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The Government is introducing legislation to give new powers to the Secretary of State for Health to control prices of unbranded medicines sold by companies that are in the voluntary Pharmaceutical Price Regulation Scheme (PPRS). It will also allow them to gather more cost data from companies in the supply chain supplying the NHS. The Medical Supplies (Costs) Bill is being scrutinised by MPs who have requested written evidence on its potential impact.

What does the Bill do?

The Bill closes a loophole that currently means the Government is unable to regulate the price of unbranded medicines supplied to the NHS by companies in the voluntary PPRS.

Currently, any medicine not covered by the scheme (e.g. an unbranded generic medicine) is exempt from price controls if it is produced by a manufacturer that is a member of the PPRS. The Bill will make it possible for the Secretary of State to control the prices of these medicines through repayments or reducing the price directly, as it can do for companies in the statutory system.

It also amends existing legislation so that all pricing control powers apply to medical supplies as well as medicines. Medial supplies are defined as “surgical, dental and optical materials and equipment.”

Finally, the legislation gives new powers to the Secretary of State to request data from any company involved in the supply chain of medicines being sold to the NHS. The Government says this is to inform reimbursement payments to pharmacies and GPs and to determine if the NHS is getting value for money.

The BIA understands that the data collection requirements are not intended to apply to companies involved in the R&D of medicines but will seek more concrete assurances. The precise details of what data and what type of companies this will apply to will be set out in secondary legislation Regulations once the bill is passed by Parliament. The BIA is representing our members at meetings to discuss the Bill at the Department of Health and will be monitoring its passage through Parliament.

Why was this Bill introduced?

The Times reported in June 2016 that certain pharmaceutical companies were buying the production rights of medicines that were out of patent and producing and marketing them as unbranded generics. As they were the sole supplier, these companies were able to substantially increase prices, apparently by over 1000% in some cases. This was reported as costing the NHS an extra £262 million a year. The Bill is intended to prevent this from happening in the future. The Competition and Markets Authority has also launched an investigation.

What next?

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The Bill had its first debate by MPs (2nd reading) on 24 October and was broadly supported by Labour and other parties. It will now be scrutinised in detail by a committee of MPs, who are requesting written evidence from the public and business. See the Parliament website for details on how to submit. You can also contact Martin at the BIA with your evidence to inform the BIA’s position.

The Bill is expected to receive Royal Assent in spring/summer 2017 subject to Parliamentary business. The Regulations will then also need to be produced, consulted on and Parliament given opportunity to object to them. It is therefore expected that changes will not be introduced until the 2017/18 financial year.

For more information you can read the Department of Health’s factsheet or a briefing produced by the House of Commons Library.