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10.18 pm
The Minister of State, Department of Health (Mr. John Denham): I congratulate my hon. Friend the Member for The Wrekin (Mr. Bradley) on his success in the ballot. He is right to identify as an important issue the cost of medicines to the health service. We are striving to achieve the best return on our use of NHS resources. The use of generic medicines can make a major contribution to achieving that goal.
It is widely accepted that, save for a few examples--treatments for epilepsy, for example, where it can be important that the patient receives the same brand--non-proprietary or generic medicines are as clinically effective as their proprietary or branded counterparts. Generics are generally cheaper and therefore more cost-effective.
We spend large sums on medicines. In 1997-98, total NHS expenditure on drugs was £5.1 billion. Of that, £4.1 billion represented drugs prescribed by family health service practitioners, mainly family doctors. Prescribing by hospitals accounted for just over £1 billion. Those two components have up to now been managed as distinct budgets by different parts of the NHS and subject to different rules and flexibilities. Those are major deficiencies, which our reforms, set out in the "New NHS" White Paper, are designed to address.
Action to secure higher rates of generic prescribing continues to figure prominently. The national performance figure across health authorities of 63 per cent. generic prescribing hides wide variations in performance--the best being about 74 per cent., and the lowest about 49 per cent. Shropshire--in common with other authorities serving predominantly rural areas--is a relatively poor performer. The prevalence of dispensing doctors is likely to be a factor, but there are many other influences that can have a bearing and will vary from authority to authority.
I should caution my hon. Friend on his simple equation between the cost of non-generic prescribing and past overspends in health authority budgets. There can be a wide variety of local variations in performance giving rise to such differences.
We attach special significance to generic prescribing targets. By the end of March 2002, we aim to achieve an average national generic prescribing rate of at least 72 per cent.--the current figure is about 63 per cent.--and at least half the practices currently below 40 per cent. to be brought above it. Currently, about 7 per cent. of practices are below 40 per cent.
I should like to deal now with the first specific issue that my hon. Friend raised--hospital prescribing. Prescribing by hospital specialists is managed by health authorities within their cash-limited budgets. Cash limits are a key mechanism for ensuring that the NHS stays within funding limits approved by Parliament.
Historically, however, prescribing by family doctors has been subject to a separate and distinct funding stream, which is often referred to as a non-cash limited budget. However, even here, the position is blurred, as 50 per cent. of that budget has been covered by general practitioner fundholding and managed as a cash-limited budget. Under the existing system, the risk of an overspend on those non-cash limited costs is managed centrally by the Department of Health.
It is important to realise that, in non-cash limited prescribing costs, although there may not be a pre-determined limit on the amount that may be spent in each health authority, all expenditure at national level has to be met from within the overall funds voted by Parliament for the NHS. Any increase in non-cash limited services above assumed levels has to be managed and may involve reducing or deferring expenditure in another area of the NHS budget. Those costs are therefore not a free good to the NHS.
There is the possibility that, within the arrangements that we inherited, hospital specialists working within cash-limited budgets may view the prescribing budgets of their GP colleagues as a free good. Any arrangement that provides for an artificial separation between clinical and financial responsibilities will almost inevitably result in clinicians making decisions without full knowledge of the financial consequences or decisions by NHS management that appear to disregard clinical efficacy. The current disjunction between clinical and financial responsibility creates fertile ground on which to develop perverse incentives to shift the cost to another budget.
My hon. Friend was right to identify the hospitals' huge influence and impact on the prescribing behaviour of GPs. Once a drug is prescribed by a hospital, the patient's reluctance to change is understandable. Clinicians in secondary and primary care should collaborate, but it is easy enough to recognise the temptation to shift the cost of treatment to another budget. In those circumstances, a hospital specialist may maximise the use of his budget without taking into account the overall impact on the use of NHS resources.
We acknowledge those problems. The introduction of unified budgets, from 1 April, is a key feature of the changes that we are making, which will remove the artificial funding barriers that actively discourage collaboration between doctors working in primary and secondary care. We shall bring together the hitherto separate components for hospital services and GP prescribing, with investment in GP practice infrastructure, in a single funding stream.
Those changes will complement the changes that we are making in management of the NHS. Unified budgets will help primary care groups and primary care trusts to
fulfil their key functions--developing local health services and improving the health of their local populations--by enabling them to decide the priorities across the full range of their responsibilities, in the full light of those budgets and the wider NHS.
If a medicine is judged to be the most appropriate treatment, local mechanisms should be in place to ensure the most cost-effective provision of that medicine. Most health authorities have established forums to deal with those issues--generally through area prescribing committees, which facilitate the exchange of information between primary and secondary care. The role of the committees is being developed to encompass the introduction of primary care groups.
Certainly, we do not expect hospitals to buy in medicines at artificially low prices, taking no account of the true cost to the NHS resulting from wider use in primary care. I am pleased to note that Shropshire health authority is working with its primary care groups and trusts to address those concerns.
I now turn to the second point that my hon. Friend raised--the concerns being expressed about the prescribing activity of doctors, predominantly serving rural areas, who are allowed to dispense medicines to those of their patients who do not have easy access to a community pharmacy. The basic allegation is that the so-called dispensing doctors dispense more costly branded medicines to their patients rather than the cheaper generic versions of equal clinical efficacy. It is suggested that the way in which we pay dispensing doctors influences their prescribing activity.
As has been recognised, there are sound reasons for allowing some doctors to dispense medicines to some of their patients. Generally, doctors prescribe medicines and pharmacists dispense them. Patients benefit from the expertise of two professions. However, in rural areas where a pharmacy would not be viable, GPs may be required or permitted to dispense. About 16 per cent. of GPs in England are dispensing doctors, covering about 3.2 million patients. In those cases the GPs provide a valuable additional service and it is one which is greatly appreciated by their patients. Of course patients must have adequate services available to them wherever they live. Equally we must ensure that those services are provided in the most efficient manner possible.
I have already described the targets that we have set on generic prescribing and we have introduced a number of developments to underpin the work, including the introduction of unified budgets. Primary care groups are being encouraged to make fuller use of other professional expertise, particularly that of pharmacists, to support better prescribing practice. Prescribing incentive schemes will continue to be developed, allowing GP practices to
retain a share of the savings they make as a result of better prescribing. There will also be a role for computerised decision support systems such as PRODIGY.
My hon. Friend has recognised that there are already good examples of improvements that can be secured if practices work together to a common goal.
Dispensing doctors will be subject to the programme of action. In particular, their performance will be subject to scrutiny by their peers in primary care groups, and we expect them to contribute to the development of cost-effective services for their patients within the new financial and management structures.
Shropshire health authority recognises the desirability of improving the prescribing behaviour of its GPs. I understand that the authority is forecasting a 3 per cent. overspend, involving some £1.16 million, against this year's prescribing budget. It has identified the specific need to improve generic prescribing performance by its dispensing practices and has established pilots to seek to develop ways to improve generic prescribing, but in a manner which does not jeopardise practice income and which maintains services to patients.
It is commonly claimed that the dispensing doctor pay system actively discourages the use of generic products. Dispensing doctors are paid by a mixture of fee per prescription item and an on-cost allowance of 10.5 per cent. of the list price of drugs dispensed. It is argued that there is an in-built incentive to use higher-cost drugs because they get paid more for doing so. The evidence is not clear, but the perception is there, that doctors may be influenced in their prescribing decisions. That is recognised by professional representatives and, as my hon. Friend said, back in 1996, the then General Medical Services Committee of the British Medical Association suggested that a more appropriate method of payment would be by a higher professional fee alone, which would provide the same total amount of remuneration as at present provided by fees and on-costs combined.
I recognise that there may be merit in arguments that we should underpin our basic strategy by removing anomalies within dispensing doctor pay arrangements, but it a complex issue and one that we are looking at. I will reflect carefully on the points made during tonight's debate.
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