be a monopoly supplier, in the case of the unbranded generics. For the branded products, we have a long-established procedure for recognising the recovery of R and D costs through the pricing mechanisms, and while we may not like paying for some of those branded products at the rate that we have to, we recognise that it is a competitive marketplace and, because of the cost of innovation—the cost of conducting clinical trials and so on—it is necessary to stimulate that innovation to ensure that those companies make a reasonable profit.

Promoting innovation is a high priority, not only for the Government and the NHS but for many other stakeholders in the industry. In our view, it would not be possible to quantify the contribution of the schemes in the Bill to that endeavour, for the reasons I have discussed. Trying to assess the impact on innovation is a much wider endeavour that does not just rely on price. For those reasons, I urge members of the Committee to reject the new clause.

[Justin Madders]

I hear the Minister, but I have to say that I respectfully disagree with some of what he said. I think there is a direct connection between the effects of the Bill and the impact on research and innovation. That is what the impact assessment clearly states. I feel that having draft regulations that have not yet been consulted on is not an adequate substitute for the assurances that we are seeking.

[Mr Dunne]

I am grateful to the hon. Gentleman for letting me intervene. We are not saying ourselves that there is no such direct relationship between innovation and the cost of drugs; we are taking evidence from a report on “Key Factors in Attracting Internationally Mobile Investments by the Research-Based Pharmaceutical Industry”, which was undertaken by NERA Economic Consulting, and from a publication specifically on the voluntary scheme by the Office of Fair Trading. Both those documents date from 2007, when the hon. Gentleman’s party was in office. The impact assessment, as he pointed out, refers to an impact of £1 million, which needs to be set against the benefit of close to £90 million that the high-value generic clauses impact. We therefore think, relatively speaking, that it is not significant.

[Justin Madders]

We will have to see whether those figures and estimates become reality, in particular in the light of the fact that the industry has not yet seen the regulations proposed. The approach is a wider one, based not only on the impact on research and development but on the continued duty of the NHS to promote innovation and the way in which the powers will affect the availability and cost of medicines and medical supplies. I will press this to a vote.

Question put, That the clause be read a Second time.

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[Mr Dunne]

We are now at the conclusion of our deliberations. Thank you very much indeed, Mr Pritchard, for using your new-found experience in chairing Bill Committees to such good effect. You have conducted our affairs in a characteristically skilful way, and I am grateful to you, the Clerks and the Doorkeepers for managing the Divisions. I am grateful to the Front-Bench spokesmen from both the official Opposition and the SNP, as well as to all Back Benchers who have contributed to our deliberations. We have given this short Bill adequate and appropriate scrutiny, and I hope it will proceed to consideration on Report, where it will get continued consensual support across the House, which is, frankly, a joy to participate in.

[Justin Madders]

I echo the Minister’s words of thanks, including to you, Mr Pritchard, for the sensitive way you have handled our discussions. We have made good time today, while enabling everyone to contribute who wished to. I am grateful to the Minister for his clarification on a number of points. There are issues we will have to continue to discuss, but in the main he has been able to put our mind at rest on a number of issues. I also thank the SNP Members for their contributions, as well as all Back Benchers.

[The Chair]

I thank the Clerks, officials, Doorkeepers, the Minister of State, shadow Ministers and all colleagues.

Question put and agreed to.

Bill, as amended, accordingly to be reported.