Health Service Medical Supplies (Costs) Bill — House of Lords, 2016-12-21
Topic: Health
David Prior (Conservative, Centre-right): My Lords, I thank the noble Baroness, Lady Walmsley, and the noble Lord, Lord Hunt, for their kind comments about me. I have very much enjoyed this role for the past 18 months. Going over to BEIS, which is the rather horrible acronym we have, I will still have a keen interest in many of the issues that lie behind the debate we have had today. I welcome my noble friend Lord O’Shaughnessy, who is sitting behind me, to his role I think my noble friend Lord Lansley, or maybe the noble Lord, Lord Warner, said that in another place this was called a technical Bill. At one level it is, because the issues are quite difficult and technical, but there is substance in it as well. It is not a technical Bill in that sense of the word I will start by addressing the wider issues around life sciences and access. We are all agreed that access to new drugs and devices for the NHS is a huge issue. We are falling behind. I do not think there is any doubt about that. That is what lay behind the Accelerated Access Review; that is why we had it. The work led by Sir Hugh Taylor and Professor Sir John Bell absolutely nailed that in its report. I assure the House that the principles behind the Accelerated Access Review will be incorporated into our strategy for life sciences that we are developing over the next few months with industry We have to reconcile access and affordability. That is the issue behind the NICE and NHS England consultation: if the impact is more than £20 million per annum—that is our suggestion—it has to be looked at. There will always be a tension between access and affordability. As I said in my opening speech, that circle can often be squared because many such new developments, particularly in medical devices, will save costs. A lot of the work that has been done around digital health, adult hospital healthcare, health analytics, machine learning and the like has the potential to help us solve the productivity problem which has bedevilled not just our own health system but every health system in the world. I think it is pretty much universally agreed that we need to take more powers around isolated cases of huge price increases for certain generic medicines where there is no competition. I think there is no question about that and we are all as at one The purpose of putting a payment mechanism into the statutory scheme, which is in the first part of the Bill, is only to align the two schemes. I assure the noble Lord, Lord Hunt, that we are not doing away with the voluntary scheme—on the contrary. It is just that we want to avoid the temptation, to which my noble friend Lord Lansley alluded, for companies, quite legitimately, to arbitrage between the two schemes. Historically, the two schemes have been broadly aligned from a financial point of view. It was only when the payment scheme was introduced into the voluntary scheme in 2014 that the two schemes became unaligned. The department’s view at the time was that we had the powers under existing legislation to put a payment scheme into the statutory scheme. It was only when, as part of the consultation, the industry queried whether we had that power that the department decided that we should introduce the power, which we are doing through this Bill, to put the two schemes roughly on a par. That is not to say that there will not be other benefits in the voluntary scheme which will still be very attractive to industry. I hope that that is the case and that we will be able to build on the voluntary scheme It is also worth mentioning that we will become much more sophisticated over time in the way that we price medicines. As a relative layman and objective viewer, it seems to me extraordinary that we have not already developed outcomes-based pricing for many of these drugs. When a drug is going to have an effect on 60% of the people who use it, why would we want to pay for the other 40%? Given that we in the UK are a single system and have access to data in a way that many other, more disaggregated systems do not, we are in a very strong position to have well-informed, data-rich, outcome-based pricing. The hep C drug is a classic case of our being able to move towards more annuity-based pricing. If we cannot afford the up-front cost of some medicines all in one go but can spread the cost of them over a number of years, that would seem an eminently sensible reimbursement process. I think we will see some much more sophisticated pricing arrangements coming into the mix as we move forward. That is the purpose of aligning those two schemes The aspect of the Bill about which the noble Lord, Lord Warner, and others have expressed the most concern is the information requirements and powers to extract information, particularly from small companies supplying medical devices. The noble Lord asked what the cut-off was for an SME. It is sales of £5 million, which omits quite a few supplies into the NHS from companies below that level. Again, the purpose of this part of the Bill is to ensure that we get our reimbursement rates right, particularly for integrated wholesale pharmacies. There is a feeling that some of the very big wholesalers—I will not name any names—make pretty hefty margins on some of these products. We need to know what price they buy at so that we can try to manage those margins and be sure that the NHS gets a reasonable deal. Many of the issues raised are quite detailed and I am delighted to leave them to my successor to address in Committee. However, the last thing in the world we want to do is to build a bureaucratic edifice here, or to gold-plate regulations, information requirements and the like. I assure noble Lords that we are absolutely open to all ideas and suggestions on how we can reduce the regulatory and bureaucratic requirement on companies that supply the NHS The noble Lord, Lord Warner, heard that certain companies look to go overseas to less bureaucratic and regulated systems. I think that that is down to not so much the regulation as the uptake issues. I am sure the noble Lord and others have met, as I have, many small companies that tear their hair out about trying to supply to the NHS. They find it easier to supply the US, Australian or other world markets than our own. That is not to do with the information requirements that already exist or will exist under the Bill. It is still the case that the NHS is a very treacly organisation. It is hard to get your product into it. Even when it has been approved by NICE, it is difficult to get it diffused throughout the NHS Not many noble Lords participated in the debate but, as always in this House, the quality of contributions has been extremely high. I thank all those who contributed and ask the House to give the Bill a Second Reading.