Select Committee on Trade and Industry Minutes of Evidence


Examination of Witnesses (Questions 280 - 299)

TUESDAY 27 APRIL 1999

DR J PATTERSON, DR A HESKETH AND DR D BRICKWOOD

  280. Equally, on a drug by drug basis, therefore volumes do not really come into this, the aggregate argument does not come into this, as far as Britain is concerned, because we are paying too much for drugs which we consume in the same amount as the French do.
  (Dr Brickwood) You have to look at the total life of a brand as well because there might be a difference during the patent stage; but equally, if you look at France, there is not a developed generic market. In the United Kingdom we have a developed generic market, which is encouraged through generic prescribing with doctors, and is very commodity based. When you look at the total picture there are differences in the phase of the product. So there may be benefits, which are gained in the generic phase in the United Kingdom market, that are not gained in the French market.

  281. So the price in Britain for generic and non-generic drugs would reduce the level of price in the United Kingdom to something like France? Is that what you are telling us?
  (Dr Brickwood) And maybe lower after the end of the patent life.

  282. I thought you sold generic drugs during the patent life as well. Did you not say that to Mr Butterfill?
  (Dr Brickwood) No, no. If that is what you believe—
  (Dr Patterson) He gave one specific example of a product which was black-listed a number of years ago. Generally speaking—
  (Dr Brickwood)—generics are not sold in the patent life. That product was beyond its patent life.
  (Dr Hesketh) If I could give a definition of generics, a generic is sold by anybody after the patent expires.

  283. If we are talking about drugs during the patent life, so there is no generic in it, on the one hand, the French do not prescribe more than the dose which would be prescribed in the United Kingdom and, therefore, we are dealing with a specific drug in terms of roughly the same volumes. Would that be correct? Yes or no?
  (Dr Patterson) They would give two drugs for high blood pressure instead of one, quite frequently. That is the way the increase goes.

  284. On the other hand, if we are only getting one drug for high blood pressure in the United Kingdom, would we be getting more or less of that drug than the French?
  (Dr Patterson) The dose is roughly going to be the same.

  285. So high blood pressure is treated with the same drug in both countries and roughly in the same way. The only problem is that I, as a British taxpayer, pay more for it. Is that right? Let us get that established.
  (Dr Patterson) You would have a higher price for some of them, yes, but not all of them.

  286. You are telling us that the reason why we are paying more is because there are greater volumes of the drugs, but we now establish that the dosage question brings it to a different position altogether.
  (Dr Patterson) We are saying that the French Government insists on paying us a lower price because they see a higher volume. It is the other way round.

  287. A higher volume in aggregate but not in particular.
  (Dr Brickwood) May I give you some figures about the per capita sales in pharmaceuticals in 1997. For France it was £240 per person; in the United Kingdom it was £154 per person.

  288. With respect, does that mean anything at all?
  (Dr Brickwood) It means that in the United Kingdom the amount spent per head on pharmaceuticals is less than in France. We seem to be going into a French/United Kingdom argument.

  289. You told us that it was 2.4 items per visit and in the United Kingdom it is 0.8 items per visit, so that in France we should be talking about £450 million, not 240. Is that not correct? On the same rough and ready pro rata basis that you are trying to give me at the present moment.
  (Dr Brickwood) If you want to do the mathematics like this, you can do it like this.

  290. It is not really very convincing either way, that is the point. Global figure are largely meaningless. But what we do know is that we are paying rather more than we should for the fewer number of drugs that we seem to consume.
  (Dr Brickwood) I think per drug item is your argument.

  291. When it suits you, you argue in the general, and when it suits you, you argue in the specific. Then you complain about the fact that I multiplied by 3 and got 450, which is nearly twice as much as what you were saying before. All I am saying is that I do not think your arguments are very strong. They do not stand up to very close scrutiny of a generalised claim, the like of which you are advancing at the moment.
  (Dr Patterson) But if you are suggesting, therefore, that the United Kingdom prices should come down to the French level, then your same argument could be true that we should go down to the Greek level, which has the lowest price in Europe. Our argument is that we are expecting a fair return for our products in the United Kingdom. We have the ability only once to price our products, which is at entry, and our profits are capped under the PPRS scheme, so there is a clawback by the Government of any excess profit we make, which is capped to the average of the FT 350 written on capital.

  Chairman: I have to say that the British record on regulation and capping of companies, certainly the research we did with utilities some years ago suggested that it is not a state of the art operation in every circumstance. Let us put it no stronger than that.

Mr Butterfill

  292. May I press you on one thing. I gave you the example of DF 118 as a specific example. You are saying it is a one-off; the only example of a drug that is in patent, which is being sold as a generic. I do not believe that to be so. There are surely many other drugs which are being sold as generics which are still in patent, particularly if they are on the limited list.
  (Dr Brickwood) In that specific case I do not believe that the DF 118 is in patent.

  293. It was at the time.
  (Dr Patterson) I can tell you that from my company's perspective in the United Kingdom we do not sell generics which are in patented products, nor do most others. What happened there was that the Government unilaterally decided, on the black-list, to remove certain products from reimbursement in the National Health system; and in so doing obviously somebody made some changes, that I am not familiar with, to try and circumvent. We are not in that situation here. The products for breast cancer, hypertension, anaesthetics, those kinds of products have never been black-listed. We are talking about serious medicines for serious diseases. We do not sell the generic alongside the patented product.

  294. That applies to all of you, does it?
  (Dr Brickwood) Yes.

Mr Laxton

  295. May I pick up on a couple of points before I move on to the issue of product labelling and packaging. You said, Dr Patterson, that the lowest prices for drugs were in Greece. In terms of that, are you trying to indicate to us then that perhaps in terms of your pharmaceutical sales to Greece they are almost loss-leaders, or that your profit level on them is absolutely minimal in comparison to here in the United Kingdom?
  (Dr Patterson) I did not say they were either loss-leaders or minimal.

  296. I was just putting that forward as a proposition.
  (Dr Patterson) We make a lot less return on those products but we do not sell them at a loss.

  297. The other question I would like to pick up as well, in response to the line of debate that Mr Butterfill was exploring with you, was about the issue of whether there is some form of subsidy which keeps pharmaceutical companies here in the United Kingdom. There is a fair amount of evidence around that although R&D is strong, in terms of the involvement of pharmaceutical companies here in the United Kingdom, they are putting out their manufacturing processes, particularly to areas such as Ireland, for example. Is there any particular reason for that? Are your companies involved in that process? Of shipping out the manufacturing process from the United Kingdom to Southern Ireland?
  (Dr Brickwood) I think it is fair to say that countries around Europe are obviously interested in the economic balance that they have, their trade balance. Methodologies of encouraging inward investment are used and they vary from country to country. Ireland has its approach and other countries have their approaches. It happens.

Chairman

  298. How do your companies respond to the blandishments of Ireland? Has Astra Zeneca established a plant yet in Ireland?
  (Dr Patterson) We do not have any manufacturing in Ireland.

  299. Glaxo?
  (Dr Hesketh) We do manufacturing in Ireland. We manufacture in a number of places around the world.


 
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