On 17 November 2023 the UK Competition and Markets Authority (the “CMA”) has published a statement confirming that, provided certain conditions are met, it will not prioritise the investigation of commercial negotiations and agreements between medicine manufacturers which aim to make combination therapies available to the NHS.  This statement follows a long-running engagement by the Association of the British Pharmaceutical Industry (the “ABPI”), NHS England and National Institute for Health and Care Excellence (“NICE”) on this issue.  

Combination therapies – treatments involving two or more separate therapeutic agents (“Components”) used together – must meet a ‘cost-effectiveness’ threshold in the same way as monotherapy treatments to ensure that they represent sufficient value for money for the NHS before they are made available to patients.  For any patented medicine available on the NHS, there are typically two prices: a public list price determined by the manufacturer, and a confidential discounted price agreed between the manufacturer and the NHS which meets this ‘cost-effectiveness’ threshold. 

Complications arise with this pricing structure where the confidential price at which an existing medicine (the ‘backbone’ treatment) is sold to the NHS is already at or close to the ‘cost-effectiveness’ limit, such that there is little room to accommodate the cost of the treatment being ‘added on’ to create a combination therapy.  The manufacturer of the ‘add-on’ treatment may therefore be required to lower the price of its own medicine until the combined price of the Components is below the relevant cost-effectiveness threshold.  In some cases, this results in the combination therapy being no longer commercially viable.

The ABPI, its members and other industry bodies such as NICE have made representations to the CMA that commercial agreement between the respective suppliers of the Components is the only means by which the parties can reach a satisfactory solution to the benefit of the NHS and patients.  However, the perceived risks of competition law infringement – specifically around exchange of competitively sensitive information and price-fixing – have to date acted as barriers to the necessary commercial discussions which would enable these potentially life-saving treatments to be developed and made available to the NHS. 

The CMA has confirmed that it will not prioritise investigation of any required exchanges of information during negotiations or subsequent agreements whereby the manufacturer of the already-supplied medicine agrees to pay to the manufacturer of the ‘add-on’ medicine an agreed amount per patient to compensate for the necessarily low price at which it supplies the NHS within the ‘cost-effective’ threshold.  This will be the case so long as the manufacturers creating a combination therapy follow the negotiation framework developed for this purpose by the ABPI and any information exchanged is limited to what is strictly necessary.  Crucially, such information may not include, or allow to be reverse-engineered to obtain, the confidential discounted prices offered by either manufacturer to the NHS for each Component.

The CMA’s statement, which provides welcome and much-needed guidance to suppliers of Components regarding the application of competition law to these vital collaborations, is the first of its kind worldwide.  While competition law is clearly only one challenge faced by manufacturers attempting to bring combination therapies to market, this framework opens the door for a significant increase in the number of treatments available to NHS patients for a range of serious health conditions, including cancer.  It remains to be seen whether other competition authorities follow suit, as well as whether the CMA deems it appropriate to extend a similar self-assessment framework to treatments offered to patients in the private sector.  In the meantime, the CMA’s statement provides welcome clarity to medicine manufacturers and legal advisers on this key issue for the industry.

Authored by Alice Wallace-Wright, Jane Summerfield, and Juliette Parkinson.