The Pharmaceutical Industry 1996

The pharmaceutical industry is a multinational profit making business which has an important role in the British economy and which has an obvious interest in and relationship with the NHS. Policies toward this sector will be an important test for a Labour government keen both to safeguard and develop the economy as well as the health service.

The drug industry

The pharmaceutical industry has proved itself an outstanding success in business terms and UK based companies are no exception. In the UK there are few other industries who can match their success when measured in terms of achievements in

  • employment -UK industry employs around 80,000 people directly and around 250,000 in support jobs.
  • exports – there is currently a positive balance of trade for pharmaceuticals of around £1.5billion per year
  • produce many of the medicines we use in this country and the NHS spends about £3.5 billion per year on drugs.
  • research – company laboratories are staffed with personnel of the highest calibre and furnished with state of the art equipment
  • innovation – the development of new molecules and devices continues unabated

Labour’s policy The policy document “Renewing the NHS” hardly mentions the drug industry and Labour has not spelt out its policies. Policy statements suggest that the price regulation scheme will be examined, that there will be more transparency, drug promotion spending will be scrutinised and the quality of drug research will be assessed.

The Socialist Health Association proposes

1. Pharmaceutical price regulation scheme (PPRS): Until a better alternative is in place a Labour government should continue to use the Pharmaceutical Price Regulation Scheme (PPRS) as a way of controlling branded drug prices. However it must review the workings of the PPRS in detail, making the process more transparent, ensuring that the government is expertly advised and policies are fair to both sides.

The scheme guarantees the industry between 17-21% profit on capital investments and generous allowances are made for promotional spending. The method of calculating the fixed and current assets is complex and a 25% “margin of tolerance is allowed”. Smaller drug companies with sales of under £20m (about 15% of brand name sales) escape close scrutiny. The maximum profit permitted is 25% on capital employed. This secretive process needs to be reviewed to ensure that the taxpayer gets value for money, that money is not wasted and the small national government teams are aware of commercial practices such as international transfer pricing.

2. Research and development (R&D): The pharmaceutical industry must be brought within the national strategic R&D framework and contribute to national objectives by funding NHS R&D priorities. An R&D levy could be a rich source of funds for NHS R&D priorities, enable partnership with the industry and would avoid wasting money on poorly designed trials.

3. Drug advertising: Drug advertising and promotional activities which amount to about 10% of its sales must be brought within a new code of practice which is determined not only by the industry but jointly with other stakeholders such as the government, professional and consumer interest groups. Sponsoring symposia for doctors should be seen as promotional activity and not provision of drug information.

4. Department of Health’s role :Labour should change responsibilities so that the Department of Health is not asked to be responsible both for the welfare of the public and the sponsorship of the pharmaceutical industry. This dual responsibility (also seen in MAFF with confusion about food producers and consumer interests) represents a conflict of interests and the health of the public must be given priority.

5. Medicines Control Agency: Labour must review the Medicines Control Agency to see if it serves the public appropriately. In the review there must be a specific assessment of Summaries of Product Characteristics (formally Data Sheets) and of the Patient Information Leaflets to check the consistency and see whether they are kept up to date and reflect a fair appraisal of the evidence. The review should assess the membership of the advisory committees and scrutinise the mechanisms used for selecting and appointing advisors.

The licensing arrangements must become less secretive and Labour should consider including a consumer representative/advocate on the various advisory committees (Committee on the Safety of Medicines, Medicines Commission).

6. Drug companies and education:

  • A Labour government should look closely at the control of drug promotion which often is involved in postgraduate medical education. It is not appropriate for the industry to be a primary sponsor of postgraduate education about treatments. We would like to relieve drug companies of this burden and a levy system introduced so that educational funds can reflect educational priorities rather than marketing interests.
  • The Labour government must be committed to ensuring the best use of medicines and the best management of the NHS. A Labour government should actively encourage ways to prevent ill health, and to this end should direct funds towards research into preventive methods. When medicines are required they should be available, free at the point of access and used, wherever possible, according to evidence based guidelines.
  • Labour must develop policies to ensure that money is not spent on drugs of unproven efficacy, or on expensive drugs where cheaper, clinically equivalent, alternatives are available. Whenever feasible we would expect doctors to prescribe generically and will introduce systems to permit generic substitution. We must consider introducing an NHS Prescribing List, and in this way introduce a system that will ensure that the medicines bought by the NHS are the best available and at reasonable prices. In this system all drugs given marketing authorisation by the Licensing Authority would be available for five years after which their position would be closely scrutinised by a special NHS committee. Only drugs for which there was clear, research based evidence of clinical value would continue to be paid for by the NHS, and where two clinically equivalent drugs were available in terms of effectiveness, safety and convenience, only the cheaper would be kept on the list. Selection would be determined by information from well controlled trials and the basis for any decisionwould be made public.
  • To ensure the highest standards of prescribing the Labour party should continue to support many of the research (Cochrane Centre, NHS Research Initiatives) and advisory (British National Formulary, Effectiveness Bulletins, Drug and Therapeutics Bulletin) arrangements now in place. In addition the government should work to inform and involve the public in health issues.
  • The new administration should review prescription charges, considering both the amount paid and the exemption arrangements.
  • As part of the provision of treatment a Labour government must encourage the involvementof patients as equal partners in the therapeutic dialogue. Unless there is good reason, a drug should not be prescribed without the patient’s prior agreement. The new administration must consider ways of improving public knowledge about medicines generally.

Clearly a Labour government should work closely with the industry to support, encourage and build on these achievements, helping provide the infrastructure and relationships to maintain its successful momentum both here and abroad.

A Labour government should recognise the industry’s need for stability and should, in any negotiations, be committed to ensuring that any fundamental change(s) would be introduced after negotiation