Health and Sport Committee

Meeting date: Tuesday, January 17, 2017

Official Report 538KB pdf

---

Health Service Medical Supplies (Costs) Bill

Agenda item 8 is consideration of a legislative consent memorandum from the Scottish Government on the Health Service Medical Supplies (Costs) Bill. I welcome to the meeting Shona Robison, the Cabinet Secretary for Health and Sport, who is accompanied by Rose Marie Parr, chief pharmaceutical officer, and Martin Moffat, policy adviser, pharmacy and medicines division, Scottish Government.

Cabinet secretary, do you want to make an opening statement?

Yes, convener, and thank you for the invitation to speak to the committee. I am grateful to the committee for taking the time to consider this important legislative consent motion on the information powers proposed in the Health Service Medical Supplies (Costs) Bill, especially given the challenging timescales surrounding the bill’s passage.

We all have a shared responsibility to deliver value for money in our public services and to look at every opportunity to control costs better, and healthcare is no exception. Medicines are by far the most common form of healthcare intervention used by clinicians. In 2015-16, the NHS in Scotland spent a total of £1.67 billion on medicines and appliances or approximately 13.6 per cent of the total healthcare budget. In primary care alone, the gross costs of drugs and appliances dispensed increased by over 14 per cent between 2006-07 and 2015-16. With advances in science and our ageing population, those costs can only continue to grow, and the measures in the bill will enable the four UK administrations to secure better value for money for the NHS from its spend on medicines and other health service medical supplies.

The information powers, which are the focus of the LCM, are a key plank of the bill and will be instrumental in achieving its aim of better control of the costs of health service medical supplies, particularly medicines. They will augment the existing quarterly drug pricing inquiry survey in Scotland, which we conduct through the provisions in the NHS (Pharmaceutical Services) (Scotland) Regulations 2009, and will help provide greater transparency and insight for the Scottish Government and NHS Scotland with regard to the costs of health service products. Moreover, they will help to evaluate whether the supply chain or specific products deliver value for money and control costs and to assess whether adequate supplies of health service products are available for the health service.

In particular, the information powers will open up access to information on sales and purchases of health service medicines and other medical supplies from other parts of the supply chain, particularly manufacturers and wholesalers. Through the development of memorandum of understanding arrangements, the powers will allow the UK Government and devolved Administrations to work together to access and share data on more products and from more parts of the supply chain.

As well as collaboration on health service costs, the approach offers a more streamlined framework for the application of the information powers and reduces duplication of effort across the four UK countries. Data requirements on UK suppliers of health service products will be set out in regulations. The process of developing those regulations, including consultation with stakeholders and the impact assessment, will ensure that data requests put a minimal burden on industry while ensuring that the Government has the information that it needs to make decisions on health service medicines and other medical supplies. Subject to the bill’s passage through the UK Parliament, it is anticipated that the consultation on regulations will take place over spring and summer this year for commencement in the autumn.

I am happy to take questions from the committee.

Okay. Richard Lyle will go first.

Reading through the background paper, I was quite astounded. I will focus on two bits. There are two systems—a statutory scheme and a voluntary pharmaceutical price regulation scheme, or PPRS. A comparison shows that

“a number of single source unbranded generic medicines manufacturers have recently been able to significantly increase prices, often by over 1000%.”

Is that really the case?

In some cases, yes. One of the important elements of the LCM is to consider how costs can be controlled. Martin Moffatt can say more on the PPRS and its relationship with the statutory scheme.

The bill aims to create level playing field between the PPRS, which is a voluntary scheme, and the statutory scheme, and to prevent switching. That would give us far greater insight and control over the costs of drugs and how those costs are investigated and examined. The drugs that we are specifically talking about are unbranded medicines that would not naturally fall under either the voluntary or the regulated scheme, because those focus on branded medicines. As soon as something comes off patent or the licence is sold on and it is marketed as a generic drug, it falls outside the scope of either the voluntary or the regulatory scheme. The bill aims to close that gap.

Am I right in saying that this is a reserved matter? The Scottish Government does not set the prices, but the UK Government does. Bear with me. The original clause applied only to England—as suggested by the paper from the Association of the British Pharmaceutical Industry—and that was resolved following agreement between the Department of Health and the Scottish Government. However—and I just love this—the ABPI says:

“Clause 9 of the Information Regulations states that all ‘English producers’ must keep the following information re. all ‘English health service medicines’ and produce it when requested by the Secretary of State”.

We are being asked to resolve the issue by next week, but prior to this, it was only England that came under the regulations until they thought, “Oops, we’ve got to add other people in” and now they have amended the bill to include us. Is that correct?

Yes. The bill is largely predicated on the reserved matters around price regulation. However, after discussion with the four countries concerned, it was agreed that the best and most practical approach was to involve all the UK countries in discussion in how we can better monitor and control the cost of drugs.

Given the UK character of the manufacturers and wholesalers, it was thought that rather than taking a separate approach it would be better for us to work together to take a more aligned approach to managing costs.

This is my last question. Was it ever previously the case that drug manufacturers were charging different prices in England, Wales, Northern Ireland and Scotland? Has that ever been found to happen?

Some of that information would be quite hard to ascertain. We are now talking about a slightly different issue, which is more about when medicines are taken through the various approval systems, such as SMC, NICE and so on. The offer that is put forward to different health services by pharmaceutical companies often differs. That is not just the case for the UK, but for other countries as well, although the situation is more marked when the offer differs across the four nations.

Generally with the cost of medicines, it is correct that our health service is treated separately. However, we have a close relationship with the UK. As Martin Moffat said, it is important that the wholesalers and the supply chain are mostly UK-based. Going back to the bill, it is now up to the Scottish Government and the NHS to do our best on the price of drugs and perhaps to change some of the areas where there is not a level playing field.

My final question is: will the bill stop that practice?

Martin Moffat laid out the issues of generic and branded medicines and ensuring that action can be taken on things such as the 1,000 per cent increase. Mr Lyle then moved on to the issues when drugs are taken through the approval systems and the prices that companies offer, which can be different for different health systems. The important point on that is that our health system and our approval process through the Scottish Medicines Consortium try to achieve the best and fairest price. There is a responsibility on the pharmaceutical industry to offer the best price. Some of the changes that the Montgomery review recommended will give the Scottish Medicines Consortium more options. For example, it might be able to put a product into the market for a period to test the clinical evidence on it. It will also be able to get the help of NHS National Services Scotland to be more robust in price negotiations at an earlier stage.

We want patients in Scotland to get access to medicines as quickly as possible and we want the health service to get the best price and deal for those medicines. The recommendations on SMC changes that I have approved will help with that.

Why are medicines regulated under two systems—one voluntary and one non-voluntary?

The voluntary pharmaceutical price regulation scheme, or PPRS, has been a UK Government system for a long time and it relates only to the control of branded medicines. Obviously, those drugs are not the same as generic medicines, which is what we are trying to get a level playing field for through the bill. The PPRS is a payment mechanism through which companies pay back to the Department of Health based on, I suppose, aspects of sales. The bill amends things so that there will be no doubt that both schemes will have a level playing field, which will allow us to look at both. Historically, the approach has been on a UK level, looking at the different aspects of generic and branded medicines.

It is also fair to say that the PPRS has not worked as well as anticipated, which is why Jeremy Hunt and his health officials have been in negotiations to try to secure a better deal. Work is still going on to try to get a better deal for 2017-18 while other longer-term changes are made. Obviously, we have a close interest in that, because the PPRS receipts are important for the new medicines fund.

My experience as a member of Parliament for the past almost six years is that I have been lobbied heavily by drugs companies, as I am sure other members and officials are. I have a problem with the way in which drugs companies do that. The conversations usually go along the same lines. The representative comes in and says that the company has a new drug, which is usually to deal with life-limiting or very serious conditions, and they say that they want it in the NHS system. They say that it will make a difference for patients and they really want our help or anybody’s help to get it through the system.

The question that I always ask is, “How much is it?” The representatives then take in a lot of breath through their teeth and kind of shrug their shoulders and say, “Well, we could have a good discount for the NHS.” Then I say, “How much is it?”, and they say that it is £50,000, £60,000 or £70,000. The companies have never lobbied me on anything that costs a fiver, a tenner or 20 quid.

There is a problem with the way in which the drugs industry behaves in dealing with the Government and the Parliament and with the way in which it promotes products. In many senses, I think that such companies are playing God, because they have the power to help people, but they engage in that game. Will the bill help us to get away from that and see what the real cost of medicine is?

In some ways, the bill will help, because it will bring back into line the very small number of companies that might be flipping between the systems—the bill will stop them doing that. The problem of the drug that comes off patent and is then subject to a huge price increase—of up to 1,000 per cent—will absolutely be stopped, which is a benefit.

The bigger picture on medicine supply and cost is very complex. As the cabinet secretary said, we have systems in Scotland that look at clinical effectiveness and cost effectiveness, which is important when we consider the whole population of Scotland and what medicines are coming through. There is also national procurement to try to get the fairest and best price once a medicine has been approved. There will always be discussions about that. The pharmaceutical industry operates in a global market, of which the UK is an important part, and price is a part of that.

I would not like to say that the bill will end our difficulties. We will need to continue to ask for fair prices.

The Montgomery recommendations on the SMC process will also help. What we are looking for is a fair price. We recognise that a lot of research and development costs arise in the development of drugs and that costs are borne by the pharmaceutical industry.

Quite often, when a company makes a submission to the SMC for a second or third time, it attaches a different price. With the involvement of NSS and others, we want to get the best and fairest price early, so that drugs can get to patients earlier, rather than go through a process of rejection and resubmission with a better price. If there can be a better price at resubmission, why cannot there be a better price the first time the drug is submitted? I hope that the Montgomery recommendations, which are not what we are talking about today but are nevertheless important, will help to get drugs into patients’ hands more quickly and at the fairest price.

The bill will not shed light on what it costs to produce a tube of ointment or packet of pills.

Most of the information that we have is about the cost to the NHS. In a global market, it is difficult to work out the development and marketing costs.

I declare an interest: I am a pharmacist, registered with the General Pharmaceutical Council. Like many members, I am pleased that the loophole is being closed. It is galling to see the price of old drugs being hiked up because there is a small market and there are few alternatives. Audit Scotland highlighted the issue in its report on the NHS, and I welcome the proposed approach.

I do not want to be the defender of the pharmaceutical industry, but I note that the Association of the British Pharmaceutical Industry expressed in its submission concern about the data requirements. Is what the bill asks the industry to do achievable? Can the information on individual generic drugs at UK level be extracted from the global information?

I do not think that the proposed approach is onerous. A lot of the systems are already in place. I note the concerns that have been expressed, but companies are already required for tax purposes to keep information on sales and income for six years, so the requirement to record similar information will not create a huge additional burden. The UK Government is going to undertake an impact assessment for the regulations, which I hope will take account of concerns that the industry has raised.

The intention is not to look at every product. Specific instances might require further investigation, which will be to do with value for money for the product across the supply chain. It would be wholly unreasonable to collect such information routinely. The best example that I can cite concerns high-priced unbranded medicine. Gathering information on such medicines will give us further intelligence about whether the prices are justified or need to be amended in some way.

However, as the cabinet secretary said, there will be a consultation on all this, and industry will have an opportunity to respond to that consultation, to consider any practical areas that might be a cause for concern and to address them through the consultation process.

I will ask a further question, which is based on the submission from the Royal College of General Practitioners. A dispensing doctor from that organisation expressed concerns about the particular issue of pregabalin, which I suspect that the bill will not tackle. I understand that the licence for the generic drug did not cover all the indications that the licence for the proprietary drug covered. Is the bill likely to close that loophole or would we need further legislation for that?

We would need further legislation, but we need to make it clear up front that there is an issue around pregabalin and that its use has been subject to judicial review and the appeal process. We probably should not get into the detail of that at this stage, but I believe that once all that has gone through the proper judicial process, there will be an opportunity to look again at the prices that are associated with drugs such as pregabalin and to control those costs better.

As there are no other questions, I thank the witnesses for their attendance.

12:21 Meeting continued in private until 12:31.