Selected List Prescribing Scheme: Extension

HL Deb 14 April 1993 vol 544 cc1147-74

8.18 p.m.

Lord Hacking rose to ask Her Majesty's Government what effect the extension of the selected list scheme will have on the attainment of targets contained in the Health of the Nation White Paper, especially in relation to mental illness.

The noble Lord said: My Lords, on 12th November last year the Government announced their intention to extend the selected list scheme, which was originally implemented in 1985 for seven therapeutic categories of drugs, to a further 10 therapeutic categories. These include drugs for the treatment of, for example, anxiety and mental illness, skin diseases, women's vaginal infections and contraceptives.

As with the earlier selected list scheme, the intended result is substantially to reduce the number of drugs in these categories which will be available for prescription under the National Health Service. Altogether some 549 drugs are affected. The Department of Health is not only the regulator of the United Kingdom pharmaceutical industry but it is also effectively the monopolistic buyer of its goods. Therefore, the immediate impact of the measures will fall upon the pharmaceutical industry. It will be serious —very serious—for the industry. The net sales of those 549 drugs to the NHS amount to about £450 million per annum. Therefore, it is estimated that the reduction in volume of those sales is likely to be in the region of £250 million to £300 million; in other words, sales will be lost to the industry to that degree.

According to a survey carried out by the ABPI from answers received from 46 out of 65 companies, consequential job losses to the industry will be in the region of 3,000 people and there will be a cut-back on capital investment in the UK in the pharmaceutical industry of up to £400 million in production and/or research and development. The impact on some companies will be quite devastating. It affects some companies to the degree of 47 per cent., 64 per cent. or 83 per cent. of their total sales. Indeed, five United Kingdom companies whose sales will be affected by up to 100 per cent. literally face extinction.

Serious harm must also be contemplated for overseas companies manufacturing and/or selling their products in this country. There are also serious implications for the United Kingdom economy. The pharmaceutical industry's exports are currently just under £3 billion per annum with a surplus of exports at about £1.3 billion. The pharmaceutical industry is second only as an exporter to the power generating machine industry and is ahead of the oil industry with all its fields in the North Sea. Therefore, who can doubt that the result will be a significant drop in the inward investment into the United Kingdom for one of our prime and most successful industries?

It has been, and is, particularly difficult for the pharmaceutical industry because, as openly stated by the Minister of State in another place, these measures were announced without consultation and without warning. The industry asks, "Are we not meant to be working in co-operation with the Government on the PPRS scheme and elsewhere? Are we not meant to be working with the Government in the interests of patients?" It asks also, "What next?"

In my years in your Lordships' House, particularly during the past 10 years when I have involved myself in matters concerning the pharmaceutical industry, I have never known that industry to be more upset. I am anxious to get on with my speech but I could quote to your Lordships a letter that was written by the chairman of one major pharmaceutical company to the Secretary of State in which he expressed anguish at the decision.

It is often said that the industry is profitable and prosperous and that cries from it are cries of wolf. Perhaps I may cite what has happened to one company at the time of the last selected list scheme in 1985. After development costs of about £75 million, it produced a drug which was able to treat both anxiety and depression. In 11 months it achieved a 6.2 per cent. share of that sector of the United Kingdom market. It was then black-listed at the stroke of a pen. I should add that in the meantime, outside the United Kingdom, that particular drug became a world leader.

I cite also what happened in Canada since it adopted some 20 years ago a cheap drug policy. It moved from being a net exporter to a net importer of pharmaceuticals and almost entirely lost its R&D industry. Perhaps my noble friend will come with me to the end of the story of the little boy and the wolf because it is my recollection that at the end of the story there was a wolf and it is my further recollection that, in the rather macabre account of that tale, the wolf ate the little boy.

I put on record the position of the pharmaceutical industry because I believe that it is right to do so. The serious impact of the selected list scheme should be a matter of grave concern to us all. However, the greater question which we are debating this evening is the impact which the selected list scheme, as now proposed in its extended form, will have on the Government's own policies.

Again, as openly stated by the Minister of State in another place, this is a cost-cutting exercise. Pharmaceuticals account for about 10 per cent. only of the total NHS budget but, quite rightly, the Secretary of State is entitled to look for cuts in costs where it is proper to do so. No part of public expenditure should be immune from cuts. Her Majesty's Treasury should not be treated as, or seen as, the Devil. It acts ultimately on our own behalf.

That brings me to the Health of the Nation. That is an excellent piece of work for which profound congratulations should go to my noble friend and her colleagues in the Department of Health. It sets out an excellent strategy with clear and obtainable objectives. We are also brought to the central and sound policy of this Government, which I fully support, to shift where possible patient care from secondary and more costly hospital care to primary care by general practitioners. For example, I refer to the King's Fund Report on London health care and to the Tomlinson Report, which we debated recently in this House and to Making London Better, the Government's response to the Tomlinson report in February of this year.

However, the inevitable and proper result of that shift to primary care is an increase in the drugs bill because drugs represent the main and less costly means of treatment by GPs. Therefore, the question is whether that extension of the selected list scheme can be achieved without adversely affecting, in the words of the Secretary of State in her announcement on 12th November last year, Patients' ability to receive the medicines they need when they need them and for as long as they need them". The Government believe that that can be achieved. Almost all of those who wrote to me believe that it cannot be achieved. The National Eczema Society wrote to me about the 11.6 million sufferers from eczema and dermatitis. The letter said: For many patients a long process of trial and error has been involved before finding the right product for their condition. Unlike tablets and other systematically administered forms of drugs, topical formulations cannot readily be compared with, or substituted for, one another".

I received a letter from the Birth Control Campaign, which wrote to me about the use of contraceptives prescribed in the Well Women's clinics and the difficulty of finding the appropriate contraceptives with acceptable side-effects. The Royal College of Nursing wrote to me about contraceptives, skin drugs and drugs for mental illness. It concluded: The RCN believes that the widely endorsed targets set out in the Health of the Nation may be jeopardised by the extension of the selected drugs list. If patients cannot be prescribed products in which they have confidence, patients' compliance will be adversely affected. This may lead to increased morbidity and a subsequent increase in hospital admissions. If the interests of patients are not put first, the reduction of the drugs bill through extension of the selected list may be outweighed by greater costs to the NHS". I have yet a further example. A survey of GPs reveals that 62 per cent. of them believe that under the selected list scheme there will be an adverse effect on patient care.

That brings me to the treatment of mental health —a matter of particular concern to the Secretary of State. I refer to her recent speech to the Royal College of Physicians. It is also a particular care in the Health of the Nation because mental health is one of the chosen targets in that fine document. Yet following in the tracks of the benzodiazepines (used for the treatment of anxiety) appearing in the first selected list scheme, there now appear anxiolytics (which again are crucial drugs for the treatment of anxiety but which do not carry the disadvantages of benzodiazepines—concerning, for example, side-effects, interaction with alcohol and major abuse problems), this despite the noble words in paragraph C.21 on page 90 of the Health of the Nation which advocate "further effort" to find replacement drugs for treatment of mental health. It is therefore very worrying that the Government have chosen this particular health-cutting exercise.

No one who has studied the escalating cost of health care can deny that the Government, as custodian of the health of the nation, are facing a very serious problem. In the footsteps of my noble friend Lord Jenkin of Roding, two years ago I addressed the Federation of European Pharmaceutical Companies. In that address, a copy of which I have given to my noble friend, I quoted the fearful escalating figures of the cost of health care. There is much to congratulate the Secretary of State and my noble friend on achievements in the field of health care. Actually the United Kingdom has done very well and provided better standards of health care at lower costs than almost any other Western country. Yet the National Health Service simply cannot survive into the 21st century without radical changes. In a sentence: the burden will be too great for future generations to bear. The main cause is the fine demographic changes which are taking place that enable all of us, and most particularly your Lordships, to live longer, but to live longer at the greater cost of health care.

What can be done? I shall put forward—and I shall be bold about it—a few ideas. More private prescribing. My noble friend will know that under Section 1 of the National Health Service Act 1977 there is a limitation on doctors prescribing National Health Service patients with private drugs. Indeed, the only exception made for the selected list came into effect shortly after the list came out in 1985. My noble friend will also be aware of the problems of the pharmaceutical surcharge for private prescribing. That is one area that could perhaps fruitfully be looked at.

Perhaps another area which could be fruitfully looked into is the categories of exemptions for National Health Service prescription charges. Why —and I am being bold—are there free drugs for those who can afford to pay for them? Why are there free consultations for those who can afford to pay for them? Further, why are all drugs for the disorders listed treated as exempt well beyond those essential drugs —and I am not quarrelling with that—for the treatment of those with say, diabetes? Why not, for example, a separate health tax which matches reasonable income with reasonable expenditure?

Perhaps I may cite France as an example. In that country acute or life-threatening illnesses receive 100 per cent. contribution from the state. Middle illnesses, such as ulcers, receive about a 75 per cent. contribution. But for self-limiting illnesses—for example, colds, flu and so on—there is no contribution from the state.

Finally I should like to speak about the relationship between government and the pharmaceutical industry. It can and does work well. Let us take, for instance, the massive savings to the NHS for the two drugs, both developed in the United Kingdom, for the treatment of ulcers. I know that when my wife was a young doctor, not very far away from here in St. Thomas's Hospital, she can remember that something like three in every five surgical operations were operations concerning ulcers. It was a risky and very costly operation. All of that has gone and has meant a massive benefit to the NHS.

When I was standing in the footsteps of my noble friend Lord Jenkin of Roding at Interlaken in May of 1991 I asked pharmaceutical companies to understand the problems of government. I now ask government to understand the problems of the pharmaceutical industry.

8.36 p.m.

Lord Lovell-Davis

My Lords, I accept that there must be some limit to the number of drugs which may be freely prescribed by GPs and paid for by the National Health Service. As a one-time member of a district health authority, I have always supported moves by hospitals and GPS to prescribe generically whenever practicable and possible.

Much as the pharmaceutical industry may wish to have no restrictions imposed upon its activities, it is simply unreal to envisage a situation in which the NHS has no control over the drugs—many of them grossly expensive—which consultants and GPs are free to prescribe. I believe that any reasonable person accepts that there has to be a limited list. In fact I doubt whether there continues to be serious informed opposition to the present selected list with its seven categories.

However, the 10 new categories which the Department of Health proposes to add to the selected list are birds of a different feather. They are much more significant and far reaching in their implications, not least for the vast number of sufferers concerned. The new categories require much closer and most careful consideration.

It would be interesting to know, in passing, who decided upon the extra categories and by what process they arrived at a decision acceptable to the Secretary of State. Perhaps the Minister can enlighten us. I cannot pretend to have expert knowledge of all, or any, of the new categories listed. But coming from a family prone to allergic conditions and disorders of he skin, I know about the reduced quality of life and the distress that these can cause, particularly to children and the elderly. I recognise the need for a properly integrated, often long-term, treatment based on the availability of a wide range of medicaments.

A drastic reduction in the drugs prescribable by the GP for, say, eczema would in no way fulfil the Secretary of State's absolute assurance that, patients will continue to receive the medicines they receive for as long as they are needed, under the new measures unless, of course, they spend their lives in hospital, face the costly and counter-productive prospect of continually journeying to and from hospital to collect their prescription or buy the whole package privately, a course completely outside the scope of any but the most well heeled. However, perhaps that is what the Secretary of State means.

I shall go no further into the specific implications of the Government's proposals, except to say that, if they are misjudged, those implications could be extensive —affecting the quality of patient care, the cost to the NHS in terms of flare-ups of disease and hospitalisa-tion and the negative impact on the development of new treatments. Unless the outcome of whatever actions follow on the recommendations of the committee, with its extended membership, is very carefully assessed and allowed for, millions of our people who already lack faith in what this Government blandly reassure us will be in our best interest will simply have their distrust confirmed.

As I said at the start of my argument, there has to be some control over the number of drugs that the NHS can afford to, or should, provide. However, as the Secretary of State herself agrees, there has also to be a sufficient range of medicines to meet the needs of patients for as long as they are needed. Frankly, I am getting so used to the double-talk of this Government that I hope I have not missed some underlying and totally different meaning to her words.

Another recently stated government policy for the NHS, with which I wholly agree, is shift of emphasis from hospital to general practitioner care. I take again the example of skin disorders. Many patients need a dermatologist to diagnose and try out different medications. As some may not work for certain patients and may even produce painful allergic reactions, the appropriate treatment can be found only by trial and error. Once a cream which reduces or contains the condition, for instance eczema, has been identified, why should the patient have to keep going back to the hospital when a GP could follow up the case? But there would, of course, have to be sufficient treatments available for the GP to prescribe. Surely such an arrangement would be an important element in developing the seamless care between hospital-based services and primary care which is one of the Government's stated aims.

In drawing up the selected list which may be appropriate for the majority of cases, I hope that the committee will give special attention to accommodating those patients who may need a particular and/or unusual drug but who are not able to pay for it. Surely, when such drugs are prescribed by a hospital physician there should be opportunities for discussion between primary and secondary levels of care as to the best interests of the patient. The alternative is that such patients will want to stay with the hospital. That is a very expensive way of providing care and contrary to other aspects of government policy.

When the Minister replies, will she tell the House —the noble Lord, Lord Hacking, mentioned this matter but from a very different point of view—how the Government reconcile their advocacy of shared care between hospital consultants and general practitioners, and agreed protocols, with the extension of the selected lists for GPs?

8.43 p.m.

Baroness Masham of Ilton

My Lords, I wish to take this opportunity to thank the Minister and noble Lords for their kind birthday wishes in the first debate this afternoon. I do not think I would be here today if it were not for antibiotics. I have personal experience of just how important the correct drug can be. The noble Lord, Lord Hacking, has done a great service in bringing this important matter to the notice of your Lordships this evening. Like the noble Lord, I appreciate the difficulty the Government are having in containing the ever-rising costs of the National Health Service. But I, like many other people associated with various groups of patients, share their concern that extending the selected list scheme may be detrimental to many individual patients and to complicated conditions and research.

The debate in the name of the noble Lord, Lord Hacking, is very well timed. The selected list whereby certain medicines in seven therapeutic areas are not reimbursable under the NHS was first introduced in 1985 to contain government spending on health care. The Government, in a further move to curb rising health costs, are proposing to extend it to a further 10 categories, as the noble Lord, Lord Hacking, so clearly said. These new therapeutic areas will be assessed during 1993 by the advisory committee on NHS drugs. I wish to ask the Minister whether evidence can be given by interested parties before the committee makes recommendations to Ministers. This debate will, I hope, alert some people to the fact that this is taking place and they will then be able to put evidence forward.

A prescribed medicine that is not put on the selected list could continue to be prescribed by GPs but patients would have to pay the full cost and many, particularly those on low incomes, might not wish or be able to do so. If sales fall dramatically, a manufacturing company would need to consider whether it would be justified in keeping the medicine on the market. It would be wrong to concentrate on the cost of medicines alone. Many medicines reduce expensive hospital care and can improve the quality of life for patients.

Many GPs are opposed to the selected list extension. I am concerned that patients may suffer if they do not have an adequate choice. Patients and their conditions and response to treatment can be very different. Some patients respond well to a certain treatment. However, some cannot tolerate it and others would not respond but would respond to another treatment. As patients differ in their response to treatments, medicine is made much more interesting and challenging but also more expensive.

Before extending the limited list, I think the Government would have been much more popular with patients if they had looked closely at the escalating costs of management, who are not in the direct line of patient care and treatment. For some time I have been president of the Psoriasis Association. I am lucky as I have never been afflicted by a serious skin problem, but I am well aware of both the physical and mental distress caused to those who suffer from such conditions. They need support and advice, which the association gives them. This association fears that if the proposed drugs blacklist goes ahead there will be a decrease in the variety and availability of treatments for this chronic skin condition. Psoriasis is a very individual condition. What suits one person does not necessarily suit another, or indeed that individual all the time.

The emollients and other preparations could be too expensive for many patients to buy over the counter. Pharmaceutical companies could therefore be discouraged from researching and developing new, safer and more cosmetically acceptable treatments. Pharmaceutical companies could also withdraw financial assistance to other research centres.

Now many GPs are finding that when they give several prescriptions to patients who have to pay the prescription charges the patients ask them, "Doctor, which one is the most important because I can only afford one?". Does the Minister agree that conditions such as severe eczema, which often affects children, can be agonising and should be taken seriously? The Minister is helpful and understanding in these matters. The Patient's Charter stresses that patients should receive treatment when they need it. Is that charter being taken into consideration in this matter?

The noble Lord, Lord Hacking, is right to stress the importance of the treatment of the mentally ill. The Health of the Nation has a whole green book on mental illness. There is anxiety among many people that under so-called "care in the community" and with the closure of so many hospital beds those ill people will not receive adequate treatment. Am I not right in saying that in mental illness the balance of the right drugs and the monitoring of their effect on the patient are most important?

With so many patients needing primary health care does the Minister not agree that it is wise to ensure that there is adequate postgraduate training and refresher courses for general practitioners? Many current courses are sponsored by the drug industries, which may not continue to pay for them if the companies move from the British market.

The financial cost of mental illness to industry has been estimated at over £3.7 billion a year. The benzodiazepines which are used for the treatment of anxiety have, one hears, caused many problems of addiction and abuse. It is feared that safer alternatives may be taken off the white list because they are more expensive. Will that be cost-effective in the long run?

There is also a fear that various products especially targeted at women will go. With both the Secretary of State for Health and the Minister in this House being women I hope that they will look closely at the well-being of women, who are now often the breadwinners as well as the child bearers.

8.51 p.m.

Lord Jenkin of Roding

My Lords, in the past I have tended to believe that it is right to place constraints on the drug budget in the National Health Service. Indeed, when I was Secretary of State I strengthened the pharmaceutical price regulation scheme and encouraged officials to operate it strenuously. When Sir Norman Fowler introduced the selected list scheme in 1985 it seemed to me a very reasonable step. It seemed wise to substitute generic products for much more expensive branded products provided that that was done carefully and did not lead to the dangers which my noble friend Lord Hacking so graphically outlined for the pharmaceutical industry. However, the more I have studied the effect of introducing the selected list at that time and how it has worked in practice the more I have come to doubt whether it is a sensible measure.

I begin by quoting from an editorial in the professional journal the Prescriber which said: It is disappointing that the DoH has not realised that the introduction of the limited list in 1985 had no effect on the ever-rising costs of drugs in the NHS. A study of the graph of the costs of drugs to the NHS over the past 10 years shows very little short-term change in 1985–86 and no change over the longer period". That seemed to me a disturbing view, so I asked the medical director of the trust of which I am chairman —the Forest Healthcare Trust—for advice. She wrote me a very helpful note in which she said: The vast majority of patients were changed to a generic equivalent i.e. an unbranded version of the blacklisted product or to a therapeutic equivalent, i.e. a different drug from the same therapeutic class. The introduction of the Limited List resulted in a short term fall in the number of NHS prescriptions written (and presumably savings on the NHS drugs bill), but this fall has not been sustained and the widespread view is that it was an inconvenience which Doctors have learnt to avoid. In some instances it will have produced an increase in prescribing costs". That struck me as an interesting and disturbing conclusion.

I asked for further and better particulars and whether the scheme actually led to a rise in drug costs. I have been provided with a note by the pharmaceutical adviser to our local family health services authority. He took the particular example of antacids, which were put on the list in 1985. Before the blacklist, large numbers of branded antacids were available on the FP10. There were 37 brand names, most of which came in two or three formulations. Most cost between 50p and £1 per 100 millilitres. The British Pharmacopoeia products such as magnesium trisilicate and aluminium hydroxide gel all cost less than 20p. The blacklist aimed to cut prescribing of the big selling branded products such as Asilone and to get GPs to prescribe British Pharmacopoeia products. However, the door was left ajar by not blacklisting everything. Some branded products remained available. Those included Maalox and Mucogel, which were combinations of magnesium and aluminium, Actonorm, which is again magnesium and aluminium with dimethicone, Mu caine, magnesium and aluminium with anaesthetic, and Gaviscon and Gastrocote, respectively an antacid and alginate for reflux.

When the blacklist was introduced sales of Gaviscon were probably quite small compared with the big selling antacids such as Asilone, Aludrox, Polycrol etc. It cost much the same. However, instead of moving to the cheaper BP products the GPs quickly learnt the names of the branded products that could still be prescribed on FP10 and used those instead. That must have delighted the manufacturers of such products as Maalox, which most people had never heard of until the blacklist and which was no cheaper than the blacklisted products.

The chief beneficiary of all this was Gaviscon because it was the one brand name still available with which most GPs were already familiar. Sales increased dramatically, supported by an advertising campaign which, I am sure my noble friend knows, continues until this day. Eventually the manufacturers of Asilone and some of the other blacklisted products dropped their prices and were allowed back on to the permitted list. Gaviscon was left as the clear market leader with a price far higher than any of the competition.

Whether that entire saga resulted in any change in prescribing expenditure on antacids is anybody's guess. What probably happened was that, first, many people who needed only simple antacids ended up on Gaviscon, a product designed specifically for reflux. Secondly, there was no significant change in the prescribing rates of simple BP antacids because GPs prefer to use brand names unless forced to do otherwise, for example, with diazepam. Thirdly, there was a significant drop in the price of the branded antacids but the unfamiliarity of the brand names combined with the familiarity of the Gaviscon meant that they never achieved the same market shares as those enjoyed by the brand products. The blacklisting of large numbers of familiar branded antacids may have fuelled the growing tendency to use 112 antagonists for even the slightest hint of indigestion. As my noble friend will be aware, those are drugs for the very much more serious condition of gastric ulcers, to which my noble friend Lord Hacking referred.

That was not an isolated case. The same happened with decongestants. Everything except Sudafed was blacklisted, resulting in a bonanza for Wellcome. Sudafed was no cheaper than any of the blacklisted products. The same will be true of the new blacklist categories unless whole categories are banned. To blacklist five out of six topical NSAIDs will simply result in everyone shifting their prescribing to the remaining product, which then has a monopoly.

My noble friend may find that a disturbing story, as I did. The British Government are not alone. That is happening all over the developed world. Governments are picking off the 10 per cent. of their national health costs represented by the drugs budget because that seems to be an easy target. They do not appear to recognise that many drugs prescribed by family doctors are saving far more than their costs by keeping patients out of hospital. The best example was quoted by my noble friend Lord Hacking, and I shall quote it again, namely, the H₂-receptor blocking agents such as Tagamet and Zantac. One survey showed that those medicines increased drug costs for ulcer patients sixfold but have reduced total treatment costs by 66 per cent. It is madness to pick on the drugs budget if we have an example like that where the invention and prescribing of new expensive drugs saves far more than their cost in keeping patients out of hospital. It is misleading simply to judge matters by the increase in the cost of drugs when the overall saving can be much greater.

I read the other day that the Office of Health Economics has calculated that as a result of the reduction in hospital bed days, savings from seven groups of diseases had amounted to nearly £4 billion a year by 1991. By contrast, the cost of all medicines prescribed in general practice for all diseases in that year was only £3.3 billion.

The overall message has to be that medicines are a very cost-effective way of spending on health care resources. My noble friend Lord Hacking pointed out that new categories of drugs are going on to the black list: for example, anxiolytics for mental health patients. What will happen to the Government's mental health targets in the Health of the Nation? Contraceptives are going on the list, yet the Government have set a target for the reduction of teenage pregnancies. It just does not make sense.

Then there are appetite suppressants. What is the consequence of untreated obesity if it is not the danger of heart disease and many other conditions, as I am sure my noble friend the Whip on the Front Bench knows? She is tempting me to go further but I shall not be tempted.

My noble friend Lady Cumberlege spelt out to me in a letter the very careful steps that the Government are taking before the new black list is drawn up. I hope that they will proceed with extreme caution in this field. There can be no possible justification for black listing if it does not save costs. I have to tell the Minister that from the studies I have made I have no evidence whatever that the figures which Ministers lightly bandy about of savings of, some say, £65 million or £75 million a year have been achieved. There is some evidence that black listing has led to an increase in costs. So when she comes to answer the Question put by my noble friend Lord Hacking, I hope that the Minister will address those arguments because they are causing widespread anxiety in the health service.

9.2 p.m.

Lord Butterfield

My Lords, I rise because I have been informed that the noble Lord, Lord Rea, is unable to be here tonight. I hope that he is not unwell but, if he is, I hope he is in good medical hands. I wish to thank the noble Lord, Lord Hacking, very much for introducing the debate, which is timely. I have just returned from the Far East and was therefore in a position to hear the one o'clock news in Cambridge before driving here. Apparently the pharmaceutical industry is among the leaders in increased industrial production over the past three months.

I wish to associate myself with the philosophies expressed right down the line by all speakers until now, which imply that the pharmaceutical industry deserves special protection because it is very successful. The wording of the Unstarred Question links pharmaceutical products with Health of the Nation, to which I shall come in a moment. To start with, perhaps I should declare an interest. The noble Lord, Lord Jenkin of Roding, referred to a recent publication by the Office of Health Economics and for about a decade I was chairman of the editorial committee of the office. I was grateful to him for his good reviews of articles which we published. I wish to make it clear that the Office of Health Economics publications and books are based on research themes. They are a means of putting out information, especially to general practitioners as they go about their business.

I have done a little research and am pleased to be able to quote figures which indicate that our general practitioners are better friends of the Government and of health expenditure in regard to pharmaceutical prescriptions than those in most other countries. For example, in Germany the prescription rate is £122 a year per head; in Italy, it is £107; in France, it is £105 per year, whereas the prescribing rate of our general practitioners is only £70 per head per year. To me that shows that, rather along the lines mentioned by the noble Lord, Lord Jenkin, general practitioners may not be the first people whom we should pick out for major economies: they have a good track record. I find that they have an even better track record when it comes to the prescribing of new medicines, which is presumably what lies behind the new regulation. I find that in the use of new medicines our doctors spend per head about £6 a year, whereas those in Germany spend £21 a year. In France, it is £14 and I have mislaid the figure for Italy but it is very much in excess of our figure—about £30. If I could read my prescription-prone handwriting, I should be able to tell the House more clearly.

Stepping into this arena when I recently returned from the Far East, I got the impression that the Health of the Nation is an important statement. I agree very much with the recognition of it by the noble Lord, Lord Hacking, and wish to add my congratulations to the Department of Health, which has produced such an important document. I think that the new President of the United States of America would be pleased if such a document had emerged in his country and had the level of backing that it has here.

The integration into this document of the health services, local authorities and various other organisa-tions which are associated with health is a wonderful example of first-class public health planning. Personally, I am particularly pleased with the establishment of the ministerial committee, which means that the idea of health is reaching out beyond the hospitals and general practice into the workplace and everywhere else. Indeed, it is much in the minds of people who work in the health service.

I had rather hoped that in the near future we would hear that the pharmaceutical industry would be called—it may already have been called, and, if so, I hope that the Minister will bang me down—to one of the ministerial Cabinet Committee meetings. If one looks through the document, one sees that 10 per cent. of our NHS activity, namely the pharmaceutical industry's part in our affairs, is not referred to at all. It is a terrible thing for a practising doctor who has relied so much on the pharmaceutical industry to say, but it reads like a document produced by the public health chaps who have their graphs and statistics and are busy, quite rightly, in giving advice on how to improve the shapes of the graphs and the tables.

What concerns me is that, when I read the document—and I read it again in the past 24 hours—I was very conscious that there were all kinds of ways in which progressive pharmaceutical people could make contributions to the health of the nation through achievement of the targets—not only on the question of anxiolytics, which is terribly important. I have received a letter from a company which has developed a non-diazepine anxiolytic and is worried that it may not be able to get it into the "white list". It is obvious that there will be developments in the treatment of circulatory diseases (coronary heart disease and others) related to the great new pharmacological development, the finding of the importance of the gas nitric oxide in dilating the blood vessels of the skin and the heart. I wonder whether we shall have a chance of incorporating that in our attempts to achieve the targets for coronary heart disease.

Another factor which will help coronary heart disease is the control of over-weight. I believe that the pharmaceutical industry could well be brought in for discussions to help with that problem. I am sure that all who are in health promotion—that is one of my lines of business—are thoroughly aware of the importance of exercise. Among elderly people, swimming is a very important form of exercise but is very often inhibited by the inadequacy of our anti-rheumatic therapeutics. I hope that the pharmaceutical industry may be drawn into that area. I am slightly ashamed to say that while I was in America, I was talking to one of their leading authors, who, I knew, used to be a chain smoker. His name is Willie Gaddis. He said, in an American accent which I shall not try to reveal to noble Lords: "I have to tell you how grateful I am to the pharmaceutical industry for the development of nicotine patches. I have been able to give up smoking through this development". Might it not be a good idea, if the conference that I hope to stimulate comes about, for those who are concerned with nicotine patches—and there will, I am sure, be better developments from the industry than nicotine patches—to come forward and help us to cut down smoking and so achieve our target in that field?

I am astonished that in the anxiety we all have to try to control the spread of the AIDS virus, there has not been more interest in the possibility of a viricide which would work in the way ascorbic acid is supposed to work in the case of the common cold—namely, to be taken before people risked exposure. At the moment, we use the physical means of the condom as our only approach. I would hope that, if the Department of Health could take part in the conference, that kind of idea would be explored.

I have been well aware since I was chairman of the Medicines Commission of the very great importance of the PPRS (the Pharmaceutical Price Regulation Scheme). It was explained to me 10, 12 or 15 years ago that its central theme was like a coin which had two sides. The one side is what we are all worried about in this House—namely, good value for the public from the products of the pharmaceutical industry. But the pharmaceutical industry was interested in the PPRS because it got an assurance that the department would take note of its great dependence on research and development. If, as an innovative industry, it is choked of the possibilities for research and development, it will perish.

The point has already been made by many speakers that this is an industry which depends upon innovation. I am very worried that any changes in our arrangements for prescribing will interfere with the development of the pharmaceutical industry. It is a very important industry not only because it makes a positive balance of payments each year of about £1 billion, but also because it offers young people leaving sixth-form colleges and schools generally the chance to go into a modern, clean industry which uses the brainpower of our young scientists as well as those skilful in marketing.

I hope that it is not too late but it may be too late. On these Cross-Benches we believe that we can improve things. I should like to suggest that some kind of conference—a two-day or even a whole day conference—should be held between the various people who are concerned with trying to achieve our targets. If we are in a position to show the world that we can achieve those targets, national status will rise and the National Health Service will emerge from any shadows in which it has lately stood.

It is to be hoped that we can bring together to work for the health of the nation all the parties, including the brilliant brains of those in the pharmaceutical industry and of the administrators in the Department of Health, in such a way as to produce good and prompt action to find out what we need and to transfer it from the industry into the hands of the general practitioners.

9.16 p.m.

Lord Ennals

My Lords, I am very happy to follow the noble Lord, Lord Butterfield. I totally support his idea of a very widely representative conference to look at The Health of the Nation and to see how in particular the five target areas set out in that very important document can be promoted. It would be nice to have some reaction to that suggestion from the Minister when she comes to reply.

One of my concerns is that so much is done by this Government—and much is done by this Government in the health field—without consultation with the people who are principally affected. I thank the noble Lord, Lord Hacking, for putting his Question and opening the debate. I was quite staggered to hear—I shall be corrected if I am wrong—that the ABPI was not consulted about the preparation of the list. Since the ABPI was not consulted, I should like to know just who was consulted about the preparation of the list. I know that it is for examination and that there is an advisory committee, on which additional members will sit, on borderline substances. However, I suspect that certain matters are written in stone, one of which is this list of 10 categories. There may be some argument about which medicines appear in one category or another, but the principal consultation ought to have been about the categories. The people who drew up the categories either had not read The Health of the Nation or did not believe that it was an important document.

I am glad that the interests of the pharmaceutical industry have been put forward. As the noble Lord, Lord Butterfield, is aware, I was the Secretary of State in 1977 who signed the PPRS and I did so with a pharmaceutical industry that I tremendously admired. At the time I hoped that it was a reciprocal admiration society. The case need not be put for the pharmaceutical industry but it has been powerfully made. I disagree with some of the conclusions reached by the noble Lord, Lord Hacking, but I do not disagree with anything that he said about the pharmaceutical industry.

I wonder what consultation there has been with the doctors. As a nation we now quite rightly believe that people should be treated more and more in primary health care. We want fewer people to stay in hospitals and more to be looked after by their general practitioner and within the field of community care. One of the ways in which the Government intend to strengthen the role of the doctor is to encourage all doctors eventually to have their own budget and to decide for themselves how they spend it. If that is to happen and doctors are to be given the right and power to decide for themselves how to use the money put at their disposal, it makes no sense at all to present to general practitioners and other medical practitioners such a list with all its weaknesses.

I hope that the Minister will explain where, within the philosophy of the future of the health service, comes the thought that doctors are not to be given more choice; that they are to be given less choice. One of my anxieties in regard to the new list is that doctors—GPs, those who know best about most of the treatments in this country—are being denied what they believe to be the best form of treatment for purely financial reasons.

I would say the same about the nurses. I too received a note from the Royal College of Nursing which I saw only this evening. I have tremendous respect for nurses and for the RCN. I am delighted that the nurses are being given, as part of the medical teams, more opportunity to do their own prescribing and to advise their doctors on the sort of prescribing that they should do in cases where the nurses do not have the power. The nurses are opposed in principle not only to the idea of the list but also to the particular categories.

I want to ask the Minister to report fully to the Secretary of State. A tremendously powerful case has been made by those involved in research, those who are in contact with the pharmaceutical industry and those who are involved with the running of the health service at trust level, together with a couple of former Secretaries of State who are not totally ignorant about these matters. I believe that the Government have made a profound error and should think again. I do not finish there. I may repeat that in my final words.

I am particularly concerned with one aspect of the list. We have been reminded that mental health is one of the five key areas targeted for action in the Health of the Nation. The White Paper advocates a range of measures to improve the diagnosis and treatment of mentally ill people. It proposes a switch from benzodiazepines, which, in my view, are currently prescribed far too widely, to psycho-therapeutic methods of treatment and, where appropriate, other medicines. The White Paper speaks of "other medicines" which do not have the disadvantage of benzodiazepines. To go along with the proposal that the list should include anxiolytics as well as hypnotics is absolutely contrary to what the White Paper is saying about how we can better treat mentally ill people.

We need the most modern and effective medicines that do not have the side effects which over the years people have found the benzodiazepines to have. The selected list scheme addresses only the direct costs of medicines and not the overall costs and benefits of a treatment regime of which pharmaceuticals are only one part. In the case of anxiety and depression, that means medicines and psychotherapy or counselling. It is possible that restricting the range of medicines will have the effect of increasing the net expense. Without the benefit of at least some study in that regard the Government may not even achieve a short-term saving. Even a limited piece of work to get this right would surely be worth while.

I was fascinated by the evidence given to the House and to the Minister by the noble Lord, Lord Jenkin of Roding, who succeeded me as Secretary of State for Health. With all his background experience, his immediate experience and the research of his colleagues upon which he is able to draw, he is saying that the first list did not save anything. Perhaps it did for six months or one year. But, when one looks at the run, it did not save anything. That was a list that many of us were prepared to support because of the nature of the cases that were on the list.

In the present list I have already touched upon the cases that affect mental health. Other noble Lords have spoken about drugs for allergic disorders and drugs to suppress appetite. I want to touch on contraceptives, since I do not think anyone has yet done so. It would be an absolute tragedy if the Government limited the range of contraceptives which general practitioners can prescribe. The advisory committee on NHS drugs is currently reviewing the range of contraceptives available on NHS prescription. This has caused widespread concern among healthcare professionals. The concern is felt not only by the RCN but also by the Royal College of Obstetricians and Gynaecologists, the Birth Control Trust and the Family Planning Association, with which I have an involvement. I wonder how many of those organisations were consulted before contraceptives were put on the list. What advice did they give to the Ministry? What advice has the Ministry received about the effect of limiting contraceptives in that way?

In the United Kingdom approximately one-quarter to one-third of sexually active women use what is the cheapest form—the COCP—as their chosen method of contraception. Its usage in younger women is widespread. It is the most effective and appropriate contraceptive for most women. The COCP pill contains oestrogen and progesterone and, when taken on a cyclical basis, inhibits ovulation and thereby prevents conception. If those pills are removed from the list there will of course be another range of alternatives, but another range of alternatives which are much less likely to be effective.

I hope the Minister will tell us why contraceptives were included in the list. If we look at Health of the Nation we see that another of the targets is to decrease the number of unwanted children and to reduce the number of abortions. The more unwanted children we have, the more abortions we have, to the moral horror, the health horror and every other horror of the nation. I believe that the Government have got this seriously wrong. I trust that, once the arguments that have just been touched upon by noble Lords from all parts of the House—in fact all noble Lords who have spoken—are deployed by the real experts, the case for the list will be torn up. It will be shown to be nonsense. I do not think that there will be a saving. What is proposed could be disastrous for the health of the nation. I hope that the Government will think again when taking their decisions.

9.28 p.m.

The Viscount of Falkland

My Lords, I have thoroughly enjoyed the debate. I became so absorbed in listening to it that I almost forgot that I was down to speak. I shall not say very much because I feel somewhat at a loss among so many distinguished speakers on the subject of health. In fact, if the noble Baroness, Lady Robson of Kiddington, had been present, she would have spoken from the point of view of her long experience of nursing and other health matters.

I am entirely convinced by what I have heard. I thank the noble Lord, Lord Hacking, for giving us the chance to discuss the subject. He expressed his views with great clarity. That may help me make up my own mind, which certainly was not made up when I entered the Chamber. The noble Lord, Lord Jenkin of Roding, expressed scepticism about the effectiveness of the list and the noble Lord, Lord Butterfield, revealed that we come well down the list of countries as regards the cost of prescriptions by doctors.

I echo the views expressed by the noble Lord, Lord Ennals, and others. From where have the Government got their ideas to produce the lists? The health of the nation is as important, if not more important, than any commercial activity. The aims of the Government's White Paper, Health of the Nation, are admirable. But as with any commercial operation, research and development are essential. I am utterly convinced by the arguments that the effect of lists and the reduction in the amount of choice given to general practitioners and nurses to prescribe on research and development by pharmaceutical companies will be restrictive. I am utterly convinced by the argument that it may well not be cost effective in the long run.

I speak because the debate dovetails with the discussion in which many of us took part on drug addiction and alcoholism. From my experience as trustee of two residential centres for drug and alcohol abuse, there is great difficulty for general practitioners with regard to mental health. Numbers of patients complain of being depressed and anxious. They are diagnosed by doctors quite understandably as being anxious and depressed. However, many of those patients are drug addicts or alcoholics. I have sympathy with doctors who ask the patient questions. I have met some of those patients; they deny that they are abusers of substances. They are prescribed drugs which seriously aggravate their problems, creating complicated addictions which are extremely difficult to treat when they go into care in residential centres which happily are still open, although, given the Government's community care arrangements, somewhat under threat at present.

I should hate to think that the effect of the Government's selected list with regard to benzodiazepines and anxiolytics mean that we shall not be able to develop drugs which, whether prescribed correctly or incorrectly, would not create serious side effects. A Member of your Lordships' House who spoke very convincingly in the last debate told me that if such drugs as valium or librium are taken together with other drugs the effect is to multiply by a factor of three the serious effects of the combination of the two drugs. The noble Baroness, Lady Masham, referred to the appalling accounts that we have read of sleeping pills—they may not have been pills—which were taken apart and injected. I refer to Temazepam. Clearly, there are issues that have to be addressed and the list can be nothing but restrictive.

It has been a fascinating debate. I look forward to hearing the noble Baroness. She has some serious and well articulated charges to answer. The noble Lord, Lord Hacking, produced an utterly sensible idea. In France, as I understand it, funding is applied according to the seriousness of the illness. I would only say to him that that sounds sensible to me. On the two or three occasions in your Lordships' House that I have referred to the French experience in other subjects, it has turned out to be surprisingly unproductive. It may have something to do with the idea that the French eat horses or that their children go to bed late, or something of that kind. Such examples never produce any great effect on the Government. Having said that, I very much look forward to the Minister's comments and thank noble Lords for allowing me to participate in this most interesting debate.

9.35 p.m.

Lord Desai

My Lords, perhaps I should say first that, by and large, we on these Benches support the Government's initiative. Although with some qualifications, to which I shall come later, by and large, I think that it is a good idea for the Government to examine every aspect of a large budget for cost-effectiveness. The fact that we are talking about only 10 per cent. of that budget is neither here nor there. Indeed, even if we were talking about only 5 per cent., 5 per cent. of £30 billion is a lot of money and we must examine things for cost-effectiveness. Having said that, we have reservations which I shall come to later. Perhaps I should add too that I have checked what I am saying with my Front Bench in another place because the other day I embarrassed the leader of my party in another place when the Prime Minister quoted me against him on the subject of VAT. This time what I am saying is genuinely the party's view. It is not some kite that I am flying but something that I have checked out.

I should like to deal with some of the many things that have been said about the sort of harm that might be done to the pharmaceutical industry and about the fact that such a strategy might not save money and might affect research and development. I admit immediately that I am not a great medical expert, but luckily I am an economist and economists are used to being able to theorise from the abstract on almost anything. It seems to me that, although it is true that the Government are a monopoly buyer, the sellers whom they face are not competitive. They are an oligopoly. The Government must face powerful pharmaceutical firms. It is not as if a very powerful buyer is facing some very weak sellers because the other side comprises powerful sellers. Those powerful sellers have argued that somehow what they do is right and cost-effective and that therefore no restrictions should be placed on their activities.

I am a relative newcomer to these matters, but it seems to me that what the Government are proposing is a consultation exercise—no decisions have yet been made. Putting 10 more items on a list is not really the end of the world as people are pretending it is. If the pharmaceutical industry is as successful as people claim it is—and I know that it is, although I shall not go down in history as a great friend of the pharmaceutical industry, but that is another matter—I think that it is a dubious argument to say that such a small extension to the list of drugs will cause great havoc. I do not think that it pays to say that our successful industries need as much protection as our unsuccessful industries. If that were so, by God, then everybody would get protection and then where should we be?

I am not persuaded that this particular limited list—it is a consultation list and I shall come to the matter of consultation in a moment—poses as great a problem to R&D as has been made out. I admit that I could be wrong, but more and greater things will have to be said before I, as an economist, am convinced that extending the limited list of drugs on the selected list will cause such great damage to R&D.

If it is going to do so, however—let us suppose that it will—we must ask: what is the right way to correct it? Is it to leave the list unrestricted or to have more selective targeted policies to protect R&D while at the same time saving on NHS drugs bills? When it comes to helping the poor, we are all for targeting. When it comes to taxing the rich, we are also for targeting. If R&D expenditure is the problem in this case—and it could be—the correct way of dealing with that problem is not to go soft on it but to figure out the correct incentives for R&D expenditure. There are ways of doing that. I am not in favour of the unselective, broad-brush strategy.

The noble Lord, Lord Jenkin, with his great knowledge in this field, gave a good example of how the 1985 policy did not work. One could derive various lessons from that. The lesson I derive from it is not that the policy should not be tried again but that, if we want to control costs, we must think carefully about the strategy and not leave out one or two branded drugs just because they have a small market share and the company has five out of seven drugs. Because people will obviously go for branded drugs. This is a oligopolistic industry in which branding a generic drug gives a great deal of extra profit. We go for generic substitution because it tells us that the effectiveness of a medicine does not depend upon its brand name. The brand name is a function of the oligopolistic structure of the industry and is used in order to make extra profits. That may be all right. This has been known to economists for about 50 years. I am not saying anything new.

If it is true that a brand name is not an extra label but is genuinely an innovation, that is fine: there will be no substitutes. There will be no difference between a generic prescription and a brand prescription, but, if there is a cost saving to be made from generic prescription as compared with brand prescription, it behoves a large public agent, such as the NHS, to pursue that saving, to the extent that it does not affect patients' health.

From that point of view, the strategy of controlling costs would be to say, "If you go for generic prescription, you go for ordinary prescription". I should add at this stage that in economics there has been great progress in such thinking, and that perhaps the Government should avail themselves, if they have not already done so, of the new research into what is called industrial organisation. I can supply names in that regard. This is a methodology where people think out carefully the problems of pricing, R&D strategies and such things. We of course want to do things which simultaneously save the public purse and do not affect R&D. I agree with that. I do not agree that criticising the proposed extension of the selected list is necessarily the answer to our problems.

I wish now to deal with the two or three qualifications of the selected list which I have and which some noble Lords have already mentioned. The first is the issue of choice. We all know that medicine is a peculiar area in which consumers can have only a limited choice because they do not know what they want. They must rely on the producers to provide the choices that they need and the doctors to tell them what they need. However, in cases such as contraception, which was mentioned by my noble friend Lord Ennals, there may be an element of consumer choice but it is restricted—consumer choice may not be sovereign because the consumer may not know what is good for him or her. However, to the extent that there are different items which different people may need we may wish to qualify the items on the selected list.

Apart from the issues mentioned by my noble friend Lord Ennals relating to who is being consulted, I wish to know how wide the consultation has been especially in respect of patient groups. I should like to think that before the final decision is made the Government will consult as widely as possible so that there is no feeling among patients that somehow they are being given the cheap option, though just because an option is cheap it is not necessarily less effective. Let us be sure that the option is cheap and effective. To that extent it would be proper for the Government to consult patient organisations and to include patients in the process more vigorously than has been the case. In that respect the subject of contraceptives raised an anxiety which was mentioned by my noble friend Lord Ennals. I shall not go into detail, therefore, but I hope that the Minister will comment on it.

I have nothing in particular to say about mental illness except to recall that during our earlier debate on drug and alcohol abuse there was a considerable question about whether certain prescribed drugs mentioned by the noble Viscount, Lord Falkland, were on the borderline of being addictive as well as effective. A careful line must be drawn in that regard.

I apologise on behalf of my noble friend Lord Rea, who was to speak in the debate but who was taken unwell during the day. He wished to make one or two points which perhaps I may mention at this stage. First, he believes that many special interest groups are loudly pleading their case. They should be heard but not judged by their decibels. My noble friend believes that the decision should be made on scientific and clinical grounds alone, and I agree with that view.

My noble friend also mentioned the education of GPs. It is a subject about which I know nothing and so I shall merely pass on his views. He mentioned PACT—prescribing, analysis and costs—which is a service for GPs. They need to be educated about the cost-effectiveness of drugs. My noble friend found the service to be so useful that if possible it should be further extended.

Finally, he mentioned the interesting problem of incentives. If the aim of the Government is to save the drugs bill of the NHS, which is an entirely noble aim and which I support, GPs must be given incentives to reduce costs. To the extent to which GPs are effectively reducing costs, especially in prescriptions, some formula should be found to give them rewards for achieving savings without affecting patient care.

I know that the problem is difficult. We do not wish to cut corners as regards patients' health and we do not wish to affect patient choice. We should like not to affect R&D. I am not convinced, although many people more expert than I will not agree, that what the Government are doing is as wrong as it is made out to be. I am waiting to hear the Minister's reply but cautiously, although somewhat critically, we are with the Government as regards this policy.

Lord Hacking

My Lords, I listened with great care to the noble Lord's speech. At no time did he mention the publication Health of the Nation. I find it difficult to follow what guidance he is giving to your Lordships this evening when the Question before the House is what effect the extension of the selected list scheme will have on the Health of the Nation.

Lord Desai

My Lords, it is true that I did not mention the Health of the Nation. I know that I should not really say this but I regard all White Papers as containing many good ideas but very little detail. I am worried about the contraception problem. However, I do not believe that this small category of drugs which are to be put on the selected list will have as drastic an effect on the targets in the Health of the Nation as some seem to believe. I hope that I am not being rude but I do not believe that anybody has demonstrated this evening that it will have such a serious effect.

9.51 p.m.

Baroness Cumberlege

My Lords, I am grateful to my noble friend Lord Hacking for initiating this debate. He is, I know, one of the best informed on this subject and is an international speaker of high reputation as are many of your Lordships. We not only heard from two former Secretaries of State for Social Services, who I believe also share the joint presidency of MIND, but we heard also from a noble Lord who is former vice-chancellor of two universities and past chairman of the Medicines Commission. Other noble Lords have other areas of expertise and personal experience. I believe that the hallmark of the debate has been compassion and concern for others. I am sorry that the noble Lord, Lord Rea, is not here this evening especially since, as far as I know, he is the only Peer in your Lordships' House who is actually in possession of a prescription pad.

I shall try to make the Government's position clear on the Health of the Nation targets for mental illness on the one hand and the selected list scheme on the other, and the relationships between the two.

I am grateful to my noble friend Lord Hacking and to the noble Lord, Lord Butterfield, for their generous comments about the Health of the Nation White Paper. I hope that we shall win over the noble Lord, Lord Desai in due course.

The Health of the Nation White Paper provides for the first time an explicit, coherent strategy for improving and maintaining people's health; and we start from a sound base. Health in this country has never been better. Many diseases have been brought under control and some eliminated. Life expectancy at birth is now 73 years for men and 79 for women, whereas 100 years ago it was 44 for both. But too many people still die prematurely or have the quality of their lives, especially in their later years, impaired by avoidable ill-health. An overall objective of any nation must be to add not only years to life, but life to years.

A leading cause of sickness and disability is mental illness, and it has therefore been included in one of the five key areas for action set out in the White Paper. In the course of a year about one-in-10 of the population suffers from some sort of mental illness. It is three times as common as cancer, and accounts for about 14 per cent. of the certificated sickness absence and roughly the same proportion of NHS in-patient costs. Fifty-one million days are lost from work and mental illness accounts for 18,200 deaths in any single year. But the cost in human misery and suffering to individuals and their families is incalculable.

There is no doubt that the development of new drugs over the past 40 years has revolutionised the treatment of a whole range of psychiatric illnesses. As the noble Baroness, Lady Masham of Ilton, rightly said, drug regimes need careful monitoring. That has enabled the vast majority of patients to be treated in the community and for thousands to hold down jobs successfully; people who in former years would have been detained in large forbidding mental institutions "put away for life".

Drugs are a powerful and effective therapeutic weapon to be used against many different kinds of illnesses. But they cost the NHS a lot of money. The biggest element in overall NHS expenditure is of course pay, which is responsible for around 70 per cent. of the total. However, once that is stripped out, the drugs bill accounts for about one-third of total NHS costs. It is, therefore, an element of expenditure which needs to be kept under continuing close scrutiny, to ensure maximum cost effectiveness.

My noble friend Lord Hacking mentioned the hair-raising cost of drugs. He is right. I also welcome the support received from the Opposition Front Bench that the bill needs to be controlled. Over the past 10 years, the total drugs bill for the NHS in England rose from £1.2 billion to £2.9 billion—an increase of 132 per cent. in cash terms, and 39 per cent. in real terms. In the financial year which has just ended, we estimate that the family health services drugs bill will have risen by another 14 per cent. That at a time when inflation is running at under 2 per cent. and NHS staff are being asked to settle for a ceiling in pay of 1.5 per cent.

It is, therefore, not surprising that the Government are concerned, as the noble Lord, Lord Desai, said, in their vulnerable position as the monopoly buyer, at the speed and scale at which the drugs bill has increased and the fear that, without check, the momentum will continue at the expense of other NHS services.

It is against that background that we need to be alert to ensure maximum cost effectiveness in prescribing. One important development is clearly the GP fundholding scheme. GP fundholders have a direct interest in improving the cost effectiveness of prescribing. They can retain any savings on drugs to reduce the demand on the hospital referral element of their budget. That is not just a theory. In 1991–92 fundholders' prescribing costs increased by an average of 3 per cent. less than those of other GPs, and without any loss of quality.

The scheme is being extended to other practices in terms of incentives. Hospital formularies have also shown how savings can be made without diminishing patient care. From my chairmanship of the Brighton Health Authority I know how effective that can be.

The noble Lord, Lord Lovell-Davis, mentioned the problem of cost shifting from hospital drug budgets to those of GPs. Our view is quite clear: it is unacceptable to shift prescribing costs in that way. We have always applied the rule that the responsibility for prescribing rests with the doctor who holds clinical responsibility for treating the patient.

The selected list scheme, to which I now turn, should therefore be seen as only one element in a wider strategy to control the rise in the NHS drugs bill. As my noble friend Lord Hacking and the noble Lord, Lord Lovell-Davis, mentioned, the scheme was originally introduced as long ago as 1985 and included seven therapeutic categories of drugs. Initially there was scepticism and indeed downright hostility. There was hostility from the pharmaceutical industry but the doom and gloom scenarios were not enacted.

My noble friend Lord Hacking made some surprising predictions—surprising because we cannot say how many products will be listed. That depends upon the independent advisory committee to which I shall turn my attention in a moment. However, I should like to reassure noble Lords that there is no preset target. Any possible effects on employment cannot be estimated at this stage. Wild allegations on the impact on patient care also cannot be founded on fact.

I agree with my noble friend, Lord Jenkin of Roding, that keeping people in hospital is expensive. It is not only cheaper but much better to have them in the community. However, that does not necessarily mean that we have to accept an uncontrollable rise in pharmaceutical costs. Controls on some drugs does not mean that a hospital stay is the alternative. We have seen drugs substituted with good effect and no detriment to patients. Many noble Lords have expressed concern at the huge sums of public money that are spent to sustain the NHS. The noble Lord, Lord Desai, was correct to say that it is a question of choices. I find it hard to defend a paracetamol which is prescribed at 20 times the price of a standard product of the same efficacy. That particular drug was included in the original selected list and has now been withdrawn without any ill effects.

Fears were expressed that substitution could also lead to more expensive or indeed more inappropriate drug prescribing. In that case the advisory committee on drugs can revisit the category and make further recommendations to prevent such inappropriate prescribing. Unlike the position in 1985, companies now will be consulted and may reduce prices to keep their products prescribable. That is an important difference which should go a long way to avoiding inappropriate substitution. Hostility was also forthcoming from the then chairman of the General Medical Services Committee who said that the limited list of categories represented, a serious reduction in the services available to patients and would he "a bureaucratic nightmare".

Neither of those prophesies has been fulfilled. Experience with the scheme has demonstrated that downward pressure can be applied to the drugs bill without detriment to patients. Contrary to the fears of the noble Viscount, Lord Falkland, and the assertions of the noble Lord, Lord Ennals, in the first year of the scheme, savings of £75 million alone were realised. It therefore seemed right to extend the scheme to 10 further categories of drugs. The noble Lord, Lord Lovell-Davis, asked how these were chosen. The categories were chosen on the basis that they covered a range of products at varying price levels and therefore offered potential scope for savings while enabling all clinical needs to continue to be met.

There are three aspects of the selected list scheme which I wish to emphasise. They address the question raised by the noble Lord, Lord Lovell-Davis, as to the procedure which enables my right honourable friend the Secretary of State for Health to reach her decisions. First, the decisions on which individual drugs may no longer be available on NHS prescription are taken only on the basis of advice from the Advisory Committee on NHS Drugs (ACD). This is an independent body of experienced doctors, dentists and pharmacists appointed following consultation with the relevant professional organisations.

Secondly, the ACD's remit is to ensure that drugs to meet all real clinical need can be provided as economically as possible under the NHS. This means that drugs will not be rejected purely on grounds of cost. The committee will take full account both of the therapeutic value of the drugs under review and of patients' needs. Thirdly, the committee will ensure that manufacturers are informed as soon as possible if their products are to be considered. Manufacturers will also be given an opportunity to make representations to the committee against any provisional view that a product should not be prescribable under the NHS.

The noble Baroness, Lady Masham of Ilton, asked how interested parties will be able to present their arguments. Companies whose products will be affected will have at least two opportunities to make representations before a decision is made. The committee may also ask advice from other sources if it chooses, and it will certainly take full account of patients' needs in its review. The manufacturers of products which the committee has considered for possible inclusion in the selected list will have been notified and invited to provide details of the drugs under consideration.

The membership of the committee has been extended to reflect its new remit. The enlarged committee has met on two occasions. It has considered the preliminary reports from the subgroups on the first three categories of drugs, which are topical anti-rheumatics, anti-diarrhoeal drugs and appetite suppressants, and drugs for vaginal and vulval conditions. The manufacturers of products which the committee then recommends for inclusion in the list will be notified and given an opportunity to make representations before final decisions are taken.

On 6th May the committee will also be considering preliminary reports from the subgroups on hypnotics and anxiolytics, drugs used in anaemia and topical corticosteroids. The committee will receive reports from the subgroups on the remaining categories at its meetings in June and July. The industry will have further opportunities to make representations and the final decisions will be taken by the Secretary of State later in the year.

My noble friend Lord Hacking suggested that some additional ways of reducing the high cost of drugs could be examined. I should like to do that and I shall write to my noble friend in due course.

The noble Lord, Lord Butterfield, mentioned European comparisons. I can assure the House that the changes we are introducing mirror measures being taken throughout Europe to limit growth in the drugs bill.

The noble Lord mentioned nicotine patches as an aid to giving up smoking. I should like to make the point that smoking is a very costly business—£2.20, I am assured, for a packet. I would therefore have thought that smokers might be able to fund their own patches.

The noble Lord, Lord Butterfield, also mentioned the profitability of the industry. The Government are concerned that companies can make a fair return on their sales to the NHS after allowing for research, capital and other expenses. At the same time companies' worldwide returns are holding up well. According to the Financial Times, Glaxo made a 38 per cent. return on capital worldwide last year and Smith Kline Beecham 45 per cent. after research and development costs.

The noble Lord also suggested that a conference should be held to discuss the Health of the Nation and how its targets could be achieved. Fourteen conferences have already been held in all 14 regional health authorities. I apologise to your Lordships' House because clearly the right people were not invited.

The noble Lord, Lord Butterfield, and the noble Lord, Lord Ennals, were concerned that there had not been sufficient discussion with the pharmaceutical industry. We have established a strategy working group of officials from the DTI, the Treasury, the Department of Health and the pharmaceutical industry to take a long-term view of the contribution made by pharmaceutical products to health care and the future development of the industry. The first meeting of that working group was held this morning.

Some of your Lordships raised particular concerns about benzodiazepines. The Health of the Nation stresses the need for further effort to review the use of benzodiazepines and replace them as necessary with behavioural, cognitive and other psychotherapeutic methods of treatment and, if appropriate, antidepressants. Benzodiazepines, sedatives and tranquil-lisers have, of course, been within the scope of the selected list scheme since its inception. That reflected the Government's continuing concern, shared by the noble Lord, Lord Ennals, about the dangers of long-term and indiscriminate prescribing of benzodiazepines. Although drug treatment with those drugs can be effective in relieving anxiety in the short term, their effectiveness decreases over time. Long-term use can lead to dependency and they can mask the underlying symptoms of depression which may then remain untreated. Benzodiazepines can still be prescribed under the NHS on a generic basis but, interestingly, the number of prescriptions which were dispensed fell in England by 35 per cent. between 1980 and 1991.

I have listened with great interest to the debate tonight and particularly to the views expressed by my noble friend Lord Jenkin of Roding. I should like to read Hansard carefully and take into account all the points he made and perhaps come back to him at a later date.

In conclusion, we have taken great care that while we control the growth in the drugs bill we also safeguard the ability of patients to receive the medicines they need, when they need them and for as long as they need them. As guardians of the public purse we have a duty to ensure that the resources available to the health service are used more effectively in order to treat yet more patients. It is only by achieving these twin objectives that we shall be able to contain expenditure and, more importantly, achieve the valuable goals set out in the Health of the Nation White Paper.

House adjourned at ten minutes past ten o'clock.