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3.45 p.m.

Lord Newton of Braintree: My Lords, I support the noble Lord, Lord Morris of Manchester, in the concerns he expressed. In doing so, I should mention the fact that I am an adviser to the Royal Pharmaceutical Society of Great Britain many of whose members clearly would have a strong interest in the matter. It is a particular pleasure to join forces with the noble Lord over those concerns. Although he and I have been on opposite sides for many years, either at the other end of the building or in this House, we have more often than not been on the same side of the argument--even if I was sometimes restrained from making that as clear as I might have wished.

The noble Lord has set out his case clearly and comprehensively and I shall not take the time of the House merely to reiterate the facts and figures he gave and the points he made. However, I observe that I believe he has made points which cannot be, and I hope will not be, lightly dismissed.

As he indicated in the course of his remarks, what we have here is something with which I became familiar over many years as a member of Her Majesty's former government--a classic case of the need to balance different objectives of public policy between which there is a quite powerful tension. It is of course a proper objective to seek to ensure competition, to encourage efficiency and thus to restrain or reduce prices in this or any other field. But it does not follow that that is an end which can be pursued in all circumstances without regard to other objectives of public policy--in this case the desirability of a strong and viable network of community pharmacies. That has certainly become no less desirable in the light of the recent White Paper--the Health of the Nation--and the Green Paper, with the emphasis which both place on the importance of primary care.

There is to my mind an obvious parallel from the field of social security, which I know even better. Potentially there is no doubt whatever that there are large administrative savings, and in that sense efficiency gains, to be made from the much wider adoption of automatic credit transfer into people's bank accounts, and a move away from the weekly payment of benefit to the monthly payment of benefit. In itself that can be seen as almost obviously desirable. But whenever we looked at that over a long period, we came to the conclusion that the effect on another aim of public

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policy--namely, the maintenance of sub-post offices, especially rural sub-post offices--meant that, to put it mildly, great caution was required.

In my view that is true in this case also. I should be surprised if that view was not shared by current health Ministers, as I am sure it would have been in the previous administration. Indeed, I know that the present Secretary of State has expressed his concerns, as the noble Lord mentioned.

I hope very much that the points raised by the noble Lord will be given most careful consideration by the Minister when he responds.

Viscount Waverley: My Lords, we should not give way to cavalier supermarkets, which often pay scant regard to the consequences. What briefing has the Minister received from the Department of Health? That is the department from which we need to hear an all-encompassing, well thought-through strategy. Until that happens, we should reject this piecemeal approach. Until the Government devise a strategy that protects the public, so that guaranteed, convenient primary care is secured in such a way as to relieve pressure on our beleaguered National Health Service, the present arrangements should stand. We should be strengthening the role of pharmacies, not undermining them.

I wish to put one further question to the Minister. What has changed since the courts decided in the 1970s that similar moves to those proposed in the Bill were against the national interest? We should support the amendment.

Lord Campbell of Alloway: My Lords, I support the amendment. I was involved professionally, as counsel, in one of the monopoly reference cases concerned with pharmaceutical goods. I accept that the day may come when, as a matter of policy, the supermarkets will oust the pharmacies, grocers, butchers and everything else. But that day has not yet come.

I wholly support the spirit of the amendment. The only problem is that it is so drafted as to include many aspects other than pharmacy and the sale of products in local pharmacies. I therefore ask the Government to consider the introduction of a special measure of interim safeguard in whatever terms, albeit for a period of time, at least to hold the position of pharmacists, for the reasons given, so that they may supply the needs of the public and avoid being scattered, with unemployment and all the misery pertaining to it.

Lord Jacobs: My Lords, I remain troubled that the consumer interest is so seldom supported in either House. In this case it seems that the Community Pharmacy Action Group has been very active indeed. Its objective is simply to protect the profits of pharmacies (chemists' shops) in the interests of the community. The group has sent out 14 pages of closely-worded argument to explain how strong its case is. It has even apologised to every Member of this House that it was unable to contact each one of your Lordships individually. It mounted a very strong lobbying campaign. However,

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there is no lobbying or campaigning on the part of the consumer groups. Someone has to speak for them, and I shall try to do so.

The action group claims that the poorest members of society will lose out if RPM is abolished and the prices of branded non-prescription medicines are reduced. It argues that even if prices are reduced by as much as 20 per cent., there will be nowhere within reach for the elderly and mothers with young children to go. Consumer groups, however, do not appear to have supported the amendment or to have said anything about it. It may be that their resources are more limited, or they are not as well organised as this particular pharmacy group.

Pharmacies are basically the distribution arm of the great pharmaceutical companies. If we look at the pricing policy of such companies, it is recognised that they usually charge very heavily for medicines that are under patent. I agree with that approach as they have to fund all the research and development. But just look what happens when medicines that have been under patent for 16 years become free of patent. There is an illness from which I am sure none of your Lordships suffers. It used to be called gout. The charge for the best known branded medicine for treating this condition is £42 per 100 tablets, and one has to take one tablet a day. If I sound like a sufferer, it is because I am. As every pharmacist will agree, the generic product is identical in quality, purity and performance. The charge is £5.50 per hundred tablets. That suggests that not only the pharmacists but the pharmaceutical companies are in a sort of friendly pact to keep prices as high as possible. That cannot be in the interests of the community.

There is, however, a valuable role that some community pharmacies play. They give advice in certain areas to individuals. Some deliver medicines to old people who are unable to get out. So I accept that pharmacies play a good role. If RPM is abolished perhaps the Government should consider the possibility of compensation to those who carry out those special roles in the community. The present situation should not be left as it is, since everybody pays higher prices.

My 40 years of business experience has taught me that, if you have to choose a business from scratch, you should first try to find a monopoly--preferably of a product with an inelastic demand--in other words, however high the price is, people have to have the product. That is to some extent true of medicines. If you cannot find a monopoly--and these days they are very few and far between, I am glad to say--then you should find a product with resale price maintenance. Then you have only to concentrate on giving quality and service and you know that your profits are assured.

A street near to my office in London is about 300 yards in length. There are four chemists' shops in that street, one every 75 yards. If that does not tell noble Lords the position of profitability in the pharmaceutical industry, I do not know what does. It is not high demand that produces four shops in that short distance; it is the fact that for a relatively small turnover they can make very good profits.

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RPM is great for business, but generally speaking it is bad for the consumer. I agree that prices in this country may be favourable compared with those in the rest of Europe. But nobody mentions the United States--for the very simple reason that in the United States the medications that one buys are significantly cheaper. There is no resale price maintenance.

These matters are likely to be considered by the Restrictive Practices Court. Therefore, I recommend that the amendment is rejected and that we leave it to others with more time on their hands to evaluate the issue more carefully.

Earl Howe: My Lords, I spoke in Committee in favour of the amendment tabled by the noble Lord, Lord Graham. I do the same today in support of the noble Lord, Lord Morris. I agree with everything that the noble Lord said. It would be crazy if, as a result of this Bill, we put in jeopardy a community service which is every bit as much a part of primary patient care as is the GP's surgery.

My noble friend Lord Newton is right to draw attention to the need to balance the benefits of different aspects of government policy. This amendment stands absolutely four-square with the Government's wider health objectives. I hope that the Government will respond to the strength of feeling that is in evidence on this issue.

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