HC Deb 23 March 1984 vol 56 cc1386-92

Motion made and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]

2.40 pm
Miss Betty Boothroyd (West Bromwich)

I sought this debate because I do not believe that the Government are taking sufficiently seriously the growing criticism coming from many quarters, including the Public Accounts Committee, of the unsatisfactory way in which the pharmaceutical pricing system is operating. The bill for drugs must be met from an already badly overstretched NHS budget. That bill is not small. Annually, it amounts to about £1,300 million. If we reduce that figure to manageable levels, it means that of every pound spent in the NHS, lop goes on drugs. That is a sizeable portion, which does not remain static, while at the same time health care facilities within that same budget are being massively axed.

It cannot have escaped the attention of the Under-Secretary of State that in the west midlands we have some of the longest queues for general surgery. Only last month, the consultant surgeon at Birmingham's Queen Elizabeth hospital reported that two of his cardiac patients died while waiting for life-saving operations. He said: the chance of dying is much higher on the waiting list than after the operation". He added: that 18 heart operations were cancelled on the day of surgery because of lack of intensive care facilities". In my area of Sandwell, the cardiac specialist reported that many patients had been waiting for 10 years for operations but a far more sinister fact was that one waiting list patient dies every month". It cannot have escaped the hon. Gentleman's attention that page 27 of the Tory manifesto—I always keep it handy—boasted that the Government would make extra provision for health care in the midlands. We know that that promise is not worth the paper on which it is printed.

Against that background of deepening cuts, it is outrageous that drug companies are allowed to inflate profits at the expense of the Health Service. I believe that thousands of people share my feeling of burning injustice when they see industry escape restrictions imposed elsewhere in the Health Service and when drug companies are regarded by the Department as deserving of special treatment. People lose confidence in a system that denies their needs and ignores and overrules well-documented alternatives.

My interest is also for the future of the industry's jobs and exports. I declare an interest, because I belong to the General, Municipal, Boilermakers and Allied Trades Union, which is the union with the largest membership in the pharmaceutical industry. The union's main motivation is the security and prosperity of those members. The Under-Secretary will recall that the unions were not happy with the voluntary price regulation scheme when it was introduced in 1977. They argued then that the scheme was not the mechanism to promote research and development or to assist the contribution made by individual companies to exports. They regard the scheme as a cosy, bipartisan arrangement between the Department and the employers. They were right to do so. I believe that their position has been vindicated by the tenth report of the Public Accounts Committee on drug dispensing.

Despite the massive amount of money that has changed hands over the past six years, where are the higher levels of growth in exports? There are increased exports, but I question whether the scheme has generated faster growth proportionate to the investment provided. Further, I ask the Minister how he is monitoring the depth of research and new drug development. I believe that drug companies have grown lethargic from the National Health Service budget and that the precious money provided for drug innovation has been dissipated by the development of the "me too" drugs which make little contribution towards advancing health care.

The drug companies have become defensive and oversensitive because they have tied themselves into that cosy arrangement with the DHSS. They tend to react to argument and criticism by blandly accusing those who are interested in these matters of "having a go" at the pharmaceutical industry.

It is a pity that that defensive attitude has spilt over and that the Minister has become infected by it. In an Adjournment debate on 7 February, initiated by one of his Back Benchers, the Minister concluded that the Labour party's solution to the problem was to cane the drugs industry.

The Minister displays a disgracefully lopsided attitude. He should develop his mind more fully and not just exercise it by jumping to such conclusions.

I wish to deal briefly with the activities of the drug companies in the Third world. The Minister knows that many countries have acknowledged the needs that exist there and the market that there is for generic products. Many other nations are actively developing strategies to capture that market.

The trade unions on the Pharmaceutical Economic Development Committee have taken initiatives to obtain an agreed strategy to pursue a share of that market for the United Kingdom. However, the Government refuse to tackle the main problem of the control of the pharmaceutical market in Third-world countries. The Government have supported the World Health Organisation drug action programme, but they have done nothing more. Neither the DHSS nor the Overseas Development Agency will put resources into a pilot project to carry out supply and distribution. I refer to early-day motion 447 which has attracted a great deal of support in the House, but the Minister continues to hide behind the industry's international federation and says that we must leave it to the industry to get on with.

How can the Minister take that attitude when he must be aware of the widespread inappropriate—I am modest in my language and use the word "inappropriate"—marketing practices of pharmaceutical manufacturers? What action is he taking to ensure the success of any PEDC initiative and will he now place on record why the Government will not give active political and practical backing to the World Health Organisation's independent code? Why is he leaving it entirely to the industry?

Having complained of the pricing system, it is incumbent upon me to outline some of the changes that I believe are necessary, and that the Minister might like to study.

First, in rejecting generic prescribing, the Minister rejected a measure that could have saved the Health Service something like £80 million a year. An answer to a parliamentary question made it almost impossible for me to obtain a comparative price list of brand name drugs and their generic substitutes, but, despite the DHSS obstacle course, I have some information. I have it here. It is very enlightening, but it is far too long a list for me to place on record today. The Minister knows that there are massive savings to be achieved, but the reality is that he has again bowed to pressure from the drugs industry.

Secondly, the Minister has refused to accept the Public Accounts Committee's recommendations on the profitable rate of return for companies supplying to the Health Service and in so doing is placing an unnecessary extra £40 million on the NHS bill. The industry argues that it needs more than a 17 per cent. return on capital employed to finance research costs. If the Minister accepts that argument, he must be in a position to tell me the degree of research that he regards as being basic to new development and the degree of research devoted to devising additives to existing drugs which serve only to aid applications for patent protection. What percentage of expenditure is used to develop additives and how much is spent on drug innovation? If the Minister accepts the industry's argument that more than 17 per cent. is necessary for research and development costs, I suggest that any sum over that amount should be directed to specific projects and funded outside the NHS budget, to be open to public scrutiny like any other public procurement. The present arrangement is inflating profitability at the expense of patient care.

Thirdly, the parallel import drugs trade where the importer, distributor and chemist use cheaper foreign imports and then charge the NHS with the higher British price—which is a great deal more—is costing the NHS about £100 million a year, and it must stop. Rightly, the pharmaceutical industry has called on the Government to act, and I agree with it that it is totally unacceptable that retail pharmacists should be allowed to profit at public expense in this way". When is the Minister going to stop this drain on NHS resources? There has been a 12-month delay, but he continues to drag his feet. Is the Minister going to bring in new strict regulations? If so, when? Or is he just going to tinker around with licences and allow the NHS to be used as a succulent pot of honey to be scraped dry?

Fourthly, I object to the massive price of £180 million a year paid by the NHS for drug industry advertising and promotion. I share the outrage of thousands of people in this country who have been waiting years for operations. They know that that figure could be dramatically reduced and that the resources could be diverted to medical care. Certainly the Minister can stop abuse where each major company has a family of almost identical products marked by subsidiary companies—each with their own sales force and each paid for by the Health Service. Why does the Minister permit his Department to give the Beecham Group allowances for its two sales forces? One of them sells ampicillon, and the other company, Bencard, sells amodycillin. The same applies to Glaxo, Hoechst, ICI, Merk, Sharp and Dome and to Roche. The Minister insists on economies elsewhere in the NHS budget, so why does he not logically carry them through and demand economies in this sector?

There are many other suggestions that I could make, but what I have said could lead to savings in the NHS bill of more than £300 million a year — not to be sneezed at. The root cause of the problem is the price system itself. The Public Accounts Committee said that it believes that the PPRS has not ensured the reasonableness of drug prices generally.". The trade unions within the industry believe that the pharmaceutical sector is one of our industrial successes and want to stay that way and to maintain and develop it. It has to be recognised that we need a pricing system which is not only fair to the industry, but fair and just to the National Health Service and the taxpayer.

The Minister's statement on the future of the pricing system is not the end of the matter because he failed to tackle the fundamental problem. He failed to tackle the all-too-cosy relationship between the industry and his Department. Against a background of massive cuts in the Health Service, the Minister's December statement demonstrated——

2.55 pm
The Under-Secretary of State for Health and Social Security (Mr. John Patten)


Miss Boothroyd

The Minister will have time to reply.

The Minister's December statement demonstrated a disregard for thousands of people who are suffering unnecessarily. Social justice demands changes, and I wait to hear what the Minister has to say.

Mr. John Patten

I apologise for interrupting. I did not realise that the hon. Member for West Bromwich, West (Miss Boothroyd) was in the middle of her peroration. Her speech was at the same pitch and pace throughout. It is good of her to give me adequate time to reply. I wish all hon. Members allowed Ministers time to give the full treatment to all the issues.

I was going to say when I was interrupted that it is wrong to talk about savage cuts in the National Health Service when we are spending more in real terms. We live in a peculiar world if anyone can say that increased expenditure represents real cuts. Perhaps the hon. Lady does not wish to debate that with me.

Miss Boothroyd

I said early in my speech that the Government are not even meeting the promises for the midlands made in the Conservative manifesto. The need for medical care is not being met by the Government.

Mr. Patten

I refute that. A Government who spend double what was spent in 1979 and are spending £15.5 million on the health care of the nation have not reneged on any promises.

The hon. Member for West Bromwich, West has indulged herself in trying to rewrite history. She made strong criticisms of the drug industry and the effects of what she described as excess expenditure by the drug industry on patient waiting lists. The hon. Lady has forgotten that the waiting lists grew inexorably in the 1978–79 winter of discontent when hundreds of thousands of names were added.

Waiting lists were brought down fast in 1982. The regrettable industrial action in the National Health Service added once again to the list of people waiting so that they numbered about 750,000. I do not recall the hon. Lady making her voice heard. If she did dispute the need for industrial action which damaged patients, perhaps she can draw my attention to the relevant passage in Hansard or elsewhere.

I am pleased to report to the House that waiting lists are now coming down after the 1982 strike. The number is now only about 700,000. The list must be brought down much further.

I have indulged in what I hope has been an honest and straightforward rebuttal of the honest and straightforward remarks of the hon. Member for West Bromwich, West. In politics, and even in the Civil Service, idealism is not dead. Helpful civil servants seek to guide Ministers in what they should say, even in response to an Adjournment debate. I have been provided with a number of alternative openings to the speech which my civil servants would like me to make. I shall quote one of the alternatives. The following is me answering the hon. Member for West Bromwich, West: I am delighted to hear that the hon. Lady does not show the bias against the pharmaceutical industry of some of her colleagues, but that she was ready to acknowledge the major contribution which it makes, not only to the National Health Service but to the economy of the United Kingdom as a whole. I am afraid that one young man's hopes have been sadly dashed. With his hopes my hopes have gone, too. I do not doubt the hon. Lady's integrity or her strength of feeling for her constituents and the members of the union to which she belongs. Looking at the hon. Lady, I am bound to say that any boiler that she has seen must have been from the outside and not in close perspective.

Miss Boothroyd

Perhaps the Minister does not understand that one does not have to work in a boilerhouse to belong to a trade union.

Mr. Patten

I fully understand the nature of the hon. Lady's trade union. I too, when I was outside the House, was a member of a trade union that was affiliated to the Trades Union Congress.

The hon. Lady entirely ignored the fact that the contribution of the pharmaceutical industry to the health and well-being of the nation is impressive. One has only to think of the enormous strides made in recent years in the treatment of diseases such as high blood pressure, stomach ulcers, asthma and certain, although far from all, of the cancers—especially leukaemia, which used to result in the tragic death of so many children but which now, thanks to the introduction of new drugs, is often curable.

One must offset the hon. Lady's strictures about the drug industry with the considerable success story of the pharmaceutical industry, not in terms of its profits, but in terms of the benefits that it has undoubtedly brought to mankind, both in the western world and in the Third world. If I do not get a chance this afternoon, because of time, to answer all the matters that the hon. Lady raised, in particular about the Third world, I undertake to write to her.

In all manner of diseases, both the expectation and quality of life of those suffering from them have been greatly improved by medical advance. Practically all the major discoveries of new drugs in recent times have come, not from research institutions, but from the industry, although there have often been close links between research institutions and the pharmaceutical industry. Critics of the industry tend to overlook this highly creditable aspect for the occasional, and of course very regrettable, instances of a drug having to be withdrawn because its side effects outweigh its benefits.

The research and development record of United Kingdom companies, particularly in the discovery and development of new medicines, is first-rate. That led, not surprisingly, to our industry being in the top half dozen of pharmaceutical exporting countries and in the pharmaceutical industry being a major currency earner for this country and a major supplier of jobs. Although it is true that in recent years employment in the industry has declined, it has declined only slightly, from 73,000 to about 67,500—not because it is a declining industry, but because of increasing productivity.

That increasing productivity and the discoveries made in an active development and research programme are taking place against a background in which—as my right hon. and learned Friend the Minister for Health announced in the House on 8 December 1983—we have sought to make considerable savings on the NHS drugs bill for the benefit of the patients we seek to serve. Those savings will total about £65 million in 1984–85, and about £100 million a year thereafter. Those are substantial savings, and they will benefit patients. We believe that we have the balance right between the research and development needs of pharmaceutical companies and the proper needs of the NHS, as the major and almost only consumer of drug products in this country.

The fruits of research and development are one reason why the United Kingdom industry is so successful in export markets. I shall say more on this subject later, if I have the time, and I shall certainly say more when I write to the hon. Lady about exports to the Third world. It must be a matter for despair to the industry that it almost invariably receives a bad press. That must be demoralising, not only for the management of the industry, but for the scientists who work in it, and for the 67,500 workers who are employed in it. Debates such as this provide an opportunity to present a more balanced picture.

I come now to prices. The hon. Lady spoke in some detail about prices, and as she knows from her long experience, the prices of medicines supplied to the NHS are controlled under the non-statutory pharmaceutical price regulation scheme. It has been in existence largely in its present form under both Labour and Conservative Governments. It might not be ideal or seem particularly logical, but no hon. Members—I think that I see the hon. Lady nodding her head in assent—have found a better way to deal with the problem.

The dual objectives of the scheme are to ensure that good quality medicines are available to the NHS at fair and reasonable prices. That is the Government's aim and I am happy to have the chance to re-state that this afternoon. We also hope that the United Kingdom pharmaceutical industry is, because of the benefits arising from the scheme, capable of sustaining a large and important research and development programme, which will continue to produce the new and improved medicines that a modern Health Service needs. Paradoxically so many of the new and improved medicines cost so much, certainly in the first years of their existence, that they often lead to increasing demands on the NHS.

The other major aspect is the increasing aging of society. Those are the twin imperatives that are driving NHS expenditure inexorably on. I am beginning to sound like the right hon. Member for Down, South (Mr. Powell). I had better stop using such words as "imperative".

As long as costs and overall profits are within reasonable limits, it is of no concern to us under the PPRS whether the manufacturer takes more profit on certain of his products and less on others. I do not see how we can possibly operate a scheme under which that obtained.

One of the major problems that faces us is the drugs bill. The House knows that the Government have been looking carefully at the PPRS in the light of such factors as the welcome fall in inflation and interest rates, the growing profitability of the United Kingdom pharmaceutical industry, and the pressing need to try to make all possible economies for the NHS. That is the cocktail, or mix, that one is trying to get right in the interests of those who work in the pharmaceutical industry and in the interests of the patients whom the NHS exists to serve. That is why, after the close review in the autumn of last year, my right hon. and learned friend the Minister for Health announced significant changes on 8 December. One should look at the postbag that the DHSS receives from all sorts of interest groups to see just how significant those changes have been. There are significant changes in the costs that can be incurred and profits that companies are allowed to make.

The target profits, expressed as the hon. Lady knows, as a return on the capital employed in producing NHS medicines, have been reduced by an average of four percentage points from 1 April this year. That is a formidable drop. That means that when the price freeze, which we agreed with the industry last July after difficult and delicate negotiations, ends on 31 March this year, companies will generally be allowed to increase their prices to the NHS only where they can clearly demonstrate to the Department that on existing prices their profits will fall below the new and lower targets. We shall certainly maintain the long-standing practice of containing prices and profits at reasonable levels within the objectives of the scheme.

The hon. Lady has referred, almost in parenthesis, to the great cost of NHS advertising. I have seen many complaints about the high cost of advertising to the NHS. It is a free country. The pharmaceutical companies can choose to advertise where they like. Many pharmaceutical companies advertise in forms of weekly media, which go, particularly, to hospital doctors and general practitioners around the country. In making their dispositions about where to advertise, I hope that they continue at least to consider the interests of important medical journals, which are distributed not weekly but monthly or quarterly, containing material of great importance to general practitioners, continuing their postgraduate education. That is important for a drug company to consider.

It is only right that the pharmaceutical industry, whose products represent a 10 per cent. share of NHS spending, should bear its share of the economies that we are seeking to make within the NHS to bring about an improved and modern NHS. I believe that we have the balance right. With respect, I believe that the hon. Lady is profoundly wrong in her attitude.

Question put and agreed to.

Adjourned accordingly at nine minutes past Three o' clock.