My Lords, I am grateful for the quality of the debate on this amendment. Before I turn to the specifics of the amendment, I join noble Lords in reflecting on the success of the UK life sciences industry. The UK has a lot to be proud of. We have a world-class science base and an excellent reputation for the quality and rigour of our clinical trials and the data they produce. The UK has one of the strongest life sciences industries in the world, generating turnover of more than £60 billion each year. Indeed, it is our most productive industry. This Government are deeply committed to supporting that industry to flourish and, in doing so, to provide jobs and transform the health of the nation. That is why it was a Conservative-led Government which introduced the first life sciences strategy in 2011.
More recently, we have introduced a range of measures through the taxation system to create good conditions for business growth and to encourage business investment. These include: R&D tax credits for small and medium-sized enterprises; R&D expenditure credit for larger firms; the patent box; a permanent annual investment
allowance; and the seed enterprise investment scheme, the enterprise investment scheme and the venture capital trust scheme, as well as entrepreneurs’ relief.
Take just one of those examples: the patent box. Phased in from 2013, under a Conservative-led Government, it incentivises companies to develop and manufacture new, innovative patented products in the UK by giving an effective 10% corporation tax rate on UK profits derived from the product’s qualifying UK and EU patents and equivalent forms of intellectual property. In 2013-14, a total of 700 companies claimed relief under the patent box, with a total value of £342.9 million, with 64% of those in manufacturing. In 2013, GSK decided to invest more than £500 million in the UK after the patent box was announced. Its CEO Sir Andrew Witty said:
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments”.
The Government’s R&D tax credit is one of the biggest sources of financial support for innovative UK companies and one of the most competitive in the world. It is widely commended and, in 2014-15, almost 21,000 companies claimed tax relief, totalling £2.45 billion, with R&D expenditure used to make these claims reaching £21.8 billion. The Autumn Statement announced £4 billion of additional investment in R&D, specifically targeting industry-academia collaboration, which is so important in the life sciences. We would expect the life sciences industry to be a substantial beneficiary. I am sure your Lordships will agree that these are bold, new, high-value measures which demonstrate that the Government are serious about attracting inwards R&D investment into cutting-edge industries like the life sciences.
This determined action is reaping rewards. The UK ranks top in major European economies for foreign direct investment projects in the life sciences. Just last week, Danish drugs company Novo Nordisk announced a new £115 million investment in a science research centre in Oxford. This comes on top of £275 million additional investment announced by GSK in June and AstraZeneca reaffirming its commitment to a £390 million investment in establishing headquarters and a research centre in Cambridge. As the noble Lord, Lord Patel, mentioned, we are also working on the creation of UK Research and Innovation to enhance this further. These are examples of the positive policy changes that are supporting the life sciences industry and transforming the health of our nation.
Looking ahead, Professor Sir John Bell, whom several noble Lords have mentioned, has agreed to lead the development of a new life sciences strategy for the long-term success of the UK. The formation of the strategy will bring together broad representation from across the sector, including from industry, charities, academia and the health and care system. It is aligned with the industrial strategy announced recently by the Department for Business, Energy and Industrial Strategy. The strategy will outline what the life sciences industry can deliver for the UK economy and for UK patients and set out what actions government needs to take to set the framework on the road to success. Building on a sector deal for this diverse and complex sector, the life sciences strategy will be bold and ambitious as befits the needs of a global Britain. We will seek to
make the UK the global home of medical innovation, creating jobs, improving health outcomes and transforming the NHS.
As all noble Lords have mentioned in the debate today, the issue of access to or uptake of new medicines in the NHS must be a key part of that life sciences offer. I recognise and share the desire of noble Lords to ensure that the NHS is at the forefront of innovation, and that medicines which have been approved by NICE are made available quickly to the patients who could benefit from them. This Government have been very active in improving access, and have already taken a number of important steps to do so. The early access to medicines scheme, introduced in 2014, provides a platform for drugs that do not yet have a licence to get to patients at a much faster rate than before. We have now seen 29 promising innovative medicine designations, and 10 positive scientific opinions have been awarded by the MHRA, the regulator. As my noble friend Lord Lansley mentioned—and I must give him credit for the introduction of this policy—the cancer drugs fund, created in 2011 and renewed in 2016, has provided over 95,000 patients with access to innovative cancer drugs that would otherwise not have been available.
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NHS England’s test beds programme, launched last year, is providing an opportunity to link new technologies with new ways of delivering care. It involves life sciences companies such as MSD, Phillips and Verily working with forward-looking NHS organisations to design new care pathways that support cutting-edge life sciences technology. We have also developed the innovation scorecard, to track the uptake of new medicines and benchmark different NHS organisations against each other. This is helping to support NHS England’s RightCare programme, which is addressing variation in clinical practice across the country to ensure that high standards and access are consistently being met.
Several noble Lords mentioned NICE thresholds and the consultation on those. I repeat the point made by my noble friend Lord Lansley, who has great experience in these matters. The proposal not only balances the important considerations around the benefits of the life sciences industry and cost considerations for the NHS, but brings those discussions of cost into NHS England at an earlier point, and benefits can flow from that.
There is clear evidence that our work is having a real positive impact. The latest innovation scorecard, published in January, showed that in the 12 months to June 2016 the use of medicines to treat acute coronary syndrome increased by 19%, medicines used to treat multiple sclerosis increased by 76% and the use of new oral anti-coagulants in primary care increased by 110% and in secondary care by 37%. Of the 77 medicines on the scorecard that are measured individually, over half saw growth in uptake over 10% year on year. I make those points about access because I want to demonstrate that the Government not only take this issue seriously but are acting robustly, and we are seeing positive results. There is more to come, as we will publish our response to the accelerated access review as part of our plans for the life science strategy.
When discussing access to innovative drugs, it is only right that we also talk about costs. Noble Lords will know from discussion in Committee that my policy brief encompasses both life sciences and medicine pricing and regulation. There is a tension between those two considerations that I grapple with every day. We must be clear that, in a time of fiscal restraint, medicines spend is rising much faster than other areas of the health budget. Last year, overall spend on medicines, after payments from the PPRS are taken into account, rose by 5.5%. This year, spend is forecast to rise by 8.8%. This compares with an increase in overall health spend of 3.4% and 2.9% respectively.
To put it another way, 30% of the additional funding for the health system in England over the last two years is expected to have been devoted to additional spending on medicines, and most of this additional spend on medicines is going on newer drugs. So the NHS is making a real financial commitment to medicines, at a time when it is striving to make difficult decisions and efficiencies elsewhere. It is simply not accurate to say that the NHS is not supporting uptake. On the contrary, given the fiscal environment, it is going above and beyond its overall funding growth to support the adoption of new medicines, and that is because everyone involved in the healthcare of the nation understands that it has a positive and symbiotic relationship with a thriving life sciences sector.
I hope that I have been able to persuade noble Lords of the Government’s commitment both to the life sciences sector and also to addressing the specific issue of access to new medicines. I now address the amendments specifically. As I have set out, I have a great deal of sympathy with the intent, but I am concerned that the amendment itself is not the right way to achieve it and would be damaging to the core purpose of this Bill.
The effect of the noble Lord’s amendment would be to require the Government to design price control schemes in such a way as to deliver growth in the life sciences sector in the UK. I believe that we are united in our desire to see such growth, but the evidence suggests that the most important factor in attracting companies to invest in research in the UK is the availability of world-class scientific expertise. That will clearly be an issue that noble Lords will raise in our Brexit negotiations. It remains a key focus of the Government’s effort to ensure that the UK remains at the forefront of global research and development.
Strengthening and putting beyond doubt the Government’s ability to operate price control schemes is a core purpose of this Bill, and I am grateful for the reiterations of support for that core purpose that have come from all sides of the House. This amendment would undermine one of the core purposes of this Bill by undermining the ability of the Government to put effective price controls in place. That is because controlling the price of medicines cannot in itself promote the interests of the life sciences sector and deliver growth, so the effect of the amendment would be that any price control scheme could be challenged in the courts. The amendment would take a carefully struck balance that is already set out in legislation between, on the one hand, the need for medicines to be available on
reasonable terms to the NHS and to take account of the R&D costs of the life sciences industries, on the other, and overweight it in favour of industry. It would create an asymmetry that would lead to higher costs to the NHS, less money for patients and lower uptake of new medicines. This serves no one’s purpose.
I turn to the second part of the noble Lord’s amendment, concerned with the rapid uptake of new medicines. The Government share the desire to see NHS patients benefiting from swift access to new innovations, particularly those medicines which have been recommended by NICE through its technology appraisals. It is for that reason that NHS commissioners are legally required to fund drugs and other treatments recommended in NICE technology appraisal guidance, normally within three months of final guidance. Throughout our discussions on the Bill in both Houses, we have emphasised that its provisions and wider government policy relate to maintaining the supply of existing effective treatments and improving the uptake of new cost-effective medicines.
Concerns were raised in Committee that CCGs were rationing medicines, and the noble Lord, Lord Hunt, has raised the point again today. No CCGs should be rationing medicines approved by a NICE technology appraisal and we are not aware of this happening. However, if noble Lords have evidence, they must send it to me and I will raise it with NHS England.
As I have set out, the Government have strong ambitions in this area, but the uptake of medicines is dependent to a significant degree on the prescribing choices of individual clinicians, who need to be aware of new drugs and persuaded that they may be a better option for individual patients, taking into account other conditions each patient might have and other medicines they are taking. We need to change the culture and behaviour of those clinicians who may be reluctant to use innovative medicines, but legislation is not the right way to effect behaviour change. Rather, it is working with the NHS, regulators, arm’s-length bodies and the medical colleges to create a professional environment that is more receptive to innovation, and of course continuing with a policy approach that supports uptake and access in other ways, as I set out earlier.
To conclude, I applaud the intent of the noble Lord in bringing forward the amendment. In their contributions, noble Lords have quite rightly drawn attention to policy objectives that this Government view as a critical priority and on which we are taking action. As I outlined earlier, a number of programmes are underway to influence prescribers and improve the uptake of NICE-approved drugs that are unrelated to pricing, but this amendment would undermine the core purpose of the Bill, which is supported in its main intent on all sides of the House, by undermining the ability of the Government to have effective price control schemes. I would therefore ask the noble Lord to withdraw his amendment.