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Baroness Cumberlege: I wish to speak to these amendments. I shall resist the great temptation to make a Second Reading speech. However, I wish to ask about something that was not available to us at Second Reading and which concerns the clauses we are discussing. We have in this House the impressive Select Committee on Delegated Powers and Deregulation. It is respected by your Lordships. Its deliberations are consistently thoughtful, wise and appropriate. I know that when I was a Minister I was extremely concerned to meet the requirements of that committee. Never have I known the committee so concerned and for it to use such direct language, urging the Committee to amend the clauses to prevent their bypassing primary

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legislation, and to put the Bill in proper order thus avoiding Henry VIII clauses. What does the Minister feel about the report, and how will she and her colleagues treat the considered and forthright advice given to them? At 20 minutes to 10 this evening the Minister the noble Lord, Lord Hunt of Kings Heath, said in relation to local authorities--I use his words directly--that it was the Government's intention "to use regulatory powers sparingly". If the Government are to use those regulatory powers sparingly in relation to local authorities, I wonder why the Government appear to be so punitive and dismissive of the commercial sector.

Baroness Sharp of Guildford: My name was attached to this series of amendments, I think mistakenly, although I have sympathy with some but by no means all of the proposals, as will become clear when I address the Question of whether the clause should stand part of the Bill. We on these Benches by and large do not believe it right to have statutory regulation of a voluntary scheme. By and large we support the amendments because they make the provision more of a voluntary scheme. Nevertheless, our preference would be to have the clause withdrawn completely from the Bill.

Baroness Hayman: There has been something of the flavour of a Second Reading debate about our discussion on these amendments although I make no complaint about that because we have moved on to an important area of the Bill which concerns the regulation of prices in the pharmaceutical industry. It is right that we should discuss Amendments Nos. 156, 157 and 158 which I shall discuss in a moment. The noble Earl, Lord Howe, also spoke to Amendments Nos. 170 and 175. I shall come to those in a moment.

Perhaps I may respond to two general points. I agree with the noble Baroness, Lady Cumberlege, that one should pay special attention to the Delegated Powers and Deregulation Committee. I said at Second Reading that we would look with care at its report. It made two main recommendations regarding the elements of the Bill on PPRS and statutory reserve powers for companies which were not compliant. One recommendation was that we should have affirmative rather than negative powers when regulations and directions are made under Clauses 26 to 29. I indicated to the Committee when we met last week that the Government accept that suggestion and will bring forward an amendment at an appropriate stage to take affirmative rather than negative powers. Equally, when we come later to a specific amendment on the issue of an appeals procedure--which was of concern to the committee--I can be helpful and will indicate what the Government will intend to do.

Perhaps I may respond to the comments of the noble Lord, Lord Walton of Detchant, about the value of a voluntary agreement. The noble Baroness, Lady Sharp, also referred to the general issue of the desirability of a voluntary rather than a statutory agreement. I reaffirm the Government's view that, in the main, the voluntary agreements that have existed for 40 years have been of great value. They have been to the benefit both of the

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industry and patients in the NHS, as represented by the Government. It is our intention--we are conducting negotiations at present--to continue that tradition. We hope that we shall reach agreement on another voluntary agreement that properly recognises fairness to the NHS in terms of the prices paid for medicines and is fair and reasonable to the pharmaceutical industry as the supplier. One would wish to take into account the need to recognise the very clear demands of funding on research and development that is very important both for the industry's success and the improvements in patient care to which the noble Lord referred. We are aiming to provide another successful voluntary agreement.

Although the noble Lord, Lord Walton, suggested that there had been very few areas of non-compliance, there are concerns that areas of non-compliance are increasing. Companies are failing to submit their financial returns by the due date to enable the Government to assess profit levels and are delaying the provision of information or delaying the repayment of excess profit. One major company has refused to submit financial returns since 1990 and has resisted all approaches to comply. Over the past year, 24 companies have increased product prices without the Government's agreement--at an estimated cost to the NHS of £30 million a year and at the expense of other NHS treatment and care.

There is a risk that if we do not take action to secure compliance, some of the companies that have so far complied properly will cease to do so. In addition, there are issues of transparency. The PPRS has been criticised by the Select Committee on Health, among others, for its lack of transparency. We need to consider that in the light of general government policy and indeed of European law. While we wish to retain a scheme of profit-capped regulation for a further five years and we hope to see that successfully and voluntarily negotiated with the pharmaceutical industry, we also need to have the levers necessary to ensure compliance. I think the noble Lord, Lord Walton, recognised that need.

The Government believe that Clause 26 provides a firm and clear foundation on which voluntary agreements will stand in the future. The voluntary scheme itself will determine what is required for its effective operation. Perhaps I may reassure the noble Earl, Lord Howe, by saying that we intend that the information required will be set out in the agreement which we are seeking to reach with the industry. However, I recognise the concerns that have been expressed that, as currently drafted, Clause 26(3) is perhaps very wide in terms of the information that could be sought. With the Committee's agreement, I should like to take that away and see whether we can come up with drafting that will suitably circumscribe the kinds of information that would be called for.

Perhaps I may deal also with the two amendments that are linked with Amendment No. 156. Amendment No. 158 also covers the information requirements of the voluntary scheme. It would remove from the face of the Bill the reason for information being required under the voluntary scheme. I believe that it is necessary to be

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explicit here and to make plain the reasons why companies will be required to record, keep and provide information. It would not be consistent with what I have just suggested on Amendment No. 156--to see whether we can provide additional clarity--to take on board Amendment No. 158, which would reduce that clarity. Therefore, I would urge the Committee not to pursue that amendment.

With regard to Amendment No. 157, as has been the case for the past 40 years, we envisage only one voluntary agreement to be in place at any one time. However, the term "a voluntary scheme" in Clause 26 (3), as in Clause 26(2), merely indicates that there will probably be a series of such voluntary agreements over the lifetime of the Bill rather than that there will be several specific agreements in place at any one time. Therefore, I do not think that that would be a sensible amendment to make.

Amendment No. 159 seeks to add the words,

"after consultation with the industry body".

I said earlier that we acknowledge the value to be placed on a voluntary agreement between the Government and the pharmaceutical industry. By definition, the content of a voluntary agreement will be decided only with the express consent of both parties to it; that is, the Government and the ABPI. It is therefore unnecessary to provide a further consultation with a body that has already subscribed to and chosen to join the agreement. So I do not think that that adds anything in terms of ensuring that the agreement is voluntary.

Perhaps I may deal with Amendments Nos. 170 and 175.

11.15 p.m.

Earl Howe: I am grateful to the Minister. I did not speak to Amendment No. 170 and I shall not move it.

Baroness Hayman: I am grateful to the noble Earl. I shall follow his example and not speak to it either.

Turning to Amendment No. 175, it is entirely proper that the industry body should be consulted over matters of detail relating to sales of medicines to the NHS. The setting up of the statutory scheme is already subject to contribution. These are matters on which the industry body can contribute.

The amendment as drafted may not be the best way of extending the consultation process. If the noble Lord and the Committee were content, I should like to take the matter away in an attempt to see whether we might produce a government amendment to introduce the consultation process in the setting of maximum prices.

On an issue of clarity, I should not have given my recollection of what the Select Committee said rather than read carefully what it had actually said. The committee did not in fact recommend the affirmative resolution procedure, as I mentioned in my response to the noble Baroness, Lady Cumberlege, other than for Clause 30(6). That is the area in which we should intend to bring forward an amendment in order to conform with the recommendations of the Select Committee.

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