The Voluntary scheme for branded medicines pricing and access (“VPAS”) is a voluntary agreement that regulates the price of the vast majority of branded medicines sold in the UK (including branded generics and biosimilars). VPAS is critical to the commercial interests of most innovative pharmaceutical companies operating in the UK. It has traditionally been negotiated and agreed upon by the Association of the British Pharmaceutical Industry (“ABPI”) and the Secretary of State for Health and Social Care (“SoS”).
These negotiations take place pursuant to Sections 261 – 263 of the National Health Service Act 2006 (the “Act”), which permit the Secretary of State to agree to a voluntary scheme with “the industry body.”
The current VPAS expires at the end of the year, and is set to be replaced by a new scheme in January 2024. Negotiations between the ABPI (as the industry body) and the Department of Health in respect of the new VPAS commenced on 4 May 2023.
The British Generic Manufacturers Association (“BGMA”) has brought a judicial review to challenge the decision taken by the SoS not to include BGMA in these negotiations.
BGMA argues that the VPAS not only affects branded innovator products (whose interests are traditionally represented by the ABPI) but also branded generics and biosimilars. It argues that the relevant “industry body” in respect of those products must be BGMA and not the ABPI. According to BGMA, it must therefore have a seat at the negotiating table.
The SoS has stated that he prefers to deal with one “industry body” in the negotiations – namely the ABPI – and would only grant BGMA “observer status” in the current negotiations.
The ABPI is also involved in the case as an interested party.
While the detailed grounds of the SoS and the ABPI are not yet available, we note the following initial observations from the court papers currently available:
- The application for permission to apply for judicial review will be rolled up with the substantive claim. In other words, if the Court grants permission then the substantive case will be heard at the same time.
- BGMA applied for an expedited timeline, which the Court has granted. Given that the preparatory steps set out in the Court’s directions will not be completed until the week commencing 12 June 2023, it is likely that the hearing will take place in late June 2023 (although the timing is not totally clear).
- It appears the SoS offered observer status to BGMA for the VPAS negotiations on condition that BGMA discontinue any legal proceedings. BGMA rejected this.
- It appears to be common ground between the parties that BGMA does indeed represent the interests of manufacturers of branded generics and biosimilars. The SoS, however, has said he wishes only to negotiate with a single industry body (rather than multiple bodies) – on the basis that this is most advantageous to the interests of the NHS – and has the discretion to do so. The SoS believes the appropriate body here must be the ABPI.
- BGMA contends that:
- Section 261 of the Act does not require, nor provide the discretion for, the SoS to select and deal with a single body. According to the claim, the SoS has therefore made an error of law, given consideration to irrelevant factors, and has frustrated the relevant statute. Rather, according to BGMA, the Act requires the SoS to make a judgment as to whether a body is “appropriate” to represent a section of the industry in negotiations. The SoS has failed to carry out a reasonable and objective assessment of who the relevant industry body/bodies is/are here.
- In the alternative, if the SoS does have discretion to select the relevant industry body/bodies, then in this case the SoS has exercised that power unreasonably, unfairly and incorrectly.
We will continue to follow this case closely and provide updates. At this stage, given the claim is now expedited, we imagine the outcome will be known by mid-Summer. In commencing negotiations already (and only with the ABPI), the Department of Health seems to have taken a pragmatic “continue as before” approach, unless and until the Court requires it to change tack.