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Health Service Medical Supplies (Costs) Bill: Briefing for Lords Stages

Published Thursday, December 15, 2016

The Health Service Medical Supplies (Costs) Bill was introduced into the House of Lords on 7 December 2016 and is due to receive its second reading on 21 December 2016. The Bill seeks to amend and extend the provisions of the National Health Service Act 2006 which relate to the control of the cost of both health service medicines and other medical supplies.

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The NHS in England spent £15.2 billion on medicines during the financial year 2015/16; a rise of over 20 percent since 2010/11. Currently, the cost of branded medicines is regulated primarily through a voluntary scheme; manufacturers/suppliers who do not join the voluntary scheme automatically join a statutory scheme. Unbranded, or generic medicines, are not regulated and rely on competition to keep prices down. Recent price increases of some generic medicines have led to concern that not enough is being done to regulate their price. In addition, income from the voluntary scheme has reduced and some manufacturers/suppliers have chosen to join the statutory scheme, which does not involve the same payments to the Government under the voluntary scheme.

The Bill includes provisions to bring the current statutory medicines pricing scheme, which applies to branded medicines, into line with the voluntary scheme: the Pharmaceutical Price Regulation Scheme (PPRS). The Bill would also allow the Secretary of State to make regulations to limit prices of, or profits relating to, unbranded medicines. Currently, the Government cannot apply price controls to the unbranded generic medicines of those companies who are members of the PPRS; the Bill would remove this loophole.  In addition, the Bill would introduce a new power regarding information provision, which would enable the Secretary of State to make regulations to obtain information about health service medicines and other supplies from all parts of the supply chain. The information would be used for defined purposes, set out in the Bill.

The Bill was broadly welcomed by Labour, the Scottish National Party and the Liberal Democrats. Several government amendments were made at committee stage and a new clause was added, relating to the information provision requirements in the Bill. A small number of government amendments were also made at report stage. No non-government amendments were successful at either committee or report stage. An amendment to ring fence the money collected through the voluntary scheme to invest in “access to new and innovative medicines and treatments”, was defeated on division at committee stage, as was another to specify reporting requirements that the Secretary of State should follow in assessing the impact of the Bill. This briefing provides an overview of the clauses of the Bill and details its passage through the House of Commons in advance of the Bill’s second reading in the House of Lords.

Lords Library notes LLN-2016-0069

Author: Heather Evennett

Topics: Health finance, Health services, Medicine

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