Finance Committee, 06 Mar 2001

Meeting date: Tuesday, March 6, 2001

Official Report 232KB pdf

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Proposed Contingent Liability

Members have before them the paperwork on the clinical trial of blood products by the Scottish National Blood Transfusion Service protein fractionation centre. We discussed a similar, but not quite the same, contingent liability last year.

The paperwork is self-explanatory and lists the seven trials that are being carried out. Do members have any comments?

Is there no possibility of quantifying the liability? I assume that the liability is for more than £1 million, otherwise the Scottish Executive would not have brought the matter before the committee. Cannot we have a ballpark figure—a guesstimate based on previous experience—or an analysis of such contingent liabilities and the risk factors that are involved?

I agree with Adam Ingram. Clinical trials are common—current medicine approval is based on clinical trials—therefore the private sector has substantial experience of managing such risks. Some sort of ballpark quantification should be possible, unless the Scottish Executive is saying that the trials involve unlimited liability, which may be the case. If so, that should be stated.

For clarification, we received evidence from John Henderson some months ago that one could not undertake unlimited liability as, conceptually, the limit to the liability is the overall size of the Scottish budget—that is, about £19 billion. It is clear that it is not possible to have unlimited liability.

Unlike Richard Simpson and others, I am not an expert on clinical trials. Has the Executive considered purchasing an insurance product rather than undertaking a contingent liability? That is what a private company would do. On what basis are such judgments made? Why do not we purchase insurance against the risks? That would allow us to make the best judgment, instead of having a cost-free but potentially large-cost contingent liability.

We have been given notification of seven trials, which begin this month. The notification covers the next 12 months. It is likely that we will be asked to renew the contingent liability annually, although the process will be easier next year in the light of the seven trials.

I do not have an answer to Andrew Wilson's question about the commercial sharing of risk with those who use the products once they are brought in. At present, the Executive has not given us specific information and I am not sure whether it would be able to do so. The paper does not refer to previous examples. Perhaps Richard Simpson, with his medical experience, could enlighten us. There is no information on which to base an indication of what the risk might be.

It should be possible to quantify or get some idea of the risk. Often, the risks can be difficult to assess, but the likely cost of something going disastrously wrong should be quantifiable. I find it difficult to believe that that has not been done, given the length of the trials involved. The exercise will become very complex if we are faced with costing little bits of trial each year.

The seven trials range in length from nine months, which is the shortest, to three years, which is the longest. A number of the trials will last 18 months. The Executive should specify the liability for each trial, but perhaps the trials are not sufficiently large for that approach. Some of the trials involve a small number of patients, while others involve about 90 patients, so it should be possible for the Executive to add to its paper a column that says, "We are putting in a contingent liability of X." That should be done to cover the entire length of the trial.

I do not know whether the budget allows us to adopt that approach, but it would seem more sensible than being left to consider the last two months of a trial. It would be better if the Executive were to say, "We're signing off on this package of studies."

I do not know where we can take our questions, given the time scale that is involved. We need advice from the convener and the clerks.

I suggest that contacting the Auditor General might be worth while. We could ask for his long-term views on contingent liabilities, the number that are undertaken, the monitoring that is carried out and the scope of those liabilities. If we were to undertake a large number of contingent liabilities without having an idea of the total limit, we could be left with unlimited liabilities that go well beyond the scope of the budget. We should probably keep an eye on that issue. Given the small scale of the present liabilities, the situation may not be serious, but we might want to keep a lid on liabilities.

I understand that officials are willing to come to the committee to answer our questions. In the light of the points that have been raised, perhaps we should ask them to do so.

I note that the minute from the Executive is dated 5 February, and that the paper says that we

"should approve, or propose an amendment, within 20 days".

I ask Callum Thomson to clarify when the 20-day period begins.

The committee has more latitude than the memorandum suggests. I have spoken to the officials and understand that it would be acceptable for the committee to take evidence from them next week. After that, the committee would either agree the memorandum or propose an alternative form of words. Members need not worry that the 20-day period runs from 5 February.

I had the same question about sharing the risk. We should, as far as possible, identify the risk. This is as near as any of us will be to signing a blank cheque, which is not a step to take lightly or unadvisedly.

The view of the committee is clear: we want to invite officials from the Scottish Executive health department and perhaps from the finance department to assist us with some of the questions that members have raised. That may or may not be possible next week, although Callum Thomson reckons that it will be. We will seek to achieve that, therefore this item will be continued.