Health Service Medical Supplies (Costs) Bill — House of Lords, 2017-02-07
Topic: Health
James O’Shaughnessy (Conservative, Centre-right): My Lords, I am bringing forward this amendment and others in this group in response to the matters relating to specials raised in Committee by the noble Baroness, Lady Finlay, who regrettably is not able to be here with us today, the noble Baroness, Lady Masham, and others. I must thank noble Lords for the work they have done to explore these issues by bringing them forward for debate in a most constructive manner. I also take this opportunity at the start of Report to thank noble Lords for the generally constructive debate in Committee, and in other meetings since then A special is a medicine manufactured to meet the specific needs of a specific patient. By nature they are bespoke and therefore do not have the same economies of scale during manufacture and distribution as licensed medicines. In Committee, the noble Baroness, Lady Finlay, presented a strong case that the current arrangements for reimbursement of specials are not sufficiently effective at securing value for money for the NHS. In England, reimbursement prices for the most commonly prescribed specials are listed in the drug tariff. Those reimbursement prices are based on sales and volume data, which the department currently obtains from specials manufacturers under a voluntary agreement. By setting a reimbursement price we encourage pharmacy contractors to source products as cheaply as possible because it allows them to earn margin, which in turn creates competition in the market. As a result, reimbursement prices decrease. Since these reimbursement arrangements were introduced in 2011, we have observed that in England the average cost for specials listed in the drug tariff decreased by 39% between 2011 and 2016 Basing reimbursement prices on selling prices from more manufacturers than we do now would make the reimbursement system more robust. For specials, we currently rely on information from those manufacturers that have signed up to our voluntary agreement. There have been talks with NHS manufacturers to provide information on a voluntary basis. However, we have not been successful so far in securing data from NHS manufacturers on this basis. The Bill would enable us to retrieve information from all manufacturers, including NHS manufacturers. Once we receive data from NHS manufacturers, we will be able to assess whether it is appropriate to include them in calculating reimbursement prices However, through our very constructive debates on previous stages of the Bill and the further discussions I have had with the noble Baronesses, Lady Finlay and Lady Masham, I am persuaded that we need to do more. The unique nature of specials and their manufacturing arrangements means that we need to do more to ensure that the prices paid by the NHS represent good value for money for all these products. I am therefore bringing forward amendments that will enable alternative approaches to be developed to address this issue The amendments make changes to Section 164 of the NHS Act, which relates to the remuneration of persons providing pharmaceutical services. Proposed new subsection (8A) provides for a new regulation-making power in respect of special medicines. This would enable us to develop options that will secure the improved value for money that we all wish to see. Proposed new subsections (8B), (8C) and (8D) go on to provide illustrations of how that power might be used but do not restrict its application to those approaches. A number of different options may be considered. The example the noble Baroness, Lady Finlay, gave in Committee, drawing on the Scottish experience of using a quotes-based system, may be one option, although we recognise the potential difficulties with such an approach—in particular, the burden it may place on the pharmacist, who has to seek the quotes, and the potential delay it may cause to patients getting their medicines. We will draw on the Scottish experience and the knowledge and expertise of stakeholders to develop and clarify the options I reassure noble Lords that we are legally obliged to consult the body that represents those providing pharmaceutical services—dispensing contractors—the Pharmaceutical Services Negotiating Committee, and will consult other interested stakeholders before making a decision I hope your Lordships will understand that, at this stage, I am bringing forward a legislative framework which I believe to be fully justified by the need for action that was so clearly expressed by the noble Baronesses, Lady Finlay and Lady Masham, and other noble Lords. The detail of any new arrangements will need to be drawn up and consulted on with those who represent providers of pharmaceutical services, but I can give every assurance that I fully intend to explore the options provided by these powers to improve value for money for the NHS, which I know we all wish to see I thank the noble Baronesses, Lady Finlay and Lady Masham, and other noble Lords for bringing this matter forward. I beg to move.