Part 1: Controlling cost of health service medicines Section 5: Statutory schemes
Section 5 of the Act amends section 263 (Statutory Schemes) of the NHS Act 2006.
	Section 263(1) provides the Secretary of State with the power to make a statutory scheme for the purpose of:
limiting the prices which may be charged by any manufacturer or supplier for the supply of any health service medicines, or
limiting the profits which may accrue to any manufacturer or supplier in connection with the manufacture or supply of any health service medicines.
	Subsection (2) of section 5 amends section 263(1) of the NHS Act 2006 to add a new paragraph (c) which clarifies that the Secretary of State can make a statutory scheme for the purpose of providing for any manufacturer or supplier of any health service medicines to pay to the Secretary of State an amount calculated by reference to sales or estimated sales of health service medicines.
	Subsections (2)(a) and (3) of the Act amend the consultation requirements under section 263 of the NHS Act 2006. In particular, the requirement to consult with the industry body is amended so that the Secretary of State also must consult with any other person the Secretary of State thinks appropriate. In addition, when carrying out the consultation the Secretary of State must consult about the economic consequences for the life sciences industry in the United Kingdom, the consequences for the economy of the United Kingdom and the consequences for patients to whom any health service medicines are to be supplied and for other health service patients.
	Subsection (4) of section 5 adds a new subsection (5A) to section 263 to enable the Secretary of State by regulations or directions to require a manufacturer or supplier who has not made payments in accordance with the statutory scheme, to make a payment to the Secretary of State within a time period specified in the regulations or directions.
	Subsection (5) of section 5 substitutes section 263(7) which used to have the effect that the power to create a statutory scheme could not be applied to a manufacturer or supplier to whom the voluntary scheme applied even if the price of the medicine they supplied was not controlled by the voluntary scheme. The effect of the amendment is that if, at any time, a health service medicine is covered by a voluntary scheme that applies to its manufacturer or supplier, the power in section 263 cannot be exercised in relation to that manufacturer or supplier as regards that medicine. The Secretary of State would continue to be able to exercise the power in section 263 in relation to a supplier who is not in the voluntary scheme even where the health service medicine has already been subject to controls under the voluntary scheme by virtue of the manufacturer of the health service medicine being a member of the voluntary scheme.
	Subsection (6) of section 5 adds new subsection (8) to section 263 of the NHS Act 2006. This provision provides that any liability of a manufacturer or supplier to pay amounts that arose at a time when the health service medicine was covered by a statutory scheme which applied to the manufacturer or supplier is not affected by the manufacturer or supplier joining a voluntary scheme.