High Court dismisses challenge to pharmaceutical pricing-agreement scheme

In R (British Generic Manufacturers Association Ltd) v Secretary of State for Health and Social Care [2023] EWHC 1725 (Admin), at issue was key decisions made by the Secretary of State in negotiating the Voluntary Scheme for Branded Medicines Pricing and Access (“VPAS”). This is a very important – if not often discussed – mechanism which affects the price of a huge amount of medicines provided as part of the NHS.

For many years, the Secretary of State, with the agreement of the Association of the British Pharmaceutical Industry (the “ABPI”), has set up a voluntary scheme by which manufacturers and suppliers of branded medicines who sign up agree to limit the profits made on the sale of certain branded medicines to the NHS – currently known as VPAS. This voluntary scheme runs for 5 years and is enforced by the powers in s.261 of the National Health Service Act 2006 (the “2006 Act”). These enforcement powers only apply if the voluntary scheme was agreed between the Secretary of State and the “industry body”. The “industry body” is defined in s.266(6) of the 2006 Act as “any body which appears to the Secretary of State appropriate to represent manufacturers and suppliers.”

The British Generic Manufacturers Association (the “BGMA”) claimed that it was also an “industry body” for the purposes of s.261 and 266 of the 2006 Act in relation to VPAS and that, therefore, it must also be a formal negotiating partner alongside the ABPI. It was also said that the ABPI’s interests, which were focused on originator and in-patent medicines, were in fundamental conflict with the BGMA’s interests, which were focused on generic and biosimilar products. As such, any decision to exclude it from the negotiations would be unlawful, unfair and irrational.

In March 2023, the Secretary of State disagreed and decided that the BGMA would not be permitted to negotiate the next VPAS, to run from 2024-2029. In doing so, he took into account a number of factors, including the fact that having three parties at the negotiation would increase the risk that no scheme would be agreed at all. Nevertheless, formal observer status was offered to the BGMA so that they could fully observe the negotiations. The BGMA brought proceedings challenging this decision.

Following a rolled-up hearing on 27 June 2023, Turner J dismissed the challenge. He found that the Secretary of State’s decision to exclude the BGMA was lawful. In particular:

1. The Secretary of State had a wide discretion in deciding who would be a formal negotiating partner under the terms of ss.261 and 266(6) of the 2006 Act.
2. He was entitled to take into account the fact that a 3-way negotiation would inevitably increase the risk of no voluntary scheme being agreed or that, at the very least, there would be potential for delay.
3. He was not satisfied, on the facts, that the ABPI would be liable in practice to deprioritise the interests of generic manufacturers in the course of negotiations – i.e. the BGMA’s members.

In all the circumstances, Turner J found that the Secretary of State had acted entirely rationally when excluding the BGMA as a formal negotiating partner and that he did not take into account any irrelevant considerations.

Yaaser Vanderman appeared for the Secretary of State for Health and Social Care.