HC Deb 08 May 1984 vol 59 cc728-30
13. Mr. Willie W. Hamilton

asked the Secretary of State for Social Services if he will make a statement on the further steps he intends to take to curb the profits of the pharmaceutical industry.

Mr. Kenneth Clarke

I have nothing to add to the statement that I gave to the House on 8 December 1983 when I announced measures that we expect will save the National Health Service about £100 million on the drugs bill in a full year.

Mr. Hamilton

Is the Minister aware that because of his constant pussy-footing around the problem drug companies are still making, and are likely to make, extortionate and indefensible profits at the expense of the National Health Service? Will he give an assurance that he will use the same energy on the scheme to get at the drug companies' profits that he and his colleagues put into the Bill to charge foreign visitors for their health care, which is an absolute disaster?

Mr. Clarke

With respect to the hon. Gentleman, he was asking the same type of supplementary question before our package in December. Since then we have announced proposals to save the Health Service £65 million in 1984–85 and £100 million in a full year. If he meets people from the pharmaceutical industry he will find that the steps we have taken to contain sales promotion costs are having a marked effect on the companies. We believe that it is in the interests of the Health Service to stop excessive sales promotions being financed by the National Health Service.

Mr. McCrindle

No one would wish to defend excessive profits, but is not the hon. Member for Fife, Central (Mr. Hamilton) out of date in what he says? Are not the drug companies in this country experiencing falling profits on prescription drugs? Taking into account the possibility that they could take their research and manufacturing facilities to other European countries, do we not have to take a rather more balanced view than that expressed by the hon. Gentleman.

Mr. Clarke

I entirely agree with my hon. Friend. We must strike the right balance between the interests of the National Health Service as a customer and the interests of the industry, which is a major employer and a major source of export earnings and inward investment. The revision that we carried out to the scheme that we inherited from the Labour Government has made substantial savings for the taxpayer, which is a considerable advance.

Mr. Ashley

Is the Minister aware that some of these profits are made out of faults and misleading advertisements, which do not explain clearly the adverse effects of and the damage that can be caused by some drugs? When can we have some action on that gross dereliction of duty on the part of the drug companies?

Mr. Clarke

There are strict rules in force about the advertising of drugs. There is also a voluntary code drawn up by the Association of British Pharmaceutical Industries, which is acted upon by its members. I take as serious a view as the right hon. Gentleman about misleading advertisements, and our Department and the industry ensure that we stop them.

Mr. Beaumont-Dark

Does my right hon. and learned Friend agree that while profiteering should be curbed, if one were to adopt the attitude that it is immoral to make any profit out of drugs research would decline, which would be a real cost to the National Health Service and to the earnings potential of an industry which is valuable to this country and to sick people?

Mr. Clarke

I agree. The pharmaceutical industry is one of the most successful research-based manufacturing industries in this country. The advances made by the industry have been of enormous benefit to patients throughout the world. We must protect that, while ensuring that we do not pay excessive prices for drugs through the National Health Service.

Mr. Donald Stewart

How does the Minister defend that in the light of an answer from his Department to the hon. Member for Brent, South (Mr. Pavitt) which compared the costs of 12 brand names as against 12 generic drugs, and which showed that there would have been tremendous saving to the National Health Service bill?

Mr. Clarke

The doctor decides whether to prescribe a branded or generic drug. He should prescribe a generic drug unless he believes that there is some definite therapeutic value to be derived from the branded drug. We are reinforcing that advice to doctors and will be following it with further training and education. All attempts to change to generic substitution, as some people called it, led to great confusion and difficulty for the profession, and would have led to considerable confusion about liability in those cases where things 'went wrong.

Mr. Soames

Will my right hon. and learned Friend reiterate that without profits there would be no research and without research there would be no new drugs?

Mr. Clarke

I certainly reiterate that point. I give the House the example of the pharmaceutical industries of eastern Europe, where I assume that they operate without making any profit and where, so far as I am aware, they have made no worthwhile advances in living memory in the interests of their own or anyone else's patients.

Mr. Meacher

Is the right hon. and learned Gentleman aware that drug companies' profits from the National Health Service, even after his December announcement, are likely to be about £250 million this year, which is grossly excessive, and that, from certain drugs, Glaxo and ICI are still allowed to make profits of about 30 per cent. from the National Health Service as a result of private deals with the Department of Health and Social Security? Is that not a scandal, when 2,000 people will die this year because of the alleged lack of public money available to buy the kidney machines that they need to stay alive?

Mr. Kenneth Clarke

Whatever profit is made will be based on a drugs bill that is £100 million less in a year than it would have been had we left undisturbed the arrangements that we inherited from a Labour Government. The deals that the hon. Gentleman described are those made between our officials and the pharmaceutical industry following the rules laid down by the PPRS. Those perfectly proper rules have been tightened up so that a drug company cannot have a target profit of 30 per cent., as the hon. Gentleman claims.