Drugs: Price Differences (Hansard, 25 October 1982)

§ Baroness Dudley
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why some drugs which are sold to the National Health Service in the United Kingdom can be purchased for under one-quarter of the price in other countries.

§ The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne)
My Lords, such large differences in price are exceptional. I do accept that some medicines in some countries are cheaper than they are here. But others are more expensive. The differences are due to different economic and fiscal policies, local price control schemes, exchange rate fluctuations, effectiveness of patent protection, and market forces. Price differences from country to country are not of course peculiar to medicines. On the whole the prices of medicines in this country compare well with those in Western Europe.

§ Baroness Dudley
My Lords, is it not true that in some cases they are 10 times more expensive here than they are there? If we could do something about that, would it not save the National Health Service £80 million a year?

§ Lord Trefgarne
My Lords, my noble friend may be referring to a case that attracted some publicity recently—namely, the case of a drug called Zyloric which is apparently available in Spain at about a quarter of the price at which it is available in this country. It was a special case. That drug has been available in Spain for about 12 years and it was introduced into that country in 1970, at which time it was more expensive in Spain than it was here. But since that time price controls in Spain have prevented any price increases apart from two recent ones, and the sale of that drug in that country is now unprofitable for the manufacturer.

Lord Wallace of Coslany
My Lords, is the noble Lord aware that the question of the cost of drugs is one that needs thorough investigation so far as the Health Service is concerned, because it is a field where there could be considerable savings without affecting patient care? Secondly, is the noble Lord aware that I can give some slight evidence to support the noble Baroness? I use a proprietary medicine occasionally, and recently in Malta I bought a small tube for the equivalent of 30p; it is an item manufactured in Great Britain and it costs me in the United Kingdom 59p.

§ Lord Trefgarne
My Lords, I am sorry to hear about the noble Lord's unfortunate experience, but our own method of controlling price and profit levels is, of course, the Pharmaceutical Price Regulation Scheme. It does not control the price of individual drugs which are fixed by companies, but it ensures that excessive profits are not made. British pharmaceutical companies make a very large contribution to our exports—the balance of payments in our favour in pharmaceuticals is about £600 million per annum—they invest heavily in research and development and employ about 70,000 people. It is important that they should be given a proper return on their investment, and, of course, we take these benefits into account in operating the scheme.

§ Lord Wells-Pestell
My Lords, I should like to ask the noble Lord about the basis of the comparison upon which he states that the prices of drugs here compare favourably with those in western countries. Is he comparing drug with drug, or is he taking an average?

§ Lord Trefgarne
My Lords, I am looking at the cost of drugs right across the spectrum. Some drugs in this country are more expensive than they are elsewhere; some drugs in this country are less expensive than they are elsewhere. I was taking a broad look at the position when I made the general assertion which I did just now. Perhaps I should add that, of course, in some of the countries of Europe—not all of them—they do not have the large pharmaceutical manufacturing industry which we have in this country and we have to take the interests of that industry into account when operating our scheme.

Lord Chelwood
My Lords, should we not also bear in mind that pirating drugs without spending any money on research at all is very simple in many cases and that, as my noble friend indicated in his second reply, most pharmaceutical companies spend up to 10 per cent. of their annual sales on research, which is the only source of new products?

§ Lord Trefgarne
My Lords, my noble friend is quite right that the source of funds for research purposes in the pharmaceutical companies is from the margins they make from the sales of their products. It is also the case that, without the necessary controls upon the manufacture and sale of pharmaceuticals, one cannot he certain where the drugs come from, whether they are counterfeit, whether they are contaminated or, indeed, whether they are the product they say they are.

§ Lord Molloy
My Lords, I should like to ask the noble Lord whether he would be prepared to examine the possibility of perhaps establishing a guidance council from the British Pharmaceutical Society to aid the Government and the National Health Service in such matters as we have been discussing this afternoon?

§ Lord Trefgarne
My Lords, the noble Lord has put his finger on what I believe is a very important point. I wonder whether he has seen the work done by Professor Turner at Bart's Hospital where he has prepared what is called a formulary to give advice to doctors and others about the best and most economical drugs to prescribe in any particular case.

§ Lord John-Mackie
My Lords, would the noble Lord like to consider the question that arose over agricultural chemicals, which I think has some bearing on the question of the noble Baroness? When we went abroad to buy these chemicals we found that sometimes we could buy them at a price up to 50 per cent. less than the price at which they were sold in this country. Since then the price in this country has been brought down by 20 per cent., 30 per cent., or 40 per cent. in many cases. If the same happened with drugs, we would find them cheaper in this country.

§ Lord Trefgarne
My Lords, with respect that goes slightly wide of the Question on the Order Paper, but, speaking from personal experience as regards my own cat which had to go to the vet recently, we found it very expensive.