ROCHE PRODUCTS LIMITED (Hansard, 27 June 1973)

§ Mr. Benn (by Private Notice)
asked the Secretary of State for Trade and Industry whether he would make a statement on the price increase announced by Roche in defiance of the Monopolies Commission order.

§ The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)
The prices of certain drugs, namely Librium and Valium, supplied in this country by Roche Products Limited have been reduced by the Regulation of Prices (Tranquillising Drugs) Orders 1973 following the Monopolies Commission report.
I have to tell the House that the company, through its solicitors, has given notice to the Government that unless the Government agree to certain conditions in connection with the possible repayment of moneys representing the difference between the pre-order and post-order prices, Roche intends to disregard the order and to raise prices to pre-order levels tomorrow at noon. I am placing copies of the letter from the company's solicitors of 25th June in the Library.
It has been reported that, without waiting for the Government's reply, Roche today informed pharmaceutical wholesalers that prices have been raised in breach of the order as from 9 a.m. today, but I have subsequently been informed by the company's solicitors that this is not the case.
The Government are ready to seek an injunction in the High Court to secure compliance with the order. The Government will continue with the arrangements for the debates on the motions in both Houses for an affirmative resolution on the Regulation of Prices (Tranquillising Drugs) (No. 3) Order 1973.
Roche's threatened non-compliance with the order has caused great uncertainty and possible financial risk to thousands of retail and wholesale chemists. My right hon. Friend the Secretary of State for Social Services is watching the position carefully but sees no need for immediate action.

§ Mr. Benn
I am very grateful to the right hon. and learned Gentleman for his statement and especially for his agreement to publish the text of the letter so that the House and the country may see what this company is seeking to do. It is clear from the right hon. and learned Gentleman's statement that what is in effect a militant multinational monopoly is trying to exploit for its own benefit those who use the National Health Service. I assure the right hon. and learned Gentleman that he can count on the full 1531 support of the Opposition in the very strong line which apparently he intends to take.
May I ask the right hon. and learned Gentleman these questions? Is he satisfied that he has adequate powers already to deal with the situation, and will this involve a criminal act or will it simply come under another category of law breaking? Secondly, has he adequate powers to get the information required, and is it possible that Section 8 of the Counter-Inflation Act, which gives him power to amend previous legislation if it relates to prices and charges, could be used if the monopolies legislation required to be changed for this purpose? Thirdly, does the EEC have any powers which may restrict the action of Her Majesty's Government? Finally, does not this confirm the wisdom of the Opposition's proposals for some element of public ownership in the pharmaceutical industry?

§ Sir G. Howe
I am grateful to the right hon. Gentleman for his support of what I have told the House, although I cannot go along with him in the implication that he draws in the last part of his supplementary question.
The right hon. Gentleman asks whether we have powers to enforce compliance with the order and whether they are of a criminal or a civil nature. As I understand it, compliance with an order of the Monopolies Commission is secured by means of an injunction and by the associated civil remedies which may lead to the full sanctions available in the High Court.
The right hon. Gentleman also asks whether we have power to obtain information from the company. The House will recall that this has been at the heart of the problem. As the Monopolies Commission records in paragraph 156 of its report, it asked the company to provide in support of its claim certain details of the group's trading for 1970 which, in the Commission's view, was … the minimum we thought necessary for our purpose. The group refused to supply that information. To this day, that remains the position. At no stage, even before the Committee set up in the other place, has the information been forthcoming.
1532 As for the possible use of the provisions of Section 8 of the Counter-Inflation Act, I am afraid that, not having had an opportunity to consider the matter, I can only say that my impression is that those powers can be used only for the purpose of that legislation.
I am not aware of any powers available to the European Economic Communities restricting our own powers in relation to this matter.

§ Mr. Tugendhat
Is my right hon. and learned Friend aware that the behaviour of Roche throughout this controversy has occasioned grave disquiet amongst many industrial companies, especially those engaged in the pharmaceutical industry, where it is felt that the company is behaving in an extraordinary and unreasonable manner? Will my right hon. and learned Friend emphasise the point which he has made already, that the basis of the dispute is the company's refusal to provide information which almost any company in any other part of the world would regard as reasonable if it were given to any journalist and published in a newspaper? The dispute is not about the matters of principle raised by Roche but about the company's refusal to substantiate its claims by providing basic information. Is it not the case that if the company substantiated its claims the Government would be prepared to consider them?

§ Sir G. Howe
I agree with my hon. Friend that the behaviour of Roche in this matter has caused disquiet to many other companies, and not only in this industry, and is unrepresentative of the conduct of companies whose affairs are investigated by the Monopolies Commission. The Monopolies Commission was seeking information. It required further information to enable it to arrive at a judgment taking account of the matters that Roche would have wished to put forward. In the absence of that information the Commission made every allowance possible and arrived at an independent judgment. It reached the conclusion that the research and promotion costs claimed grossly exceeded levels which should be taken into account in arriving at a fair price. That is the underlying difficulty in the dispute.

§ Mr. Pavitt
Will the right hon. and learned Gentleman confirm that under 1533 Sections 41 and 46 of the Patents Act there is power to purchase from alternative sources similar medicinal products having the same therapeutic quality? Will he bear in mind that Roche has had a free run and, according to the Monopolies Commission, has been making fairly large profits for 14 years? Since there are only two years to run, although I do not suggest there should be any element of a threat, will the right hon. and learned Gentleman confirm that he does not preclude the possibility of using weapons which he has to hand?

§ Sir G. Howe
The two sections of the Act are available for use in the two circumstances which they apply. In fact there is no reason at present to believe that there will be any case for using them. My right hon. Friend the Secretary of State for Social Services has no reason to anticipate difficulty in securing the continued availability of these drugs. But obviously my right hon. Friend will bear in mind what the hon. Gentleman says.

§ Sir Harmar Nicholls
Would my right hon. and learned Friend bear in mind that he has the support of every reasonable person for the Government establishing their authority in the interest of the nation? In view of the last sentence of the comments by the right hon. Member for Bristol, South-East (Mr. Benn), will he beware of the help offered by the Opposition, as those words show that they would not be working on the merits or demerits of this case, but using it as a hook on which to hang their usual political prejudices about public ownership?

§ Sir G. Howe
There is no question of using or advancing political prejudices of the kind to which my hon. Friend has referred. The position is as he stated it. The prices of these drugs charged by this company have been considered by the Commission established by the authority of Parliament and in accordance with the duly laid down procedures of that body. The Commission came to a certain conclusion, as a result of which I made this order. The order has been affirmed by this House and been the subject of debate in the other place. We are proceeding upon that basis in accordance with the will of Parliament and acting, as we believe, in the interests of the nation.

§ Mr. English
Is there not a more general power to break a patent than that mentioned by my hon. Friend the Member for Willesden, West (Mr. Pavitt)? Would not the solution be to allow other pharmaceutical firms to manufacture the products, including perhaps the British-owned firm in my constituency?

§ Sir G. Howe
The powers referred to by the hon. Member for Willesden, West (Mr. Pavitt) are the principal powers of this kind. I do not know of any wider power of the kind referred to by the hon. Member for Nottingham, West (Mr. English).
When considering this matter my right hon. Friend has, on the one hand, to consider the availability of the drugs in question, and as a general rule we ought always to remember the extent to which the great majority of pharmaceutical companies are responsible for the development of drugs of this kind and are entitled, in the general view of the House, to recover some profit by means of patents for their original investment and research. The question is how far and to what extent.

§ Mr. Dalyell
Is the right hon. and learned Gentleman aware that some of us, after many hours on the Counter-Inflation Bill, left Committee Room No. 10 under the impression that the powers of disclosure related not only to inflation, but to monopolies? Is he now saying that this is wrong and that the Counter-Inflation Act does not apply?

§ Sir G. Howe
The powers of the Counter-Inflation Act are available for the purposes and in the context of that Act. In this case it is beside the point, because we are concerned with the extraction of information from outside this country. It was that information that the Monopolies Commission sought. If that information had been made available, it would have helped the Commission to appreciate the case that Roche claimed to put forward. That could not be helped by the exercise of disclosure powers of whatever kind in this country.

§ Mr. McBride
Would the right hon. and learned Gentleman accept that there is no legislation in the European Economic Community for such a position as has been stated? Would he further accept, in the context of a multi-national 1535 company, that the Commission's definition is that this is second generation thinking born of the original Treaty of Rome, so there is no legislation whatsoever?

§ Sir G. Howe
I do not quite follow the hon. Gentleman. Articles 85 and 86 of the Treaty of Rome give the Commission power to deal with commercial practices which, in accordance with their provisions, are operating contrary to the proper working of the Market. Those powers can be and have been exercised by the Commission in a number of cases. It is a different question whether they will be exercised in this case.

§ Mr. Benn
Would the right hon. and learned Gentleman look again at the powers in the Counter-Inflation Act? Paragraph 40 of the Pay and Prices Code makes it clear that price reductions can be forced upon a company where profit margins are exceeded. Hence, this must carry with it the power to get by force, under the provisions of the Counter-Inflation Act, the information necessary to make such a judgment.
Would he recognise that there would be widespread resentment if wage claims were held down under the Counter-Inflation Act with the possibility of criminal action, whereas only civil action could be taken against a multinational company?
Finally, would he recognise that the problem of the multinational company is not confined to the trade union or workers' side, but threatens the sovereignty of Government and must be seen to be a major problem? Whether or not hon. Members agree with the solution put forward by the Opposition, the multi-national company is a threat to and erodes the national sovereignty of nation States.

§ Sir G. Howe
The position about this multinational company and our powers is that we have the powers which the House has authorised me to exercise. Those powers have been exercised by the making of an order against the company. The only point at which the powers of any nation state run out is when it seeks to exercise powers outwith and beyond the jurisdiction. If we seek, either under the Counter-Inflation Act or under this legislation, to enforce disclosure from defendants who are not within our jurisdiction, there is a manifest limit to what 1536 can be done in that respect. However, that has not prevented the Monopolies Commission, in the absence of co-operation by the company, from reaching the conclusion that it has reached and recommending as it has recommended. We have been able to make this order fixing the prices at which the products may be sold in this country. So, within the jurisdiction and under our existing powers, an appropriate order has been made.