HL Deb 04 February 1987 vol 484 cc302-19

10.14 p.m.

Lord Northfield

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Northfield.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD AIREDALE in the Chair].

Lord Northfield

Before my noble friend Lord Stallard begins, perhaps I may suggest that it may be for the convenience of the Committee if we discuss together Amendments Nos. 1, 2, 3, 4, 5 and 7. They all raise the same point. If the noble Viscount, Lord Craigavon, is in agreement, I am sure that that will speed up the proceedings.

Lord Stallard

I am quite happy to accept the suggestion put forward by my noble friend Lord Northfield.

Clause 1 [Restriction of acts authorised by certain licences]:

Lord Stallard moved Amendment No. 1: Page 1, line 9, after ("patent") insert ("which has not at the commencement of this paragraph passed the end of the fifteenth year from the date of the patent").

The noble Lord said: I beg to move Amendment No. 1 and I shall speak to Amendments Nos. 3 and 5 at the same time.

I ought to say that I do not claim to be an expert on patents. Nor have I any vested or other interest in this Bill. I have been involved in health matters in the National Health Service for a long time. For many years I was chairman of local authority housing health committees. I was a member of an area health authority. I am a consumer of the National Health Service—perhaps the only person in the debate who is solely a consumer, apart from my noble friend on the Front Bench here.

I therefore take a deep interest in affairs affecting the National Health Service, and so I have read the Second Reading debate. I have gone back over the Second Reading debates in both Houses on what became the 1977 Act. I have also read the literature that most noble Lords received in the course of the earlier discussions. I have since read some recent newspaper articles on the subject and I have tried very hard to find it in my heart to support the motive behind the Bill.

However, I must confess that what I have read disturbs me even more than my first examination of our Second Reading debate. I was then concerned that there had been no reply to the questions put forward by my noble friend on the problems of the National Health Service. I shall return to that later in the Committee. I am seriously concerned about a number of matters. One of these—it is the reason for my tabling the first amendment—concerns the retrospective nature of the legislation. There has always been discussion and fierce argument about retrospection in any legislation. It seems that a number of anomalies will be created if the legislation goes through as it is without my amendments. I wish first, to reduce the damage that might be done to the National Health Service.

Amendment No. 1 changes the date from which the Bill applies so that it affects only patents which, up to the date of commencement, will not be available for licences of right and for which valid applications have not been made. By deleting the reference to "17th December 1986", the amendment removes one of the most undesirable retrospective elements in the Bill, and treats all applications equally. For this reason I hope that the noble Viscount, Lord Craigavon, who made very similar comments during the Second Reading debate, will be able to support the amendment that I am moving tonight.

A further and even more important benefit arising from Amendment No. 1 is that the National Health Service would be paying less for some of its drugs in the late 1980s than would otherwise be the case. I shall say more about that matter when we deal with a later amendment.

Amendments Nos. 3 and 5 are consequential on the first amendment and I do not have too much to say about them. However, Amendment No. 3 seeks to ensure that a reasonable time limit is placed on patentees so that, if they intend to file declarations under the Bill to prevent licences of right becoming available, they must do so within the time specified by the Secretary of State. I believe that this will help to remove uncertainty and will establish a more ordered framework for the whole pharmaceutical society. Amendment No. 5 simply proposes drafting changes which are a consequence of the earlier amendments.

I hope that these modest and constructive amendments, and the spirit in which I have spoken, will persuade the sponsor that he could quite readily accept the amendments and incorporate them into the Bill. I beg to move.

Viscount Craigavon

First, I am particularly glad that the noble Lord, Lord Denham, is present to listen to this debate on the very important issue of retrospection. I have a fairly long speech to make, but, having said that, I do not expect the noble Lord to stay throughout my remarks. I hope that he will be able to read my speech in Hansard as I think that this is a very serious matter.

I should like to speak to my Amendment No. 2, which is very similar to Amendment No. 1. As with the amendment of the noble Lord, Lord Stallard, I seek to provide a clear, simple date—namely, the date of commencement—from which this Bill becomes effective. The very complicated transitional provisions can then be abolished. The small but significant difference between my amendment and that of the noble Lord, Lord Stallard, is that once commencement has occurred, no products which come into the licence of right in the following year can be claimed for licensing.

The consequential amendment for me, as for the noble Lord, Lord Stallard, is that the existing complex transitional provisions of the Bill in subsections (4) and (5) are thereby rendered unnecessary. For the same reason the new subsections (4) and (5) being offered in Amendment No. 6 are also unnecessary. We shall be dealing with that amendment in due course, but because I am dismissing it as unnecessary for the purposes of my argument here, I should like to say that I am grateful to the ABPI for apparently labouring long and hard to come up with an amendment to meet a particular problem which I raised at Second Reading concerning possible unfairness between generic companies.

I understand that it has been difficult to find a comprehensive solution to the problem. I hope to show that while I accept the spirit of what is being offered, I am advised that Amendment No. 6 being put forward by the noble Lord, Lord Northfield, is both ambiguous and contradictory as well as being difficult to understand.

I mention this fact now to emphasise that all these difficulties of transitional provisions would evaporate if we adopt the clear and simple date of commencement as it is being offered in Amendments Nos. 1 and 2.

I shall hope to show that the prime reason, and the overriding reason, why we should adopt the date of commencement as the trigger for this Bill is that that is what the established practice of parliament requires of us.

I have taken the highest and best advice on this matter that one can in this House. The more I have thought about it, the more surprised I am that anyone, let alone myself, is having to advocate in this Committee and in this detail one of the basic assumptions of parliamentary life; namely, the laws we pass only take effect when the Sovereign has given the Royal Assent.

Clearly, there are exceptions to this which we all know. But, underlying them are very limited parliamentary considerations which can be properly adduced against the general presumption of the effective starting date of a Bill being after the Royal Assent. To go against that, reasons have to be compelling—not compelling in equity but compelling for proper legal and parliamentary reasons. Later, in order to support this general presumption, I am going to quote a very authoritative passage from a speech made by the noble Lord, Lord Lucas, in April of last year in answer to the noble Lord, Lord Northfield on exactly this issue.

I have said that there are exceptions to the general presumption against retrospection. An example would be budget or tax changes which traditionally can date from the date of announcement. Another example would be legislation to correct a loophole, or where the nature of the problem being corrected by the Bill would lead to general mayhem if the problem was stated in a Bill and the solution was not to date from the same time.

The fact that I had been involved in a planning Bill in this House quite recently, where this was the case, was partly responsible for my not mentioning the issue now before us on Second Reading, although I did ask that the cut-off point be related to the passing of this Bill.

I should like to apologise to the Committee for the length of this intervention and I am afraid I still have some way to go. I should explain that what I am proposing in my amendment is very simple and clear-cut. But what I am now going to have to take time to rebut is the use in the Bill (as it now stands) of the effective starting point of 17th December, 1986—that is the day it was published. That fact is contained rather opaquely in the transitional provisions of subsections (4) and (5) in Clause 1.

To come to the point, the effective dating in this Bill amounts to retrospection. I know that the noble Lord, Lord Northfield, wants to resist that appellation. I know that the noble Lord said on Second Reading at col. 466 in Hansard that there is no retrospective legislation involved in this Bill. He resisted the use of that word in this context when I personally mentioned my concern to him about this matter over a week ago. I hope that with his immense parliamentary experience he would not be embarrassed to use the word in the same way as is customary in this building. I shall be quoting the noble Lord, Lord Lucas, in a minute to show how his use of the word corresponds to the normal parliamentary practice that I am going to follow.

On reflection, my thoughts are drawn along the line that the more the noble Lord, Lord Northfield, resists the normal parliamentary use of this word, the more he has to cover up. The stupid thing is that we do not disagree on the date we are talking about. This is only a semantic disagreement, but it will make the debate confusing for anyone following it, and this debate has yet to continue in the House of Commons if the noble Lord, Lord Northfield, continues to use his own private definition of "retrospection".

I am prepared, and this Committee should be prepared, to listen to the arguments put forward by the noble Lord, Lord Northfield. One has already had a colourful and robust preview of those arguments in Hansard in April of last year when the Patents, Designs and Marks Bill was going through its stages in this House. At that time the noble Lord, Lord Northfield, was using that Bill as a vehicle to which to attach similar provisions to those which the present Patents (Amendment) Bill seeks to achieve. It was on that Bill in April that the Minister gave, and reaffirmed, the Government's commitment to the central provision of the Bill before us.

It will be my case in the next few minutes that although the Government, through the Minister, were giving that central commitment, in absolutely no way and at no stage was anything said by the Minister that could support any element of retrospection in the present Bill. In fact the opposite is the case. The Minister went out of his way, as I shall show, to say that he could not prejudge the matter of the date when the proposed measure should become effective. One of the major reasons he gave was the need for consultations, and I shall have quite a lot to say about consultations in a minute.

To substantiate what I have said, perhaps I may now turn to the record in the Lords Hansard of 22nd April 1986 of the Report stage in this House of the Patents, Designs and Marks Bill. The noble Lord, Lord Northfield, was trying to tack on to that Bill roughly what is in the present Bill, but what I am focusing on now are the various ways in which he tried to persuade the Government to give immediate effect to those provisions. In other words, even at that time the date at which these present provisions were to come into force was a prime issue for the noble Lord.

He was resisted for good reasons, as will be seen, by the Minister, the noble Lord, Lord Lucas. The noble Lord, Lord Northfield, started with some rough words for the generic producers. He called them, in col. 1125: 'pirates'—the copiers of drugs; and some call them parasites". The noble Lord, Lord Lucas, put him right at col. 1136 in saying: However, one must accept that there are two sides to be considered. Whatever anybody may think of what, if I may use my term. I call copyists rather than parasites, they have made preparations in good faith, and within the law, to seek licences and to exploit the inventions. Directly after his mention of "pirates" the noble Lord, Lord Northfield, was asking for time to consult the industry, and telling us how important that was. Unfortunately for the noble Lord the difficulty and paradox for him was that the ABPI has actually quite a lot of "pirates" in its membership, and in fact he was proudly telling us at the Second Reading of this Bill that his organisation represented 90 per cent. of the "pirates" or "copyists"—that is, the generic producers.

That is the central dilemma to what is under discussion; namely that the ABPI is trying to represent two groups with radically conflicting interests. I nearly said that it tried to hold the ring, but in practice the big pharmaceutical companies are virtually dominant within the ABPI, as one might guess from hearing the noble Lord, Lord Northfield, representing their views.

Within the ABPI, I understand, the generic companies can be represented on a committee which meets about every two months and whose members are drawn from what is called the Standard Formulary Medicines Register. The dilemma arises when the noble Lord, Lord Northfield, tells the House or the DTI that he has consulted the ABPI. What, if anything, has got through in this process to these representatives of the generic sector? On matters in this Bill the answer is usually: precious little or nothing. The committee was not consulted about any transitional dates in the Bill; nor, as I understand it, was it formally consulted about the Bill itself.

The Bill itself has been in the background generally for some time and I understand that, individually, generic members take a reasonable and pragmatic view and accept what has happened, at least about the general principle, but not about the activating date of the Bill, about which they were never consulted by the ABPI. That is how I came to say on Second Reading that my friend, who is managing director of probably the largest generic company, Evans, supports the general principle of this Bill.

I am not unsympathetic—nor are Evans—to the basic case as put forward on many occasions and in the Official Report of 22nd April 1986 by the noble Lord, Lord Northfield. If I may say so, he puts up a good fighting case on many points. However, what I do resist, as did the noble Lord, Lord Lucas, on 22nd April, is any attempt to "bounce" us—that is, your Lordships—into precipitate action against the better judgment of your Lordships and against your established traditions and practices.

In the debate on 22nd April the noble Lord, Lord Northfield, tried various devices to get what he wanted as soon as possible. The noble Lord, Lord Lucas, rightly resisted him. The noble Lord, Lord Northfield, put down an amendment calling for a statutory instrument to contain transitional provisions made by the Secretary of State. The Minister called that a little disingenuous—a foot in the door approach. He suggested that the powers of the Controller of Patents could be modified.

More importantly, at col. 1134 of Hansard the noble Lord asked whether the Government could help the industry that day, 22nd April. I quote: that the Government can announce today that the repeal legislation will cover any patents endorsed for licences of right from today's date. Why did the noble Lord, Lord Lucas, resist these appeals and this intense pressure? The answer is in col. 1137 of Hansard, in a direct quote from the Minister which I have been trailing in this speech. There he enunciates his views, and presumably those of his department, on retrospection. I quote the Minister's answer in reply to the noble Lord, Lord Northfield: He asked me to give a commitment that the legislation will be as from a certain, particular date. That would be wrong in principle. There are of course precedents for legislation to be retrospective to the date of announcement but most of the instances of which my officials have been able to advise me are measures that affected the relationship between the Government on the one hand and the public on the other. I suggest that it is a different matter where the change would alter the balance between two groups of private parties. If I may pause in the quotation, I should like to underline that last sentence and say now how much more hesitant one should be where the Bill is introduced by one of those private parties. The noble Lord, Lord Lucas, continued: Before we did that, we should have to consult. It will be necessary to do that, particularly on the question of the transitional arrangements, because any other announcement would prejudge that issue. We must decide what should be done about existing licences, about existing applications for licences and about patents already endorsed as licences of right. Any announcement that I might make today would, I believe, prejudge the answers. What I can say in that context is that we will set in hand at the earliest possible time within this year those consultative procedures, but they will not be dealt with in a short time, because there are a number of people who wish to give us their views. Finally, I say to the noble Lord in that context that if I went further it would be unfair to applicants now because any announcement of a patent becoming endorsed in the future would by its very nature leave the endorsement retrospectively removed. That would he unfair to those who have in good faith already applied for a licence and made preparation". The noble Lord, Lord Lucas, has emphasised the need for consultation. As I explained earlier, no consultation took place with generic companies about transitional provisions through the ABPI. This was the stage when the generic companies were referred to as pirates and parasites.

So it is quite clear that 22nd April passed with no assurances about dates, and the first the generic companies knew about transitional provisions was when they read them in this Bill. The first time that the generic sub-committee was therefore able to discuss this matter was at a committee meeting in January 1987. In the meantime, they had naturally been spending considerable sums of money on developing products for the future in the reasonable expectation that there would be some warning before new provisions came into force. Had the Minister not emphasised the vital importance of consultations? Your Lordships may be pleased to know that I am now coming to the home straight—

Lord Denham

I hope that the noble Viscount, Lord Craigavon, will realise that he has now been speaking on this amendment for rather longer than he took on his Second Reading speech, which is not basically what we do in your Lordships' House.

Viscount Craigavon

I am extremely sorry. I was ignoring the clock and completely mistimed myself. Perhaps I may finally say that, for parliamentary reasons which I have not been able to go into, I should like to recommend that the Committee stick rigorously to the requirement that the date of commencement stems from the date of Royal Assent.

Lord Beaverbrook

Perhaps it will be for the convenience of the Committee if I speak to Amendments Nos. 1 and 5, and Nos. 2, 4, 7 and 3, at this time, and I shall be fairly brief. With regard to Amendments Nos. 1 and 5, these amendments would allow anyone to obtain a licence of right on any patent which had already entered its sixteenth year at the date of commencement of this Bill. For patents which had not passed the end of the fifteenth year at commencement, licences of right would not be available if a declaration was filed. These amendments therefore have the attraction, not present in the Bill as it stands, that if there is any opportunity for a licence of right on any particular patent it is equally available to all. The amendments would, however, prevent declarations being filed in respect of older patents for which no licence had yet been sought. This may not be entirely fair to the patentees concerned. However, the Government feel that this is a subject to which the House could possibly return on Report.

With respect to Amendments Nos. 2, 4 and 7 of the noble Viscount, Lord Craigavon, it seems fair that patent proprietors should have the opportunity to get their declarations in place before their patents become subject to licences of right. Amendment No. 2 would deny them this opportunity. I think therefore that the Government really could not support that amendment. The consequence of Amendments Nos. 4 and 7 would be to cause the Bill to have an effect on licences of right that are in force today, and again the Government could not support a measure that would involve a deprivation of existing rights.

The noble Lord, Lord Stallard, and the noble Viscount, Lord Craigavon, mentioned a reference to retrospection in the Bill. Our view is that the Bill is not strictly retrospective, but the Government agree that the date at which the Bill bites is something which must be looked at again. With regard to consultation, the ABPI have been consulted on the exemption of pharmaceutical patents from licences of right in addition to individual independent generic pharmaceutical companies.

With respect to Amendment No. 3, at this stage the Government feel that this is a matter to which we can perhaps return at a later stage. However, we do not have a firm view at this time.

Lord Northfield

I shall also be brief. I shall deal with the point concerning retrospection by saying that it all depends on what one means by the word "retrospection". Normally, it means that one is providing for something that occurred before a Bill even started its passage. In other words, one had no notice of it happening and one goes back into the past to change something, to regularise something; or whatever the case may be. There is in fact no retrospection in this Bill. All that happens is that it states that the starting date is the date of publication of the Bill.

If I may continue from there, the noble Viscount, Lord Craigavon, seemed to contradict himself. He stated that people ought to have made arrangements in good faith and should therefore be given further time. He then went on to say that they knew that this Bill had been in the background for some time. Everyone has known that this Bill was coming and—

Viscount Craigavon

Will the noble Lord—

Lord Northfield

I do not want to give way. I shall not be anything other than absolutely brief. This Bill has been in the background for a long time now. It seemed only fair, since the Government said last April that it was time this matter was repealed, that the right date to start—everyone having had a lot of notice—should be when the Bill was published. Otherwise, all sorts of things would begin to happen between now and the passage of the Bill which would waste a great deal of time and money and start further legal cases.

As regards the views of the noble Lord, Lord Lucas, in April, I accept immediately that he may well have said that he could not see the case for this sort of starting date. We have spent much time since then trying to convince the Government on this point. My hope was that we had succeeded. However, that may not be the case.

I wish to bring this matter to a conclusion in this way. As the noble Lord, Lord Beaverbrook, said on behalf of the Government, there are some matters surrounding the whole problem of the starting date which need to be looked at between now and Report stage. However, some of the amendments proposed by the noble Viscount could not possibly be accepted because they will not have the effect which he hopes they would have.

Perhaps the best thing to do is to say that I give a full assurance that between now and Report stage, leaving ample opportunity for everyone to come into the picture and to be consulted, there will be wide consultations with the Government. Industry, for example, needs to consult the Government on the whole matter that has been raised. I therefore hope that if I give the clear assurance that there will be time at Report stage to go into these matters thoroughly, noble Lords will withdraw the amendments.

Lord McIntosh of Haringey

As always, when speaking from this Dispatch Box on a Private Member's Bill, I wish to state that there are certain matters on which I speak in a personal capacity, and certain matters which I believe are matters of the policy of my party and on which I shall not speak in a personal capacity.

I regret to say that in the first category falls the issue of retrospection. I have listened with great attention to the noble Viscount, Lord Craigavon. He has certainly convinced me not only that he has a case but also that it is unreasonable and wrong for a Bill of this kind to seek to ensure that it takes effect from publication rather than from Royal Assent. He appears to have convinced the Government that they should take no view on the matter at this stage. To that extent I believe that, whatever he may do about his amendment, he has made out a reasonable case.

The matter that concerns the Opposition is the matter of cost to the National Health Service. It must be obvious—

Lord Northfield

With respect, that is not really on this issue. If that matter is to be raised, it should be done on "clause stand part". It has nothing to do with these amendments.

Lord McIntosh of Haringey

The issue of the starting date of the effect of the Bill is very much an issue of the cost to the National Health Service. We are talking about a finite period of time in any case and if that finite period is—

Lord Northfield

My noble friend is—

10.45 p.m.

Lord McIntosh of Haringey

I shall gladly give way. If my noble friend wants to make comments from a sedentary position, that is his privilege. I shall give way to him if he wishes his comments to be put into the record.

The issue with which we are faced here is the issue of the finite period of time in which the licences of right are to be abolished. If that period of time is to be reduced the effect of the Bill will therefore be reduced. Unless it can be shown firmly and without contradiction that the Bill does not involve additional cost to the National Health Service, then a reduction in the time of effect of the Bill is to the benefit of the National Health Service and is in accordance with the policy of my party.

Therefore I state as clearly as I can that any delay in the introduction of the Bill is in the interests of the National Health Service and in the interests of my party. I would vote for any such amendment. It is no use saying that as an assertion, as the Association of the British Pharmaceutical Industry seeks to do. It is necessary to give evidence. It is necessary above all for my noble friend who introduced this Bill to give evidence for his assertion that there is no cost to the National Health Service.

That assertion has been made solely on statements from the Department of Health and Social Security. The department gives no evidence for the assertion and when the assertion is challenged by an independent report from the respected Henley Centre for Forecasting commissioned by an interested party—I make that clear—which gives the opinion, calculates it and gives the reasons for it, that the cost to the National Health Service could be anything from £50 million to £190 million, with a most likely figure of £110 million, then it is the responsibility of the Department of Health and Social Security and of my noble friend to give evidence to refute those figures. No such evidence has been given.

Indeed, in the Financial Times this morning the Association of the British Pharmaceutical Industry simply commented—it may have been quoted wrongly and if this is wrong I shall gladly be corrected on it: There is no way these figures can be right. The changes would be cost-neutral or on a worst case would cost the National Health Service between £5 million and £10 million a year". If the Association of the British Pharmaceutical Industry, which is, in effect, promoting this Bill, admits the possibility that there will be a cost to the National Health Service of between £5 million and £10 million a year, I ask myself what is the difference between its figures and those from the Henley Centre for Forecasting. Even if one accepts the figures of the Association of the British Pharmaceutical Industry, this Bill cannot be acceptable, and any amendment which seeks to reduce the finite period in which it takes effect must be preferable to the Bill as it stands.

On that basis, whatever arrangements my noble friend may wish to make for consultation between now and Report stage, I suggest to my noble friend Lord Stallard that it is proper for him to pursue this matter.

Viscount Craigavon

Before the noble Lord, Lord Stallard. decides what to do with the amendment, I should like to say on Amendment No. 2 that I accept the suggestion of the noble Lord, Lord Northfield, that this could be talked about during the coming weeks. The noble Lord accused me of contradicting myself. I am afraid that he completely missed my point, in that I said that everyone knew about the Bill and knew that the Bill was likely to come forward. What was not reasonably expected was the transitional date and the effective date with which we have ended up.

Lord Northfield

The issue of the cost of the Bill has been one of the difficulties, because my noble friend on the Front Bench would not accept the assurances that were given by me at Second Reading in quite deliberate words in cols. 449 and 450 of the Official Report, and also did not accept the statement made in support of me by the noble Lord, Lord Lucas. I find that very strange, but if that is the way he wishes to go about the matter, I shall not complain except to say that those are not my standards. He now produces a report by the Henley Centre which is apparently intended to contradict what I say.

I should like to make several observations about that report. First, it gives no figures for the basis of its calculations. It does not take the starting point and does not take us through the figures. Secondly, it is based on a crude projection of today's situation. He admitted that the report has been spatchcocked together in a week or two. It is based on a projection of the present situation. It does not take into account, as the industry and the Government have had to take into account, the actual drugs that will become subject to licences of right in the next two or three years, to the end of the decade, and make a projection on that basis. It is a crude analysis.

Thirdly, the report refers to figures which nobody else will ever agree. It talks about using the discounts on these generically provided drugs as 30 per cent. to 50 per cent. The normal figures in the industry at present are 5 per cent. to 20 per cent. That ruins the basis for most of the calculations. I could go on in more detail. The main issue is that the Henley Centre itself says at the beginning of this document that it makes no allowance for the operation of the pharmaceutical price regulation scheme. That is the whole point about the situation.

What my noble friend has never realised, although I must have said it six times, is that the pharmaceutical price regulation scheme operates to set a limit on the cost and profits of drugs charged to the National Health Service. This means that if the pharmaceutical companies were to make more profits on these particular drugs they would then have to reduce profits elsewhere in order to remain under the ceiling provided by the pharmaceutical price regulation scheme. That is the simple point and the Henley Centre says quite frankly in its analysis that it has taken no account of that overriding factor.

That is the position and everyone is agreed on what must be the basis for the future. Nobody has any intention of allowing the ceiling that is provided under the pharmaceutical price regulation scheme to be breached. The Government are in a position to enforce that. The scheme is keeping costs and profits on drugs supplied to the National Health Service below the average return to manufacturing industry. That is an extremely important point. There are no excessive profits being made out of drugs sold to the National Health Service. The Government, in promulgating the new pharmaceutical price regulation scheme, have admitted that and have said that over a period of years the large profits should be brought nearer to the average for manufacturing industry. They are at present below it. However, no matter where they are, the fact is that a ceiling is imposed by the pharmaceutical price regulation scheme. As I said, any extra profits that might be made on these particular drugs will have to be balanced elsewhere in order to remain within that ceiling. That is the simple position that my noble friend refuses to recognise.

I give one other point which perhaps is worth making. My noble friend has produced a document which, quite properly, was produced by the Henley Centre in a very short time. Does he really think that he can set that document against a study by the Department of Health and Social Security and the Department of Trade and Industry which has been going on since 1983? Since 1983 the Government have been pressed by the industry for this repeal. The Government have been studying this repeal for four years. Finally, after three years' study, they said "We think you have made the case and we think, within that, we can say quite happily that there will be an insignificant"—I deliberately use that word—"effect on the cost to the National Health Service." Frankly, in view of the admitted defects in the Henley Centre's report—the absence of allowance for the operation of the price regulation scheme and the other points on which I could have elaborated even further—I hope that nobody will set that report against the three or four year study by the departments of state that are reasonably concerned in this.

Does my noble friend really think that the Department of Health and Social Security, pressed for money at every turn at the moment, is going happily to countenance some figure like £100 million extra being spent on drugs, given the squeeze on its general budget? He must be joking; he really must be joking.

The answer broadly is—and I hope the Minister will say a word to complete what I am saying—that the Henley Centre has enormous limitations. It has never been discussed with the industry. It is not based on projections of what is actually going to happen in terms of particular drugs coming up for licensing in the next four years. It does not claim to be that, and it of course has left out the effects of the price regulation scheme.

In all those circumstances, I hope that we can get on with the Bill on the basis that we are very happy indeed to look at the other problem, which is that there is a problem with the starting date of this Bill, if my noble friend has made his point, and if the Government upon reflection, and having heard these speeches, think that the date should be altered, I am quite prepared to discuss that before Report stage and I hope we shall then reach an amicable agreement about it.

Lord McIntosh of Haringey

I am very pleased that my intervention has encouraged my noble friend to say a little more about the evidence for and against the assertion that there will be no significant increase in cost to the National Health Service. I listened with care to what he said about the report of the Henley Centre for Forecasting. I would be the first to admit not only that it has been commissioned by parties who have a pecuniary interest in the matter, but also that it has been produced in a great deal of hurry. The point that must be made is that it is the only analysis that has been published on this matter.

My noble friend refers to three years of discussions between the departments and the industry. The results of these discussions have not been published. I asked the Association of the British Phamaceutical Industry before the Second Reading debate if they would give me evidence for their assertion that there is no significant cost to the National Health Service. I have not heard a single word from them from the time of the Second Reading until now. If these conclusions are as convincing as my noble friend suggests, I would have expected that such arguments would have been presented to me before now because although I did not raise objects at Second Reading, I certainly asked questions. Those questions have not been answered at any stage.

The fundamental point that my noble friend makes is that of the operation of the pharmaceutical price regulation scheme. As I understand it, this scheme is designed to ensure that the profits from the National Health Service to the pharmaceutical industry are maintained at a level, and no more than a level, which will protect the research and development support which the pharmaceutical industry quite properly demands. That is the fundamental interest to the National Health Service certainly. If they have any other interest it is to grind the prices down as far as possible, but they are properly concerned about research and development support for current drugs.

The point about this legislation is that it refers only to drugs which were patented in 1977 and earlier, and therefore has no effect whatsoever on the current research and development effort by the drug industry. It would merely provide a windfall profit for the drug manufacturer. Those are the facts of the matter. The arguments of my noble friend have not shifted my views in any respect.

11 p.m.

Lord Northfield

That is because my noble friend does not want to listen. That is the real answer. If I tell him that the report to which he refers is shot through with basic inconsistencies and is admitted to be a broad brush approach and therefore reaches extraordinary conclusions, he does not take any of that into account. He does not take into account the ceiling that is put on the whole situation by the pharmaceutical price regulation scheme. In other words, he ony listens to what he wants to listen to. That is the difficulty of someone who is quite new to the industry and knows nothing about it, being pitchforked into the middle of this discussion.

I would come to his point about whether this is a windfall profit. It is not. What my noble friend is doing—and he has done it before and I object to it very strongly—is that anything that helps private enterprise is bad. It must be questioned; it must in some way be exposed and be shown to be evil.

This reallocation of profits between the generic producers and the original producers, which is what this Bill is about, in some ways is erected by him into a great bonanza for the original producers. It is nothing of the sort because of the operation of the price regulation scheme. It is a pity that my noble friend does not realise that the purpose of the Bill is to encourage companies to invest in research and development in this country. This is the only country in the advanced world—I do not know about those which are not advanced—in which a 20-year patent life is subject to a four-year licence of right in its last four years. It is the only country in which the industry is being hobbled in this way. We are the only country to do this.

We are trying to say that it is only fair to return to Parliament's intention of 20 years ago, now that patent life in general has been so grossly eroded by the Government—and is accepted to be so—and it is better to go back to the original intention and admit that it has been wrong to hobble companies in these past four years, because it is a deterrent to future research. Companies that are looking around the world for research can now choose their location very easily. If difficulties are put in their way, such as this sort of legislation, more and more they will think twice about investing in the United Kingdom. I am sorry that my noble friend is so bitterly anti-private enterprise. It makes me very much ashamed of what he had to say.

Lord McIntosh of Haringey

It would be improper to continue a "duellogue" between my noble friend and myself. I shall not do that. I have a very thick skin. However much I may resent some of his remarks and the motives which he imputes to me, I think it would be improper for me to pursue them at this Dispatch Box. In regard to the international comparison that he makes, I say merely that, for example, the United States retains only a 17-year patent life and that in Germany the patent life before 1978 was only 15 years although it has now been increased to 20 years.

Lord Northfield

It has been increased in the United States. My noble friend knows nothing about the matter.

Lord McIntosh of Haringey

My noble friend makes remarks about my awareness of the pharmaceutical industry. He is quite right. Two weeks ago I knew very little about the pharmaceutical industry. Since then I have learnt a great deal, and what I have learnt is not very much to the credit of many of the people concerned.

Lord Northfield

I shall not detain the Committee very much longer. My noble friend's remarks show the depths of his ignorance. The United States has just increased pharmaceutical patent life by a further five years to cope with exactly the problems that lie behind patent life exclusion. Japan and other countries are considering doing exactly the same. My noble friend really ought not to keep talking about something that he knows nothing about.

Lord Beaverbrook

Very briefly, the pharmaceutical price regulation scheme, as mentioned by the noble Lords, Lord McIntosh and Lord Northfield, sets a ceiling on a company's profitability. The Department of Health and Social Security examines critically the individual costs of each company and the department cannot see the abolition of the licence of right provisions producing additional costs to pharmaceutical companies, and thus furthering the need for price increases on other products.

I too have read the report in today's Financial Times and I find it difficult to accept the estimate quoted by the Henley Centre. The advice that I have received from the Department of Health and Social Security is that there will be no significant impact on National Health Service costs by the abolition of the licence of right provisions.

Lord Tordoff

Can the noble Lord put a number on "significant" in that situation?

Lord Beaverbrook

I think that it would be wrong for me to do so at this stage because the report was published in the paper only this morning and we have had only a short time in which to look at this matter. But the position is that we feel that it would be broadly cost equivalent. There would be no basic change.

Lord Tordoff

The noble Lord will be aware that the bottom line of the Henley forecast is £50 million. Does he regard that figure as significant or is he saying that the Government's view is below that figure?

Lord Beaverbrook

The Government would regard £50 million as being significant.

Lord McIntosh of Haringey

How do the Government regard the £5 million to £10 million which the Association of the British Pharmaceutical Industry considers as being its worst case? Does the noble Lord consider that to be realistic?

Lord Beaverbrook

I have gone as far as I can. As I have indicated, we have looked at this matter today and I think that the best I can do is to say that we continually review the position. We believe that there would be very little, if any, change in the costs.

Lord Northfield

In reply to the noble Lord. Lord Tordoff, the answer is this. If nothing is done in certain circumstances and certain drugs and consumption patterns emerge and are allowed to occur, one could have a small increase. If one balances that by saying: but the pharmaceutical price regulation scheme insists that this be kept constant because of the agreement that there be a ceiling, that wipes it out and adjustments must be made to counteract it. It is the working of the PPRS that would hold back an increase, if such a thing happened, although the calculations show that the effect is more likely to be neutral anyway.

Lord McIntosh of Haringey

Then why is the Bill being promoted?

Lord Stallard

If I said that this had been a fairly ragged debate, I should be very kind. It has moved a long way from the simple amendment that I moved, to discussing retrospection and the date of implementation of the Bill.

I was very heartened to hear the speech of the noble Viscount, Lord Craigavon, although he was interrupted by the noble Lord the Chief Whip. I thought that he was making a perfectly reasonable case against retrospection and in favour of the fact that the Bill should not commence before the dates that he and I suggested. There is, indeed, not much between us.

I was a little put off by my noble friend Lord Northfield when he seemed to imply that nobody who is not an expert in the pharmaceutical industry has any right to take part in the debate.

Lord Northfield

I was talking about costs, not about this issue.

Lord Stallard

I accept that, because I said that I was not an expert.

My noble friend said at one stage that people are in discussions, and this was a point that both I and the noble Viscount, Lord Craigavon, made. He said that that is fair, people are in discussions and these things are going on. But after all, he said, they ought to have known, because they expected the Bill and, therefore, in his view ought to have been further advanced than they are; there ought to have been a cut-off date and that was the justification for the retrospective element.

I considered the debate on Second Reading. I would dispute that the people who were involved most deeply could reasonably have expected that there was a Bill immediately in the offing. It was very doubtful at one stage. My noble friend Lord Northfield on 12th January 1987 at col. 446 in the debate on Second Reading quoted the noble Lord, Lord Lucas who, on 14th April, pledged to repeal the licences of right provisions. He referred to the Bill that would deal with the intellectual property rights. My noble friend Lord Northfield said: That was a Bill we were all expecting this session. But it did not come in this session. Why would people be expecting the Bill if it was not in the Queen's Speech? There would be no panic to carry on with the negotiations and discussions at that stage if there was no Bill in the Queen's Speech, so it could not really be expected in this session.

My noble friend said that the noble Viscount, Lord Whitelaw, wrote to him on 25th November—that is not very long ago; only a few weeks, if one takes into account the recess—and informed him that, the question of a short Bill on licences of right is being considered. It is still not a definite thing if one is talking about discussions going on. I do not think one could be faulted for not being wholeheartedly in the midst of discussions on the basis of these assumptions which might not be correct. The noble Viscount is quoted as having said: 'The latest position is that such a Bill can indeed be detached from the Intellectual Property Bill and the Government hope very much that it could go through this session as a Private Member's Bill' Those were further complications. The noble Viscount hoped that the Bill would be taken up in the ballot for a Private Member's Bill in the Commons. It was a very haphazard, slap-happy suggestion to say that. Who would say that, on such a basis, people ought to have embarked on further deep discussions in the hope that they might win? People in business do not react like that. They might make some contingency plans, but they would not be expected to go into deep discussions on the basis of a raffle in the House of Commons. The raffle, of course, did not come off, and they did not win the Private Member's Bill ballot.

The Minister then suggested to my noble friend that he might like to take up the matter in this place. He did, and this Bill is the result. It is not fair to say that there was plenty of notice that a Bill was expected. It was doubtful until my noble friend Lord Northfield took up the matter whether there was to be a Bill. When he introduced it he expressed regret that it was a Private Member's Bill and not a government Bill. I support that view wholeheartedly. It should have been a government Bill. We should not have been put in this position and neither should the business interests and the people involved.

The date being fixed as it is has worsened the position. It is not fair to say that people have had sufficient notice of this Bill. That is not true. My noble friend said that he considered that retrospection related to before the Bill started its passage. I do not accept that as a definition of retrospection. If any date before Royal Asssent is used, the measure must be retrospective. It does not have to be before the Bill started.

The Bill started on 17th December and it will not be through until some time after Easter. That the starting date goes back to 17th December is good enough for me with regard to retrospection. I do not think that the argument for retrospection was made out. I listened carefully to the Minister, who seemed to accept and then reject the amendment. He was looking for a way to push it to one side. The matter is ragged and unacceptable. I am in a worse state now than when I moved the amendment.

There was a discussion about National Health Service finance. I have only one point on that. My noble friend Lord Northfield said that my noble friend Lord McIntosh should not be quoting the Henley Report because it was rushed and could not be based in anything concrete because the figures were picked out of a hat.

Lord Northfield

I did not say that.

Lord Stallard

My noble friend implied that the figures could not be based on a study similar to one that had taken place in the DHSS.

Lord Northfield

I did not say that.

Lord Stallard

The figures were not to be reckoned on the same basis as those of the detailed study—I accept that there must have been detailed study—in the DHSS. When challenged by the noble Lord, Lord Tordoff, the Minister could not produce a figure for the word "significant". If there have been detailed studies in the DHSS, the Minister should be able to say something more than "significant", or the argument falls. I am completely dissatisfied and almost disorientated by the replies and the cut and thrust that there has been.

Lord Beaverbrook

I do not believe that the Committee would expect me to stand here and agree to considerable extra expenditure by the DHSS. When I say that the expenditure involved would be broadly neutral, the Committee should consider that that is our view and it is what we mean.

Lord Stallard

I accept that that is the Minister's view. "Significant" or "broadly neutral" would mean much more if there were a figure attached. I do not know what "broadly neutral" or "significant" mean in this context. We must have a figure or it becomes doubtful whether the matter has been studied in the detail that it should have been.

I know how health departments work. There is a mass of statistics and figures. They look at everything upside down four or five times. The proposal goes round and round departments for months and months, so they have figures. At the end of the day they add up all the figures and say, "Equals significant" or "Equals broadly neutral". There should have been a figure. There is no figure and I am still dissatisfied. I am inclined to test the opinion of the Committee on Amendment No. 1.

The Deputy Chairman of Committees (Lord Airedale)

The Question is that Amendment No. 1 shall be agreed to. As many of that opinion will say, "Content"? To the contrary, "Not-Content"? I think the Contents have it.

Lord Northfield


The Deputy Chairman of Committees

I collected the voices and it seemed that the "Contents" have it.

Amendment agreed to accordingly.

[Amendment No. 2 not moved.]

Lord Stallard moved Amendment No. 3: Page 1, line 24, at end insert ("and within the prescribed time limits")

The noble Lord said: I beg to move.

11.11 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 2; Not-Contents, 2.

McIntosh of Haringey, L. [Teller.]
Stallard, L. [Teller.]
Hacking, L. [Teller.]
Northfield, L. [Teller]

11.22 p.m.

The Deputy Chairman of Committees

As it appears that fewer than 30 Lords have voted, in accordance with Standing Order No. 5 I declare the Question not decided, and the further proceedings on the Bill stand adjourned.

House resumed.

House adjourned at twenty-four minutes past eleven o'clock.

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