My Lords, we tabled Amendment 7 to probe the Government on why, in their new draft regulations, with 25 pages just on the branded medicines proposals, they seek to alter the current arrangements for exempting low-cost presentations from the price-reduction requirements of the statutory scheme. As the Minister will know, the existing regulations specify as an exemption a low reimbursement price of either under £2 an item or low primary care sales to NHS England of less than £450,000 a year. The provision has been there to protect the commercial viability of low-revenue or very low-cost medicines. It therefore seems somewhat counterintuitive to remove this safeguard at a time of such significant uncertainty for the pharmaceutical industry, particularly in the face of what could be a highly disruptive withdrawal from the EU.
Under paragraph 11, the proposed revised regulations give the Secretary of State the power to exempt a manufacturer or supplier where he considers that an exemption is necessary to ensure adequate supplies of medicines for health services purposes. This changes
the current arrangements to give the Secretary of State a discretionary power that he may use in certain circumstances, rather than the automatic exemption that currently operates for £2 per item or a £450,000 annual sum. The current provision is important in maintaining adequate supplies to the health service of the medicines in question.
We are concerned about the significant impact that the removal of the current arrangements will have on manufacturers producing the common, low-cost generic branded medicines in question, such as those for hypertension. Although it is not always the case, the producers of such low-cost medicines are often small businesses operating on small margins. If they are not exempted from paying a rebate on those medicines, many will struggle to maintain current low costs, resulting in a consequent rise in costs for those medicines.
It is also important that the regulations accompanying the Bill maintain a specific exemption from the statutory scheme in the case of supply shortages, as currently. Amendment 8 would therefore formally place this duty on the Secretary of State. This is particularly important given the concerns of GPs and other health professionals, who have voiced frustration about having to prescribe “second choice” medicines because their preferred drug is out of stock. Representative bodies have also expressed their concern about the removal of the current exemption.
The amendments do not call for anything new but for some of the current regulations to be maintained and—where the Secretary of State believes that there is a case for it—strengthened. I look forward to hearing from the Minister the Government’s reasons for seeking to change the current regulations. Has any work been undertaken to assess the potential impact on the future availability and cost of the medicines that will be affected, and on future supplies? Is this designed to save costs—and, if so, what is the expected level of savings to the NHS?
Noble Lords may feel that there is a case for debating the long-term place of such exemptions in the regulations, but now is clearly not the time to pull the rug from beneath the producers of low-cost medicines, or medicines at risk of supply shortages. Instead, it is important that the status quo is maintained until such time as the Government can be clear about the consequences and the benefits of any change. I beg to move.