Health Service Medical Supplies (Costs) Bill
Public Bill Committee, 8 November 2016.
Examination of Witnesses
Justin Madders (Labour, Ellesmere Port and Neston)
This question is to Dr Ridge. The pharmaceutical bill has increased significantly in recent years—up another billion pounds in the last financial year. Could you give us some thoughts on why that has been the caseQ ?
Rob Marris (Labour, Wolverhampton South West)
The new proposals suggest a £5 million threshold exemption for small companies. I wonder what your views of the appropriateness of the magnitude of that threshold are. Perhaps Mr Kennedy might lead on that because it is principally your bailiwickQ .
Rob Marris (Labour, Wolverhampton South West)
Q So what threshold would you have?
Maggie Throup (Conservative, Erewash)
I have another question for Mr Kennedy, and anyone else if they want to add to it. Is the definition of medical supplies under the National Health Service Act 2006 sufficient, or do you think it needs to be clarified furtherQ ?
James Berry (Conservative, Kingston and Surbiton)
We have had a submission from the British In Vitro Diagnostics Association, which says that if its products are included within the definition, it does not envisage that the new Q information required under clause 6 would be too burdensome and that much of the information that it would be required to provide is information that companies record anyway. Do you disagree with that analysis?
Jo Churchill (Conservative, Bury St Edmunds)
My question is to Dr Ridge and to Mr Kennedy. I have a concern about how the Bill might have an impact on pharmaceutical companies’ research and development, particularly in the light of medical innovations and how they are moving on. We do not want to stop that innovation with things such as pumps and so on. We know that we are trying to reduce the viscosity of insulin to get the pumps to work more effectively. How does this cover the case? Is it a medicine or an innovation? Can you give me a little more of your thoughts of how we pin things down? On the personalised front, are we future-proofing? Good legislation should be adaptive, I would argue, so that we do not revisit this.
Jo Churchill (Conservative, Bury St Edmunds)
Q I suppose the question was more about how the burden could be minimised, from the comments that you made, referred to earlier. I am concerned that we do not cut off that important pipeline, particularly of personalised medicines. It is about where we are taking ourselves in the future, whether in generic or pharmaceutical industries.
Philippa Whitford (Scottish National Party, Central Ayrshire)
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 thingsQ ?
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Julie Cooper (Labour, Burnley)
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? Q
Andrew Selous (Conservative, South West Bedfordshire)
ThisQ is a question for Dr Ridge about the analytical capacity of the Department to look at the extra data you are going to be collecting. I was a little worried that, in The Times investigation, given some of the emails and responses from officials, they did not really appear to be on top of what was happening in terms of prices. My question is to seek reassurance as to the capability within NHS England sensibly and intelligently to analyse the extra data that will be collected under the Bill to know what is going on.
Kevin Foster (Conservative, Torbay)
In looking at any piece of legislation, one must consider whether there is an alternative. My question is directed at Mr Smith in particular. To put a scale on this, although we accept that it concerns a minority of manufacturers, we are talking about 262 million quid a year for 50 drugs that have increased significantly in price. Given the voluntary range and references to past difficulties, do you see any sensible alternative to dealing with the minority of companies that have adopted that type of approachQ ?
James Davies (Conservative, Vale of Clwyd)
I want to return to the medical supplies issue, if only because this is perhaps the more controversial aspect of the Bill. I met with Coloplast yesterday evening. It is concerned about the potential impact of the control of prices and information disclosure requirements on investors. To what extent do you think that investment is at risk as a result of the provisions of the Bill? Further to that, you have suggested that all medical supplies, or reference to them, should be removed from the Bill. Failing that, what reassurances would you like to see, bearing in mind that there are already information-gathering powers in the 2006 ActQ ?
Martyn Day (Scottish National Party, Linlithgow and East Falkirk)
The Scottish Government have used payments from the PPRS towards a specific fund for access to new medicines. Does the panel think that a similar model would be good elsewhere in the UKQ ?
James Berry (Conservative, Kingston and Surbiton)
Q Dr Ridge, are there any disadvantages with the Scottish system, which is different from the one you run in NHS England?
James Berry (Conservative, Kingston and Surbiton)
Q No, but why are we not adopting the Scottish situation? There must be some disadvantages if we are not following it here.
Maggie Throup (Conservative, Erewash)
Q Coming back to the information side of the Bill, I have a question for Mr Kennedy and Mr Smith. What information do your members currently provide to the Government? Can you describe how it is used?
Maggie Throup (Conservative, Erewash)
Q So your concern is really more about where this Bill extends to and what data will be required?
Justin Madders (Labour, Ellesmere Port and Neston)
Q Mr Kennedy, you have talked about the difficulties your members have in providing this information. Is it the profitability element that your members are unable to strip out at the moment?
Justin Madders (Labour, Ellesmere Port and Neston)
Q Do you not factor that in when you are putting tenders in in the first place?
Justin Madders (Labour, Ellesmere Port and Neston)
Q So you would tender for something you might make a loss on.
Rob Marris (Labour, Wolverhampton South West)
Q Or the other way round—what the market will bear. That is our concern.
John Glen (Conservative, Salisbury)
This question is to Mr Kennedy and to Mr Ridge. With the data on the cost of medicines going up by over 7.5% in the last year—at a time when we have aggressive efficiency savings of £21 billion, or whatever it is, over the next few years—something needs to be done. To Mr Ridge, I am concerned that this is not radical enough. If we are really going to deal with the expected increases in medicine costs, we have got to do something more about innovation and the way that the NHS embraces Q innovation, so that we do not rely on Mr Kennedy’s members to provide what the NHS needs, which is wholly necessary at the moment, but the NHS could take more ownership of that. I would like you to reflect on that.
Mr Kennedy, in terms of the distribution of sales between what goes into the NHS and what goes into exports, surely one of the big justifications for the Government moving this forward is the fact that the rigour of the challenge, and the regulatory challenge, in the NHS—before medicines and devices that apply to the NHS—validates a considerable volume of export sales. I understand your difficulty in quantifying where your fixed costs are distributed over your NHS sales and exports, but nonetheless there is a massive advantage to supplying the NHS in terms of validating markets outside. How do you respond to that?
John Glen (Conservative, Salisbury)
Quite modest.
John Glen (Conservative, Salisbury)
That’s my fault.
John Glen (Conservative, Salisbury)
Yes. My question to Mr Kennedy was directly relevant to the Bill.
John Glen (Conservative, Salisbury)
Q One justification for the Bill and the Government intervening to deal with access costs in the NHS is the understanding that, as a consequence of supplying the NHS, there is a boost to the export potential of some of your members. I wanted you to clarify whether you perceive that to be the case.
John Glen (Conservative, Salisbury)
My question did, with respect; I just did not get an answer to it.
John Glen (Conservative, Salisbury)
Q It is quite simple. The Bill will allow us to intervene to reduce the cost to the NHS. The way in which that is justified by the Government is that an export potential is derived from the validation of supplying the NHS. Is that justified, in your opinion?
John Glen (Conservative, Salisbury)
Right. Thank you.
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
Q Would the information definitely apply to people who produce specials? That is not mentioned anywhere in the Bill.
Philippa Whitford (Scottish National Party, Central Ayrshire)
That was the basis of the Bill we debated last November.
Philippa Whitford (Scottish National Party, Central Ayrshire)
To be fair, it is not usually the company that finds the new use. Repurposes are nearly all academic and clinical discoveries rather than—
James Berry (Conservative, Kingston and Surbiton)
Q I will be very quick. We have had submissions from suppliers and trade associations, and they made the point that there are a number of powers in the 2006 Act that have not been used and that this Bill merely extends those powers. Is the logical conclusion of your argument that you do not agree that the Government should have had the powers in the 2006 Act in the first place because they are too burdensome on your industry?
James Berry (Conservative, Kingston and Surbiton)
It has not been used.
Jo Churchill (Conservative, Bury St Edmunds)
Q Thank you for that answer on the off-patent or repurposed drugs, Mr Smith. Perhaps putting them in the British National Formulary might help. What is the one thing, gentlemen, that you would do to get better value for the NHS? If costs have gone up by 59% since 2010—I think that is the statistic you threw in at the beginning—we have to do something. What is the one thing you would do to make the NHS provide better value for drugs?
Jo Churchill (Conservative, Bury St Edmunds)
Yes, you are allowed only one, and you have got only two minutes.
Justin Madders (Labour, Ellesmere Port and Neston)
Q Dr Ridge, where does the rebate currently go, and where would you like it to go in the future?
Examination of Witness
James Berry (Conservative, Kingston and Surbiton)
Q Mr Watson, do you think it is right that the Government should take action to stop profiteering from the NHS on drug prices?
Rob Marris (Labour, Wolverhampton South West)
Q Do you think there are further steps, besides what is in the Bill, that could be taken to ensure that the NHS gets best value for money?
Andrew Selous (Conservative, South West Bedfordshire)
Q What would be a reasonable return on capital for your industry, so that we have a thriving and competitive pharmaceutical industry in this country, with prices that are fair to the NHS and the taxpayer?
Andrew Selous (Conservative, South West Bedfordshire)
Q Give a range or an indication. Obviously, you are a wide industry and there are different parts to it. We have seen considerable variation in prices and returns from some of the information that has come into the public domain.
Andrew Selous (Conservative, South West Bedfordshire)
Q What is the general perception about operating within the UK then among the members?
James Davies (Conservative, Vale of Clwyd)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
Q So you do not feel it is increasing access to new drugs in the way that was envisaged.
Maggie Throup (Conservative, Erewash)
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?
Maggie Throup (Conservative, Erewash)
Q So you feel that what is included and what is not included is correct in the Bill?
Justin Madders (Labour, Ellesmere Port and Neston)
Q You mentioned various challenges to the industry. I wonder whether you could expand on that a little and say whether you feel we are close to a tipping point in terms of the potential impact on investment in jobs and research.
Rob Marris (Labour, Wolverhampton South West)
Q Following up on that, I understood you to say that other jurisdictions do it better, particularly for new medicines. Forgive me if I misunderstood you there. If I did understand you correctly, can you give some indication of what they are doing that we are not doing, which you and your members think would be desirable for the industry and for patients, were we to do it in the United Kingdom?
Rob Marris (Labour, Wolverhampton South West)
Q Is that partly because NICE is slower than you would wish it to be?
Maggie Throup (Conservative, Erewash)
Q In your written evidence, you said:
“The Department of Health should provide greater clarity on the additional information that will be required by the Department”.
Can you expand on that further and outline what clarification you need as an industry?
Jo Churchill (Conservative, Bury St Edmunds)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Philippa Whitford (Scottish National Party, Central Ayrshire)
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?
Andrew Selous (Conservative, South West Bedfordshire)
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?
Andrew Selous (Conservative, South West Bedfordshire)
Q You could not give us a range within which “reasonable” might lie typically within the industry that you think would still lead to a healthy, thriving industry, which is what we want, with an NHS that is not being ripped off.
Andrew Selous (Conservative, South West Bedfordshire)
Q The actual question I want to ask follows on from Ms Churchill’s question. What is your experience of how reasonable the NHS is when dealing with you on the sort of quality and safety issues you referred to in terms of how the Government will respond on pricing if there are specific reasons in terms of plant safety and quality and so on that might justify a slightly increased price? You have obviously been dealing with the Government for a long time. What is your experience of the NHS’s reasonableness in responding to those valid issues you mentioned?
Jo Churchill (Conservative, Bury St Edmunds)
Q Is there a better way of looking at this? If we had more transparency through the pricing mechanism, but enabled tax efficiencies, R and D and so on, would that be a different way of balancing this for the industry?