Dods Monitoring: Health Service Medical Supplies (Costs) Bill. Briefing following Second Reading

Size: px

Start display at page:

Download "Dods Monitoring: Health Service Medical Supplies (Costs) Bill. Briefing following Second Reading"

Maximillian Watkins
5 years ago
Views:

1 Dods Monitoring: Health Service Medical Supplies (Costs) Bill Briefing following Second Reading October 2016

2 Background The Bill seeks to address the current imbalance between the two regulatory schemes used to price the sale of NHS branded medicines: the voluntary Pharmaceutical Price Regulation Scheme (PPRS) and the Statutory Scheme. If passed, the Bill will make a number of amendments to the National Health Service Act In the UK a number of schemes exist to regulate prices of branded drugs following authorisation from the EU or UK. In the current regulatory system for marketing NHS branded medicines, however, manufacturers and suppliers can sign up to one of two mechanisms. The Pharmaceutical Price Regulation Scheme (PPRS) is used by the Department of Health and involves a noncontractual agreement with the Association of the British Pharmaceutical Industry (ABPI). The PPRS is a voluntary agreement to control the prices of branded drugs sold to the NHS. It is negotiated between DH, acting on behalf of the UK government and Northern Ireland, and the branded pharmaceutical industry, represented by the ABPI. The scheme applies to all current branded, licensed medicines available on the NHS, the purpose of which is to achieve a balance between reasonable prices for the NHS whilst providing a fair return for manufacturers. The current PPRS scheme uses a value-based pricing mechanism and its primary objective is to deliver value for money, encourage innovation, promote access and uptake for new medicines, and provide stability, sustainability and predictability into the UK market. It does not cover unbranded generics or unlicensed products. The most recent scheme was agreed in 2013 following consultation, and came into force in January 2014, expiring in As part of the agreement, the pharmaceutical industry agreed to a limit on the growth of prices for branded medicines, with set growth rates each year. In February 2016 the Government reported that the estimated income from PPRS payments would be 647m in the 2016/17 period. Any supplier or manufacturer which does not currently participate under the PPRS scheme is automatically subject to the statutory scheme, as under sections 262 (2) and 263 (7) of the National Health Service Act The Act provides powers to control maximum prices of medicines and currently there is a 15 per cent reduction in the price of branded medicines that were on sale in December 2013, however medicines launched after this time are not subject to the reduction. In 2014 the statutory scheme covered only around 6 per cent of branded medicines around 710m, compared to the 75 per cent, or 8,290m sales covered by the PPRS scheme. The Government did however consult on a number of issues relating to drug prices in For unbranded generic medicines, the Government allows manufactures to price their own products, relying on competition to deliver value for money. The current dual system has been criticised for not facilitating enough competition which has led to higher prices and an increased cost pressure o the NHS. In addition to this, there have also been a number of high profile cases of price increases for unbranded generic medicines. In June this year The Times reported that certain pharmaceutical companies were buying the production rights of medicines without patents and then producing and marketing them as unbranded generics whilst substantially increasing their prices. This also drew criticism within Parliament, most notably from the Health Select Committee. dodsmonitoring.com

3 Bill Explained There are three main elements of the Bill: Statutory medicines pricing scheme The Bill would put beyond all doubt that the Government can require companies in the statutory scheme to make payments to control the cost of health service medicines. The Government would be allowed to apply penalties for non-compliance and to recover any payments owed through the courts following a right of appeal to a tribunal. High-priced unbranded medicines The Bill would enable the Government to require companies to reduce the price of a generic medicine, or to impose other controls on that company s unbranded medicine, even if the company is in the PPRS scheme for these medicines. This seeks to address the perceived market failures when generic medicines are priced unreasonably high. Information powers The Bill would bring together the information requirements for health service medicines and other supplies in one places in the NHS Act and would enable the Government to make regulations to obtain information on sales and purchasers of health service medicines and other medical supplies from all parts of the supply chain. The Bill would strengthen the statutory footing for existing data collections. Clause breakdown: Clause 1 Expands the types of schemes to which the Secretary of State can apply their powers. A third scheme would be added where manufacturers or suppliers are required to pay the Secretary of State a certain amount in relation to the sales or estimated sales of medicines. The Clause also provide that where a company leaves the voluntary scheme they will still remain liable to make any payments owed from the time during which the medicine was covered by the scheme. Clause 2 Extends the powers in Section 262 to enable action to be taken against manufacturers/suppliers where their medicines is not covered by a voluntary scheme, irrespective of whether the manufacturer/supplier has other medicines controlled under the voluntary scheme. This means the Secretary of State would be able to control the prices of unbranded generic medicines produced by members of the PPRS scheme. Clause 3 Ensures the Secretary of State can make a statutory scheme that may require any manufacturer/supplier to pay a certain amount relating to the sales or estimated sales of a medicine. Clause 4 Amends the NHS Act in relation to enforcement provisions. The penalty that can be applied by the Government in the case that the provisions are not complied with are either a single penalty of up to 100,000 or up to 10,000 a day. Clause 5 Provides powers to the Secretary of State to make orders to control the maximum price of medical supplies other than medicines. Clause 6 Makes regulations to require any manufacturer, supplier of medicines or medical supplies to provide information to the secretary of state. Clause 7 Relates to a number of consequential amendments to the National Health Service Act Clause 8 Provides that the Act will apply across the UK. Clause 9 Provides that (except for clauses 8 and 10) the provisions of the Bill will come into force on a date provided in regulations made by the Secretary of

4 Second Reading and Reaction The Bill passed its Second Reading on 24 October 2016 Second reading transcript Second reading summary The Bill was passed on the same day the independent Accelerated Access Review was published. In setting out the case for the Bill, the Secretary of State for Health, Jeremy Hunt, explained how spending on medicines was second only to staffing costs in the NHS, with an estimated spend of 15.2bn during But he also paid tribute to the life sciences industry, which contributed 56bn to the UK economy, with 80m generated from intellectual property during a six year period. He stressed that the NHS was making efficiency reforms from growing demand pressures and that he wanted to speed up innovation and science which provided great opportunities for the NHS. Hunt explained how the statutory scheme had delivered lower savings than predicted and confirmed the Government s commitment to clarifying its power to introduce a payment mechanism for this scheme. The intended application of the powers would, he continued, be set out in regulations, and he confirmed the Government would provide "illustrative regulations to reassure the House that we will be fair and proportionate in exercising the powers." On information, the Secretary of State argued that the Bill would streamline the existing information requirements in the 2006 Act relating to controlling the cost of healthcare products. He believed the statutory footing for data collections was important so that the Government could run a robust reimbursement system for community pharmacies, and he sought to reassure the industry that the requirement to keep and record data did not significantly increase the burden. Hunt also confirmed a consultation would take place on the regulations specifying the information requirements. Labour broadly supported the aims of the Bill but had concerns with a number of measures that did not form part of the initial consultation and felt they had been added to the Bill at the last minute. Shadow health secretary John Howard was concerned, for example, with the potential additional administrative burden for community pharmacies and small companies. The Opposition was however particularly infuriated by those firms who exploited the loophole the Bill seeks to close. Likewise the SNP also broadly supported the Bill, with health spokesperson Dr Philippa Whitford declaring that the PPRS needed to apply to all drugs, not just all companies. She wanted further clarification on the data sharing and along with several Labour members, the SNP wanted further clarification on the definition of medical supplies. The Liberal Democrats health spokesperson Norman Lamb meanwhile called the Bill an uncontroversial set of measures and expressed his party s broad support for the Bill. He agreed that the incentive had to be removed from shifting between the statutory medicines pricing scheme and the voluntary scheme and particularly welcomed the proposals to strengthen the Secretary of State's powers to intervene where unbranded medicines were priced excessively. Several members, including health select committee member Maggie Throup, expressed concerns over the burden of the information reporting requirements for smaller firms. Dods Monitoring will be tracking the progress of this Bill through Parliament. For further information, please contact adam.wright@dods.co.uk dodsmonitoring.com

5 Key People In the Commons- Jeremy Hunt Secretary of State for Health Philip Dunne Minister of State for Health John Ashworth Shadow secretary of state for health Barbara Keeley Shadow minister for mental health and social care Justin Madders Shadow health minister Dr Lisa Cameron SNP spokesperson for health Norman Lamb Liberal Democrat spokesperson for health Dr Sarah Wollaston Chair of the health select committee Dr James Davies Member of the health select committee Maggie Throup Member of the health select committee Next Steps Timeline: Public Bill committee to meet on 8th, 15th and 17th November Procedure At Committee Stage the Bill is scrutinised by parliament line by line. For Bills starting their legislative journey in the Commons this usually takes place in a public bill committee. A programme motion, published before committee stage, will determine how many days and sittings the committee will meet for. Membership of public bill committees is determined by the Speaker and represents the political composition of the House. The Speaker will usually choose members with a qualified interest in the Bill such as Government and shadow ministers and Whips and there are usually between 16 and 30 members on a public bill committee. Amendments at committee stage should be tabled three days before the date they are due to be considered. Amendments tabled after that date will be only be considered at the discretion of the chair. Public bill committees are also able to invite written and oral evidence from relevant and interested stakeholders. This often includes Government Ministers, departmental officials and experts or affected people from the stakeholder

Dods Monitoring will be producing briefings on key Government legislation in this session. Expected Bills can be viewed in our summary of the Queen s Speech here.

6 Dods Monitoring will be producing briefings on key Government legislation in this session. Expected Bills can be viewed in our summary of the Queen s Speech here. For more information on the legislative process, please contact your Political Consultant. For more details on this briefing, please contact Adam.Wright@dods.co.uk Dods The Shard 32 London Bridge Road London SE1 9SG

3.2. CCG Board Paper Summary Sheet. Agenda Item. DETAILS Part 1 (Open) X Part 2 (Closed) Title of Paper Pharmaceutical Rebate Schemes Meeting

3.2. CCG Board Paper Summary Sheet. Agenda Item. DETAILS Part 1 (Open) X Part 2 (Closed) Title of Paper Pharmaceutical Rebate Schemes Meeting CCG Board Paper Summary Sheet 3.2 DETAILS Part 1 (Open) X Part 2 (Closed) Agenda Item Title of Paper Pharmaceutical Rebate Schemes Meeting CCG Board Date 5 st November 2015 Executive Lead Dawn Clarke,