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Lord Milverton: My Lords, I support the amendment. It seems crazy to disband pharmacists. One can go into a pharmacy and receive excellent advice. I am afraid I cannot accept the argument from the Liberal Benches; I accept far more the argument put by the noble Lord, Lord Morris of Manchester, and by my noble friend Lord Newton. I hope that the Minister will accept it--or, if he does not, that he will take it back, re-examine it and consider an even more thorough provision.

Lord Desai: My Lords, there are problems with this amendment. My mind is not yet made up but I wish to highlight the problems. The argument from my noble friend Lord Morris is that the community pharmacy gives a bundle of services, one of which is selling drugs. He suggested that because there are all the other services, we ought to subsidise them by having resale price maintenance. I sympathise with that argument but I also feel that to the extent that we can unbundle some of the services, we ought to do so.

If the community pharmacy gives primary healthcare services, advice and so on, could the Government not find a way of making payments for those services, while not having resale price maintenance? There are a number of medicines which people can take without having to seek advice from anyone. Those drugs at least should be available without resale price maintenance because taking advice and receiving primary care are not relevant. It might be possible to lift resale price maintenance from some medicines and not others; that is a technical matter with which I am not familiar. However, to the extent that those services are bundled

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up, it is always a bad idea to link an extra price to other services. If we want other jobs to be done, then they ought to be covered specifically by other devices.

To the extent that we can spread the benefit of lower prices, we ought to do so. If the community pharmacists have other functions to perform, we ought to find ways of paying them for it, but so far as possible we should not mix the two things.

4 p.m.

Baroness Ludford: My Lords, I find myself very much in sympathy with the views expressed by the noble Lord, Lord Desai. The idea of retaining resale price maintenance in one sector troubles me, as an economic Liberal and former employee of the Competition Directorate of the European Commission.

However, while I also agree to some extent with my noble friend Lord Jacobs, perhaps I should point out to him that I have a briefing from the National Council of Women of Great Britain which expresses support at least for the objectives of the amendment. I am identifying a common view on the objectives of the amendment, while some of us are concerned about the means. The need to maintain the valuable community service, including the enlarged community service, through the provision of primary care and advice is something I very much support. As a councillor in an inner city ward, I know that it is not only in rural areas that there is concern about the loss of independently owned pharmacies. There are many elderly people in areas like mine, densely populated areas, who are only mobile to the extent of being able to walk a few hundred yards to their local pharmacy. So there is great concern.

I should welcome hearing from the Minister whether he has considered other means of reaching the objective of helping local pharmacies to stay in business. It may perhaps be through a means which I mentioned at Committee stage, the uniform business rate or enabling local authorities to help. I realise that there is a problem in that it means public money being sought, whereas at the moment the services are cost free, at least to the Treasury and to public resources, because the price is being paid through the retail mechanism. I do not know how to solve that. My hesitation is that I am unhappy about doing so through resale price maintenance in one sector.

Lady Saltoun of Abernethy: My Lords, perhaps I may bore the House for a minute or two with an example of the kind of thing which the Bill may lead to. I live near the village of Braemar in Aberdeenshire. For 20 years we had no chemist in the village, the nearest was 17 miles away in Ballater. A prescription from the doctor had to be put in a locked box and sent down to Ballater on the bus. The medicine had to be put in the box and returned on another bus. Then you had to go and collect it. Sometimes that meant you did not get your medicine until late evening or even the following day.

Last summer, after 20 years without one, we got a chemist in the village. But just across the road is a small supermarket--very small, but one of a large chain. If

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that supermarket can undercut our chemist on such staple items as aspirins, indigestion mixture and so forth, it may very well be that our chemist will no longer find his business viable. He might have to give up. Then we would be back to having the nearest chemist 17 miles away. I think that probably Braemar is not the only village in the country where that kind of situation obtains. So I support the noble Lord, Lord Morris of Manchester, very heartily in his amendment.

Lord Fraser of Carmyllie: My Lords, I am grateful to the noble Lord for returning to the subject on Report. We have already discussed it at earlier stages of the Bill. As my noble friend Lord Newton said, it would appear that here are two government policies in conflict. That is self evident. However, at Second Reading, the noble Baroness, Lady Jay, when asked what was the attitude of the Department of Health, said that the department was neutral on it. I find that an astonishing proposition, particularly now that the Minister for Health himself--and the noble Lord quoted it--said in another place:

    "We want to retain as many local community pharmacists as possible and to encourage trained pharmacists to make a greater contribution to the national health service than they are making at present".--[Official Report, Commons, 28/1/98; col. 131.]

He said later at the same column:

    "We want to maximise the convenience of all potential users of pharmacies, and to encourage and extend the contribution that trained pharmacists can make".

I say to the Government that I regard that as an excellent policy. If they wish to pursue it, I have no doubt that on this side of the House we would give them warm support for greater involvement of pharmacists in relieving the load on so many GPs who are too frequently burdened with requests for advice when patients could obtain the advice adequately and satisfactorily from their local pharmacists.

That is where the conflict lies. It seems absurd not to face up to it. I do not know what the noble Lord intends to do, but it would not be our proposal at this stage to seek to divide the House. Apart from anything else, the way this has been put together makes it an incomplete package. There are later amendments to another schedule and that might be a point at which we could examine the matter further, if necessary.

I hope that we can obtain from the Minister a firmer indication of how the conflict will be resolved. I notice with considerable interest that there is an Early Day Motion in another place which is signed by no fewer than 94 Members of Parliament, of whom 86 are Government Back-Benchers. So the idea that this is simply a matter that has been stirred up from this side of the House is not the case. The signatories to the Early Day Motion have indicated exactly what I understand to be the problem They say that they further note:

    "that the loss of RPM [retail price maintenance] on OTC [over-the-counter] medicines could lead to the closure of many independent community pharmacies, an outcome which would seriously undermine the Government's health strategy and increase the burden on GPs; and the Motion calls on the Government to ensure that a nation-wide network of community pharmacies remains in place to serve the needs of all the community, in particular the elderly, the infirm and mothers with young children".

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Perhaps I may say to those 86 Labour Back-Benchers that it seems to me that they have a good solid point to make. I do not expect that the noble Lord will be in a position to indicate now where the Government stand on this. But I hope that before we return to the matter another day on Report or on Third Reading, we can obtain a clear indication of a resolution of the problem. I hope that it is clear to the Minister, not only from the contributions made in your Lordships' House at Second Reading, in Committee and now on Report, but also from the concerns expressed by a wide section of Members of Parliament, that the Government should recognise that this conflict must be resolved. There is a real concern that community pharmacies should be maintained throughout the country. It is not only extremely important for places like Braemar to have a local pharmacy, the issue is far wider than that. I hope that the Government will at long last seek to resolve it.

The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, first, I thank my noble friend Lord Morris of Manchester for standing in for my noble friend Lord Graham and for putting the arguments so clearly and convincingly. In response to the noble and learned Lord, Lord Fraser, I say at once that we know that this matter will be returned to at a later stage of Report and I shall therefore confine myself to the principles involved in the issue.

This is a matter to which we have given careful consideration and we are mindful of the importance attached to it by a number of interested parties. The Bill does not of course provide for the abolition of resale price maintenance of over-the-counter medicines as has been suggested at times by the press. That is not its purpose. An agreement maintaining resale prices would in due course come to be assessed against the Chapter I prohibition and the exemption criteria in the Bill, as would any other agreement. Nor do the Government dismiss the arguments that have been advanced seeking to demonstrate that resale price maintenance in this sector is in the public interest. We have always understood the important role that community pharmacies play.

The issue is not whether resale price maintenance of over-the-counter medicines should be abolished; the issue is whether the arguments should be looked at again. After nearly three decades, the director general decided that the arguments should be reassessed and sought leave of the Restrictive Practices Court. It is entirely reasonable that the matter should be capable of being reviewed. It would be wrong for us to use the Bill to stop this legal process. It would also be wrong to prevent the arguments from being looked at again. Indeed, we heard a number of important arguments put forward forcefully by, among others, my noble friend Lord Morris. However, as we heard today and in Committee there are forceful arguments on both sides, some put forward by my noble friend Lord Desai and some from the Liberal Democrat Benches by the noble Baroness, Lady Ludford.

We are clear that resale price maintenance ensures access to healthcare on the high street--and on many village high streets as far away as Braemar. Those are

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important issues. We know that independent pharmacies would close if it was merely a matter of repealing price maintenance. We know that access and choice are important--more important than price to 70 per cent. of those people asked. We heard from the noble Viscount, Lord Waverley, from my noble friend Lord Desai, from the noble Baroness, Lady Ludford, and, finally and most convincingly, from the noble and learned Lord, Lord Fraser, that pharmacists have a crucial role to play in developing and delivering the Government's healthcare policy with an emphasis on self-medication.

It is not my purpose today to decide the health policy; my purpose is to look at the Competition Bill. It is not for me to reject or even to take a view on the forceful arguments put both for and against resale price maintenance on this category of product. Let me emphasise again that the issue we are debating in relation to the Bill is not whether resale price maintenance is a good thing and should continue; it is whether the arguments should be capable of being looked at again at this stage. Let me add a further point. For the Restrictive Practices Court to look again at the same issue it would need to be satisfied that the test is met that there is prima facie evidence of a material change in the relevant circumstances since its last decision. That seems an entirely proper process. I do not believe that it is right to use this Bill to cut across the judicial process now started.

If the Restrictive Practices Court were to find again, as it did in the 1970s, based on forceful arguments, that resale price maintenance for over-the-counter medicines is in the public interest, we recognise that there is a case for providing generous transitional arrangements before the Chapter I prohibition applies. It would be wrong for the arguments to be capable, even in principle, of re-examination at the moment the prohibition comes into effect. We agree that if the court maintains the exemption for over-the-counter medicines it is right that there should be a five-year transitional exclusion from the Chapter I prohibition from the date the court proceedings reach a conclusion. That is, of course, likely to be some time off given the nature of the extended reviews.

Furthermore, there is a case, as my noble friend Lord Morris outlined, to remove the ability that the director general would have to propose to terminate the transitional exclusion early should the court find in favour of the continuation of resale price maintenance for OTC medicines. As my noble friend Lord Morris pointed out, that point was raised in Committee by my noble friend Lord Graham of Edmonton and, as mentioned by the noble and learned Lord, Lord Fraser, we shall return to the matter.

I appreciate that there will need to be further debate. But that further debate should come when we reach Schedule 13. In the meantime, given the seriousness we attach to this matter, I hope that my noble friend Lord Morris will be prepared to withdraw his amendment at this stage.

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