My Lords, I am glad to support the noble Lord, Lord Patel, and I have a great deal of sympathy with this amendment. Of course, I speak as one of a long line of former Ministers who have wrestled with the tension between a cash-restrained NHS and the imperative to invest in new medicines and devices. I have come to the conclusion that we are not going to see the investment we want to see in these new medicines without a radical change of approach.
When we debated access in Grand Committee a couple of meetings ago, the Minister used words to the effect that he would not go anywhere near reimbursement. That is at one with the way the NHS regards drug costs: as a price and a cost to be pared down rather than as an investment in patient care. The unwillingness of Ministers to tackle the issue of reimbursement to the industry in a way that incentivises the use of new medicines is, I think, very disappointing. I do not think that there is any way around this, unless we top-slice some of the resource for the NHS and distribute it separately for investment in new medicines.
The noble Lord, Lord Patel, referred to current and previous agreements with the industry. I want to go back to the 2014 PPRS agreement, which does I think provide a model for us. It provided assurance on almost all of the branded medicines bill for the NHS, so the bill stayed flat for the first two years of the scheme and grew slowly after that. The industry made quarterly payments to the Department of Health when NHS spending on branded medicines exceeded the allowed growth rate. The quarterly payments that the industry made could have been used to fund new medicines—but, as the noble Lord, Lord O’Shaughnessy, mentioned
last week, it is very hard to explain what exactly happened. With a cap in place and with reimbursements being made by the industry, the NHS proceeded to try to ration drug costs at local level. So, instead of having a virtuous circle where essentially the industry guaranteed the cap on drug costs in order to allow for investment in new medicines, we had a double whammy. The industry price was pared down and the NHS continued in its bad old ways of trying to prevent new medicines being accessed by patients.
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We have a new scheme—the voluntary scheme for branded medicines pricing and access—that came into force in January 2019. It has two parts. First, it sets out a range of measures to support innovation and better patient outcomes through improved access. It then sets out a UK-wide affordability mechanism under which scheme members make a financial contribution to the department for sales of branded health service medicines above the agreed allowable growth rate. It is very much built on the foundations of the 2014 agreement. The big question is this: where does the rebate go to? Is it recycled back to the NHS through the kind of mechanism that the noble Lord, Lord Patel, mentioned, or is it simply an in-year addition to the DHSC to help it balance its books? Is it discounted in advance by the Treasury, which, in a sense, keeps the proceeds?
I will be very interested in the Minister’s response. The one thing for sure is that, unless we change the dynamics, we are going to starve a fantastically important industry in this country, NHS patients will not get access to new medicines and we will all be the loser.