HC Deb 24 March 1999 vol 328 cc498-506

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

9.55 pm
Mr. Peter Bradley (The Wrekin)

It is hard, on an evening such as this, to turn one's mind away from the events in Kosovo. Nevertheless, I am grateful for the opportunity to expose in this House two lawful but, in my view, improper, scams —I can think of no better word to describe them —which last year plunged 78 of the 100 health authorities in England into a deficit on their drugs budget. Five of those health authorities —East Kent, Leicestershire, Manchester, South Cheshire and Suffolk —were in deficit by over £2 million, and no fewer than 34 were in deficit by over £1 million, including Shropshire health authority, which serves my constituency.

Last year, the total overspend on drugs in the national health service was no less than £69 million. That sum would have helped the NHS to recruit an additional 4,000 nurses or abolish dental charges throughout England. That sum is in excess of that required for the construction of the new hospital in Barnet.

All hon. Members are aware of the strains on the NHS drugs budget. The technological, scientific and medical breakthroughs that many of this country's leading drug companies are pursuing and achieving puts a strain on our health service, as does increasing life expectancy. The raising, year by year, of expectations among patients and the demands that they place on their GPs and hospitals also cause strain. However, the drugs overspend to which I am drawing attention does not benefit the patient or the taxpayer. It benefits pharmaceutical companies and, sadly, some general practitioners.

It is a shocking fact that, of last year's £69 million drugs overspend, no less than £66 million could have been saved. If that money could have been saved on behalf of the NHS, why was it not? The answer is that pharmaceutical companies push branded drugs in our NHS and some general practitioners are addicted to those drugs. For companies and GPs, there is profit in dispensing branded drugs in place of generic drugs.

As I said, there are two scams. First, there should be a Government health warning that hospital-led prescribing can be habit-forming, and it certainly will be if pharmaceutical companies have their way. Their intention is to push on our hospitals discounted, branded drugs that are as loss leaders all too irresistible to many hospital consultants. When patients are discharged from hospital with prescriptions for branded drugs, they in turn place almost irresistible pressure on GPs to prescribe the same brand.

Research by the University of Keele has demonstrated that some 70 per cent. of prescriptions in primary care are influenced by prescriptions in secondary care. In 1994, when the Select Committee on Health undertook investigations into the pharmaceutical industry and prescribing practices, Dr. Malcolm Patch, a general practitioner from Maidenhead, gave evidence to the Committee.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

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

Mr. Bradley

Dr. Malcolm Patch told the Select Committee: A lot of expensive drugs are initiated within hospitals. The patient then comes to us as their GPs for further prescriptions. It is very difficult to change this prescription even if there is a cheaper and equally effective alternative as the patient sees the consultant as the ultimate decision-maker on therapy. Dr. Patch was clear about the pharmaceutical companies' motives. He said: The drug companies sometimes offer loss-leaders' to hospital pharmacies at an artificially low price so that the drug replaces others …Thus the drug companies get their products initiated by hospital based doctors and we GPs are left to foot the ultimate, long-term and more expensive bill. Dr. Patch's evidence was borne out by Professor Charles George, a consultant and member of the Royal College of Physicians, who told the Committee: I would be the first to acknowledge that we have been responsible in hospitals for creating problems for general practitioners. He cited the example of the drug Frumil. He said: It's relatively cheap in hospital and it is very expensive out there in the community—there is no doubt that hospital doctors have created problems for general practitioners because of that. I can tell the House that, while only 37 per cent. of GPs' prescriptions are branded, they account for 49 per cent. of the drugs budget.

Dr. Howard Stoate (Dartford)

My GP colleagues round the country will be interested to hear what my hon. Friend says. I am sure that many of them share his concerns. Many GPs are already trying to prescribe generic rather than branded drugs, and many health authorities offer incentive schemes for prescribing, to ensure best value. Those schemes allow GPs to have money to spend on equipment in their practices, if they can show genuine savings on the drugs budget.

Mr. Bradley

I thank my hon. Friend for that intervention, which prompts me to make it clear to the House and to general practitioners throughout the country that I am certainly not alleging that they are all out to exploit the national health service and to make a profit from branded drugs. That is not the case. I am speaking of a small minority of GPs, but of a very large sum, which belongs to the NHS, to the community, to patients and to the taxpayer.

As my hon. Friend suggests, there is a great deal of best practice, to which I hope to refer later. The problem is that it is not yet as widespread as it ought to be. I hope that, by raising the issue tonight, we can encourage and educate more doctors so that that best practice is more extensively adopted.

The price differentials between drugs dispensed in the hospital and those dispensed in the community can be staggering. Shropshire health authority tells me that the cost of prescribing the diuretic Frumil in hospital is 6 per cent. of the cost of prescribing it in the community—6 per cent. In other parts of the country, Frumil costs 20p per patient per day in the hospital, but £6.20 per patient per day out in the community.

Mathematics has never been my strong point, but I calculate that as a differential of 2,800 per cent. Shropshire health authority tells me that the cost of Imdur in hospital is 2.5 per cent. of its cost when prescribed by a GP. In other health authorities, I understand that it costs 14p per patient per day to dispense in a hospital, but £11.14 per patient per day outside hospital. That is a differential of 8,000 per cent.

Giving drugs away in hospital makes good sense for the pharmaceutical companies, because only 20 per cent. of our drugs are dispensed there. The other 80 per cent. are dispensed in the community. That is where the profit is to be made. The drugs barons, whether they are in pharmaceutical companies or in a more illicit trade, know that first they must hook their victim—in this case, in the hospitals—so that then they can then take the money from him. For good measure, they provide a ceaseless flow of gifts for GPs—blotting pads, pens and calendars, which hang on the walls of surgeries—which serve as constant reminders of the names of the branded drugs that they want doctors to prescribe or dispense.

The drugs barons have another clever, but effective, means of achieving their ends. They give branded drugs names that are simple and memorable, compared with the Latin or Greek roots of the names of generic prescribed drugs. Thus diconal is a branded drug and di—I cannot pronounce that word; it is Milosevic hydrochloride. I was hoping that my hon. Friend the Member for Dartford (Dr. State) would ask me to give way.

Dr. Stoate

The correct pronunciation is dipipanone hydrochloride.

Mr. Bradley

I am grateful to my hon. Friend for coming to my aid; I have been rehearsing all afternoon, but this has proved my point: it is a great deal easier to remember diconal than it is to remember whatever name my hon. Friend just—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I hope that the hon. Gentleman will not require simultaneous translation throughout the rest of his speech.

Mr. Bradley

I will resist the temptation, Mr. Deputy Speaker.

There is a problem too in the pharmacies. When a GP writes a prescription with a branded name on it, the pharmacist is not in a position to dispense anything other than that brand. That is not the case if the prescription specifies a generic drug—the pharmacist can dispense whatever comes to hand or whatever he advises—whatever is cheapest.

The key point is that, in the vast majority of cases, there is absolutely no difference in effectiveness in terms of the patient's welfare between the branded and the generic drug, but there is most certainly a difference in price. That problem alone costs my health authority, Shropshire, about £400,000 a year. That money could, and should, be spent on cancer care or on the Cinderella services such as mental health and services for people with learning difficulties.

The second scam is a nice little earner for a small minority of GPs. This country has about 23,000 prescribing doctors in general practice and 4,000 doctors who are entitled to dispense. They practise, typically, in rural areas. They provide a dispensing service as a community service, which is very valuable for people in isolated communities who do not have access to pharmacies. Dispensing GPs have been providing that service for a long time and the vast majority of them do so with quiet efficiency and with no thought for anything other than the care of their patients.

However, dispensing is also an income supplement for those GPs and it was intended to be so from the beginning of the national health service, when it was recognised that GPs in rural communities had fewer patients than their counterparts in urban communities. They therefore tended to earn less, and deriving a fee—and therefore an income—from dispensing was regarded as a sensible way of equalising their pay.

The income that GPs derive from dispensing consists of four elements: a dispensing fee, a container allowance, a value added tax allowance and a payment of 10–5 per cent. of the cost of the drugs that they dispense. The problem is the built-in incentive for some GPs to abuse the system. It is clear, particularly in respect of proportionate element of remuneration, that the greater the volume of drugs dispensed, the higher the cost of those drugs, the more frequent the prescription and the larger the income supplement that doctors are able to derive.

The GP community has been concerned about that issue for many years. In 1996, the British Medical Association's General Medical Services Committee discussion document "Dispensing Remuneration" stated: unfortunately the on-cost arrangement is open to the criticism that a dispensing doctor can increase gross earnings from dispensing more expensively". That is absolutely true. Unhappily, the BMA concluded, somewhat complacently, that there was no clear evidence of this.

Mr. David Drew (Stroud)

The situation is not helped by the fact that there has been something close to a state of war between dispensing general practitioners and pharmacists in rural areas. Until that is sorted out, problems will continue, and, inevitably, it will be the patients who suffer in the end.

Mr. Bradley

That is an important point. We are doing our best to dismantle the internal market in the national health service—to some effect, I think—but all too many rivalries, factions and hostilities persist. There are conflicts between one type of doctor and another, between doctors and pharmacies, between general practitioners and hospital consultants and between medical practitioners in general and administrators. Only when we ensure that everyone working in the health service works for the health service will we see the progress that we all wish to make. It strikes me at times that some people in the NHS—I stress that I am talking about a small minority, but that minority can wreak considerable damage—are more committed to their own interests than to the interests of the health service and the patients whom, they ultimately serve.

The incentive to which I have referred is clear and irresistible. Among non-dispensing GPs, the average prescribing of branded drugs is about 34 per cent.; the remaining 66 per cent. consists of generic and cheaper drugs but, among dispensing GPs, the average is 74 per cent. In other words, only a third of non-dispensers' prescriptions consist of branded drugs, while the figure for dispensing GPs is virtually three quarters. The average cost of a prescription per patient per year is £118 in the case of dispensing GPs, while in the case of non-dispensing GPs it is as little as £78.

The question is this: is the original purpose of the scheme whereby doctors in rural communities were entitled to derive a supplementary income from the scheme being fulfilled? The answer is no. Between 1995 and 1997, the average GP's income was £47,000. The average for prescribing GPs was lower, at £45,800. However, the average for dispensing GPs, whose incomes had originally been considered to be falling below those of their urban counterparts, was £53,400—over £7,500, or 16 per cent., more than that of their non-dispensing colleagues. Dispensing GPs can make a profit of as much as £50,000 from dispensing. Some of them bank the money, as they are entitled to; others invest it in securing locums or other partners in their practices, and can therefore enjoy a rather more leisured life than other doctors.

In Shropshire, 21 of the 66 general practices dispense. Although they account for only 28 per cent. of the drugs budget, they account for 36 per cent. of its overspend. The Government have set a target: they intend 72 per cent. of all drugs dispensed to be generic by 2002. Shropshire's average is currently 57 per cent. Prescribers are working towards the 72 per cent. target, and are currently at 63 per cent., but the dispensers are way down the order at 30 per cent.

As I have said, I am not arguing that rural doctors, particularly those in isolated areas in, for example, Scotland and Pales, do not need that valuable income supplement. If we are to recruit and retain doctors who perform such a valuable duty in those communities, we must find a way in which to help them to supplement their income. Nor do 1 by any stretch of the imagination claim that all dispensing doctors are exploiting the system.

I pay tribute to the only dispensing practice in my constituency, the Wellington Road surgery in Newport. In the context of his intervention, the following information will be of particular interest to my hon. Friend the Member for Dartford. The practice dispenses to some 5,000 of its 12,500 patients, but its generic prescribing rate is as high as 70 per cent. —well in excess of the county average in Shropshire and more than double the rate of dispensing colleagues throughout the county. The rate can be achieved if a practice is committed to keeping costs as low as possible on behalf of the NHS. The cost to Shropshire health authority of wasted dispensing of drugs is about £500,000. Two years ago, its deficit was £1.5 million. This year, it will be close to £1.2 million. Next year, it will be little better.

I should like to mention briefly some of the solutions that we might apply. It is to be hoped that peer pressure to contain budgets will be brought to bear when primary care groups are introduced on 1 April, but that in itself will not be enough. Shropshire health authority is pursuing a number of initiatives. It is seeking agreement between consultants in hospitals and GPs in the community to identify the costliest brands for the local NHS and to replace them with generics in hospital. Collaborative working is important in the NHS. The health authority is introducing software packages, so that GPs can identify in their surgeries not only the most appropriate drugs for their patients, but how to secure them at the lowest possible prices. It is introducing incentives that my hon. Friend the Member for Dartford mentioned earlier for reducing drug budgets among GPs.

In 1994, the Select Committee on Health made a recommendation about generic substitution. I hope that the Government will consider the benefits of generic substitution, which mean that a chemist or pharmacist can dispense the cheapest available drug that will do an effective job for the patient. However, we also need to rein in the pharmaceuticals, to contain their excesses and to bear in mind that in other countries, including Germany, there is legislation to ensure that the cheapest possible drugs are dispensed.

I have outlined the problem and shown that there are solutions at hand, but I look to the Minister for assurances that action will be taken to ensure that every last penny in the NHS goes on front-line health care, not into the pockets of private enterprise or a small minority of greedy doctors.

10.18 pm
The Minister of State, Department of Health (Mr. John Denham)

I congratulate my hon. Friend the Member for The Wrekin (Mr. Bradley) on his success in the ballot. He is right to identify as an important issue the cost of medicines to the health service. We are striving to achieve the best return on our use of NHS resources. The use of generic medicines can make a major contribution to achieving that goal.

It is widely accepted that, save for a few examples—treatments for epilepsy, for example, where it can be important that the patient receives the same brand—non-proprietary or generic medicines are as clinically effective as their proprietary or branded counterparts. Generics are generally cheaper and therefore more cost-effective.

We spend large sums on medicines. In 1997–98, total NHS expenditure on drugs was £5–1 billion. Of that, £4.1 billion represented drugs prescribed by family health service practitioners, mainly family doctors. Prescribing by hospitals accounted for just over £1 billion. Those two components have up to now been managed as distinct budgets by different parts of the NHS and subject to different rules and flexibilities. Those are major deficiencies, which our reforms, set out in the "New NHS" White Paper, are design to address.

Action to secure higher rates of generic prescribing continues to figure prominently. The national performance figure across health authorities of 63 per cent. generic prescribing hides wide variations in performance—the best being about 74 per cent., and the lowest about 49 per cent. Shropshire—in common with other authorities serving predominantly rural areas—is a relatively poor performer. The prevalence of dispensing doctors is likely to be a factor, but there are many other influences that can have a bearing and will vary from authority to authority.

I should caution my hon. Friend on his simple equation between the cost of non-generic prescribing and past overspends in health authority budgets. There can be a wide variety of local variations in performance giving rise to such differences.

We attach special significance to generic prescribing targets. By the end of March 2002, we aim to achieve an average national generic prescribing rate of at least 72 per cent. —the current figure is about 63 per cent—and at least half the practices currently below 40 per cent. to be brought above it. Currently, about 7 per cent. of practices are below 40 per cent.

I should like to deal now with the first specific issue that my hon. Friend raised—hospital prescribing. Prescribing by hospital specialists is managed by health authorities within their cash-limited budgets. Cash limits are a key mechanism for ensuring that the NHS stays within funding limits approved by Parliament.

Historically, however, prescribing by family doctors has been subject to a separate and distinct funding stream, which is often referred to as a non-cash limited budget. However, even here, the position is blurred, as 50 per cent. of that budget has been covered by general practitioner fundholding and managed as a cash-limited budget. Under the existing system, the risk of an overspend on those non-cash limited costs is managed centrally by the Department of Health.

It is important to realise that, in non-cash limited prescribing costs, although there may not be a pre-determined limit on the amount that may be spent in each health authority, all expenditure at national level has to be met from within the overall funds voted by Parliament for the NHS. Any increase in non-cash limited services above assumed levels has to be managed and may involve reducing or deferring expenditure in another area of the NHS budget. Those costs are therefore not a free good to the NHS.

There is the possibility that, within the arrangements that we inherited, hospital specialists working within cash-limited budgets may view the prescribing budgets of their GP colleagues as a free good. Any arrangement that provides for an artificial separation between clinical and financial responsibilities will almost inevitably result in clinicians making decisions without full knowledge of the financial consequences or decisions by NHS management that appear to disregard clinical efficacy. The current disjunction between clinical and financial responsibility creates fertile ground on which to develop perverse incentives to shift the cost to another budget.

My hon. Friend was right to identify the hospitals' huge influence and impact on the prescribing behaviour of GPs. Once a drug is prescribed by a hospital, the patient's reluctance to change is understandable. Clinicians in secondary and primary care should collaborate, but it is easy enough to recognise the temptation to shift the cost of treatment to another budget. In those circumstances, a hospital specialist may maximise the use of his budget without taking into account the overall impact on the use of NHS resources.

We acknowledge those problems. The introduction of unified budgets, from 1 April, is a key feature of the changes that we are making, which will remove the artificial funding barriers that actively discourage collaboration between doctors working in primary and secondary care. We shall bring together the hitherto separate components for hospital services and GP prescribing, with investment in GP practice infrastructure, in a single funding stream.

Those changes will complement the changes that we are making in management of the NHS. Unified budgets will help primary care groups and primary care trusts to fulfil their key functions—developing local health services and improving the health of their local populations—by enabling them to decide the priorities across the full range of their responsibilities, in the full light of those budgets and the wider NHS.

If a medicine is judged to be the most appropriate treatment, local mechanisms should be in place to ensure the most cost-effective provision of that medicine. Most health authorities have established forums to deal with those issues—generally through area prescribing committees, which facilitate the exchange of information between primary and secondary care. The role of the committees is being developed to encompass the introduction of primary care groups.

Certainly, we do not expect hospitals to buy in medicines at artificially low prices, taking no account of the true cost to the NHS resulting from wider use in primary care. I am pleased to note that Shropshire health authority is working with its primary care groups and trusts to address those concerns.

I now turn to the second point that my hon. Friend raised—the concerns being expressed about the prescribing activity of doctors, predominantly serving rural areas, who are allowed to dispense medicines to those of their patients who do not have easy access to a community pharmacy. The basic allegation is that the so-called dispensing doctors dispense more costly branded medicines to their patients rather than the cheaper generic versions of equal clinical efficacy. It is suggested that the way in which we pay dispensing doctors influences their prescribing activity.

As has been recognised, there are sound reasons for allowing some doctors to dispense medicines to some of their patients. Generally, doctors prescribe medicines and pharmacists dispense them. Patients benefit from the expertise of two professions. However, in rural areas where a pharmacy would not be viable, GPs may be required or permitted to dispense. About 16 per cent. of GPs in England are dispensing doctors, covering about 3.2 million patients. In those cases the GPs provide a valuable additional service and it is one which is greatly appreciated by their patients. Of course patients must have adequate services available to them wherever they live. Equally we must ensure that those services are provided in the most efficient manner possible.

I have already described the targets that we have set on generic prescribing and we have introduced a number of developments to underpin the work, including the introduction of unified budgets. Primary care groups are being encouraged to make fuller use of other professional expertise, particularly that of pharmacists, to support better prescribing practice. Prescribing incentive schemes will continue to be developed, allowing GP practices to retain a share of the savings they make as a result of better prescribing. There will also be a role for computerised decision support systems such as PRODIGY.

My hon. Friend has recognised that there are already good examples of improvements that can be secured if practices work together to a common goal.

Dispensing doctors will be subject to the programme of action. In particular, their performance will be subject to scrutiny by their peers in primary care groups, and we expect them to contribute to the development of cost-effective services for their patients within the new financial and management structures.

Shropshire health authority recognises the desirability of improving the prescribing behaviour of its GPs. I understand that the authority is forecasting a 3 per cent. overspend, involving some £1.16 million, against this year's prescribing budget. It has identified the specific need to improve generic prescribing performance by its dispensing practices and has established pilots to seek to develop ways to improve generic prescribing, but in a manner which does not jeopardise practice income and which maintains services to patients.

It is commonly claimed that the dispensing doctor pay system actively discourages the use of generic products. Dispensing doctors are paid by a mixture of fee per prescription item and an on-cost allowance of 10–5 per cent. of the list price of drugs dispensed. It is argued that there is an in-built incentive to use higher-cost drugs because they get paid more for doing so. The evidence is not clear, but the perception is there, that doctors may be influenced in their prescribing decisions. That is recognised by professional representatives and, as my hon. Friend said, back in 1996, the then General Medical Services Committee of the British Medical Association suggested that a more appropriate method of payment would be by a higher professional fee alone, which would provide the same total amount of remuneration as at present provided by fees and on-costs combined

I recognise that there may be merit in arguments that we should underpin our basic strategy by removing anomalies within dispensing doctor pay arrangements, but it a complex issue and one that we are looking at. I will reflect carefully on the points made during tonight's debate.

In conclusion, I am grateful to my hon. Friend for raising these important issues. We place great emphasis on the continued promotion of cost-effective prescribing, and increased rates of generic prescribing will continue to have a key place in our strategy.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.