§ Mr. Meacher
asked the Secretary of State for Social Services what have been the profits made by the pharmaceutical industry from sales to the National Health Service each year since 1975; what he estimates they would have been for each of the next five years prior to his statement on 8 December, Official Report, c. 477–478; by how much they will be reduced in each of these years as a result of his statement; and on what basis he makes this estimate.
§ Mr. Kenneth Clarke
On the basis of financial returns certified by independent auditors, actual profits achieved by pharmaceutical companies from their sales of medicines to the National Health are as follows. Our Department's own estimates of notional profit are somewhat higher because of adjustments such as the disallowance of expenditure on sales promotion above the imposed limit.
Year Company assessment of actual profit £ million 1976 57 1977 80 1978 100 1979 87 1980 108 1981 149 1982* 175 1983* 200 * Estimated.
We are unable to estimate profits for future years since these depend on levels of sales and incidence of costs which vary from company to company. But as I said in my statement the new measures are expected to reduce company profits and produce savings of £65 million in 1984–85 and well over £100 million in later years. These figures are based on Departmental estimates of reduced levels of price increases in future years and cash rebates or price reductions from companies with excess sales promotion expenditure profits.