A dose of legal certainty: CMA’s Prioritisation Statement provides guidance for co-operation between suppliers of combination therapies
21 November 2023The Competition and Markets Authority (CMA) published a Prioritisation statement on combination therapies on 17 November 2023 (the Prioritisation Statement) setting out the conditions under which the CMA will not prioritise investigations of information exchanges or agreements related to the provision of combination therapy medicines under the Competition Act 1998 (CA 1998).
The Prioritisation Statement is a response to information from the Association of the British Pharmaceutical Industry (ABPI) and its member companies that competition law concerns are preventing the formation of commercial agreements necessary to enable patient access to combination therapies.
Background
In combination therapies, two or more separate component medicines are used together to treat a disease, comprising of a “backbone” treatment and an “add-on” treatment(s). Often, the backbone treatment is the existing and approved treatment for a given disease, while an add-on treatment is typically developed by a different company either independently or specifically to work in combination with the backbone treatment. The idea being that, whilst each treatment might be effective in isolation, when administered in combination, they add up to more than the sum of their parts.
In order to introduce treatments to the market, suppliers (in this context, the add-on company) must obtain licensing approval from the Medicines and Healthcare products Regulatory Agency (MHRA) and a recommendation from the relevant UK healthcare technology assessment (HTA) agency. In order to be recommended, the new treatment must be demonstrated to be cost effective compared to existing treatments.
As combination therapies rely on two or more, often specialised, therapies they often fail to demonstrate sufficient cost benefits as against a standalone therapy when charged at their standalone prices.
Competition law concerns
In order to address these costs concerns, pharmaceutical companies seeking to launch combination treatments have been keen to explore commercial co-operation to deliver cost effective combination therapies for the NHS. However, concerns around ensuring competition law compliance have limited companies’ willingness to engage in such co-operation agreements.
These concerns manifest in two ways:
- negotiations risk facilitating an exchange of competitively sensitive information between competitors; and
- agreements in relation to price may face scrutiny and potential price fixing allegations.
Where both manufacturers are producing a medicinal product intended to treat the same condition, they are likely to be considered to be competitors such that the above conduct might amount to an infringement of the Chapter I prohibition.
Safe harbour provisions
The Prioritisation Statement aims to remove barriers to discussions by delineating the specific circumstances in which the CMA will refrain from commencing an investigation.
First, certain market conditions must be present, in particular:
- there is a public list price for the medicine as determined by the add-on supplier; and
- a confidential net price for the add-on product is agreed between the supplier and NHS representing the amount paid to the manufacturer when a medicine is prescribed for use by a clinician. This price typically cannot be increased unilaterally by the supplier.
Any negotiations must be carried out according to the negotiation framework stipulated in Chapter 4 of the Prioritisation Statement. Under this framework, parties negotiate to agree an amount per patient (the contribution payment) to be paid from the backbone medicine supplier to the add-on medicine supplier(s) when the backbone medicine is supplied as part of combination therapy. The contribution payment acts as compensation to the add-on supplier for offering their product at a price point low enough for the combination therapy to meet the cost effectiveness threshold.
The protocol sets out a total of five stages a number of which that closely resemble what one might expect when considering entering a commercial agreement, i.e. the submission of a business proposition by the add-on company to the backbone company, negotiating, and signing. However, there is the added step of submission of a dossier to the National Institute for Health and Care Excellence (NICE) by the add-on supplier following the submission of a business proposition and before initiating negotiations.
It is crucial that information exchanged is limited to public information and information classified in Paragraph 4.4 of the Prioritisation Statement, the exchange of which is strictly necessary for the purposes of negotiation and implementation of the agreement. The categories of information in Paragraph 4.4 relate to the combination therapy itself and the operation of the contribution payment, including information about comparators and timelines for HTA approval.
No information pertaining to the confidential net price agreed with the NHS or allowing for the reverse engineering of the confidential net price can be shared. The general principles of the information sharing guidelines apply, such as the limiting of information exchange to what is reasonably necessary and for its specific purpose. Further, the manufacturers must implement appropriate confidentiality rings to ensure that any information exchanged as part of the commercial negotiations is not disseminated more widely than required and/or used for other purposes.
Finally, the safe harbour sets out two hard-core restrictions which will automatically remove the benefit of the safe harbour for any agreement:
- the agreement must not involve any agreement to fix the prices of either product (which must remain individually determined by each supplier); or
- include any provisions that agree or discuss collective action above and beyond the narrow scope of seeking to obtain reimbursement approval for a combination therapy.
Summary
Whilst many of the ideas in the Prioritisation Statement are not novel, and are carried across from the horizontal guidance, this case specific application is welcome. By setting out a clear framework to enable manufacturers to co-operate to ensure that effective combination therapies can be brought to the market without giving rise to competition law concerns, the Prioritisation Statement provides companies and their advisers with additional legal certainty when structuring their discussions.
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