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

Philippa Whitford Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 8th November 2016 Public Bill Committees

[The Chair]

Thank you. A lot of people wish to ask questions, so I ask the witnesses to try to keep their answers a little shorter.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

Q I would like to ask Mr Kennedy a couple of questions. Obviously, the Bill extends the National Health Service Act 2006 to medical supplies. As someone who comes from a surgical background, my concern is that the Medicines and Healthcare Products Regulatory Agency controls the quality of drugs, so there should not be a change in quality with price, but for medical supplies—I am just thinking of the surgical gloves I have interacted with—there is a huge range. If we are just pushing on price, do we have a mechanism that you are confident in to ensure we do not end up pushing down the quality of medical supplies—I mean some of the basic things?

Philip Kennedy: Yes. We get back to the question of what is the point of having a very broad and all-encompassing definition of a medical device with within the scope of what is proposed here. The data collection on all those items—whether specialised gloves that are used in a certain area or a routine glove on a ward—is overly onerous and does not achieve the end, so we are back to the central question. The issue of the safety and quality of devices is very much regulated by a CE mark. If a product has a CE mark, it has gone through the necessary quality and safety checks.

I believe that the addition of medical devices and any other items was relatively late in the consideration. In that regard, I wonder whether there has been a proper assessment of the impact that that would have. We would welcome further work on the potential impact. It is very clear for pharmaceuticals, but extremely unclear for medical devices.

[Dr Whitford]

Q Products may have passed a CE mark, but I am conscious that, when we tried different surgical gloves, there were some makes where you were going through two or three in an operation, which means your benefit in cost has gone.

The Bill is not just about data collection; it extends the provisions on enforcement of price control to Scotland and Northern Ireland. We already have central procurement, which has helped us control prices. This is one of my anxieties. Do you think both of those moves are reasonable?

Philip Kennedy: Again, we question why the scope is being widened to Scotland and Northern Ireland at this particular juncture, given that, as you said, existing mechanisms are already in place and are effective, in our view. The competitive market for surgical gloves—not to pick on that, but since you raise it, it is always one that is easy to understand—means that competitive tendering can put in a quality matrix, a price matrix and a delivery and service support matrix. None of that is possible by simply asking companies to take six years’ worth of product data and analysing crunch profitability. It does not move the intent forward in any way in terms of having to save costs.

[Dr Whitford]

Q Do you think there would have to be another body to take quality further, in the way the MHRA does with drugs, if this were going to come in, to avoid people going down to bare-minimum quality?

Philip Kennedy: As I say, we have an extremely productive dialogue with Lord Carter and the Department of Health on the forthcoming review of the procurement landscape. Huge efficiencies can be gained in restructuring that. We would prefer to look at that work in terms of assessing quality versus price, value, lifetime ownership and pathway design, as I mentioned earlier, where more significant savings could be realised for the NHS. Indeed, it would be good for industry to continue to develop products that have a higher quality threshold. Perhaps they cost more, but they would save significantly more than focusing on data that just look at existing product and existing price.

Medical device development is a very iterative process, unlike pharmaceuticals, which perhaps have a 25-year patent that protects something. One of our members has 80% of its revenues in products that only came to market in the last two years. That is where the efficiency, the quality and the cost-saving argument comes through. We surely want to encourage that as an economy.

[Julie Cooper (Burnley) (Lab)]

Q This question is probably to Mr Smith. Generic supplies to the NHS in the UK provide some of the cheapest medicines in the developed world. Do you think that the approach to control the cost of generics is the right one, given that it is a minority of individual items that have come to the public’s attention because profits have soared significantly?

Warwick Smith: I am on record as saying it is the least worst system in Europe. There is no perfect system. What we have found, comparing what we have in the UK and elsewhere in Europe, is that competition is a much better way of controlling price than intervention. We produce lower prices in the UK than in the rest of Europe. We have had an issue, as you say. I think fewer than 2% of our products have made the front page of The Times. We agree that there should be data available to investigate whether those prices have a justification or not, and intervention perhaps by the Secretary of State or, at the end of the day, by the competition authorities. However, for the majority of products, as the Secretary of State said on Second Reading, the system works extremely well. We have spent time trying to come up with better systems and we cannot.

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[The Chair]

Can we move on?

[Dr Whitford]

Q I want to ask Dr Ridge and Mr Smith about a couple of things that I thought would be in the Bill but are not. One is repurposed off-patent drugs, which we have debated in the House before. There is a potential for their price to go up within the generic set-up. My concern is that, because they do not get relicensed, they will then be tweaked and suddenly sold back to the NHS for their new purpose at 10 grand a pop instead of 50p.

The other one is specials. I have been written to by the British Association of Dermatologists. Patients with particular skin conditions, such as some of the pretty distressing forms of psoriasis, require formulations to be made up. Again, there is quite a different system in Scotland, which uses an NHS producer to do that. In England, initially only one quote was required, which could be from a sister company, and the prices have turned pretty eye-watering. It estimates that some products cost eight times the price in England as in Scotland. Do you not think some of those things should be included in the Bill?

Dr Ridge: From an NHS England point of view, we, too, are concerned about specials and what appear to be excessive prices associated with certain specials. They are, of course, unlicensed medicines, which makes it a little bit more difficult in terms of being dealt with in the way I think is envisaged in the Bill. For example, I would have thought that the information-gathering powers will be relevant here, too, to ensure that we continue to get best value for money in this case for specials or for unlicensed medicines generally. I know that a team at the Department of Health are looking at that routinely—and more power to their elbow.

[Dr Whitford]

Q Is it not the case that, because the price is so ridiculous, the CCGs are not funding it, so the patients are not getting their ointments or cream or whatever?

Dr Ridge: There are CCGs that raise this with us, too, in terms of what appear to be outrageous prices associated with specials. It is something that needs to be addressed and I believe that the information powers will begin to do that in a way that is even more robust than the Department—

[Dr Whitford]

Q Would the information definitely apply to people who produce specials? That is not mentioned anywhere in the Bill.

Dr Ridge: I think so, but I look to others who might know better than me. It is certainly something that we feel needs to be addressed even more robustly. Whether the Bill is the right place or not is another matter altogether, I guess.

On the repurposed off-patent drugs, from my point of view, speaking in the role I do, I think that somehow we need to provide at least confidence to prescribers to be able to utilise medicines such as tamoxifen and others in a way that supports them in use in what would be an unlicensed purpose. Indeed, one of the things I have asked the regional medicines optimisation committees to do in due course is to give some thoughts about that, to support prescribers in that process. When they are repurposed and then come back at a higher cost, again, that is something I feel does need to be addressed. I agree with you.

Warwick Smith: I cannot help any more than Keith on specials. My instinct is that they would be included in the Bill, but they are not among my membership, so I have not taken any interest in that.

As far as repurposing is concerned, it is a term that sometimes gets used in two different ways. Dr Ridge mentioned tamoxifen, which I think was on Radio 4 this morning. We are working with the Department, NHS England and various charities to find ways to grant new indications on old licenses, so clinicians are comfortable about using medicines that were first licensed for different uses.

[Dr Whitford]

That was the basis of the Bill we debated last November.

Warwick Smith: And, frankly, that is happening. As we sit here today there are regular meetings going on. The problem is, if you ask a company to do the research work to prove that new use, it bears all the costs.

[Dr Whitford]

To be fair, it is not usually the company that finds the new use. Repurposes are nearly all academic and clinical discoveries rather than—

Warwick Smith: That is why they are working with charities to find a way to do this.

[The Chair]

We have got to get back to the Bill. We have got a number of issues that Members have indicated they wish to be called on and we have only got four or five minutes.

Warwick Smith: Very quickly, Chair, to finish Dr Whitford’s point, that is a good thing if we can make it work properly, and progress is being made. I absolutely agree that a change of a drug’s status to find a way of increasing its price with no clinical benefit is not something that should be supported. The Bill gives the powers properly to investigate changes like that and for the Secretary of State to take action. As I said earlier, we thought he had those powers. We signed up to his using those powers. I believe that he has used those powers, which we now discover he does not have.

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[Dr Davies]

Q We have received correspondence from an individual who takes liothyronine, as does one of my constituents who is affected by the current issues. He has pointed out that the company that manufactures that makes an excess profit of £50,000 a day as a result of the hike in prices. With that in mind, do you think that the proposed maximum fine, the penalty of £100,000 or £10,000 a day, is sufficient?

David Watson: I am not aware of the individual product. We support the Bill in so far as the Government need to be able to have the powers to step in where they spot that there have been price hikes that are not justified. It is entirely appropriate that the Department is able to question companies on why that price has gone up. If it has gone up unreasonably, it is entirely correct that they should reduce it. What I would say, though, is that the majority of branded medicines, for example, covered by the PPRS, have an affordability mechanism underneath them. For example, we repay under the PPRS the difference in NHS spend on medicines; so regardless of the list price, which is often quoted for medicines, very often there are significant deals being made underneath that with the NHS.

[Dr Whitford]

Q Obviously, one of the problems with the generics was companies that are in the PPRS but also producing generics, and the Bill looks at strengthening the statutory scheme and getting rid of this. Do you think that this is the right way go, to still have two systems, or do you think a single system such as a statutory scheme would have been more helpful?

David Watson: No, we think it is better overall to have a scheme that industry negotiates. So as for generics pricing, we agree that the loopholes should be closed and the Department should have the same powers that apply, regardless of which other scheme companies are in. As for branded medicines, I think we would say that we have had in this country a voluntary PPRS for a number of years. I think that it serves both sides very well. You also need a statutory back-up for companies that for some reason do not choose to be in the PPRS. So, by default, you end up with essentially two schemes on branded medicines, but we think that there are benefits to the taxpayer, to patients, to the industry, in having a voluntary scheme.

[Dr Whitford]

Q In the previous panel, the different ways PPRS functions in Scotland and in England was mentioned. Do you see advantages or disadvantages on either side of how that is done?

David Watson: The current PPRS is a five-year deal. This one has been very different from most previous deals, so it underwrites the growth in branded medicine spend with payments going back to the Department. The idea with those payments is that they are then apportioned to Scotland, to the health service in England, etc. So that mechanism has worked well. I think that the problem has been that, certainly in Scotland, as you know, it has gone into a specific purpose. In England, it has gone into general funding for the health service, and therefore it has not fundamentally achieved its purpose, which was to allow taking the cost question off the table, almost—being able to find the right use of medicines by essentially capping spend on them. Because that flow of money has not worked, I think that that part of its objective has not succeeded in England.

[Dr Whitford]

Q So you do not feel it is increasing access to new drugs in the way that was envisaged.

David Watson: That was the plan. I do not think it has achieved that. I think it could do. I agree with some of the comments that Dr Ridge made on this. It is quite complicated, for example, to imagine a big national medicines fund. I think that would have unintended consequences. I am not sure that is what the NHS wants. I think that there are other ways that we could address the real affordability challenge of new medicines, by finding a way to use this money through PPRS for the benefit of finding medicines for patients.

[Maggie Throup]

Q Currently, over-the-counter medicines are exempt from the proposals. Do you think that that is right, or do you think that if we do not actually include them in the proposals, we shall be sitting around this table again in a few years’ time, amending the legislation yet again? If you feel that they should be excluded, do you think that there are any other medicine groups that should be excluded or included in any other way?

David Watson: No, I think that the over-the-counter medicines exclusion is sensible. It is much easier for companies to report when they are not including over-the-counter sales. On your question about whether other medicines should be excluded, if we look at the intent of the Bill, which is to introduce a new payment mechanism for those companies that are in the statutory scheme, it was suggested in the previous panel that the problem with this is that companies are already agreeing deals with the NHS. I suspect that if we end up with a payment mechanism and deals with the NHS, there may be some reluctance to give the best deal possible to the NHS—if, at the same time, a payment is being made in addition to that. I think that may be one of the consequences of this.

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[Jo Churchill]

Q Just as a small supplementary to that, having run businesses—I would imagine pharma is the same—is it not possible that when you drill down to that sort of level, an unintended consequence will be that where you perhaps support a drug to market by using one that has volume-based profit to it, you may unintentionally stop that development? My other worry is about the rare diseases and specialist cancer areas, where it is highly expensive to develop drugs. We all know that we are trying to close this loophole, and that is right—exploitation around that area is not good for the NHS or, ultimately, patients—but can you see any unintended consequences that you would like to flag before you go?

David Watson: Yes, we recognise that it is very difficult to put a specific cap on a price, because the requirements on a company to produce, discover and sometimes cross-subsidise some of their costs across their portfolio are quite complicated. If the UK system, it seems, wants to drive costs of some medicines down to the lowest possible mark then that is, of course, quite possible, but the consequence if we look at areas such as vaccines, though, is that we end up in a situation in which companies do not invest appropriately in the factories or quality, etc., and then there are potential gaps in the supply of those products. So what we would ask for here is that, when the Department is considering the circumstances in which it thinks the price is too high, it has a dialogue with that company to understand the reasons for the price and what may be going on underneath to ensure the continuity of supply of the product.

[Dr Whitford]

Q I want to ask Mr Watson about the issue that I raised with the previous panel about the repurposing of patent drugs and the concern that we did not pass a Bill to add those purposes to old licences, or to have a new system. What would the ABPI view be on trying to avoid that, for the new purpose, suddenly a pretty similar drug comes back at an eye-watering price?

David Watson: Again, I agree with that, and I understand quite often that medicines are repurposed, not necessarily by pharmaceutical companies, but by other research centres. Quite often, even in that scenario, those companies may expect a reasonable return on their effort to bring that product in, which might mean a price rise. Again, I would say that there has to be a balance between price rises to reward innovation and return on investment and those price rises that are clearly not justified.

[Dr Whitford]

Q Do you think that the Bill as it stands will deal with that, or do some of these more specialist areas need to be highlighted?

David Watson: I do not think that the Bill will perhaps ever be clear enough about the circumstances in which one price rise is right or wrong, but I think that we agree with the need for the Department to have adequate powers to go after those cases—though of course to do so it needs adequate resources as well. But we agree with the principle that the Department should be able to look at price.

[Andrew Selous]

Q I am tempted to have another go, because you used the phrase “reasonable return” in your answer to Dr Whitford. You would not give me a figure on that earlier. Are you prepared to say anything further on that?

David Watson: I could make up some figures, but companies, depending on their skill and their pipeline—