HC Deb 23 July 1996 vol 282 cc222-4W
Mr. Bayley

To ask the Secretary of State for Health, pursuant to paragraph 2.7 of his Department's report on the pharmaceutical price regulation scheme, on what basis his Department agreed 20 per cent. as the allowable level of research and development costs. [39022]

Mr. Malone

The research and development carried out in the United Kingdom rose steadily through the 1970s and early 1980s. The Government agreed with the Association of the British Pharmaceutical Industry in 1986 that support for research and development would be maintained at the then current level of around 20 per cent. of pharmaceutical sales to the national health service. That agreement was continued in 1993.

Mr. Bayley

To ask the Secretary of State for Health if he proposes to publish a report to Parliament on the pharmaceutical price regulation scheme annually. [39032]

Mr. Malone

Following the first report to Parliament, submitted in May, I plan to make further reports on a regular basis.

Mr. Bayley

To ask the Secretary of State for Health, pursuant to paragraph 1 of his Department's report on the pharmaceutical price regulation scheme, what factors underlay the discrepancy between the companies' figure for total home profits and the Department's outturn figures. [39031]

Mr. Malone

Under paragraph 4.8 of the pharmaceutical price regulation scheme, the Department may question any figures which do not appear to be consistent with the requirements of the scheme. The difference between the company figures and the outturn figures shown in table 1 of the report to Parliament reflects the figures accepted in negotiation as reasonable for the national health service and the taxpayer to bear.

Mr. Bayley

To ask the Secretary of State for Health if he will supplement the information provided in his Department's report on the pharmaceutical price regulation scheme in respect of the nature of the research and development work carried out with funding provided under the scheme. [39001]

Mr. Malone

The pharmaceutical price regulation scheme does not provide funding for research and development, but allows as a cost a proportion of companies' spending. Research priorities are determined by the companies.

Mr. Bayley

To ask the Secretary of State for Health what assessment he has made of the factors underlying the sums spent by the United Kingdom relative to those spent by its major competitors on pharmaceutical research related to worldwide pharmaceutical development. [39023]

Mr. Malone

The "Research and Development Scoreboard", published earlier this month, shows that expenditure on research by the pharmaceutical industry in the United Kingdom is comparable to its major competitors worldwide.

Mr. Bayley

To ask the Secretary of State for Health, pursuant to paragraphs 2.4.1 and 2.4.2 of his department's report on the pharmaceutical price regulation scheme, if he will make a statement on the criteria used by his Department when it agreed a profitability range of 17 per cent. to 21 per cent. return on capital; what criteria are used to determine where on the range an individual company is placed; how the profitability of companies covered by the scheme compares with movements in the FT500 index; and how his Department measures the degree of a company's long-term commitment to the United Kingdom pharmaceutical market. [39029]

Mr. Malone

The range of target profitability under the pharmaceutical price regulation scheme allows pharmaceutical companies to earn profits in line with the average profitability of companies in other sectors of United Kingdom industry. The range was established taking account of the FT500 index, and is subject to review in the light of movements in that index, but was agreed in negotiation with the industry, not by a set formula. Individual companies are placed within that range in the light of factors which they can show to demonstrate their long-term commitment to supplying the medicines which the national health service needs. These factors are established and assessed in negotiation.

Mr. Bayley

To ask the Secretary of State for Health, pursuant to his Department's report on the pharmaceutical price regulation scheme what factors underlay his Department not being able, at 30 April, to finalise agreed outcome figures on the annual financial returns from companies for(a) 1992, (b) 1993 and (c) 1994; how many companies are outstanding for each year; and what action his Department is taking to finalise outcome figures more quickly. [39030]

Mr. Malone

Clearance of annual financial returns is dependent on completing negotiations with companies, which may be both complicated and time consuming. In addition there has been delay due to the extra work arising from the negotiation of the new pharmaceutical price regulation scheme in 1993 and from subsequent policy initiatives. On 30 June 1996 six AFRs from 1992, 14 from 1993 and 35 from 1994 remained unfinished.

Steps are being taken to clear this backlog.