Department of Health and Social Care

The debate will be opened by the Chair of the Health and Social Care Committee. Before I call her, I wish to alert Members that the same time limit of three minutes will be imposed in this debate, and I am sure the Chair of the Select Committee will be cognisant of that during her opening remarks. I call Layla Moran.

I thank the Backbench Business Committee for granting this debate on the NHS estimates and, in particular, the impact of the UK-US pharmaceutical deal. Let me start by briefly talking about the estimates themselves. I am sure that every Member has a copy of them; I have one every year. Given that we spend £211 billion on the NHS, it is rather extraordinary that £201 billion of that is simply two lines in this document. Last year, I made a request of the Department of Health and Social Care, in the light of the deal, that we get not just a better breakdown of the costs of the deal, but, more importantly, the ability to scrutinise the estimates. The Treasury’s own guidance says that the information in the estimates should be “informative” to readers. We can all read it, but—goodness me!—it tells us absolutely nothing. My request of the Department again, and much more publicly, is to sort this issue out. Other Departments do this much better, so there is no reason why we cannot. The information exists; it is a question of putting it correctly in a spreadsheet. Today, I hope that we will discuss the pharmaceutical deal. I have to admit that I had seen stuff about the deal, but it was not until a whistleblower came to my surgery that I really began to understand the implications of it. They said: “I am a doctor, a public health specialist, and a NICE employee. I am deeply concerned by the plan to change the NICE cost-effectiveness threshold. I continue to believe that the NHS would be better off if ministers decide to scrap their original plan to spend more on new, less good value medicines, and used the money instead to provide basic things that we already know are good value, but don’t manage to provide adequately.” Let us start by explaining what this deal does. It is worth mentioning that it is not a free trade agreement. That is quite important, because we will not get the normal mechanisms of scrutiny. This is one of the only ways that we can scrutinise it. We certainly do not get a proper vote on it. Different Committees of this House have raised that as a key point, so I am delighted that we are able to discuss it. The deal agrees with the USA that there will be no tariffs on UK pharma exports until January 2029, and we have agreed a series of measures in return. The most important of those, which was raised by my whistleblower, is the changes to the National Institute for Health and Care Excellence thresholds. We must remember that NICE was set up as an independent body of Government to make health economics assessments for treatment and medicines, to maximise value for money. I do not need to remind the Minister that providing value for money for the taxpayer is in the NHS constitution. The Government gave themselves powers to direct NICE on cost-effectiveness thresholds, raising them from £20,000 to £30,000 up to £25,000 to £35,000 for each quality-adjusted life year. In plain speech, that is basically the amount of money that we would spend on a medicine to increase people’s good life expectancy by one year. Historically, the NHS has had a very good deal on medicines. That is in part because of where the QALY is set; in fact, research has been done that suggests that we could have put the figure even lower. It is not a budget, and does not have to increase with inflation. Some have made that case, and I will come back to that point in a moment. The second part of my speech relates to changes to the rebate mechanism. There is a voluntary agreement between the British pharmaceutical industry companies, and the NHS caps the amount that it spends on branded medicines. If the NHS spends more, it claws back some of the money from those companies. Under the deal, the UK Government are limiting that to 15%, which is down from 22.9%. Let us put those two things together: we have the NHS paying more for medicines, and receiving less back through rebates. There is an agreement in the deal that the UK will increase support for life sciences and spending on new medicines from 0.3% of GDP to 0.6% of GDP by 2036. That is an increase of spending on medicines, particularly, from 10% to 12% of the NHS budget.

The hon. Member is making an excellent speech, and is trying to draw out the details of this deal; I am glad that one of her constituents drew her attention to it. I was lobbied by Karl Claxton at the University of York, who described this deal as an existential threat to the NHS because of the potential costs. Interestingly, the Department has not yet published its impact assessment on the deal. Does she agree that it is high time that the Department published the impact assessment and let us know the true cost of the deal?

I believe that by the end of my speech, the hon. Gentleman and I will be in violent agreement, if we are not already. There is one more aspect of this, incidentally: the supply chains deal, which I understand is being crafted. We do not have time to go into that.

I commend the hon. Lady on the speech she is making. It is really important that we talk about the disadvantages of this deal, and there is a clear disadvantage to Northern Ireland. Access to everyday medicines in rural communities in Strangford and across Northern Ireland will be inhibited, so does the hon. Lady agree that the Northern Ireland Assembly in particular should receive the resources necessary to deliver vital frontline service improvements? At this moment, it is not receiving those resources.

That is a really good point. I will come back to generics, which make up nine in 10 of the medicines that the NHS uses. There is also an issue of devolution here, which I am sure other Members will cover. At the moment it is very complex, and it is not at all clear how the deal will apply in Scotland and Northern Ireland in particular. We cannot divorce this deal from the geopolitics. It is only happening because Trump decided that he wanted to slap tariffs on every country in the world and on a number of different sectors. The reason why the US came after the NHS is that historically, we get an incredibly good deal, but we have to admit—this is why this debate is so important—that we are using the NHS and NICE in geopolitical negotiations to appease the current President of the United States. Although Trump probably wants to be President for much longer than he will be, his term will come to an end, but the effects of this deal will last much longer than the period of time he might be in office, and the amounts of money involved are eye-watering. I wish we had more information in the estimates, but everyone knows the pressure the NHS is under.

Does the hon. Lady agree that the Government’s failure to publish the impact assessment means that NHS authorities across the country do not know how much this deal will cost them? My constituents in Somerset cannot get a GP appointment or see an NHS dentist. That is far more important to them than this obscure deal.

The hon. Gentleman is absolutely right, and that lack of transparency is the nub of my speech today. There are some potential positives in the deal. At the 10 February sitting of the Business and Trade Committee, a representative of the Association of the British Pharmaceutical Industry said that zero tariffs and commitments to the pharmaceutical market in the UK were “welcome” and had been “sought for some time”. The Government’s press release points out that patients will get access to innovative new medicines—who does not want that? Of course we all want that, especially those who have incurable cancers and so on, but there is a trade-off. We all want to bolster innovation in the UK. I have an interest—I am the MP for Oxford West and Abingdon. We are the other side of the Oxford-Cambridge growth arc. Biomedical sciences are going to drive my local economy, so I absolutely want that to happen, but there are also some important criticisms of this deal. First, Medicines UK, which represents a large number of pharmaceutical companies based here in the UK, has real concerns. The life sciences sector plan has stalled, and Medicines UK points out that even though the companies it represents supply nine out of 10 medicines to the NHS, those companies are basically not recipients of what is good in this deal. Mark Samuels, its chief executive officer, has also pointed out that while there may be new investment in this country, particularly in R&D, if we want to create jobs and strengthen the economy, we must also address the inadequate support for the production of goods in the UK. That is where long-term value is created, and it is where the UK misses out compared with other countries. I point colleagues to Denmark, for example, which has had extraordinary success in its economy because it not only invests in R&D, but ensures that a proportion of the manufacturing happens in Denmark. That is what drives economic growth. I now turn to the key point, which is the money. We do not know how much this deal is going to cost. There are two suggested amounts: the Institute for Fiscal Studies puts the cost at £9 billion, but the House of Commons Library briefing points out that the 0.6% of GDP in the Office for Budget Responsibility forecast actually amounts to £14 billion. As has been mentioned, that is an eye-watering amount of money, in the same period that we need to be spending money on dentists, GPs, capital investment, attendance at A&E, prevention, the shift to community and the 10-year plan. When we should be seeing money delivered to the frontline, instead we are seeing money diverted to a small number of very large American-based pharmaceutical companies with no transparency, little debate and absolutely no vote in this House. It is the lack of scrutiny that I take issue with, and there are economists who point out that we could have an extra 330,000 excess deaths by 2036. The Minister is looking quizzically at me, but she has information that I do not. It could be that those economists are being alarmist, but maybe they are not. We simply do not know, because the Government refuse to publish the impact assessment owing to commercial sensitivities. Normally at this stage, I have a series of questions, but today—and this not just in the interests of time—I have only one: where is the impact assessment, and if the Government will not release it, what are they hiding?

I thank the Chair of the Health and Social Care Committee, the hon. Member for Oxford West and Abingdon (Layla Moran) for her comments. Life sciences are one of the country’s great strengths. We have world-leading universities, brilliant researchers, innovative companies, NHS experts and public investment. The life sciences support high-skilled jobs, drive growth and, most importantly, transform patients’ lives. The UK invented the covid vaccine, pioneered in vitro fertilisation and sequenced DNA, but we are slower than many other nations at diffusing innovation. The NHS spends £27 billion a year buying stuff that should be helping to give British patients access to innovative treatments, guaranteeing high-tech start-ups and scale-ups their first contract, and enabling clinical trials and exciting new drugs. However, in evidence to the Science, Innovation and Technology Committee, we have heard that bureaucratic processes and a culture of inertia mean that adoption is far quicker in the US, for example. My Committee was told that the NHS has more pilots than British Airways, but innovation still is not getting through. Sometimes it can seem easier to be locked into tech giants such as Palantir. My Committee has warned against that, but we do want the UK to be a great place to grow life sciences businesses. Last year, following a series of cancelled investments, we held an emergency inquiry into this area. Witnesses were clear that the voluntary scheme for branded medicines pricing, access and growth, or VPAG, was a big issue, but there were also deeper questions on whether the UK is spending enough on medicines, whether patients are getting timely access to innovation and whether companies have confidence to invest for the long term. I very much welcome that the UK has secured zero tariffs on pharmaceuticals and an exemption from the US’s most-favoured-nation pricing policy, but the arrangement is not treaty-based and is therefore not subject to scrutiny. The final cost is not clear. It depends on which medicines the National Institute for Health and Care Excellence approves and what the actual NHS uptake is. We all agree that the NHS must get value for money. Every pound spent on one part of healthcare is precious and cannot be spent elsewhere, but innovative treatments can reduce healthcare demand, and companies need to know that they have a market if they are to invest in research and development, clinical trials and manufacturing in the UK. The Minister needs to explain how these figures, such as the 0.6% of GDP, were arrived at. What international analysis has the Minister commissioned to justify them? In particular, where does the UK sit internationally? We heard from President Trump that the UK does not pay enough, but the US system is one of the most bloated and overpriced in the world, with health accounting for 18% of GDP, with worse outcomes than the NHS, which accounts for 10% of UK GDP.

An estimated 229,000 excess deaths by 2036—that is the eye-watering figure that BMJ analysis identifies as the upshot of diverting NHS funding to pay more for pharmaceuticals in response to Trump’s threats. Estimates day debates exist to scrutinise how public money will be spent before that spending has happened, not least when the decisions could have such damaging consequences for the health of our nation. This estimates day debate does not include the full budgetary consequences of the UK-US pharmaceutical deal agreed on 1 December. When we look at the cost, the Government’s figures simply do not stack up. Instead, we see a structural weakening of NHS safeguards on drug pricing, higher thresholds, weaker rebate mechanisms and a commitment to dramatically increase spending, which will prove devastating for patient health. Ministers claim that the arrangement will cost about £1 billion over the current spending review period, but independent analysis tells a different story. Using the projections of the Office for Budget Responsibility, the House of Commons Library suggests that increasing spending on medicines in line with the Government’s commitments would require about £1.7 billion extra by 2028, and potentially as much as £14 billion a year by 2036. The Government have been clear on one point, and one point only: they say that those increased costs will come from existing NHS budgets. No new funding has been guaranteed. Every extra billion spent on higher-priced medicines is a billion not spent elsewhere in a system that is already under immense strain. This is money not spent on tackling waiting lists, not spent on primary care, and not spent on saving lives. As we have heard, the Nuffield Trust has made that point starkly, estimating that the NHS will be able to save 340,000 fewer years of quality-adjusted life in 2035 if the promised spending goes ahead. Despite the magnitude of these changes, the Government have refused to publish the full impact assessment of the deal that they hold. Why? This worrying development can be seen in the way in which the UK-US pharma deal was forced through, with no vote and scant parliamentary oversight. Let me summarise what I wrote on PoliticsHome back in March. This deal will increase the cost-effectiveness threshold set by the National Institute for Health and Care Excellence, curtail the overall cost cap on patented medicines, double the amount spent on such medicines, and increase the share of the NHS budget allocated to medicines. That should worry every Member of this House, because once those safeguards have been eroded, they are very difficult to restore.

I must declare an interest as a registered pharmacist for nearly two decades and an expert on pharmacy procurement. Let be begin by saying that I welcome the UK-US pharmaceutical trade agreement, and also by saying something quite controversial: President Donald Trump is right. We do underpay for drugs—not just our expensive, lifesaving rare cancer drugs, but the everyday drugs that we purchase.

Will the hon. Gentleman to comment on the fact that the NHS pays 10 times the manufacturing costs for over 80% of the licensed medicines that we buy? How is that underpaying?

I am not sure where the hon. Gentleman’s figures come from. When we look at the drug tariff reimbursement, which is the system that we use to pay, and compare it with the arrangements in other countries, it is clear that we underpay significantly. Perhaps he is referring to something of which I am unaware; I should be happy to chat to him outside. We in this country are addicted to low-cost drugs for our health service, and what does that addiction mean? It means that we have the lowest costs and we always go for the cheapest drugs, and that favours foreign manufacturers. It destroys UK supply chains, as we have seen over the last 25 years, and it endangers our resilience as a country. We are already seeing the side effects of that, with drugs being out of stock. We have a system for payment called the drug tariff, which establishes how much pharmacies will buy drugs for and how much they will be reimbursed for. There are currently 254 price concessions. Price concessions happen when a drug is out of stock, and we must make an emergency increase to the price in the drug tariff to try to bring it back into the country. Given that there are 3,500 drugs in that section of the drug tariff, 254 does not sound a lot, but it is the highest level that I remember seeing in my entire professional career. Last month’s highest level of 230 has just been exceeded. Cheap drugs often mean that we overvalue the benefit of medicines in our system and use a “drug first” approach in the NHS, and that has continued for decades. When we increase the price that we pay for drugs, it allows us to start considering the benefits of other types of treatment, such as social prescribing. Social prescribing becomes a great deal cheaper by comparison in a system in which drugs are valued at the correct level.