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National Institute for Health and Care Excellence (Miscellaneous Amendments) Regulations 2018

Volume 797: debated on Wednesday 1 May 2019

Motion to Take Note

Moved by

That this House takes note of the National Institute for Health and Care Excellence (Miscellaneous Amendments) Regulations 2018 (SI 2018/1322).

Relevant document: 12th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

My Lords, I am glad to lead a short debate about NICE and the introduction of charges. I was NICE’s first Minister and have long taken an interest in the work of the national institute. Overall, it has done a fantastic job; its methodology has been followed by many other countries and, clearly, it has had an impact on judgments about clinical and cost effectiveness.

However, its role has changed over the years. It was brought into being to encourage and speed up adoption of proven, innovative new medicines and treatments because of a concern at the time that the NHS was slow to adopt new treatments and innovations that had been shown to be better than existing treatments and drugs.

To start with, that worked. However, despite the legal requirement on the NHS to implement the technology appraisal decisions of NICE, right from the start it proved remarkably reluctant to do so. As time has gone on and money has been squeezed, NICE has become more a rationer of treatments than a pusher of the introduction of new, innovative products. My concern about charges is frankly not so much to do with the principle of charging, because it follows a well-known model and principle used throughout government endeavours, as with some specific issues, particularly in relation to small companies and the current or future review of NICE’s methodology, which I wanted to raise.

We know from the helpful paper produced by your Lordships’ Secondary Legislation Scrutiny Committee that the government grant to NICE has fallen from £66.4 million in 2013-14 to £51.2 million in 2018-19 and that the Government have argued that NICE needs to identify other sources of funding to enable it to continue its full programme of work.

Obviously, there was consultation. One issue raised in it was the impact of charging on the relationship between NICE and the pharmaceutical industry—but it is important that we recognise that NICE is concerned not just with medicines and the pharmaceutical industry. In the consultation, the potential for conflicts of interest and the public perception of such conflicts were identified as risks. In other words, because the pharmaceutical industry will now be paying for the work being done by NICE, will it have undue influence on the work of NICE? Looking at the robust approach of NICE, I think we can dismiss that fear, but it would be good if the Minister could say something on the record about how we can avoid any perceived conflict of interest.

The second issue I want to raise is the mechanism for reducing the impact on small companies. The original proposal was for a 25% discount but, as a result of concerns raised, the Government decided to provide a subsidy of 75% for small companies. That is welcome and I accept that the Government moved a long way, but the Ethical Medicines Industry Group, which represents a number of small pharmaceutical companies, says that despite that, there is concern among those companies about the impact on them when they have a number of other issues and challenges at the moment, including Brexit and the rebates associated with statutory and voluntary medicines pricing schemes. It thinks that the NICE charges still present a significant cost for small companies and asks the Government to consider whether further measures could be introduced to help mitigate the impact of this on SMEs. One of its suggestions is a fee exemption for companies bringing their first product to market. I think that is an interesting suggestion in terms of encouraging new entrants into the market, which I believe is government policy.

More generally, it is important that, with the extra resources that will be going to NICE, we take the opportunity to ensure that NICE modernises its approach to medicines assessment. When the Government introduced the concept of cost recovery they said the charging would provide a more sustainable model, enabling NICE to flex its capacity in response to the pipeline of technologies that require assessment by NICE. That is welcome, but I want to refer to a briefing I received from a company called AbbVie, which says that it is imperative that NICE fulfils this commitment to adapt and update its methodology and modernise its approach to assessing new technologies.

One example it gives is that we know that medicines are increasingly targeted at smaller patient populations developed through clinical trials. Inevitably, these will embrace patients in smaller numbers. The problem is that regulatory agencies tend to approach this with some caveats. Inevitably, the clinical trials result in smaller datasets and regulatory agencies are certainly demonstrating significant flexibility to approve such medicines, often conditional on that data. However, the approach of health technology assessment bodies such as NICE is often challenged by such datasets, resulting in delays and highlighting a disconnect in the medicines approval pathway. AbbVie-commissioned research shows that medicines, such as those specifically expedited through the regulatory approvals system, due to their addressing areas of high unmet medical need, take longer, on average, to receive subsequent approval from NICE than those medicines that have not been expedited, thereby making the whole process very difficult. The upcoming NICE methodology review, due to commence through 2019-20, provides an opportunity to look at this again and I would be grateful if the Minister would say one or two words about that.

I also raise an issue raised with me by Alexion, a company focused on the development of medicines for rare and ultra-rare diseases. It has concerns about the potential unintended consequences of introducing charges for appraisals without action to address the significant challenges these treatments face in NICE assessments.

In conclusion, I do not object to the principle of charges: I think it is quite proper and the Government’s approach is to be supported. I have concerns about the small companies. I know that the 75% rebate is generous on any count, but any additional costs on those companies is something to be concerned about. The core of my question to the Minister is around the methodology review, to ensure that NICE keeps up to date with developments in science and technology. That is very important.

Turning to my final point, I know that the noble Baroness has taken a great interest in this over the years, representing her old constituency, particularly the life science sector. On the one hand, government policy is about encouraging UK life science and biotech companies to develop, to innovate and to invest in the UK. However, the National Health Service is set up to ensure that those innovations are not adopted by it. Despite a number of welcome government initiatives, they are all what I would call upstream, because the downstream is too difficult. This is a real problem so long as we have an NHS dedicated to stopping innovation. I fear that, despite all the warm words from Ministers that we have heard over the years, the NHS response is to dampen down investment in these new technologies and medicines. My argument is that, post Brexit, we cannot afford for this to happen. One way or another, we have to find a way to get the early adoption of new medicines and new techniques, where they can be shown to do better than the existing ones, and NICE has to play a part in that.

This is really my usual rant about innovation and getting patients access to the fantastic things being developed in the UK. I look forward to the Minister’s response and I beg to move.

My Lords, I thank the noble Lord, Lord Hunt of Kings Heath, for giving us the opportunity to ask the Minister some questions. As I expected, it was really interesting, starting with NICE from its inception. Those of us who have been involved with the NHS for some while know the standing that NICE has within the NHS community and how it is changing and adapting to changing circumstances, new technologies and the importance of really exciting new pharma, including pharma for specialised conditions. It also gives us the opportunity to better understand the motivations and reasons behind some of the changes.

As I see it, this SI does two things. It enables NICE to recruit experts from across the UK to its appeal panel, as opposed to individuals only in England. This aspect of the SI appears to represent a sensible change. Secondly, it will allow NICE to charge industry for the cost of making technology appraisals—TAs—and highly specialised technology, or HST, recommendations. I see this aspect of the SI as potentially contentious. How will the anticipated savings from the SI be used? To whom will they be allocated? Will they be used to support growth of the life sciences sector in the UK, or will they just become part of the income stream and then go some way towards the possible privatisation of NICE? Is not the reason for this SI that NICE’s government-funded budget is decreasing? The documents with this SI note that in 2013-14 NICE received £66.4 million in government funding, and that by 2018-19 this had dropped to £51.2 million. I wonder how many other NHS-funded organisations have faced cuts of 23% over five years and quite considerable growth in their business.

The Government argue:

“NICE needs to identify other sources of funding to enable it to continue with its full programme of work”.

The thought of NICE not continuing its full programme of work should, if not send shivers, be an area of concern. Clearly, we need NICE to continue. The department confirmed that charging for TAs and HSTs will enable NICE to continue the full breadth of its important work, while at the same time reducing its reliance on central government funding. Is this justified? I wonder whether it is the thin end of the wedge. What other cuts do we anticipate to other bodies, such as the CQC or Health Education England? Already, organisations being inspected by the CQC, for example, are expected to pay for the privilege. For health settings, this will come out of their annual funding, while for care organisations their funding is part private and part public. How much of their funding will be eroded by potential fee uplifts, and will the Chancellor factor this into his annual grant to local authorities? I think not.

The department found insufficient evidence to conclude that medicines for rare conditions and medical devices would be disproportionately impacted by the introduction of this statutory instrument. Can the Minister tell the House what sort of evidence was gathered to come to this view? What plans are being made to review the impact of this change over the coming years? Will it be reviewed annually or every five years? Will Parliament have a role or will it just be a relationship between the department and NICE? Who is checking whether this impacts on British SMEs? The noble Lord, Lord Hunt, spoke about British SMEs, which are important. The pharmaceutical industry includes a lot of relatively small organisations that are working hard to pull together new drugs, particularly for specialised conditions. What if they decide to market and sell overseas, or even move the business to where the regulation and manufacturing landscape is cheaper and more supportive? Could the Minister tell the House what efforts were made to reach out to equivalent organisations in, say, Australia or Canada, as well as the Medicines and Healthcare products Regulatory Agency, to learn about the problems they have faced in charging for regulation, and to learn from best practice?

Sub-Committee B of the Secondary Legislation Scrutiny Committee asked the department why the Government decided to continue with the proposals considering the consultation outcome. The department explained—I think that all noble Lords will have seen this quote:

“The Government is satisfied that the introduction of charging for NICE TA and HST recommendations will create a sustainable model for NICE, and that the proposed changes to the charging model will mitigate the risk of any unintended and undesirable consequences”.

Efforts to protect small companies are important. However, does allowing small companies to pay by instalments create a potential conflict of interest for teams undertaking appraisals? Can the Minister explain in more detail how this would work?

I find it concerning that the Government have proceeded with this SI, despite 62% of respondents to the consultation disagreeing with the proposals. The rationale for continuing with the SI appears weak. Does it not undermine the intention of consultations to gather and respect the views of industry and experts if, at a stroke, you ignore them? I recognise that the Government have tried. I also recognise that I have asked a lot of questions, and if the Minister is pushed for time or detail, I would be grateful if she would respond by letter.

I thank my noble friend for bringing this matter to the Floor of the House and for leading this short discussion. I too have many questions for the Minister but many of the questions that I would have asked have already been asked by my noble friend and the noble Baroness, Lady Jolly. It seems that our concerns are very similar. I agree with the noble Baroness, Lady Jolly, that when I read through the notes accompanying this regulation, it seemed puzzling that the consultation had produced a majority against this process, and I too was not completely convinced by the Government’s justification. That must lead to something which we can probably call cuts and wanting to save money. To want to save money with an organisation which is so integral to our NHS infrastructure and so important to ensuring the efficacy and cost benefit of and access to medicines and procedures is not a sensible way to proceed.

Some of my other questions centre around a concern about the impact that these charges will have on the jewel in the crown that is the UK-based science industry, particularly at a time when there is already such uncertainty with the dual impact of Brexit and these charges. It seems that the additional costs for a market may diminish the UK’s attractiveness for life science businesses, which has already been mentioned, and may also mean that NHS patients get access to new therapies later than those in other countries across Europe, which my noble friend also alluded to. Has there been an assessment of the impact of these charges on the UK bioindustry and its attractiveness to the international life science community, and of the UK as a location to research, develop and launch innovative medicines?

What will be the impact on patients? The UK BioIndustry Association has stated its concerns that the charges for technology appraisals could either prohibit or delay patient access to medicines in England. This could result in inequalities across the UK, as medicines may be available in Wales and Scotland, where charges for technology appraisals have not been introduced, before receiving approval for use on the NHS in England. That might disproportionately affect patients with very rare conditions, and therefore might also undermine the UK rare disease strategy to ensure equity of access across all four nations of the UK. Have the Government considered not only the financial impact but the potential impact on patient health? Do the Government have a strategy in place to mitigate delays in patient access to medicines that may come from these charges?

I join the noble Baroness, Lady Jolly, in asking whether there will be a review of the impact of this proposal, when that will take place, and when we will learn about the impact of this proposal on NICE and the NHS infrastructure. That will be important. We need to review this, because I fear that it may be a wrong decision.

I thank all noble Lords who have contributed and congratulate the noble Lord, Lord Hunt, on securing this debate. It is an important subject and it is right that we take time to consider it. I know that he takes a keen interest in NICE’s work from his previous role as the first Minister with responsibility for NICE, and it is a privilege to have taken on his mantle some years later.

This year marks a significant milestone for NICE, as it celebrates its 20th anniversary, during which time it has transformed the way in which decisions are made in the health and care system. I echo the comments made by the noble Baroness, Lady Thornton, who referred to NICE as a jewel in the crown of the UK life sciences ecosystem. She is absolutely right that we must ensure that we not only protect it but promote its success. Since its inception, NICE has played a vital role, not only in securing maximum value from health spending but in ensuring that patients are able to benefit from rapid access to effective new drugs and other treatments. The noble Lord, Lord Hunt, hit the nail on the head when he said that that balancing act in the health system is so challenging.

Of course, the NHS is required to fund the treatments recommended through NICE’s technology appraisals and HST evaluation programmes, so that they can be provided if a patient’s doctor says that they are clinically appropriate for the patient. Over the past 20 years, more than 80% of NICE’s recommendations have supported use of the technology assessed, meaning that many thousands of patients have benefited from rapid access to effective new treatments. A less-frequently reported statistic is that 75% of HST applications have also gone through, which is encouraging.

Recent IQVIA research has just been published which showed that, despite some of the frustrations we have with update and access—which is something we are working hard on—the UK is in fact one of the fastest countries in Europe to get products through its regulatory system. We can be very proud of that, and must protect it.

I know that your Lordships will agree not only that it is extremely important that we have a system such as NICE in place to ensure the NHS spends its money in the most effective way possible, but also that it is critical that NICE operates on a sustainable footing so that it continues to be responsive to developments in the life sciences sector, to which noble Lords all referred.

To date, as has been mentioned, NICE’s TA and HST programmes have been funded through government resources but, as is common with government bodies, it is right that NICE considers how to operate to the utmost efficiency, and that those who stand to benefit from services contribute.

This is standard procedure and a standard model for many organisations and ALBs such as NICE. It is standard for the MHRA, the HTA, the CQC and for HTAs in other countries, so we are not operating an unusual procedure here, as the noble Lord, Lord Hunt, mentioned. I was grateful for his support for the charging model.

However, recognising the need for sustainability must be balanced with the imperative to encourage innovation, and the Government and NICE believe that the most appropriate and sustainable model for NICE’s TA programmes in future is for it to levy a proportionate charge on companies that benefit directly from its recommendations. This goes right back to a recommendation of the triennial review of NICE in 2015, so long-term work has been going on in this area. Recognising the importance of getting it right, the Government consulted on the draft regulations. That consultation has been referred to by noble Lords. At that point, as part of those proposals, the Government proposed the 25% discount for small companies. The consultation also sought views on a proposal to enable NICE to recruit appeal panel members engaged in the provision of healthcare in the health services across the UK instead of just England. This has not been mentioned and I know is widely supported, but I just wanted to point out that fact, which we are very pleased about.

As was raised by the noble Baronesses, Lady Thornton and Lady Jolly, there were 78 responses to the consultation, around half of which represented views from the life sciences industry, including pharma companies, industry representatives, consultancies and medtech companies. Other responses came from patient groups, NHS organisations and individuals. Although, as has been said, the majority of respondents—62%—disagreed with the specifics of the proposal to charge companies for making recommendations, the analysis showed that just over half of respondents agreed that life sciences companies should contribute to the cost of developing NICE recommendations, which is why further work was done to develop the charging proposal but refine it.

Respondents also supported, by 59%, a mechanism for reducing the impact on small companies, but felt that the proposed 25% discount did not go far enough. Other more specific concerns were raised about the potential impact on patient access to new treatments, in particular for rare diseases, the impact on NICE’s independence, and the analysis contained in the impact assessment.

The SLSC also picked up on issues in its report, and I will address some of those in response to points raised by the noble Baronesses, Lady Thornton and Lady Jolly. The Government considered the issues raised in the consultation very carefully and carried out further analysis to feed into the final impact assessment. We concluded that it was appropriate to make two main changes to the policy in light of the consultation responses. These particularly dealt with concerns about the design of the charging with respect to SMEs. I know that noble Lords are well aware of those concerns.

There is an increased discount for small companies of 75%, to minimise barriers to the participation of small companies wishing to bring forward new products. I realise that many feel that that did not go far enough but, to address that concern, it also included the new power to enable the Secretary of State to direct NICE in specific cases to calculate charges on what it considers to be the appropriate commercial basis. This provides more flexibility for amending charges, should that be required in future, subject to consultation with stakeholders. For example, we may see different types of innovation, including devices or digital products going through TA programmes, and this provides flexibility for the Secretary of State to direct NICE to propose charges at a level appropriate to those markets. I think that responds to the point raised by the noble Lord, Lord Hunt.

As I mentioned earlier, I should like to go through a couple of points raised by the SLSC in its report. The committee, and the noble Baroness, Lady Thornton, noted the potential for conflicts of interest as a result of companies paying for NICE recommendations. We need to give due credit to NICE’s world-leading reputation. It was founded on independence and transparency in the work it carries out. The charging model introduced includes clear safeguards to ensure that this remains unchanged. For example, with the exception of small companies, companies will be required to pay the full cost up front, regardless of the outcome, and no one directly responsible for making NICE’s decisions will stand to benefit from the income that NICE receives from companies. NICE’s recommendations and decisions on the most appropriate programme—TA or HST appraisal—for individual products are also made transparently and in accordance with its published methods and processes.

Secondly, the committee raised the question of the impact on availability of drugs for rare diseases, as did the noble Lord, Lord Hunt. The Government considered whether products for rare diseases should benefit from a discount in common with small companies, but did not consider this necessary at this point, because companies already benefit from a significant set of incentives to develop drugs for rare diseases, and worldwide orphan drug sales are forecast to grow at 11.3% per year from 2018 to 2024, double the rate forecast for the non-orphan drug market. The noble Lord, Lord Hunt, was right to point out that we are also requesting that NICE review its TA and HST methods, specifically to address challenges to cohorts and data management as we committed to within the voluntary scheme. I have asked Andrew Dillon to ensure that the review takes into account the benefits offered by new treatments for severe life-threatening and rare diseases, so this area will not go untested.

Thirdly, the impact on the attractiveness of the UK as a country to invest in and launch new drugs, particularly at the same time as Brexit, was raised by the noble Baroness, Lady Jolly. It is important to note that the cost to companies of a NICE assessment will represent a very small percentage of the potential revenues that a company will generate from an effective new treatment, but we have still said that we will keep the impact of those costs under review in the context of the wider impact on companies of Brexit. We have made that commitment.

The Government’s overall aim remains that patients in the UK continue to access the best and most innovative medicines and devices and are assured that their safety is protected through ongoing co-operation and the strongest regulatory framework. Your Lordships will understand that our key guiding principles are to ensure that patients are not disadvantaged, that the UK will continue to play a leading role in promoting and ensuring public health, and that the industry must be able to get its products into the UK market as quickly and simply as possible.

Lastly, the noble Baroness, Lady Jolly, also raised the point that the committee queried how the savings generated from the introduction of charges will be used. As a public body, NICE will continue to be accountable to Parliament for how it uses the government money allocated to it, and I assure your Lordships that that will remain unchanged by the introduction of charging.

I close by stressing that the Government share the view that we have heard today about the vital importance of NICE’s work. These matters are very important to all of us. With the changes we have made in response to the consultation comments, I am confident that the introduction of charges and the charging regime for NICE recommendations will enable it to continue to be sustainable and develop its recommendations with the same authority, transparency and impartiality that have been the backbone of its world-leading reputation, and that the UK life sciences sector will remain as strong as it has ever been, if not stronger.

My Lords, I am grateful to the noble Baronesses who have taken part in this short debate. I echo what the noble Baroness, Lady Jolly, said about ensuring that NICE continues with a full work programme, which is very important indeed. I want to reinforce my noble friend Lady Thornton’s vital point about the rare diseases strategy and the issue of access across the UK. Twenty years on, NICE can be congratulated on its work. Remarkably, its first chief executive, Sir Andrew Dillon, is still chief executive. I extend my tribute to him. Not only has he done a great job, but he has also always been accessible to parliamentarians and held open debates, which is much appreciated by Members of your Lordships’ House.

First, I am quite clear that I do not think that there will be a conflict of interest. We can rely completely on the integrity of the NICE progress in relation to that point.

Secondly, uptake and access are fundamental issues. The noble Baroness pointed out that the UK’s position in relation to the speed of regulation is very good, which is pleasing. The problem is that the health technology assessment side is not fast. It is particularly clear from some of NHS England’s interactions with NICE that it is keen to slow down the introduction of many of these new products because, I am afraid, it is concerned about the overall financial package. The problem is that NHS England has no responsibility whatever for UK plc, nor for the health of our life sciences sector; indeed, it has often refused to meet that sector. Given who the chair of NHS England is and given how instinctively sympathetic he is to the issues we are discussing, I hope that we will see a change in attitude. If we really are concerned about the quality of patient care, we must be concerned that access to new medicines and drugs in this country is way behind that in France, Germany and other countries. Most decisions are made in North America, although the pharma industry has other global headquarters. Our reputation for being behind other countries in the adoption of such products is a big problem for future investment.

I have one suggestion. It is very disappointing that, under the original voluntary rebate scheme, the rebate money was essentially paid into the Treasury because the amount to be rebated was discounted in advance. In Scotland, some of that rebate has been used for funding that has been fed back into the Scottish health service to fund new medicines and treatments. Thinking about how we might move on, given that we now have a new rebate scheme, that money should be seen as additional money to be used to encourage the health service. I hope that the Government might think about that in future. The debate has been short but really good.

Motion agreed.