The bill will give the health secretary the power to either:

limit the pric es which may be charged by any manufacturer or supplier to whom the scheme relates for the supply of any health service medicine (Section 30(1)); or limit the profits which may accrue to any manufacturer or supplier to whom the scheme relates in connection with the manufacture or supply of any health service medicine (Section 30(2)).

Drug companies that don't comply may be fined. Section 34 (1) states that a person contravening regulations or directions under sections 30 to 33 may be liable to pay a penalty to the health secretary. This may be:

a single penalty not exceeding£100,000; or a daily penalty not exceeding£10,000 for every day on which the contravention occurs or continues (Section 34 (2)).

The government may raise the penalty by 50 per cent if circumstances warrant it (Section 34(3)), and interest may be charged (Section 34(5)).