§ Mr. Pavitt
asked the Secretary of State for Social Services (1) if he proposes to 261W exercise his powers under section 57 of the National Health Service Act 1977 to issue any directions to control the maximum price paid for any medicinal product by the National Health Service in view of the increase in public expenditure which will occur as a result of the price increases already made since January;
(2) what is his estimate of the increase in drug prices to the National Health Service by the advent of notional prices;
(3) what additional resources will be needed to finance the increase of an additional 3 per cent. in total pharmaceutical services and £23 million additional public expenditure, arising from the introduction of notional prices by manufacturers;
(4) if the notional price established by drug manufacturers as a basis for negotiations with his Department under the voluntary price regulations takes into account the 10 per cent. discount given by wholesalers to pharmacists and other discount arrangements.
§ Dr. Vaughan
Some manufacturers have reduced the discounts they allow to wholesalers. and certain wholesalers have introduced notional prices for products supplied by these manufacturers. The pharmaceutical price regulation scheme takes into account the net value of manufacturers' sales and the operation of the scheme is not affected by changes in the discounts allowed by manufacturers.
The statutory powers to which the hon. Member draws attention do not extend to the control of discounts: nor would a maximum prices order preclude the making of charges for specific costs incurred in meeting small orders outside the normal channels or times of distribution. I am, therefore, not at present convinced that such an order would be an effective method of dealing with notional pricing.
I am not at present able to estimate the net effect of notional pricing on the cost of drugs to the National Health Service, and do not know on what assumptions the figures in the hon. Member's third question are based. The net ingredient cost—adjustment factor—inquiry which the Department proposes to carry out shortly with the pharmaceutical services negotiating committee is, however, 262W designed to establish the net difference, arising from whatever causes, between the amounts reimbursed to retail pharmacists and the amounts actually paid by them to wholesalers or manufacturers, with a view to making any appropriate adjustment.