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UK Drug Pricing Bill - House of Lords Votes to Amend

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Allos Rafi
Rafi Allos

Senior Associate

London

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20 February 2017

In September 2016, the UK government introduced the Health Service Medical Supplies (Cost) Bill into Parliament.  The flagship aim of the bill was to allow it to limit the cost of unbranded generic medicines to the National Health Service (NHS) in order to prevent price increases that the Department of Health considers unreasonable.  The Bill seeks to achieve this by enabling the Health Secretary to require companies to reduce the price of an unbranded generic medicine even if the manufacturer or supplier is a member of the voluntary Pharmaceutical Price Regulation Scheme (PPRS) in respect of their branded medicines portfolio.  The Department of Health has stated that it only intends to use this power where it considers that, due to a lack of competition in the market, companies are charging unreasonably high prices for unbranded generic medicines.  The Department of Health has said that it will determine if a medicine’s price is unreasonably high by working with an industry body and the Competition and Markets Authority.  The Bill also seeks to put it beyond doubt that the Secretary of State for Health has the power to require companies subject to the statutory scheme for controlling the costs of branded medicines to make a payment on their NHS medicines sales to replace the 15% list price cut imposed by the existing scheme.  Further details of the government’s proposal are available in a factsheet published by the Department of Health.

On 7 February 2017, in a defeat for the government, the House of Lords voted by 253 to 208 to amend the Bill insert a new provision to require the Government, in discharging its responsibility to secure best value for the NHS in purchasing medicines and medical supplies, to have “full regard to the need to (a) promote and support a growing life sciences sector within the [UK]; and (b) ensure that patients have rapid clinical access to new clinically effective and cost-effective medicines and treatment approved by the National Institute for Health and Care Excellence through their technology appraisal process”.  One of the members of the House of Lords, Lord Warner, who tabled the amendment summarised its objective as being to ensure that the Bill does not focus on decreasing the cost of medicines to the NHS regardless of other considerations.  The supporters of the amendment said in the debate that they were in favour of enabling the government to act to prevent unreasonable increases in unbranded generic medicines but that the Bill went much further than that.  Lord O’Shaughnessy, the Parliamentary Under-Secretary of State for Health, said that the government supported both the growth of the life sciences sector and access to new medicines.  However, he argued against the amendment on the basis that controlling the price of medicines cannot in itself promote the interests of the life sciences sector and as such any price control scheme could be challenged in the courts.  He also argued that legislation is not the right way to change behaviour that could lead to increased prescription of innovative medicines.

The Bill will next have a third reading in the House of Lords on 23 February which is the final chance to amend the Bill.  Once this has taken place, the House of Commons will consider the amendments made by the House of Lords.  Once the House of Commons and House of Lords agree on the final version of the Bill, it will receive Royal Assent and become law.

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