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Baroness Thomas of Walliswood: My Lords, I did not suggest that it was dishonourable. I said that it was a marginal case and not very desirable.

Baroness Jay of Paddington: My Lords, perhaps "dishonourable" was the stronger language used by the noble Lord, Lord Jenkin of Roding.

Lord Jenkin of Roding: My Lords, with respect, I said that it was a breach of faith. And that it most certainly is. The Minister has been the most ready to defend every action of the Government by reference to their manifesto, but there was nothing in the Labour Party manifesto about this.

Baroness Jay of Paddington: My Lords, I hesitate to enter a long debate on this not totally central point of the discussion. But, frankly, what is agreed between officials and Ministers in a previous administration does not in any way constitute a faithful commitment to a subsequent administration.

It is worth reminding your Lordships of the present state of play as regards this issue. The basic requirements of the European legislation have already been introduced into British domestic law. It is the case that in most other member states the directive has been simple to implement because medicines are placed on the market in pre-packed packs with patient information sealed into them. In this country, our pharmacists are required to dispense precisely what a doctor prescribes and not to dispense packages of fixed size with a fixed number of pills chosen by the manufacturer rather than by the doctor. The question has therefore been how best to ensure that patients in this country receive the information which they should have and which now by law they are entitled to have.

For many medicines, the question is already answered. As the noble Baroness, Lady Eccles, pointed out, according to the pharmacy industry's information--I refer to the Association of the British Pharmaceutical Industry 1997 annual report--more than 80 per cent. of medicines are already available in patient pack form and 67 per cent. of prescriptions are dispensed in this way. Where possible, the Department of Health has been working closely in partnership with the industry and the professions to match pack sizes to appropriate treatment lengths to avoid waste and additional costs.

However, over many years NHS patients have benefited and continue to benefit from so called generic medicines. The suppliers of these medicines have kept prices low by supplying them in bulk to pharmacists. Pharmacists then dispense them in the exact amounts shown on any prescription in small containers. It is therefore in respect of those medicines that we need to be sure that patients receive proper information leaflets on compliance or concordance, dosage and other relevant matters. They need that information when they receive their medicines.

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The previous government developed a complex and costly set of proposals--those which we have discussed tonight as the so-called patient pack initiative--in an attempt to cope with the situation. Plans were based on detailed changes to pharmacists' dispensing rules with a view to moving rapidly to a situation where manufacturers' packs could be routinely dispensed for every medicine. The Government's analysis of the money which would be diverted from direct patient care to meet the additional costs associated with these plans would have been up to £60 million extra over the first three years of any scheme and some £15 million a year after that.

I am well aware that the industry has challenged these figures which were provided to it in detail by officials last November. However, the industry has been invited to provide its own detailed costings, but it has not yet done so. The noble Earl was kind enough to inform me that he might raise the issue of sufficient discussion between the department and the industry on these costings. I took the opportunity of his early warning to consult with officials in the department. Frankly, they expressed incredulity at that accusation. Without referring to detailed diaries they suggested that they had had at least half a dozen meetings on this issue with members of the industry. The accusation of lack of information may therefore be somewhat misplaced.

As the noble Earl and the noble Baroness, Lady Cumberlege, asked me to detail some of the costs and explain how they were arrived at, I am delighted to do so. I apologise to the House if it may seem somewhat detailed. Officials at the Department of Health wrote to the Association of the British Pharmaceutical Industry and other groups in November last year with an explanatory note on the costings. The projected cost of the proposals had an overall figure of about £60 million. Those were the figures for the plans developed under the previous government.

The main cost component was an increase in the price of generic drugs. The industry has said that it would have to increase its prices if it were producing medicines in small patient packs rather than in bulk supplies. The industry apparently reached an agreement with the previous government that the cost increase would be up to £25 million.

The alleged justification for these price increases was that there would be a corresponding saving of around £25 million in the allowance paid to pharmacists and dispensing doctors for repackaging medicines; the so called "container allowance". But the actual savings would have been much less than that, according to the department's analysis, and would have been around £16 million to £18 million by the end of the implementation period. This is because pharmacists would relatively often have needed to break the packs in order to meet doctors' prescriptions. Even with some degree of rounding, obviously within clinically acceptable bounds, there will remain a number of cases where the amount the doctor prescribes is not sufficiently close to an available pack size to justify rounding. The net effect of these two factors--the price

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increases and the container allowance savings--would, it was estimated, have been a cost to the NHS of around £8 million by the end of the implementation period.

The other main cost elements were, first, some upward drift in the quantity of drugs dispensed in the NHS as a result of the proposed rounding rules at an annual cost of between £2 million to £5 million. In essence, there would have been more rounding up for acute medicines than rounding down. Secondly, there would have a pharmacists' compensation claim of £9 million for residual stock which became unusable as a result of a switch to patient packs. It was estimated that the cost would be £3 million a year during the implementation period. In addition, increased operational costs for the Prescription Pricing Authority to administer the complex new dispensing and reimbursement rules for pharmacists and dispensing doctors were estimated to be around £3 million a year.

It was estimated that the total cost would have been just under £20 million, with these major components, by the end of the implementation period, or around £15 million once the compensation for residual stock was no longer payable. During the implementation period, the analysis showed that the average annual cost would have been slightly higher, primarily because reductions in the container allowance would have lagged behind increases in prices.

I am sorry if the explanation has been drawn out and long-winded, but I was asked for the details and I am happy to give them. It is important to emphasise that the costs were associated with a particular set of proposals which we inherited from the previous government; the so called patient pack initiative. There is no inherent reason why the price tag has to be attached to having a greater number of prescriptions met by patient packs and certainly not to providing patients with the right information when they need it.

Progress is being made on several fronts. As already mentioned tonight, the pharmaceutical industry, through its representative body, the ABPI, announced last month that it would be moving in any event into patient packs because, as it said in its press release when it made the announcement, it had not struck a deal with the Department of Health. We welcome this--not that it has not struck a deal but that it is moving ahead under its own steam.

The size of the packs which it seeks to introduce has to be determined primarily on the basis of clinical decisions by doctors. As I said earlier, what a GP prescribes should be determined by what is right for the patient and the NHS rather than simply a marketing decision by the manufacturer. We will, of course, encourage close working between industry and the professions to facilitate that.

We are also willing in principle, and this is in the light of the noble Earl's request to me to be constructive, to consider some rounding rules, perhaps downwards, within clinically acceptable limits. But for the foreseeable future there will continue to be a bulk supply of some medicines. To ensure that these medicines are dispensed with appropriate labels for pharmacists and leaflets for patients, the Medicines

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Control Agency will shortly be starting a consultation process on regulations. The NHS needs to be certain that manufacturers and suppliers are providing sufficient quantities of the right quality information.

In conclusion, I should like to repeat that for the Government and the health service the important principle is that patients must get the information they need and the medicines they want in a form which is most clinically and cost effective.

We will indeed work with the manufacturers and suppliers of medicines, with the clinical professions and with pharmacists to achieve what we see as this common aim. But we do not intend to spend up to £60 million of public funds to underwrite a commercially very successful industry to comply with the legal requirement to market its products in a safe and appropriate way.

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