HC Deb 20 October 2003 vol 411 cc480-8

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

10.4 pm

Mr. Alistair Carmichael (Orkney and Shetland)

I should first put on record a declarable interest: my wife is a practising veterinary surgeon and a partner in the firm of Flett and Carmichael veterinary surgeons in Kirkwall.

I am pleased to see the Minister for Rural Affairs and Local Environmental Quality. I had thought that a Minister from the Department for Trade and Industry might reply, it being the Department that is driving the Competition Commission's proposals. I should be interested to learn how this Minister's Department deals with the potential conflict that I see between the introduction of competition proposals that pose a real threat to vets in farm practices particularly, and the Government's stated animal health and welfare policy, which envisages the role of vets in large animal practices as being central. Along with many people outside the House, I shall be interested to see how the Minister squares the circle.

There are three main worries about the Competition Commission's proposals. It is feared that, first, they will lead to increased consultation charges as vets not unreasonably seek to cover the shortfall in income that they currently receive from dispensing medicines in another way; secondly, there is a risk of inequitable and superficial price comparison, which I believe would damage the much-valued trust that currently exists between vets and clients; and thirdly, there will be a negative impact on the profitability of what is already a low-margin profession.

Many vets in country areas cannot charge more than they do now, simply because the farming clients on whom they rely cannot afford to pay them. Nowadays many animals cannot be treated, and are disposed of rather than being given the veterinary attention that they need.

Mr. David Heath (Somerton and Frome)

I congratulate my hon. Friend on securing a debate for which I too applied. He is right: particularly in dairy farming areas such as mine, there is a limit to the amount that farmers can pay. Only a few weeks ago, when I visited the Delaware practice in my constituency, I was told the same thing—that farm animal practices will be in real trouble if the proposals are adopted.

Mr. Carmichael

That is true. When my wife began practising in 1987, many farmers would call her out to perform a Caesarean section. Often in the middle of the night, she would have to travel from mainland Orkney to one of the remote outer islands such as Westray. Those calls no longer come. The inevitable conclusion is that cows are being shot when they get into difficulties calving. Although the farming community should not be blamed for that, it is regrettable.

Ideally, I should like the Government to accept that the commission's proposals are flawed and damaging and to abandon them, but I have been here long enough to know that, inexorably and inevitably, they will probably be introduced in some form. I want to focus on some of the main issues drawn to my attention by farmers and vets in my constituency, and their suggestions for making what are essentially bad proposals workable.

As the Minister knows, the history of this began with the Government's paper and "action plan for farming", which led to the Marsh inquiry and report and subsequently to the announcement by the Office of Fair Trading in October 2001 that the Competition Commission would conduct a further inquiry into the supply of prescription-only medicines in the United Kingdom.

The Competition Commission produced its final report in April this year. It included two sets of recommendations, the first of which suggested remedies under the Fair Trading Act 1973. In the course of recent correspondence with the DTI, I was told that it will hold a 13-week public consultation on the form of the order that gives effect to the recommendations. The draft order was expected in the autumn. As I notice that the leaves are beginning to fall from the trees, I hope that the Minister will tell us when we can expect to see it—although I should say in passing that I would rather see it right than see it quick. The second set of recommendations relate to the system of regulating veterinary medicines. The Government gave their view on those in a written statement on 9 July.

If veterinary surgeons are not to be the sole people who dispense animal medicine, some sort of prescription form system will require to be introduced. The Competition Commission appears to think that that should be done for no fee, which suggests to me that it has a basic lack of understanding of the profession with which it is dealing. I am inclined to suspect that it sees the process as being akin to a doctor sitting in his surgery scrawling a short note for a generic antibiotic to be taken twice a day for a week. For vets, the reality will be rather different. A vet who is called upon to prescribe for, say, a flock of turkeys or a herd of pigs will need to spend some considerable time deciding on the appropriate dosage and the way in which the drugs should be administered—for example, animals are often medicated through food or water. Those prescriptions will be complex documents that must be completed in some detail—a time-consuming business over and above the initial consultation period. I am told that when representatives from the British Small Animal Veterinary Association brought that up with civil servants at the DTI, the response was: "Can't you just include these costs in your consultation fee?" Although that may not be an unattractive idea, it would make it very difficult for vets to set a single consultation fee; and I gently suggest to the Minister that it rather defeats the Government's stated aim of trying to achieve transparency in pricing practice. To my mind, it illustrates the fact that the proposals are rather less than well thought out.

The Competition Commission proposed that under the Fair Trading Act 1973, the Royal College of Veterinary Surgeons should encourage vets to provide prescriptions in a form that allows the identification and dispensing of alternative medicines, which could include its drawing up of lists of comparable medicines. I do not understand exactly why the RCVS should be charged with doing that. As a regulatory body, it is not its job to make judgments on effective clinical alternatives. Again, that will be exceptionally time-consuming and add further costs that must eventually be passed on to the owner of the animal. It is not clear whether some of those lists of alternatives might be expected to include generic medicines. That area is fraught with difficulty for vets, because they have to prescribe in accordance with the so-called cascade system, whereby they must use only drugs that are licensed for animals—if such a drug exists. The withdrawal times for meat entering the food chain can differ widely. That does not matter in terms of medicating people, because we have not yet reached the stage of eating dead people, but dealing with animals is a very different matter. Unfortunately, that subtlety has not struck home with the Competition Commission.

Andrew George (St. Ives)

Does my hon. Friend agree that in constituencies such as his and mine, the proposal will resolve none of the problems about which constituents have complained, and that, if anything, it will create problems that result in their complaining to us about expensive and inaccessible services?

Mr. Carmichael

My hon. Friend's analysis is absolutely right. In particular, I do not look forward to being the MP who receives complaints about the pricing practices of his wife's practice.

The point needs to be made that an enormous amount of bureaucracy will be attached to this proposal, the genesis of which was a handful of ill-considered complaints from groups that, to be frank, have rowed back at a rate of knots. The only people who are now driving this proposal forward are those in the Competition Commission, rather than those who stand to be most directly affected.

The full bureaucratic madness of the Competition Commission's thinking becomes apparent only when one considers its suggestion that a large and prominent sign should be displayed in all veterinary surgeries, advising clients on the price of the 10 prescription-only medicines most commonly prescribed or dispensed by that surgery in a typical three-month period. There are several problems with this proposal. It will involve a substantial amount of extra work for vets, and a cost that must ultimately be passed on to the clients. If five different presentations or sizes of the same drug are produced by the same manufacturer, should they be considered as five different drugs? If they are grouped together, should prices be listed for each of the preparations? Should the cost include the cost of additional packaging?

Additionally, the list would have to be regularly changed as new prescriptions became available, or as the season dictated the increased use of a particular medicine. Crucially, there would be pressure from clients to be prescribed a cheaper preparation, when a more expensive alternative might be better suited to the case. The fundamental question, to which I hope the Minister has an answer, is this. If the issue is one of transparency, why is the burden being placed only on vets? Why will pharmacists not have to comply with the same regulations or prepare the same lists?

I want to look briefly at the recommendations for legislative change. The main recommendation is that the Secretary of State should change the law to allow veterinary surgeons to dispense a veterinary prescription, whether or not the animal concerned is under their care. The Government accepted this in the statement of 9 July, which is to be deeply regretted. The recommendation is a cause of massive concern within the veterinary profession. Again, it betrays a fundamental lack of understanding of the profession and its ethical standards and practices. As a friend of mine in the profession said, "It is a very bad idea to enshrine stupidity into legislation." This measure would undoubtedly lead to confusion in the chain of responsibility. Who would bear responsibility for any adverse reaction to the medication: the prescriber or the dispenser? As the British Small Animal Veterinary Association stated:

The potential for confusion of clinical responsibility outweighs the benefit of potential competition. These reforms must be seen in the context of a declining large animal veterinary sector. Just 400 practices in the whole of the United Kingdom offer services for large animals. These reforms will only increase the financial pressure on remaining large animal practices to move into the small animal sector, which is seen as more profitable. According to the chief veterinary officer, Government funding for animal health and welfare is currently £50 million a year, and likely to fall in coming years. Can the Minister tell me how, therefore, the Government propose to increase agricultural veterinary cover?

When giving evidence to the Select Committee earlier this year, a Minister from the Department for Environment, Food and Rural Affairs said that we must rely on the private sector for disease surveillance. It is my contention that unless something is done—and done quickly—to encourage vets into large animal practice, we are almost guaranteed another major disease outbreak sooner, rather than later. Any savings made through adopting proposals such as those offered by the Competition Commission will be small beer compared with the cost of another outbreak of foot and mouth disease or swine fever. During the foot and mouth outbreak of 2001, many vets in private practice with large animal experience felt it their duty to leave their practice and help in the fight to control the outbreak. It was difficult and often deeply distressing work. As the number of vets with farm animal experience fall, there simply will not be the same battery of expertise to call on in any future outbreak. The Government's own animal welfare strategy stands to be threatened by their own competition policy.

I started my speech with a declaration of interest regarding my wife's practice, and I conclude with an offer to the Minister. He is welcome to send some of the suits from the Competition Commission to Orkney to work alongside my wife and her colleagues and to spend time in her surgery and on the farms. They would then see the realities of the situation in which they seek to interfere; they would see how good a service we get from our vets, and how much damage the proposals stand to do.

10.20 pm
The Minister for Rural Affairs and Local Environmental Quality (Alun Michael)

I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on promoting the family business—and also on the offers that he has made to the House. He is right to point to the important role of the Department of Trade and Industry in leading on competition policy. The Department for Environment, Food and Rural Affairs has responsibility for the topic of this debate—the prescription of medicines by veterinary surgeons—and that is why I am replying to the debate. I should mention that the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Exeter (Mr. Bradshaw), takes the lead on animal welfare and veterinary issues, but he is unable to come to the debate tonight. I cannot come to the debate with his expertise, but I have been able to cast a fresh eye on these issues in order to stand in for him.

The hon. Member for Orkney and Shetland raised a series of practical questions, including the list proposal and a number of others, but it is precisely because such issues need to be dealt with from a practical perspective that we are approaching them in consultation with the professions and the industry.

The hon. Gentleman was sweepingly critical of the proposed changes, but I congratulate him on spotting the fact that leaves are falling from the trees at present. Consultation on detailed proposals will start later this year. The formalities are that a 13-week consultation has been agreed by the Department of Trade and Industry, which set the autumn as the time for its consultation on the draft statutory instrument. We are already talking to veterinary organisations, and we will use the Royal College of Veterinary Surgeons code of professional conduct to implement the proposals where possible, rather than seeking to do so by statute.

Of course there are practical issues to be dealt with, which is why we are working with representatives of the profession to get them right. It does not help to refer disparagingly to alleged comments at meetings with officials of any Department, when none of us can check the veracity of such reports and no one has the opportunity to offer a correction.

As for the history of the proposals, the Competition Commission inquiry into the supply of prescription-only veterinary medicines was set up following complaints from farmers and pet owners about the cost of veterinary medicines. Those complaints were made to Ministers in the Ministry of Agriculture, Fisheries and Food, but MAFF Ministers had no statutory responsibility for the costs of veterinary medicines, so they referred the complaints to the Office of Fair Trading. I should say that DEFRA Ministers now would be in exactly the same position as MAFF Ministers were then.

The statement of issues to be considered by the Competition Commission was published on 16 April 2002. The inquiry focused on the supply of prescription-only medicines, on the ability of pharmacies to compete with veterinary surgeons at retail level, and on asking whether monopolies existed in the supply of those medicines, as was alleged.

The Competition Commission consulted veterinary groups, pharmaceutical companies and other interested parties, first to find out how the market worked and then, in September 2002, on its emerging findings, and likely remedies and recommendations. The report was submitted to the Secretary of State for Trade and Industry and published on 11 April 2003. It recommended a number of remedies for that Secretary of State, and also made recommendations for DEFRA.

The commission's findings were that three complex monopoly situations operated against the public interest—precisely what the complainants had said. Those monopolies were recognised as being interconnected. Taken together, the commission said, they were preventing, restricting and distorting competition in the supply of prescription-only medicines, thus increasing the cost of those medicines at all levels of the supply chain, as well as to animal owners and keepers.

To address these findings, the Competition Commission proposed nine remedies under the Fair Trading Act 1986 and made 11 recommendations to the Department for Environment, Food and Rural Affairs for changes in the regulation of veterinary medicines. The Government accepted all the remedies and most of the recommendations. The main effects will be to require vets to display the prices of the most commonly used prescription-only medicines; to require vets to offer a prescription routinely; and to allow veterinary surgeons to dispense a prescription for any animal, whether under their care or not. The commission went on to propose to give the widest distribution regime to all authorised products, which is consistent with product safety, and to improve the veterinary medicines directorate's procedures to minimise delays and consequent costs of authorisation. Finally, it wanted to encourage the proportionate cost of medicines to all animal owners and keepers.

The Government accepted the Competition Commission's report and agreed that changes in the marketing of veterinary prescription-only medicines were necessary to address the complex monopolies. The Government want to make veterinary prescriptions more widely available; to create greater competition in all levels of the supply chain; to give consumers greater choice and increased price transparency; and to reduce costs to owners and keepers. That applies as much to farmers as to owners of pet animals.

We thus come to the issue of how the Government will implement the changes. We have made it clear that we intend to do so in consultation with the veterinary profession and other interested groups. As I pointed out earlier, we will use the Royal College of Veterinary Surgeons' code of professional conduct rather than legislation, where possible.

Several concerns were raised, following the publication of the report, and the Government recognise the main concerns that have followed our response. The fears were that the proposed changes might lead to large animal practices becoming unavailable in some areas, which could result in an increase in the cost of veterinary services to farmers. It could also affect the ability of the Government to use private vets to implement important initiatives such as proactive farm health planning under the animal health and welfare strategy. It was also suggested that widening the veterinary surgeon's right to dispense another veterinary surgeon's prescription could blur the lines of responsibility for the health and welfare of the animal. Finally, it was felt by some that it would be unfair if vets were not allowed to charge for writing a prescription. I should mention that the Select Committee on Environment, Food and Rural Affairs is to report shortly, following its inquiry into veterinary services, and it may also raise related issues in its report.

We now come to continuing actions and other possible initiatives. As I have made absolutely clear, the Competition Commission's findings are being pursued through consultation with interested groups. Where possible, they will be implemented through the Royal College of Veterinary Surgeons' code of professional conduct rather than by legislation. Also, as part of the animal health and welfare strategy, DEFRA will establish a working group with the veterinary profession to consider the report of the Select Committee and to look at the future roles and availability of large animal practices.

The services supplied through the highlands and islands veterinary scheme in the hon. Gentleman's own constituency is an example of a specific provision which has been designed and implemented to meet the particular needs in one location. It may well be necessary to consider others that are appropriate for specific circumstances. Equally, large animal veterinary practices may find increased opportunities to develop the way in which they work with their farming clients. We are already aware of one practice that has linked the cost of its services to the price that the farmer receives for his milk, creating a clear business incentive for them both to succeed together.

Additionally, the effectiveness of the Competition Commission's remedies will be monitored by the Office of Fair Trading, which will also continue to monitor the provision of prescriptions by veterinary surgeons and their subsequent dispensing elsewhere and to consider whether the prohibition on charging for the provision of a prescription should be lifted after three years. The practicalities will be looked at and considered.

The animal health and welfare strategy recognises that there are concerns about the availability of prescribed veterinary medicines and associated problems such as "off label" use. The strategy includes a new initiative to assess the current availability of veterinary medicines and to discuss with the pharmaceutical industry how those concerns can be met. We are now considering how to take those issues forward as part of the implementation arrangements for the strategy.

I suggest to the hon. Member for Orkney and Shetland that two strands are evident: the strand of implementing the recommendations of the Commission, which are being approached with the veterinary profession, not separately from it; and the question of how the animal health and welfare strategy is taken forward, which is again being worked on in association with the profession. The monopolies identified by the Competition Commission have to be addressed. That was accepted when the report was made.

Mr. Carmichael

I have difficulty following the Minister's thinking. Why does he continue to look at the question of dispensing medicines in isolation, rather than as part of the totality of veterinary practice? Does

he not realise that in-creasing bureaucracy will increase consultation fees and that, ultimately, the consumer will end up paying more?

Alun Michael

I put the question back to the hon. Gentleman. Why does he not recognise that complaints were taken to the Competition Commission because the prices charged for dispensed medicines were seen by the complainants as unjustified and onerous? Indeed, those prices were found by the Competition Commission to be unjustified, and a distortion in the prices being charged was identified.

Mr. Carmichael

The Minister may need to write to me on this question, but perhaps he would be kind enough to find out how many complaints were made; my understanding is that it was dozens rather than hundreds. Many of the complaints were based on the differences between prices in Northern Ireland, which is part of the United Kingdom, and the Republic of Ireland, where very different licensing restrictions apply to the development of drugs. When will the Government tackle the pharmaceutical industry on that point?

Alun Michael

The hon. Gentleman makes several assumptions, most of which are not justified. The number of complaints is not the issue when the Competition Commission considers a subject. The Ministers involved considered that the complaints were sufficiently serious for the matter to be referred to the commission, and it then undertook its inquiry—as on a range of issues—and felt that there was a cross-subsidy that was not justified and that pricing was therefore not appropriate. I suggest that if the hon. Gentleman wishes to question the process by which the commission reached its conclusions, he discuss it with the commission, rather than assuming that it has not done a proper job. From my experience of reading reports from the commission in other contexts, it is assiduous in considering the competition issues and trying to understand the context of the trade, business or profession that it is judging. The hon. Gentleman should talk to the commission about its practices, so that he understands how it approaches such issues.

The Government will implement the Competition Commission's remedies and those of the recommendations that we have accepted—as spelled out at the time—in consultation with all interested parties and in discussion with the veterinary profession. That is the right way to take matters forward. The findings of the commission cannot be dismissed as lightly as the hon. Gentleman suggests.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes to Eleven o'clock.