HC Deb 10 July 1968 vol 768 cc654-93

Lords Amendments further considered.

Mr. Robinson

—on reasonable terms for the services of the Crown. The difficulties for the Government arising in this context would be formidable, since the consequences for the firm are much more serious and the courts might apply even stricter criteria before granting an application.

This remedy, involving revocation of the patent is more drastic than the one I propose. Anyone who was innocent of the subtleties of hon. Gentlemen opposite might have been surprised that they had tabled this as a method of procedure that they appeared to prefer. But as the House should appreciate, the matter does not end there. There is the question of delay. I am told that the delay could take anything up to five years before a decision was reached. Of course, in extreme cases this remedy might be appropriate, but even in such a case it would be right also to use Section 46 to safeguard the interests of the Exchequer before a Section 32 decision could be announced.

Mr. Brewis

Would it not be possible to use the Section 46 procedure while the delay was going on, the delay of what the right hon. Gentleman considers might be of five years' duration, which I think is an over estimate?

Mr. Robinson

If we adopted the suggestion of the hon. Gentleman's hon. Friends it would have to be not a substitute but an additional provision, and I do not think that that is what we wanted. I must advise the House that the Opposition Amendment would in no way provide a satisfactory alternative to the Government's proposal.

I said that there was one modification of substance between this new Clause and the one rejected by the Lords. Although I have said that there will be no sudden or arbitrary use of this power and that it is essentially one of last resort, I have looked round for a practical way of reinforcing this assurance. In pursuance of this, I have in this new draft of the Clause limited the use of Section 46 for the purposes of the services covered by the Clause to drugs and medicines prescribed by regulations. This provision will at least give not only due warning should it ever be necessary to invoke these powers, but give Parliament an opportunity of discussing and approving their exercise in a particular case.

This concession will, I hope, be seen by hon. Gentlemen opposite, by another place and by the industry as evidence of our intention to make use of this power only if we have to, responsibly and with due opportunity for Parliamentary debate.

Mr. Maurice Macmillan (Farnham)

Before Clause 25 was removed by another place, when it was first introduced into the Bill very late in the proceedings on Report, my hon. Friends objected in principle to what the Clause proposed to do, to the procedure in that it anticipated the Banks Report, and to the fact that it sought to put in medical legislation what should be in patent legislation. We also objected to the manner in which it was sneaked into the Bill at the last minute, not so much, in our view, because the Minister needed the Clause as because he required, so to speak, the jam to give his hon. Friends to take away the taste of the bitter pills which he had forced them to swallow on other matters. These objections still stand. We are still convinced that this would be a better Bill without any of the three Clauses that have been put in from time to time. I will not repeat the arguments, though some of my hon. Friends may later seek to develop them—

Mr. Speaker

Order. Clause 25 is now out of the Bill. The hon. Gentleman can now talk only about the two Clauses we are discussing.

Mr. Macmillan

I beg your pardon, Mr. Speaker. I am referring to the Clause that we say should come after Clause 58. We would rather not have this present Clause or our Clause, but as it is obvious that as a result of the Government's majority we are to have some Clause to this effect we would prefer to have ours, which we consider is not open to the same objection as the other from the point of view of the country, the industry or, indeed, the Ministry itself.

I hope that I shall not be out of order if I remind the House that the whole purpose of the protection of a process by patent is to encourage technical progress, to help research and development, to encourage disclosure, to reward invention and to encourage investment. I remind the Minister that this sort of protection which, admittedly, only in some cases does he seek to run down, is needed specially for innovating industry, and the results that have been seen in other countries which do not have this protection justify its existence in our pharmaceutical industry.

Secondly, I remind the House that the Section 46 powers which the Minister is invoking were originally for defence, and were extended once only in the past to apply to questions of costs. I think that the Minister is now stretching the intention of the original Act beyond both common sense and common justice. It is no good his saying that this is a logical extension of a right already enjoyed. That is an argument that could be used to justify almost anything. A parent has the right to punish his children, and it could be said to be a logical extension of that right to flog them unmercifully. I have no doubt that it would be possible to justify filibustering on the ground that it is a logical extension of an hon. Member's right to speak in this House.

In this procedure the Minister is introducing the concept of administrative right rather than that of invoking the law against any pharmaceutical firm that might, for its private profit, be seeking to exploit the Health Service. In so doing, he is to some extent frustrating the whole purpose of patent legislation. I do not think that what he is doing is necessary for the good of the Health Service. Some of the justification that was put forward earlier in this House and in another place seemed to me to be very exaggerated and to stretch the bounds of probability rather too far. However, again, these matters will be dealt with by some of my hon. Friends.

In suggesting that our wording is more suitable, more sensible and more just than that which the Minister has chosen, we are going along with him further than we did before in assuming that there is a need for what he has called an expeditious effective measure of last resort, or a long stop. The Minister has actually chosen, as he himself has said, the weaker of the two possible sanctions offered on the Notice Paper. He has chosen the least effective of the two deterrents, and the one that is likely to bring its use most into political dispute when he, or his successors, happen to use it.

The reason he has given, or which has been given in another place and elsewhere on his behalf, is that the stick suggested is too big but it is acceptable to the industry which it is alleged it will damage. It is said that the delay implicit in judicial procedure is necessarily going to make this ineffective. It is said that the judge might turn the Ministry down. What this means—the House must realise this when we vote on this issue—is that the Minister is determined to have the power to impose lower prices for political reasons regardless of whether these are fair or reasonable and he is determined to keep an impartial consideration out of the whole question.

His own procedures and committees and the Medicine Commission he has always quoted as being independent, would provide an independent tribunal. The courts certainly are an independent tribunal, but he has chosen to go for a method in which the only considerations which need be taken into account are political. Of course the Minister, as usual in all these arguments we have had on this and other legislation, has justified the powers that the Bill would give him by saying that he will never use them except in cases of emergency as the longstop he has described.

There is one point he made which has to be answered. It is that the procedure of the courts is likely to be more long delayed than that of the somewhat more arbitrary procedure he suggests. Is he not actually saying that justice through the law is apt to be slower than the arbitrary political decision of Ministers? This is an argument that the procedure we have suggested should be turned down without further thought. It is a much stronger deterrent. The Minister said that it is to be used only if there is disagreement on the voluntary system. Surely the prospect not only of having this particular derogation made to losing the patent rights altogether is a far stronger deterrent, a far stronger incentive to reaching agreement.

The effect in the end on prices and costs, should it be necessary to use this procedure and should the courts rule in the Minister's favour, would be greater than he suggests. To match the phraseology of Sainsbury and the arguments put up in another place, we have used the word "reasonable" in the same context as it was there used. It is fair to say that our wording is in itself more reasonable than the Minister's. I hope that the House will agree with this when we press this matter to a Division, as we fully intend to do.

Mr. Laurence Pavitt (Willesden, West)

My right hon. Friend the Minister stands literally half way between myself and the hon. Member for Farnham (Mr. Maurice Macmillan) as he frequently has done in Committee on this Bill and many others. Unlike the hon. Member for Farnham I think my right hon. Friend has gone a little too far to meet their Lordships' wishes. I prefer the original Clause we deleted by accepting the Lords' Amendment. Not only the noble Lords but the hon. Member protest far too much on this, as though some great innovation, some enormous weapon, a sledge hammer to crack a peanut, has been put forward by the Amendment moved by my right hon. Friend. A similar provision prevails in the hospital service, where the path was charted by the right hon. Member for Wolverhampton, South-West (Mr. Powell) when he was Minister of Health. The right hon. Gentleman is hardly the most revolutionary Member of the House. By using that provision we were able to save a tremendous amount of money.

10.15 p.m.

The Clause merely seeks to extend a reserve power in the same degree as has already been used by the Conservative Administration before us. From reading the Press reports shortly after this House dared to adopt the Clause which their Lordships have deleted, from reading the correspondence in The Times from the noble Lord, Lord Shawcross, and from reading speeches made in the other place, one would have thought that the revolution would be here at any minute and that the wicked Socialists intended to nationalise the industry by means of some hidden Clause in the Bill.

The hon. Member for Farnham has deployed a rational case, which I accept—the need to protect patents. However, over the whole period when a similar provision has operated in the hospital service there have been only five cases. When the industry thinks that there is anything which, in the bargaining process, will add to the Government's power to drive an effective bargain, the whole of the weight of the drugs lobby, which is now one of the most powerful lobbies in the House, is brought to bear so that the industry's profit shall be protected and, if possible, the Minister's hands tied behind him when he goes into negotiations.

The Minister made it quite clear on 1st April, when he succumbed to pressures, in which my hon. Friend the Member for Walthamstow, East (Mr. W. O. J. Robinson) and I played our part, and included the Clause which is now deleted, that it would be only a reserve power in the usual process which is now well worn. I sometimes wonder whether my right hon. Friend does not always negotiate with the industry before he discusses matters with his hon. Friends when he is putting forward Clauses of this kind.

The point which I am querying is the provision in the Clause—it was not in the Clause which has been deleted—about having a Statutory Instrument each time my right hon. Friend wishes to use the powers that the new Clause will give him. Does this mean that for each separate negotiation, for each separate drug, there will have to be a separate Statutory Instrument? Or does it mean that in a series of negotiations in which my right hon. Friend can foresee himself getting into difficulty he can have an omnibus Statutory Instrument to cover a similar number of drugs or to enable him, over a whole range of negotiations with the industry, to take powers so that the negotiations can be brought to a successful conclusion?

This is a mild Clause, milder than that which has been deleted. I think that it is the least that the Minister can put forward. I therefore hope that it will be accepted. The alternative put forward by the hon. Member for Farnham is one which he says that the industry is prepared to accept. Of course the industry is prepared to accept it, because it takes power from the Minister and gives the industry a little more. The hon. Gentleman has argued that in many ways it would be stronger, but he knows full well that it is very unlikely that the power contained in it would be effectively deployed. It looks bigger, but in fact it is smaller because of the clumsy way in which it would have to be used.

I am not in full support of my right hon. Friend, but I am 95 per cent. behind him. I would have preferred not to have had the Statutory Instrument provision, but if that is the concession he thinks that he must make to the tremendous pressure to which he has been subjected I hope that the House will accept the Clause.

Mr. David Crouch (Canterbury)

The hon. Member for Willesden, West (Mr. Pavitt) spoke of the Minister requiring the usual power and of a reserve process. I see in the new Clause, whichever number it be given, much more than the usual power and much more than just a reserve process.

I am concerned that, after a late sitting last night and this morning, I shall have to speak not at length but in some detail now because I feel strongly about the new power which the Minister is taking to himself in a matter which does not require such arbitrary power.

There have been references to the letter from Lord Shawcross which appeared in The Times of Friday, 24th May. I shall read an extract from it: This enables the Government, if its negotiations with the manufacturer on the price of some particular medical product to be supplied to the National Health Service are not to its liking, by executive decision without the slightest safeguard of legal process to override the patent, and, without more ado, to obtain supplies elsewhere, probably from abroad. Those are words of wisdom and not really of contention from a man sensible to the problems facing the Minister, facing society and facing the industry.

Mr. K. Robinson

Will the hon. Gentleman go on to explain that, in those circumstances, there would then be royalties payable which, in the event of failure to agree between the Government Department and the manufacturer, would be settled by the courts? It is nothing like the arbitrary procedure which the hon. Gentleman and Lord Shawcross make it out to be, and, furthermore, it has been in existence since 1949 for the whole of the hospital service.

Mr. Crouch

I am grateful to the Minister for that interjection. It underlines what I seek to prove, namely, that the Minister is a reasonable man and has been a reasonable man in office for some years, but he is tonight presenting to the House a Clause which is not reasonable. He has spoken in reasonable fashion, and I do not object to anything which he has said, but I am most concerned about the present move which he and the Government are making.

It all began with the Sainsbury Report. In paragraph 11, page 2, Sainsbury recommended: That, since the negotiation of prices may sometimes fail to result in agreement, a procedure must be available to which Ministers may have recourse; and that Ministers should consider amendment of the National Health Service Acts to bring the General Medical and Pharmaceutical Service within the definition of 'sevices to the Crown' for the purposes of Section 46 of the Patents Act, 1949. It began with Sainsbury and a responsible recommendation at the beginning of its Report in regard to what the Committee had found to be a need. In other words, Sainsbury found a need to invoke Section 46 of the Patents Act in relation to the whole of the medical services. Sainsbury is clear on two points, that there must first be seen to be a failure of negotiation between the Ministry and the pharmaceutical industry, and then, if there is such a failure, the Minister must have recourse to some instrument in order to achieve action, action, that is—I agree with what was said earlier—to produce a speedy result. Section 46 of the Patents Act would then be invoked. Why? There would be no consideration by the Ministry, an independent jury, arbitration or a tribunal. Why should we, tired as we may be, have to consider granting the Government arbitrary power and the power of executive decision? Should not we be considering arbitration, jury decision or decision by tribunal?

Much is at stake. The Bill has been before the House and another place for some weeks and months. I shall not weary the House with an argument for the pharmaceutical industry, in which I have no interest, and the case about prices, profits and expenditure on research. Rather, I seek to understand the law and the protection of the individual and individuals acting as corporations and companies serving the individual.

I return to Sainsbury, as I shall more than once tonight. Paragraph 329 of the Report says: Section 46 is a selective instrument; it has been used, and when it was used it afforded a clear and creditable action of resort by the Ministry following upon unsatisfactory negotiations. It is about the whole question of when Section 46 should be used that I wish to speak. Paragraph 331 of the Report says: We are aware of the feeling that the use of Section 46 has aroused in certain sectors of the industry, but we do not think the industry's legitimate interests would be prejudiced if the section were used judiciously only as a procedure of resort following total deadlock after full negotiations. We do not believe that if the system of negotiation we recommend is accepted the need to resort to Section 46 is likely to arise again. Yet it has arisen again tonight—

Mr. K. Robinson

Resort is not being made to Section 46 tonight. The powers are being put into legislation.

Mr. Crouch

The right hon. Gentleman might almost be a lawyer, the way he trips me up. I am glad to see the Attorney-General here to advise us. I shall not weary the right hon. and learned Gentleman—

Mr. Speaker

Order. I remind the hon. Gentleman that many hon. Members wish to speak in the debate.

Mr. Crouch

I accept that, Mr. Speaker. The new Clause is not a sop to Sainsbury, but it must be a sop to someone because otherwise I cannot see why it is here. It is highly irresponsible that we should be debating it tonight. Sainsbury proposed a pricing system based on consultation and understanding. Throughout the whole of the Report we find the phrase, "reasonable approach of the industry". Paragraph 295 of the Report says: To perform their work effectively, the Ministry must have access to the books and premises of pharmaceutical manufacturers. In transactions of the scale involved this seems to us entirely reasonable; and we should expect the industry to co-operate, as do other industries with extensive Government contracts. If any firm were to raise difficulties which could not be resolved by other means it would be appropriate for Ministers to consider the use of their compulsory powers to require disclosure". I entirely agree with that sentiment. I believe that the whole industry has agreed with such a statement in the negotiations with this all-commanding and controlling industry. I come back to the Sainsbury Report, because so much depends on it. In paragraph 320 it said: The pricing arrangements we have recommended and thee negotiations with individual firms that are involved should lead to an increased understanding by the Ministry of Health of the operations of the firms in the industry and of the way in which prices are determined. We should expect negotiations on the basis proposed to lead to rapid agreement in most cases. Yet tonight we are considering this blunt instrument which the right hon. Gentleman is asking us to accept, although throughout the Sainsbury Report, on which I thought he had based his judgment for this Clause, there is constant repetition of the statement that there is no need for such a blunt instrument and that Sainsbury would expect that the negotiations would lead to a solution.

So far so good. But still no case has been made out for this new Clause. No case was made for it on Second Reading. The Clause eventually emerged in another place as Clause 25. Now it re-emerges with a number unknown but to follow Clause 58.

I have not heard a convincing argument which makes me believe that the right hon. Gentleman, as a reasonable man, thinks that this is a necessary Clause and that it is necessary for the Government to have this arbitrary power. I believe that he would not want to use such executive action and arbitrary powers. But during the Report stage of the Bill in another place, Lord Sainsbury decided that there was a place for a Clause such as this—Clause 25 as it then was. He said: … I am still brought up against the problem of negotiations between the Departments of Health and the pharmaceutical industry—or, rather, the particular firm. In the past we have been faced with a deadlock. Under the voluntary price regulations scheme, after lengthy negotiations, we have been faced with deadlock; and we were convinced that the Ministry needed a weapon of last resort."—[OFFICIAL REPORT, House of Lords, 27th May, 1968; Vol. 292, c. 978.] I refer to this because I believe that Lord Sainsbury's reference in such a manner to the then Clause 25 is the same basis for this new Clause. I oppose it most strongly. The noble Lord spoke of a deadlock. I do not believe such a power as this should be given to the Minister. I wanted to satisfy myself on this question of deadlock because it occurs in the Sainsbury Report and in Lord Sainsbury's speech and in the debates on the Bill. I made some investigations of my own and I have been to one of the principal pharmaceutical companies. I looked at its files of correspondence of dealings with the Ministry some years ago.

I have been to Pfizer and studied its files. I have been unable to find one shred of evidence of a deadlock having arisen in 1961, when Section 46 of the Patents Act was originally applied by the then Minister. I know that it was not the only firm to whom the Minister applied the Section at that time. I would be interested to hear from the Minister whether he can cite one other example of a breakdown in negotiations which led ultimately to a deadlock, and the application of Section 46.

I have unearthed a remarkable story from the files. It starts on 1st January, 1961, when the new version of the voluntary price regulation scheme came into effect, having been agreed between the Ministry and the pharmaceutical industry. On 2nd January the Ministry of Health wrote and asked Pfizer to negotiate the price of tetracycline, suggesting a meeting. On 16th January the meeting took place, and Pfizer then promised the Ministry information on its marketing of tetracycline in world markets, and all its price details. On 23rd January this information was submitted in writing, in a long detailed letter containing information covering nine countries and ten competitors. On 26th January the Ministry thanked Pfizer for this and said that it was "studying with interest the information on prices."

On 31st January a second meeting took place. [Interruption.] I do not wish to make a tedium of this, but it is extremely important background to why we are here tonight. On 31st January Pfizer promised, at that meeting, details of profits for 1959–60. It undertook to let the Minister have those figures within eight weeks after the completion of its 1960 accounts, after 31st March, 1961. On 7th May the Minister announced the decision to apply Section 46 of the Patents Act—before the expiry of the agreed eight-week period after the completion of the 1960 accounts. Was this a deadlock?

Mr. K. Robinson

I am not trying to defend the actions of the right hon. Member for Wolverhampton, South-West (Mr. Powell). It is not for me to do so. It is interesting for the House to listen to this attack on the right hon. Gentleman. What I was doing was giving assurances, for myself, of what I think future Ministers would do if this power was in their hands.

Mr. Crouch

Again I can find no fault with the Minister's intervention. I am going through a history, and of course there are gloomy events which would prompt him to get to his feet. On 18th May, having applied Section 46, the Ministry wrote to Pfizer concerning tenders to be invited for certain pharmaceutical and patented drugs. On 27th June Pfizer presented to the Board of Trade accountant, acting for the Ministry of Health, detailed schedules with profits for 1959 and 1960. I am seeking to show that even at this stage of difficulty and disagreement, there was consultation and negotiation, between the Minister and the supplier of pharmaceutical products.

Mr. Pavitt

We are grateful to the hon. Member for his chronological study. Will he also take note of the fact that the Report of the Civil Appropriations Committee said that in dealings with Company A and Company B negotiations went on for years, and although no deadlock took place no progress was made between 1961 and 1966, and that it was only after that that £250,000 was saved in the following five years?

Mr. Crouch

I will certainly take note of that.

On 14th July, 1961, the Board of Trade wrote to Pfizer asking certain questions about the figures that it had received. I have the letter here. It was a pleasant, friendly, and even encouraging letter. The writer, the Board of Trade Accountant, said that he would be pleased to visit Pfizer's head office at Sandwich.

On 18th August, 1961, Pfizer replied fully in a five page letter, taking up the question of the proposed meeting that had been suggested by the Board of Trade to discuss Pfizer's figures, and offered to do so. No meeting ever took place, no negotiations were ever commenced, and no reply has ever been received by Pfizer to its letter, which was the result of extensive accounting research.

Mr. Deputy Speaker (Sir Eric Fletcher)

I do not know whether the Minister can help me. It is not apparent to me how the hon. Member's observations are relevant to the Amendment that we are discussing.

Mr. K. Robinson

I share your difficulty here, Mr. Deputy Speaker. This is interesting history, but it bears no relation to what will happen under this power, which was not in existence at the time that these events took place.

Mr. Crouch

I can assure you, Mr. Deputy Speaker, that it is very relevant to what we are discussing tonight, and I will say why. I have, unfortunately, had to give a chronological report of letters that I have seen on the file between a pharmaceutical firm and the Ministry of Health, which show that there was no—

Mr. Deputy Speaker

I have no doubt that this is very interesting background, but it does not seem to be relevant to the Amendment we are discussing. I would remind the House that we are discussing Lords Amendments, and the scope of debate on Lords Amendments is fairly limited. I do not think that the hon. Member should pursue this historical background.

Mr. Crouch

I accept your direction in this matter, Mr. Deputy Speaker. I have given this list of events to show that there was no evidence of a deadlock. In fact a deadlock never arose. Yet when Lord Sainsbury introduced and blessed in another place a Clause similar to this, Clause 25, it was voted out. Lord Sainsbury used as the blessing for such an Amendment being discussed the question that a deadlock had been reached between a certain pharmaceutical firm and the Ministry. All this evidence, which I consider most important, shows that no deadlock had ever arisen, and I challenge the Minister to say whether any deadlock has ever been reached with any pharmaceutical firm in any negotiations.

Lord Sainsbury, in his report, has continually shown that he did not believe that there was anything but a reasonable attitude by the pharmaceutical firms in their approach and discussions with the Ministry. Misunderstanding there may have been, but never deadlock. Yet we are asked to accept deadlock in negotiations as the reason for arbitrary executive action by the Ministry to be used at the Minister's discretion. I maintain that deadlock never obtained.

Mr. Deputy Speaker

Whether deadlock did or did not take place at some earlier date in some earlier dispute does not seem to me to be relevant to the discussion about the appropriateness of a new Clause which does not even mention deadlock.

Mr. Crouch

Mr. Deputy Speaker, I would not seek to weary you by getting you on your feet at all. Therefore, I must accept what you say. I still feel that there is evidence, which I have here and about which the House should know, which is relevant to what we are discussing, but I will not move away from the instruction which you have given me. However, this is a matter which distresses me considerably, because I believe that the Ministry is trying to write something on the Statute Book which recent history has shown not to be necessary.

10.45 p.m.

I challenge the Minister to say whether, in his Ministry's files, he can find any evidence of deadlock, or failure or breakdown of negotiations with any of the companies with which it was negotiating on prices under the voluntary price regulation scheme which makes him feel that there is a need for this House even to consider this arbitrary and executive action.

What I have recounted happened a long time ago, and it is not my purpose to cry over spilled milk. The House has been very tolerant with me tonight. The House is no doubt weary, and I am grateful for the sympathetic attitude which has been shown to me. My purpose has been, and is, to put a record straight, a record that there was something wrong, that deadlock was reached. There was never any deadlock.

I maintain that this manufacturer adopted a reasonable attitude, that he was willing, as Lord Sainsbury subsequently reported, to open his books to the Ministry and to the Board of Trade's accountants, that he was willing to agree his prices under the voluntary price regulation scheme. There was a breakdown in negotiations because the Ministry caused such a breakdown by failing to hold a proposed meeting, by failing to answer correspondence, and the Minister can check his files to find that out, but there was never any question of a deadlock.

Mr. Deputy Speaker

Order. I do not want to interrupt the hon. Member again, but this seems to me to be not only irrelevant but tedious repetition, and I must ask the hon. Member to desist from this sort of argument.

Mr. Crouch

Mr. Deputy Speaker, such strong words require me to look very carefully at my notes and to desist from quoting as much as I think the House is entitled to hear. I shall discard some of my notes, but I think that the House will be worried if it does not hear what they contain.

I suggest that there is no evidence anywhere to show this condition of deadlock—

Mr. Deputy Speaker

Order. I must order the hon. Member to discontinue his speech and resume his seat.

Mr. W. O. J. Robinson (Walthamstow, East)

I do not propose to follow the hon. Member for Canterbury (Mr. Crouch) in what he said. I think that it would be wrong to do so, because the action of which he is complaining was taken by the right hon. Member for Wolverhampton, South-West (Mr. Powell) and I have not given him notice of my intention to attack his action. I wonder whether the hon. Gentleman has thought it necessary to do so?

When I moved a new Clause embracing the principle of the new Clause which my right hon. Friend has now moved, I thought it a very modest and reasonable proposal, and I still do. I was, therefore, like my hon. Friend the Member for Willesden, West (Mr. Pavitt), a little surprised at the reaction to it in the correspondence columns of The Times, and the misrepresentation, too, of the object of the Clause, and more particularly was I surprised at the rejection of the principle of it in another place. That is why I was glad to hear my right hon. Friend move the new Clause to restore the principle which was removed from the Bill.

I share the concern of my hon. Friend the Member for Willesden, West that what had hitherto, and under a Conservative Government, been right under patent law to do by executive action should now be thought necessary to do by regulation. Because of what I have heard, I think that we ought to try to get back to what the Clause is about, and what it seeks to do. I am not an expert on patent law—in fact I am very much of a tyro—but as far as I have been able to read it cannot be said that the Clause is aiming to make new law.

Section 46 of the Patents Act already lays down and repeats the provisions of previous Patents Acts that the Crown or any Government Department has an inherent right to make use, free from any patent restrictions, of any patented invention in the services of the Crown. I would remind the hon. Member for Canterbury that the Clause does not make it obligatory or a condition precedent that any negotiations should first take place with the Ministry. It gives the Minister and the Government Department the right to invoke the provisions of Section 46 and at once to use a patented invention without any negotiations having been undertaken in any respect. So, strictly, there can be no complaint—although my right hon. Friend, being the reasonable man that he is, does not propose to invoke the law as it is and as it has been for a long time.

My right hon. Friend has reminded us that it was a Conservative Minister of Health who, without any prior approval from Parliament, sought to, and did, by executive action, invoke the provisions of this Section. It was not mentioned that his right to do so was upheld at law in an action taken against the Minister by Pfizer's. The hon. Member for Farnham (Mr. Maurice Macmillan) said that the purposes of the Section in the Patents Act was to enable the Government to use patented inventions for the defence of the country. That might have been the original intention, but hon. Members opposite should bring themselves up to date in their thinking, as did the Court of Appeal.

I want to read an extract from the judgment of one of our judges in a patents case. He said: I cannot think that according to the ordinary sense of language judged by the ideas and conditions of the present day and age that a patented process is not used 'for' the services of the Crown if it is used by a department of government for the fulfilment of the duties laid on the government by the legislation creating and regulating the Ministry of Health; or that the promotion of the health of the people of this country is in this respect capably distinguished from the provision of their protection against the hazards of war by the maintenance of the Crown's armed services. I am glad that my right hon. Friend is up to date in his thinking.

The question at issue is not whether the law allows it; it does. The only question is whether or not one action is in the service of the Crown. The argument was canvassed at great length as to whether there could be said to be any difference between giving a drug to a patient in hospital and giving the same drug to him in his own home, via his family doctor. It cannot be argued that there is any difference in the service of the Crown in that respect.

It was that anomaly to which the Sainsbury Committee drew attention. It was used by one of the judges in the case to which I have referred. It has been argued that this is an infringement of the basic rights of the pharmaceutical industry and that it is wrong to take this action. I remind the House that the Patents Act provides that if the Government take the action which the law permits the pharmaceutical industry has abundant remedy in applying to the court to settle the terms which the Government can use any patented article.

Mr. Dudley Smith (Warwick and Leamington)

Then why have patents at all?

Mr. Robinson

I did not write the Patents Act. I am only repeating what it says. The Government may grant a monopoly and decide that a patent shall enure to the benefit of an industry. If the Government can do that, why should they not legitimately, for their own purpose, take it away? This is not a hardship on the pharmaceutical industry because the courts will determine, in the absence of an agreement with the Treasury, the price to be paid, and, if necessary, there can be resort to arbitration.

Two methods are proposed, one by my right hon. Friend and the other in (he Amendment of the Opposition, which has not been moved. May I briefly draw attention to the relative merits of the two proposals? My right hon. Friend said that, despite what the law will permit him to do, he will not use this power save as a last resort if and when negotiations break down and, secondly, that he will put regulations before the House, subject to annulment, before he invokes this power. Hitherto, under existing patent law, only the courts could prevent this power from being invoked by the Government. Even though the Government would have the use of this drug, the remaining provisions of the Patents Act would still apply—that agreed reasonable terms must be fixed or settled by arbitration. Is that not an eminently reasonable approach to the problem, bearing in mind, as we must, the very considerable amount of public expenditure involved in the exercise of these powers?

In their approach, the Opposition for the first time are prepared to concede that the use of a drug for the family doctor or the family dentist service could be a service of the Crown. It is pleasant to know that they have been converted to that argument.

Mr. Maurice Macmillan

I thought that I had made it clear that we accepted that only because we realised that the Government's majority would ensure that there was such a Clause as this in the Bill. We did not accept the principle. We regarded our proposal as the lesser of two evils.

Mr. Robinson

I accept that. I was trying to be fair and I was about to say that in any event the Amendment acknowledges that principle for a very limited purpose.

What is the purpose which the Opposition have in mind? Their Amendment would enable my right hon. Friend or his Department to apply to the court, not for permission to use on agreed terms, but completely to revoke the patent, if he could show that the patentees had failed to be reasonable in their approach as to the agreed price. On first reading, and, indeed, later, I have been tempted to support the Amendment, had it been moved, because it would give the Government Department even greater advantages. It would certainly penalise the pharmaceutical industry far more than does my right hon. Friend's suggestion, for if the Government proved their case the patent would be revoked entirely, and therefore no subsequent restrictions whatever could be invoked on the extent to which the power could be used, or the manner, or the price paid. There would be no machinery for a settlement of the price or compensation.

Furthermore, if a patent is revoked it leaves the way open to all other comers to use the patented product. Is that what the Opposition want? Action would be initiated solely by the Government Department, by the executive, not by the Parliamentary control suggested by my right hon. Friend. It is for the Opposition to choose which of the two courses they prefer. Despite the attractions to which I have referred, my preference is for my right hon. Friend's new Clause, and I am sure that that would be the preference of the pharmaceutical industry.

11.0 p.m.

Sir Harry Legge-Bourke (Isle of Ely)

I wish to raise one narrow point with the Minister which has not been emphasised in the discussion and which is concerned solely with the introduction of the word "vend" into the Minister's Clause. As I understand it, this is a matter which does, or could, have the effect of making the pharmaceutical industry the only private sector industry which in time of peace has to suffer its inventions being laid open to the power actually to sell patented goods to wholesalers, retailers and consumers, being given to the Government, and by the Government to third parties.

I perhaps should declare an interest, though not a pecuniary one, in that I am Vice-President of the Institute of Patentees and Inventors to whom this particular point has been put. I am not saying that the Institute entirely shares the anxiety of those who put the point to it, but what I am saying is that what this Clause is doing is bringing in the word "vend" as a right in addition to the power to make, use and exercise. Hitherto vending has only been brought in in cases of extreme emergency as set out in Section 49 of the Patents Act, 1949.

This is a matter which I think ought to be justified. Maybe there is a perfectly adequate justification for it, but I think we ought at least to know why it is now thought necessary to do in time of peace what hitherto has only been claimed by the Crown in time of emergency.

Colonel Sir Tufton Beamish (Lewes)

I have at the outset to declare an interest in that I have been a director of a well-known pharmaceutical company for some ten years. My concern about this Clause, however, is not related to any narrow interest of the industry, still less to any interests of my own.

In my view this Clause is thoroughly objectionable on a number of grounds, not least those touching the economy of the United Kingdom as a whole.

I think the Clause is bad in principle, and that if it becomes part of the law it will be thoroughly damaging when it does. I was quite unconvinced by the Minister's argument, which I think smacked very strongly of special pleading.

I would go further and say that the Clause is disreputable. I hope I have the Minister's attention. I say it is disreputable, which I know is a strong word, because although I do not know whether the Minister connived at the putting down of a Clause very like this a few days before Report stage, he at any rate accepted it and in doing so broke a pledge he gave to the industry.

If the Minister wants to deny this, I hope he will get up and say so. But he gave a pledge that he would not legislate in this field without full consultation, yet there was no consultation at all.

I see the Minister is shaking his head. If he denies this I hope he will get up and say so, because this is an important point. He does not move.

There was no consultation at all with the industry. The outright rejection of the Clause by the other place by 93 votes to 63 gave the Minister his chance to re-establish his previously good reputation with the industry by not persisting with this Clause, and I was very sorry indeed that he did not take that chance.

I intend to refer briefly to only four of the many objections which I see to the Clause. Firstly, I think it is both unnecessary and unwise to anticipate the findings of the Banks Committee.

Secondly, I think it is contrary to the principles of our patent system in two important respects which I will describe. Thirdly, I think it is bad because it does not contain certain vital safeguards which it should contain. Lastly, I want to refer to the point raised by the hon. and gallant Member for the Isle of Ely (Sir Harry Legge-Bourke) about the inclusion of the word "vend".

As the House knows, the Banks Committee was set up in 1967 by this Government. Its terms of reference will be well-known to some hon. Members, but they were very wide indeed—so wide that the whole question of patent law in this country is now in the melting pot. This Government put it in the melting pot.

I have no reason to think that the Committee will recommend an extension of Crown use under Section 46 of the Patents Act, 1949. Indeed, a great deal of expert advice tends towards the limitation of Crown use under that Section. I regret that the Attorney-General is not here because he would be bound to agree with that view.

I will prove the point with some quotations. In the Pfizer case the House of Lords upheld the Minister of Health's action by a majority of three to two on strictly legal grounds, but a majority of the Law Lords expressed fears about any extension of Section 46 for two reasons. They questioned its extension beyond the needs of national defence—to which Section 46 was originally meant to apply, but no longer does—and they questioned its extension to cover services performed by Government Departments involving the use of patented articles by persons outside those Departments. Lord Wilberforce said during that hearing that to him this seemed … to go far beyond a logical extension of the Crown's rights …". These are important views, given by a distinguished lawyer, and it seems that no account has been taken of them by the Government in tabling the Amendment.

In evidence to the Banks Committee, the Institute of Chartered Patent Agents described the powers of the Minister of Health to invoke Section 46 … as seeming to be contrary to the principles of the British patent system. Yet that is exactly what the Minister is seeking to do by the Amendment. I wonder what advice the Government's Law Officers have given the Minister about that. I do not suppose that we shall be told. Similar views have been expressed by the Trade Marks, Patents and Designs Federation. What account has been taken of those views? As far as I can see, none.

It is, therefore, complete humbug for the Minister to describe the Amendment, which flies in the face of such a wealth of expert opinion, as not fundamental to patent law. Never have I heard such nonsense. [Interruption.] The right hon. Gentleman said that it was not fundamental to patent law. I am a layman, not a lawyer, but I suggest that the lawyers agree that what is being sought to be done by the Amendment is fundamental to British patent law. The Minister had no business to say that what the Amendment seeks to do is not fundamental in this regard.

This raises the question of the attitude of the President of the Board of Trade to the Amendment. What view has he expressed? Why is he not here? Why is not even a junior Minister here to represent that Department when the whole question of patents is being opened up by the Amendment? Perhaps the right hon. Gentleman can be sent for so that he may express his view before we part with the Amendment. Is he content for this important change to be made without the recommendations of his expert Committee, the Banks Committee, being available? Indeed, the Committee has not even reported, and this proposal will almost certainly be in direct opposition to the Committee's views. Hon. Gentlemen opposite must be anxious about this matter.

Sir H. Legge-Bourke

Has my hon. and gallant Friend noted that in peacetime the only precedent for introducing the word "vend" is in Section 106 of the Patents Act, 1949, which refers only to atomic energy? The word has otherwise been introduced only in times of emergency.

Sir T. Beamish

That is a relevant observation. I believe that "vend" also appears in Section 49, which deals with emergency powers, but I may be wrong.

The Amendment is contrary to two important principles underlying our patents system. First, as the Institute of Chartered Patent Agents pointed out to the same Committee: … the basis of the patent system is the provision of an incentive to invention and progress, by the offer of a limited monopoly, and it is believed that experience has justified the system. The pharmaceutical industry is, as the House well knows, above all an innovating industry. Therefore, to put patent rights at risk in the arbitrary way proposed by the Clause is to remove an incentive to invention and progress.

It is also, I believe, bound to discourage research and slow down the flow of important new drugs needed for medical advance, and is likely to cause a decline in the industry's excellent export record. These axe very serious risks to take so carelessly. The President of the Board of Trade has an interest to declare on this point, and so has the Chancellor of the Exchequer, particularly with the nation's economy in such a sorry state. The economic consequences of this Clause could be very serious.

The second important principle of our patents system which the Clause offends is that Britain tries to conform to good international practice and to improve international standards. This is clearly set out in the terms of reference of the Banks Committee, which mention … the increasing need for international collaboration. From time to time, as a director of a pharmaceutical company, I have written to the President of the Board of Trade, under successive Governments, about the infringement of patents by foreign and Commonwealth countries. On each occasion the Minister concerned has deplored the infringement, and agreed with my view that if the habit were to spread it would be severely damaging to our economy.

Only last October, the then Minister of State, Board of Trade, wrote in a letter to me: It is really a question of trying to persuade the Governments concerned that the erosion of patent rights will result in lack of confidence in business firms and resultant harm to the country. … Certainly we shall do all we can to persuade these people to see reason. What about persuading these present people to see reason, too? What about our own Government. If foreign Governments are doing these things, and it is wrong, why does not the President of the Board of Trade get to work on his own colleagues? Again, why is he not here tonight when we are discussing this important Clause which must be contrary to the advice he has given to the Government? Acceptance of the Amendment would be a step in the opposite direction, and set the worst possible example to countries whose standards of practice in upholding patent rights are lower than our own.

My third point is the lack of safeguards embodied in the Clause. Under Section 46 of the Act there is no appeal. The Government are not required to show why they need to exercise this arbitrary power without the judicial scrutiny which is inherent in Section 32(3). The Minister has still not explained why, if he feels that his powers are inadequate, he has not sought to widen the definition of "services of the Crown" in Section 32, as my hon. Friends suggest in their admirable Amendment.

Section 32(3) allows the revoking of a patent … if the court is satisfied that the patentee has without reasonable cause failed to comply with a request of the department to make, use or exercise the patented invention for the services of the Crown upon reasonable terms. On what other grounds could the Minister seek to revoke a pharmaceutical patent? In time of emergency the Government have absolute powers under Section 49. All the assurances, if that is the word, which the Minister gave earlier—not that I doubt his word, of course—are worthless. He said something about giving an assurance about how he thinks Ministers who follow him at the Ministry of Health are likely to act. That is worth just nothing. It is what the law says that matters, not such assurances. I do not doubt the Minister's integrity in the matter at all, of course, or his assurance that while he is at the Ministry he will act reasonably. I fully accept that. But he cannot possibly pledge his successors. All they have to do is to act within the law, and there is no reason at all why they should act reasonably.

Another small point which should be noted is that nothing is written into the Clause to make it binding upon the Minister to apply the standards of "safety, quality or efficacy" to which manufacturers applying for licences under the Medicines Bill must conform. We are told that the Government always comply with their own laws. The truth of the matter is that in 1961, when my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) invoked Section 46 of the Patents Act, it was discovered subsequently that quite a number of drugs which were imported were not only sub-standard but likely to have harmful side-effects. This could well happen again, because the Minister is not providing the safeguard that drugs made by unlicensed manufacturers must conform with regard to "safety, quality or efficacy" in the same way as drugs provided by the patentee.

11.15 p.m.

Finally, in line 5 of the Clause the Minister seeks to extend his powers under Section 46 by including the right to vend. I realise that the definition of "vend" has been debated at great length by the highest legal experts in the land, and I shall not state my own views. It was described, probably very accurately, by Mr. T. A. Blanco White in his book "Patent for Inventions". 3rd Edition. 1962, in this way: the expression 'vend' includes not only sale, but commercial dealing generally. Therefore, using this word means that the Minister is going far wider than anyone has ever gone before. We have had no explanation of this. There has been dead silence. We all want to know why "vend" suddenly appears in the Clause. I am sure that we shall get an explanation. The Minister is smiling, but it is an important point, as I am sure that he will agree. This is a new word to introduce in normal peacetime conditions. I am sure that we shall get an explanation of why that word appears.

Mr. K. Robinson

I was merely indicating that in due course I shall be happy to answer the hon. and gallant Gentleman. I am asking to be given a chance. That is all.

Sir T. Beamish

The Minister will have a chance. He need not worry. He will get plenty of chance. I look forward to hearing what he has to say. I hope that he will also answer the other points which have been raised and, in particular, tell me what the President of the Board of Trade thinks about this Clause. This is what I most particularly want to know.

These, then, very briefly indeed, are my main objections to the Clause. It pre-judges the findings of an expert committee which is already studying patent law as a whole in the context of improving international collaboration. It is contrary to important accepted principles of our patents system. It gives the Minister absolute powers which he can exercise without explanation and without allowing any right of appeal. The system of praying against an order laid under the Clause means nothing whatsoever. It is not Parliament that decides these things. It is the Government of the day. We all know perfectly well that that is true. An order cannot be amended. It can only be defeated. It is the Minister of Health in the Government of the day that has the say-so here. This is not a safeguard.

I conclude by saying that I hope that the Minister, having listened to the argument advanced against the Clause, will think again even at this very late hour. I think that this is a thoroughly bad Clause. I hope that the Minister will withdraw it.

Mr. Nigel Fisher (Surbiton)

I must as usual in these debates declare an interest as a director of a group of pharmaceutical companies. The purpose of the Clause, as I understand it, is to enable the Government to obtain the medicines they want at their own price. The Government are saying in effect, "If you will not sell to me at my price, I will break your patent and buy from people who can copy your invention without incurring the research and development costs which you have had to meet". That is legalised robbery of a patent right by a Government Department. It is just the sort of erosion of private rights against which Parliament should protect the people. It is also a bonus for the copyists at the expense of the innovators. Its objective is simply a short-term and, in my view, a very shortsighted economy for the Minister of Health.

I say that it is short-sighted because the patent system which it erodes is essential to research. In Italy there is no patent protection; therefore, there is little research and no significant new drugs. As the right hon. Gentleman knows, this is a high-risk industry. If patent rights are threatened in this way, research is automatically discouraged and the end result may well be fewer inventions, lower exports, and higher imports.

Let alone extending Section 46 in the way the Clause would provide, I doubt very much whether any part of the Health Service should be regarded as a service of the Crown for the overriding of patent rights. When it was used originally and, I thought, wrongly by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), I did not agree with what he did. In passing, I must say that it is amusing and ironic to hear, of all people, the hon. Member for Willesden, West (Mr. Pavitt) praying in aid something done by my right hon. Friend the Member for Wolverhampton, South-West. One does not often hear praise of his views from hon. Members opposite.

Mr. Pavitt

The hon. Gentleman will agree that one could not find a better or firmer example of a rigid and conservative attitude as Economic Secretary to the Treasury than that of his right hon. Friend.

Mr. Fisher

The hon. Gentleman must be very pushed for arguments if he has to quote with such approval a right hon. Member whose views on this and many other subjects he does not accept.

Although hon. Members opposite may say that what my right hon. Friend did was right, I consider that it was wrong. Moreover, as my hon. and gallant Friend the Member for Lewes (Sir T. Beamish) pointed out, my right hon. Friend received the narrowest of judgments in the House of Lords when the case went there—three votes to two—and even then the majority of the law Lords commented adversely on the inroads which the then, and lesser, Crown user rights were making into private patent rights.

This new extension of Crown rights is even more damaging to the industry and seriously reduces the protection which the patent gives to the inventor. It is also quite out of line with Europe and the Common Market. No European country has a provision like Section 46. In France, for instance, the State can take a patented invention only for the purposes of national defence. As has been said, that was the original intention of the legislation in this country, too. It was to be used for defence purposes in a time of national emergency, and quite right in that context. But that was all. To use it as my right hon. Friend did, and as the right hon. Gentleman now proposes to do, as a piece of price reducing mechanism—for that is what it amounts to—is an arbitrary action never intended or even dreamed of when Parliament passed the Patents Act.

This is a typical example of the way in which legislation passed for one purpose can be misused—I go so far as to say abused—by a subsequent Government for another and quite different purpose. Moreover, the pharmaceutical industry is the only industry in the private sector, so far as I know, to be singled out for discriminatory treatment in this uniquely unfavourable way. It is the only industry in which patented inventions can not only be taken over but can actually be sold by the State at a time when there is no national emergency.

In the other place, the noble Baroness, Baroness Phillips, implied that the C.B.I. is now quite relaxed about the Clause. That is not so. The C.B.I, is marginally less opposed to the Clause in this new form than it was to the Clause in its old form, but it is still opposed to it in any form at all. It was disingenuous of the noble Baroness to imply otherwise.

If the purpose of the Clause is dubious, the tactics in introducing it were deplorable. A Bill dealing with public health is not the right vehicle for a change in the patent law. Perhaps that is why the Clause was not mentioned in the original Bill, a Measure dealing with different matters and having no connection with patents whatever. It was not even discussed or included in Committee. Then suddenly on Report, after a four-month interval, the Clause was slipped on to the Order Paper on a Friday in a thoroughly hole-in-the-corner way.

Mr. W. O. J. Robinson

I know that the hon. Gentleman wants to be accurate. I do not make a point of this. but that has been said elsewhere, and the fact is that it was not put in late on a Friday but early on a Thursday.

Mr. Fisher

If the hon. Gentleman thinks that that makes his case stronger or less disreputable I am ready to let him have the extra day. Most people did not see it until the Monday. Hon. Members are very often in their constituencies on Fridays—I was myself—and I saw that Clause for the first time on the Monday. I have been here for some time, but I may be an innocent in these matters. I was surprised in the circumstances of the way in which it was introduced that the right hon. Gentleman so readily accepted it. I thought that it was a shabby way to treat the House.

As my hon. and gallant Friend the Member for Lewes pointed out, it was also a thoroughly discourteous way to treat the industry, because the right hon. Gentleman had promised to consult the industry and in fact there was no consultation. It had barely even been mentioned in the industry's talks with the Ministry. Between the Friday—or the Thursday—and the Monday there could have been very little time for reflection in the Department, unless it was all hatched up before. If it was a genuine back-bench Amendment there can have been only a few days for study by the Ministry and the experts. There was certainly inadequate time before the debate for my hon. Friends and myself to study the matter.

What was the hurry? The Banks Committee is reviewing the patent law and should report before long. Why should the Committee's views be prejudged in this rushed way? The right hon. Gentleman has said that the Clause is a weapon of last resort which will seldom be used. What, then, is the urgency? In any event, such a Ministerial assurance does not have the force of law.

The Treasury might well bring pressure on future Ministers of Health, and even on the present Minister, to cut National Health Service costs. It is very likely that it will. Look at what happened over the prescription charges, in spite of the assurances the right hon. Gentleman gave his hon. Friends—

Mr. Speaker

Order. That is just a shade outside the Amendment.

Mr. Fisher

I must confess that I could not resist it, Mr. Speaker; but I must accept your Ruling. It had nothing to do with the subject.

In those circumstances—and this is perhaps the relevance—the Clause would be a gift to the Treasury which few Ministers could withstand. If there is a deadlock between a pharmaceutical firm and the Government over the price of a product why should not there be an independent inquiry or arbitration to resolve it? No reasons have been given. The industry accepts the principle of public accountability for its prices. It would agree to accept the verdict of a third party, but the Government will not agree. They want to be judge and jury in their own cause.

It is no answer to say, as the right hon. Gentleman said, that arbitration would involve delay. I understand that the industry would agree to price reductions being made retrospective to the date of the start of the negotiations. That point has therefore not been answered, and I hope that we shall have a better answer when the Minister replies.

The industry would agree to the use of Section 32 of the Patents Act, as suggested in our Amendment, which carries complete revocation of the patent if the court decides that the patent holder has been unreasonable. I do not think that one can say fairer than that.

The right hon. Gentleman's Clause does nothing but legalise expropriation. Why will not the Government go to the courts? There can be only one answer. It is that they know that they might lose in the courts. The right hon. Gentleman said that he will seldom, if ever, use the Clause, which is not a very good reason for rushing it into the Bill. He does not seem to understand that the Clause will demage the industry and the nation, whether it is used or not, because research costs millions of pounds and takes years, and if there is doubt about the reliability of patent protection, many companies will be worried and some will either carry out less research or will do so in another country and export the results of it to Britain instead of exporting the results of it from Britain, that would not be helpful to our balance of payments.

11.30 p.m.

The right hon. Gentleman has dealt very fairly with the industry over the Sainsbury Report and the Medicines Bill. I wish to pay him that public tribute although it may embarrass him. I have always said—and he knows I mean it—that he is a very good Minister of Health. It is therefore all the sadder that, on this issue, he has disappointed so many of his admirers in order to placate a few of his hon. Friends. He cannot be proud of this Clause. In origin it is not even his own. I wish that he would drop it and bury it and so restore his good name for fairminded objectivity, which is a valuable reputation for any Minister to enjoy.

Mr. K. Robinson

By leave of the House, I would like to make a brief reply. The debate has been not dissimilar from the debate which took place on the matter in another place. We have had some hyperbole, some lather of passion and some monotonous declarations of personal financial interests from hon. Members opposite. We have heard a great deal about alleged injustices which might arise from invocation of these powers. I will ones again remind the House of what would happen in that event. Royalties would be determined in a court of law on the basis of fairness and equity and would be paid by the Government to the patent holder in respect of sales which the Government made from unlicensed sources. Is there any gross unfairness and inequity in a procedure of that kind? Nor have we heard one word from hon. Members opposite about the desirability of protecting the Government and the taxpayer against possible—I put it no higher—abuse of monopoly of patent rights.

The hon. and gallant Member for Lewis (Sir T. Beamish), whose speech was rather more intemperate than most, and the hon. Member for Surbiton (Mr. Fisher) accused me of taking decisions without consultation and of a breach of faith with the industry. This I reject utterly. Hon. Members know that we attach great importance to consultation with the industry and there have been a number of meetings. Section 46 has been amongst the subjects discussed, contrary to what the hon. Gentleman said, at these meetings and representatives of the Association of the British Pharmaceutical Industry have made clear their general views on this Sainsbury recommendation. They subsequently supplied my Department with their evidence to the Sainsbury Committee, which set out those views in detail, and, shortly before the Report stage of the Bill in this House, sent a prepared paper summarising their current views.

Mr. Dudley Smith rose

Mr. Robinson

No. I will not give way. I want to finish this part of my speech about consultation.

Mr. Smith

It is an important point and the right hon. Gentleman should give way.

Mr. Robinson

This paper added nothing to what we knew about the Association's views and my decision to accept the Amendment on Report moved by my Hon. Friend the Member for Walthamstow, East (Mr. W. O. J. Robinson) was taken in full knowledge and after careful consideration of the views of the Association.

I would certainly not accept that there has been any breach of any undertaking to the Association.

Mr. Fisher rose

Mr. Robinson

I will not give way. I want to deal with another matter. I have sat here, listening to a lot of hyperbolic speeches, and I propose to answer one or two points. The hon. and gallant Member for Lewes (Sir T. Beamish) claimed, unless I misunderstood him, that some of the imports made under the previous Section 46 arrangements had been defective in quality, and even dangerous. I know of no such case, and I have made inquiries. I hope that if he can substantiate this, he will let me have full particulars, so that it may be investigated.

Sir T. Beamish

I will with pleasure.

Mr. Robinson

I was asked about the use of the term "vend". The inclusion of the term is to make it clear that sales of drugs from the manufacturer or importer to the distributor, and from one of these to the chemist, doctor or dentist, who may all be involved in the supply of drugs for the pharmaceutical services, are covered by the Clause. The hospital service is already covered. The right of the person authorised to vend to the Minister was held by the courts in the Pfizer case to be implied. Any authorisations that may be issued would specify the limitation as to the use of the powers.

My hon. Friend the Member for Willesden, West (Mr. Pavitt) asked whether it would be necessary to lay a separate regulation for each drug in respect of which it is proposed to make an order. It is not necessary. The regulations could name one or more drugs, and having done so, the provisions of Section 46 could be invoked by one or more authorisations. The House has listened to a very exaggerated attack on this limited extension of patent protection, which the Crown already enjoys in the hospital service. All we seek to do is to extend that to the general medical and pharmaceutical services, and I hope that the House will now pass the new Clause.

Mr. Paul Dean (Somerset, North)

We have had from the Minister, unusually for him, two totally inadequate speeches on this new Clause. He has not only chosen an extremely bad thing to do, but he has also chosen the worst and unfairest way of achieving his objectives. In view of what has been said in some of the speeches by hon. Gentlemen opposite, I want to make clear that our Amendment with regard to Section 32(3) was by no means the choice which we would make in other circumstances. It was simply that if the Minister is determined to do something, in our view it would be fair to use the procedure of that Section rather than what he is proposing.

It has been said repeatedly from this side of the House that the Minister is creating a situation in which he will be judge and jury on a matter with regard to the reasonableness of prices. It is no good his saying that royalties will be decided by the courts. He is judge and jury in the beginning, and that, in our view, is highly undesirable, and contrary to natural justice. He also said that there has been no reference to the need to protect the taxpayer. Surely he realises that the best way to do this, in this instance, is to ensure that there are fair conditions in which the pharmaceutical industry can operate?

There is no doubt that this Clause will create uncertainty. We hope that it will not, but it could well discourage research and, therefore, have a bad effect on the very good export record of this industry. If that were to happen the Minister would not be caring for the interests of the taxpayer. The Minister said that normal competitive conditions do not exist. But surely he recognises the tremendous importance of the export trade of our pharmaceutical industry. Surely he recognises, too, that what he is proposing to do will put this country out of line with every country in Europe. There is no country in Europe—indeed, there are few countries in the world—which has a provision similar to Section 46. There is always the possibility, as a consequence, of retaliation against British patented products abroad. All these things are of significance to the taxpayer.

The Banks Committee is considering the whole of this complex subject at present. The Minister says that this is a Clause for last resort. Why the hurry? Why cannot the Minister wait until the Banks Committee has reported on this matter? It would be very interesting to know the discussions which have been going on behind the scenes between the Minister and his right hon. Friend the President of the Board of Trade. I have a shrewd suspicion that the absence of the President of the Board of Trade suggests that he is not very happy about the Clause that the Minister of Health is putting forward.

There is also the lack of consultation with the industry, which the Minister has not been able to deny tonight. Surely this is the worst possible atmosphere in which talks for the revision of the voluntary price regulation agreement can take place. The Minister is placing the pharmaceutical industry in a position in which no private industry in this country is at the moment: not only to take over, but also for the State to be able to sell. I will not repeat the points which have been made by my hon. Friends about the word "vend".

The Minister has put forward an exceedingly weak case. In our view the reason is clear. It is a disreputable example of political horse trading and appeasement of certain of the right hon. Gentleman's supporters. I hope that the Minister will feel suitably ashamed at having to stoop to this level, which is so unusual for him. In view of this, when the debate is concluded, we shall condemn it in the Lobbies.

Mr. Dudley Smith

I apologise for troubling the House at this late hour, but I will be brief, as hon. Members waiting for the next business had a late night last night. Clearly the blame lies fairly and squarely on the Government for bringing forward such important business at such a late hour. Obviously, from the speeches that we have heard, with no element of filibustering, there are some important points to be made in a debate of this kind, and it is right that Parliament should have an opportunity of expressing an opinion.

I say, further, that this debate would never have taken place if the Minister had not, at the eleventh hour, brought forward an alteration which incensed another place, with the result that this was thrown out and the Minister now needs to bring it forward again. I hope this will teach not perhaps the right hon. Gentleman, but the Government that if they do underhanded things they are liable to rebound. They gain nothing in the long term. In fact it holds up business.

I hope that the Leader of the House, who has now turned up to eventually perhaps move the closure, will realise that in circumstances like this—obviously the right hon. Gentleman is not paying attention, as usual—it is better to play straight with the Opposition, whatever the particular motives, than to introduce a Clause at the eleventh hour.

11.45 p.m.

I declare an interest, because I am a director of the pharmaceutical division of a leading British company. I make no apology for that—[Interruption.]

Mr. Speaker

Order. Mr. Dudley Smith.

Mr. George Lawson (Motherwell)

On a point of order, Mr. Speaker. Is it not in order to interject when we have listened to one Member after another telling us how this matter affects his pocket?

Mr. Speaker

No, it is not in order to continue to interject.

Mr. Smith

It sometimes helps if people with expert knowledge of an in- dustry are able to give an opinion. Quite irrespective of my connection with the industry, I was interested in it long before I was connected with it professionally, and on an issue of this sort, an issue of fundamental British justice, it is right that people should be allowed to speak, whether they have an interest or not.

It has been said that the powers contained in the Clause will be used only as a last resort. If that is the case, why have they been rushed into the Bill? The right hon. Gentleman is a good Minister in many other respects. Only the other day he made a statesmanlike statement about the Sainsbury Report. Why has he now brought in this alteration to the Bill? He has introduced it as a quid pro quo for his rebellious Left-wing back benchers who are incensed with his views on other aspects of the Sainsbury Report.

All through the debate the point has been made that there should be fair protection for patents. If we believe that the law of patents should appertain, surely in this case adequate protection should be given to the pharmaceutical industry? We have heard—and this is true—that this is an innovating industry, that it lives by research. It has brought incalculable benefits to mankind, and it should be protected.

The idea behind the Clause is obviously, in extreme circumstances, to try to get drug prices down. Pressure for this type of provision comes largely from people who adopt an emotional approach to the subject. They think that it is wrong and immoral to make a profit out of the sick. That is an emotive phrase, and most people would support it, but I say thank goodness that the pharmaceutical industry makes profits out of the sick, because by so doing it enables itself to go on with further research and to bring in new drugs to save lives and save people from serious illness.

I think that two things will happen if the Clause is implemented. Either the reputable pharmaceutical companies will find that it is not worth while going on with basic research and will begin adapting other company's products under the rules which will allow them to do so with the patents being waived, and therefore they will be purely manufacturers and not innovators, or the Minister will resort to pirate drug companies which operate not only in this country but on the continent.

I wonder whether the Minister has considered that? Does he understand that many of these pirate drug companies are dubiously operated, and only too prepared to cash in on somebody else's invention? I do not think it is going too far to say that if the Minister—or a less liberal successor than the right hon. Gentleman—brings in this provision he will provide a licence to steal somebody else's invention, and will allow somebody else to benefit very considerably from the research and financial efforts of the reputable companies.

The pirate concerns which I have in mind are completely unscrupulous. They try to cash in on the skill and efforts of others. They devote a great deal of time to bringing forward drugs many of which, as my hon. and gallant Friend the Member for Lewes (Sir T. Beamish) said, are substandard.

Instead of devoting his time to bringing in compulsory licensing the Minister should devote it to a far greater extent to running these pirate drug companies out of business. He is entering very

shady territory if he or any of his successors starts dealing with pirate drug companies in this country, who import much material from abroad, a lot of which is sub-standard. Evidence can be provided to prove this.

In effect the Minister's mollifying noises, to the effect that this is really a last resort, in case of difficulty or inability to reach agreement with companies is no assurance. We have heard such assurances on many occasions from this Government. In many cases the nation will live to regret the acceptance of those assurances, because they mean nothing. This provision will be very harmful to the pharmaceutical industry. It is the sort of move that is brought forward by a Socialist Government who do not believe in private enterprise, in order to assuage its left wing critics of the Sainsbury Report.

The Minister is far too sensible a man not to realise that this provision will do no good. He knows that it is a harmful provision, and I hope that at a later stage he will recant and withdraw it.

Question put, That the Amendment be made: —

The House divided: Ayes 87, Noes 84.

Division No. 278.] AYES [11.52 p.m.
Alldritt, Walter Hamilton, James (Bothwell) Newens, Stan
Archer, Peter Hannan, William Oakes, Gordon
Armstrong, Ernest Harper, Joseph O'Malley, Brian
Brown, Hugh D. (G'gow, Provan) Harrison, Walter (Wakefield) Oram, Albert E.
Cant, R. B. Houghton, Rt. Hn. Douglas Palmer, Arthur
Carmichael, Neil Howell, Denis (Small Heath) Pavitt, Laurence
Coe, Denis Hoy, James Peart, Rt. Hn. Fred
Conlan, Bernard Huckfield, Leslie Pentland, Norman
Dalyell, Tam Hynd, John Perry, Ernest G. (Battersea, S.)
Davies, Dr. Ernest (Stretford) Irvine, Sir Arthur (Fdge Hill) Prentice, Rt. Hn. R. E.
Dempsey, James Jackson, Colin (B'h'se & Spenb'gh) Price, Christopher (Perry Barr)
Dobson, Ray Jenkins, Hugh (Putney) Price, William (Rugby)
Doig, Peter Johnson, James (K'ston-on-Hull, W.) Robinson, Rt. Hn. Kenneth (St.P'c'as)
Dunn, James A. Jones, Rt. Hn. Sir Elwyn (W.Ham, S.) Robinson, W. O. J. (Walth'stow, E.)
Dunwoody, Mrs. Gwyneth (Exeter) Lawson, George Silkin, Rt. Hn. John (Deptford)
Dun woody, Dr. John (F'th & C'b'e) Lewis, Ron (Carlisle) Silverman, Julius
Eadie, Alex Lomas, Kenneth Slater, Joseph
Ellis, John Lyons, Edward (Bradford, E.) Snow, Julian
English, Michael McBride, Neil Varley, Eric G.
Ensor, David McCann, John Walker, Harold (Doncaster)
Evans, loan L. (Birm'h'm, Yardley) McGuire, Michael Watkins, David (Consett)
Fernyhough, E. Mackintosh, John P. Whitaker, Ben
Fitt, Gerard (Belfast, W.) McNamara, J. Kevin Whitlock, William
Forrester, John Mahon, Peter (Preston, S.) Williams, Alan (Swansea, W.)
Fowler, Gerry Mahon, Simon (Bootle) Williams, Mrs. Shirley (Hitchin)
Gourlay, Harry Manuel, Archie Willis, Rt. Hn. George
Gray, Dr. Hugh (Yarmouth) Mendelson, J. J. Woodburn, Rt. Hn. A.
Gregory, Arnold Millan, Bruce
Grey, Charles (Durham) Morgan, Elystan (Cardiganshire) TELLERS FOR THE AYES:
Griffiths, Eddie (Brightside) Neal, Harold Mr. Alan Fitch and
Mr. J. D. Concannon.
Atkins, Humphrey (M't'n & M'd'n) Bell, Ronald Boyle, Rt. Hn. Sir Edward
Baker, W. H. K. (Banff) Black, Sir Cyril Braine, Bernard
Beamish, Col. Sir Tufton Boardman, Tom (Leicester, S.W.) Brinton, Sir Tatton
Bruce-Gardyne, J. Holland, Philip Rawlinson, Rt. Hn. Sir Peter
Campbell, B. (Oldham, West) Hornby, Richard Rhys Williams, Sir Brandon
Chichester-Clark, R. Hunt, John Ridley, Hn. Nicholas
Clegg, Walter Hutchison, Michael Clark Rossi, Hugh (Hornsey)
Cooper-Key, Sir Neill Jenkin, Patrick (Woodford) Russell, Sir Ronald
Corfield, F. V. Kershaw, Anthony Sharples, Richard
Crouch, David Kirk, Peter Shaw, Michael (Sc'b'gh & Whitby)
Crowder, F. P. Kitson, Timothy Smith, Dudley (W'wick & L'mington)
Dean, Paul (Somerset, N.) Lancaster, Col. C. G. Smith, John (London & W'minster)
Emery, Peter Lane, David Speed, Keith
Errington, Sir Eric Legge-Bourke, Sir Harry Stainton, Keith
Eyre, Reginald Macmillan, Maurice (Farnham) Steel, David (Roxburgh)
Farr, John Maude, Angus Taylor, Edward M. (G'gow, Cathcart)
Fisher, Nigel Maydon, Lt.-Cmdr. S. L. C. Taylor, Frank (Moss Side)
Fletcher-Cooke, Charles Miscampbell, Norman Tilney, John
Fortescue, Tim Monro, Hector Turton, Rt. Hn. R. H.
Foster, Sir John More, Jasper van Straubenzee, W. R.
Gibson-Watt, David Morgan, Geraint (Denbigh) Ward, Dame Irene
Godber, Rt. Hn. J. B. Munro-Lucas-Tooth, Sir Hugh Whitelaw, Rt. Hn. William
Grant, Anthony Murton, Oscar Williams, Donald (Dudley)
Grant-Ferris, R. Noble, Rt. Hn. Michael Wilson, Geoffrey (Tturo)
Gurden, Harold Osborn, John (Hallam) Winstanley, Dr. M. P.
Hall, John (Wycombe) Peel, John Younger, Hn. George
Harrison, Col. Sir Harwood (Eye) Percival, Ian
Harvie Anderson, Miss Price, David (Eastleigh) TELLERS FOR THE NOES:
Heald, Rt. Hn. Sir Lionel Pym, Francis Mr. R.W. Elliott and
Mr. Bernard Weatherill.

Consequential Amendment made: In page 55, line 31, after 'Act', insert 'except section (Extension of power of user by Crown of patented invention to user for certain health services) thereof'. —[Mr. K. Robinson.]

5 "A.—(1) Regulations made under section 38(3) of the 1946 Act (which authorises regulations providing for the making and recovery of charges in respect of pharmaceutical services) and regulations made under section 1(1) of the National Health 5 Service Act 1952 (which authorises regulations providing for the making and recovery of charges in respect of the supply, as part of hospital and specialist services under Part II of the 1946 Act, of drugs, medicines and appliances) may each provide for the grant, on payment of such sums as may be so prescribed,
10 of certificates conferring on the persons to whom the certificates are granted exemption from charges otherwise exigible under the regulations in respect of drugs, medicines and appliances supplied during such period as may be so prescribed; and different sums may be so prescribed in relation to different periods.
15 (2) This section shall have effect in Scotland as if, for the references therein to section 38(3) and Part II of the 1946 Act, there were substituted references respectively to section 40(3) and Part II of the 1947 Act."

Read a Second time.

Amendment made: In line 9, leave out 'so' and insert 'thereby'—[Mr. K. Robinson.]

Mr. K. Robinson

I beg to move, That this House doth agree with the Lords in the said Amendment, as amended by the Amendment.

The object of this Clause is to give Ministers power to make Regulations providing for the issue to persons who pay a prescribed sum of certificates entitling the holder to exemption from the payment of prescription charges.

The need arises from the decision to reintroduce charges and to make arrange-