Blake Morgan successfully defends NHS England in a £1billion challenge brought against its largest ever medicines procurement

On 18 January 2019, the High Court handed down judgment in the case ofAbbVie Limited  -v-  NHS Commissioning Board (operating under the name of NHS England) [2019] EWHC 61 (TCC). Blake Morgan represented NHS England throughout the claim.

On 19 April 2018, NHS England launched a procurement for the award of contracts for the supply of Hepatitis C (“HCV”) treatments and related elimination initiatives. The Procurement, which is still ongoing, is worth up to £1 billion over a period of up to 5 years, with contracts due to commence in April 2019. NHS England has already made public its ambition for England to be the first country in the world to achieve elimination of HCV earlier than the target set by the World Health Organisation and this procurement is designed to allow this to happen. NHS England engaged specialists in the commercial application of game theory, to assist with the design of the procurement whereby all suppliers are considered across the whole market.

AbbVie, one of only three suppliers of the drugs to be procured, challenged two specific aspects of the rules governing the procurement. The first challenge was to the “dummy price mechanism” (“DPM”) which operated in the Revenue Capped Model (“RCM”). The second, was a challenge to the fixed fee rules in the Unmetered Access Model (“UAM”). The Defendant’s position was that each of these aspects amounted to a breach of the duty of equal treatment and/or were otherwise unlawful. AbbVie sought declarations that the tender documents were unlawful and should be set aside.

The RCM

In the RCM model, the DPM operates to impute a price to a bidder in respect of a particular genotype/patient group notwithstanding the fact that that bidder does not produce any drug capable of treating that patient group. AbbVie argued that the DPM thereby conferred an unfair advantage on a bidder unable to supply part of the market as compared to a bidder that could, thus giving rise to unequal treatment.

The Court concluded that the DPM did not give rise to unequal treatment, setting out that a bidder, unable to supply part of the market, was not comparable to a bidder that could. The Court further held that the use of the DPM, was neither arbitrary or excessive, nor was it introduced to favour or “accommodate” one bidder over another such as to take it outside of the margin of appreciation afforded to NHS England.

The Court also held that the Defendant had a wide discretion to choose award criteria, and that the aims of the RCM, to increase competition, achieve greater value and maximise health benefits, were legitimate ones and so even if there was any unequal treatment, is was justified on objective grounds.

The UAM

Part of the UAM model involves the payment of a fixed fee in return for the treatment of a number of patients which the supplier has committed to treat. AbbVie argued that this rule operated unfairly in that it could require one bidder to supply treatments exceeding the number they had committed to treat, without additional remuneration.

The Court rejected that argument and again found in favour of NHS England deciding that there was no unequal treatment as the same rules applied to all bidders. On the evidence, the Court also held that AbbVie’s value understanding was not one that would be held by a reasonably well-informed and normally diligent tenderer. In the alternative, any unequal treatment did amount to a proportionate means of achieving a legitimate aim and therefore was objectively justified, stating that any discriminatory effect would be modest.

The claim was conducted on an expedited basis given the importance of the subject matter and the fact that the procurement was continuing to run alongside the litigation. The whole case from commencement to conclusion took six months. The Judgment is an important authority on the equal treatment principle and the margin of discretion available to contracting authorities when conducting procurement processes.

Joanne Thompson led on the case with the core team comprising of Kevin Manship, Allan Wilson and Tom Beard. Bruce Potter and Emyr Lewis from the firm are continuing to advise NHS England on the ongoing procurement.

Counsel were Philip Moser QC (Monckton Chambers) and Patrick Halliday (11KBW).