Drug Supplies (Profit) (Hansard, 18 March 1968)

§ Mr. Whitaker
asked the Minister of Health what approximate estimate he has of the proportion of profit to drug manufacturers represented in the cost of drugs to the National Health Service.
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§ Mr. K. Robinson
According to the report of the committee of inquiry into the relationship of the pharmaceutical industry with the National Health Service, in 1965 the profits before interest and taxation of all pharmaceutical companies completing the questionnaire issued by that committee represented 20.7 per cent. of their total income from products which might be used in the National Health Service. Manufacturers' profits on this basis possibly represented about one-eighth of the total cost of drugs to the National Health Service.

§ Mr. Whitaker
asked the Minister of Health whether he receives in the case of all drugs full details of their costs from drug manufacturers, in order to enable him to ascertain whether their profit in supplying the National Health Service is reasonable.

§ Mr. K. Robinson
Under the Voluntary Price Regulation Scheme maximum prices of many drugs are determined by various criteria which do not call for disclosure of manufacturing costs; for certain firms who together supply some 60 per cent. by value of the total medicines used in the general pharmaceutical service, there are direct negotiations under the Scheme based on information about costs, capital employed and profits earned either in relation to a particular product or, more usually, in relation to the whole of the firm's National Health Service business. In such cases the information is sufficient to enable me to assess whether or not the profit is acceptable in the context of the present Scheme. Future pricing arrangements are at present under review.

§ Mr. Whitaker
asked the Minister of Health when he proposes to take steps to implement the recommendations of the Salisbury Committee regarding controlling excess profits in drugs.

§ Mr. K. Robinson
The Committee made a number of recommendations about future pricing arrangements, patents, brand names, etc., which are at present under consideration and consultation with the industry. I will announce my conclusions as soon as possible.