Court of Appeal considers the legality of policies

In Bayer Plc v NHS Darlington Clinical Commissioning Groups [2020] EWCA Civ 449 the Court of Appeal had to consider the legality of a policy issued by NHS Clinical Commissioning Groups ("CCGs”) in the light of EU law.  The court concluded that a policy which would permit the prescription of Avastin, an off-label drug for the treatment of wet age-related macular degeneration ("WAMD”), thereby resulting in significant cost savings for the NHS, as compared with licensed alternatives for the treatment of WAMD, was lawful.

The key points are:

• A policy should be construed in accordance with EU law and domestic legislation.
• The fact that one of the ways in which a policy might be implemented is unlawful does not mean that the policy itself is unlawful. It is sufficient if there are lawful means of implementation that are both realistic and (at least in outline) envisaged at the time that it was promulgated.

Background

Bayer Plc and Novartis Pharmaceuticals UK challenged the lawfulness of a policy adopted by a number of CCGs, which asked NHS Trusts, servicing the CCGs, to use Avastin as the preferred treatment option for WAMD (the "Policy”). The use of Avastin (or in its compounded form, CB) was not licensed for WAMD but was recommended as being a cost effective treatment.

The National Institute of Clinical Excellence’s Guidelines (the “NICE Guidelines”) concluded that there was no significant difference between the effectiveness of CB and licensed alternatives and the General Medical Council (“GMC”) Guidance stated that where there was no distinction in treatment, clinicians should consider costs when recommending a particular treatment.

The companies argued that implementing the Policy would result in a breach of EU legislation regulating the marketing and manufacture of medicines and the associated implementing domestic legislation. Whipple J at first instance held the Policy to be lawful and the companies appealed. The Court of Appeal rejected the appeal. In doing so, the court considered four potential modes of CB supply under the Policy.

• Mode 1: where the hospital would use Avastin in its uncompounded form (although the Court held that the Policy had not envisaged the use of Avastin in this manner in any event).
• Modes 2 and 3: supply of CB by pharmacies
• Mode 4: where a third party entity (not a pharmacy) provided CB to the Trusts.

Issues on appeal

The main questions before the court were:

Did the Judge get the test for reviewing the lawfulness of the Policy wrong or wrongly apply the test?

The court disagreed with Whipple J’s formulation of the test for the lawfulness of the Policy, namely, whether the Policy was “realistically capable of implementation by the NHS Trusts in a way which does not lead to, permit or encourage unlawful acts?” and concluded that the correct formulation, based on R (Letts) v Lord Chancellor [2015] EWHC 402, was “whether the Policy would (when construed objectively and purposively) lead to, permit or encourage unlawful acts”.

In the court’s view the Policy would realistically only be implemented with CB either being obtained from an NHS pharmacy (Modes 2 and 3) on the one hand or from a commercial compounder (Mode 4) on the other. Modes 2 and 3 were lawful. The court was unable to come to a conclusion on the lawfulness of Mode 4 but was willing to assume it was unlawful.

The companies argued that since the Policy could be implemented through Mode 4, the Policy was unlawful. However, the court concluded that the Policy could not be unlawful, just because it did not prescribe the lawful alternative and proscribe the unlawful. It was sufficient that there were lawful means of implementing the Policy which were realistic (at least in outline) at the time it was promulgated.

Was the Judge wrong to find Modes 2, 3 and 4 to be potentially lawful?

(a) Is CB a modification of Avastin such that when it is supplied under Modes 2-4 it is necessarily a new placing on the market? Is there in any event a placing on the market in relation to Modes 2-4 because there is a release into the distribution chain for each of these modes?

The court followed the decision of the Court of Justice of the European Union (“CJEU”) in Novartis Pharma GmbH v Apozyt GmbH (“Apozyt”), which established that the compounding of Avastin to produce CB would not be a “placing on the market”, and therefore not require a marketing authorisation, provided:

(i) there was no modification to the biological, chemical or physical attributes of the product and

(ii) the compounding was carried out solely on the basis of individual prescriptions (the “Marketing Exemption”)

The CJEU also concluded that a manufacturing authorisation was not required for the preparation of CB where compounding was carried out by pharmacists in dispensing pharmacies solely for retail supply (the “Manufacturing Exemption”). Individual prescriptions evidenced that the supply was for retail purposes and not wholesale distribution.

The Marketing Exemption and the Manufacturing Exemption are collectively referred to as “the Apozyt Exemption”.

The court concluded that, pursuant to the Apozyt Exemption, Modes 2 and 3 did not constitute a “placing on the market”.

The court further concluded that while the Policy did not appear to deal with the mechanics of an individual prescriptions system, the companies had failed to show that the implementation of such a system would be unrealistic.

The court could not come to a conclusion on the lawfulness of Mode 4 but did not consider this necessary to decide the appeal.

(b) Does the Policy unlawfully undermine the Directive (including if all the supply is done under the compounding exemption in Article 3 of the Directive?)

The companies argued that even if the Trusts’ use of CB to treat WAMD in accordance with one or more of the four modes could be brought within the terms of the Apozyt Exemption, “the invariable and systematic use” of the exemption would undermine the scheme of the Directive. The court concluded that this would have the effect of calling into question the Apozyt Exemption in circumstances where the CJEU had already accepted and validated the exemption. Further the court found that the Apozyt Exemption was not limited to small scale preparation and supply of CB. The limitation which the CJEU placed on the scope of the exemption was based not on scale but on the “downstream” or “retail” nature of the supply as manifested by the requirement for prior individual prescriptions. The court found that it did not need to reach a decision on safety as the NICE Guidelines had concluded that such use was safe and that conclusion was not challenged.

(c) Is the Policy contrary to the General Medical Council’s Guidance (the “GMC Guidance”) and if so does that make it unlawful?

Under Section 1 of the Medicines Act 1983, the GMC promotes and maintains proper professional standards. Under the GMC Guidance, doctors should take into account the NICE Guidelines and should usually prescribe licensed medicines. However, doctors are permitted to prescribe unlicensed medicines, where necessary, based on an assessment of individual patients and use resources efficiently for the benefit of patients and the public. In the light of the NICE Guidelines indicating that there are no clinically significant differences in the effectiveness and safety of Avastin as compared to its licensed counterparts, the GMC concluded that it would not be a breach of good medical practice for a clinician to prescribe Avastin off-label as it is cheaper than the licensed alternatives.

Conclusion

Public bodies including CCGs are not required to specify the lawful manner in which their policies can be implemented. As long as there is a lawful option to implement a policy, and the CCGs do not recommend an unlawful course of action, the policy will pass the threshold of lawfulness.