Pharmaceutical companies will have less control over how their medicines are used, as the Court of Appeal rubber-stamps a controversial cost-cutting policy for the NHS.

In a recent decision, the Court of Appeal ruled that, where there is adequate clinical evidence, healthcare providers can procure and regularly use medicines "off-label" on grounds of cost, despite authorised alternatives being available. The Court of Appeal also followed the Court of Justice of the European Union (CJEU)'s approach by allowing for compounding (aliquoting) of a medicine when done in a pharmacy on the basis of a prescription, and ruling it does not constitute "placing on the market" nor requires a marketing or a manufacturing authorisation.

Until now, the circumstances in which a medicine might be used outside of its approved indications were thought to be one-off, special cases – eg where there is no known alternative, or that alternative is impossible to procure. UK health providers may now be prepared to do it on a larger scale.

It's the economy, stupid! 

In Bayer PLC v NHS Darlington¹,  the Court of Appeal decided it was lawful for clinical commissioning groups (CCGs) to adopt a policy of offering an anti-cancer drug, Avastin off-label as the preferred treatment option for wet age-related macular degeneration (WAMD) on grounds of cost. 

This was despite alternatives – Bayer's Eylea and Novartis's Lucentis, both authorised for treatment of WAMD – being available. Furthermore, the use of Avastin (marketed by Roche) in WAMD requires dividing into smaller portions (in the judgment referred to as "compounding"²). 

The Court of Appeal decision is impossible to understand without the following three facts:

• First, the active substances in all three products are different, but they are all inhibitors of the vascular endothelial growth factor (VEGF) – ie they prevent formation of new blood vessels (angiogenesis). This helps with slowing down tumour growth by depriving it of nutrient-bearing blood supply (Avastin's approved indication), but also with abnormal blood vessel growth in the eye that occurs in WAMD (Eylea and Lucentis' approved indication). NICE found that there were "no clinically significant differences in effectiveness and safety between the[se] different anti-VEGF treatments".
• Secondly, equivalent doses of Eylea, Lucentis, and Avastin, cost, according to published price lists: £800, £550 and £28, respectively.
• Thirdly, the commercial context of this case was quite unusual. Roche had an interest in both Avastin and Lucentis, the latter being marketed in Europe by Novartis under a licence from Roche. Had this not been the case, Roche might have applied to extend Avastin's marketing authorisation to cover WAMD, and this case would never come to be.

How the case unfolded

Bayer and Novartis brought judicial review proceedings in the UK in November 2017. They were  concerned about a policy issued by a group of Clinical Commissioning Groups (CCGs) in summer of 2017, asking NHS Trusts to offer Avastin to patients with WAMD as the preferred treatment option over licensed (but more expensive) medicines with a view to save costs (the CCG Policy). 

CCGs are statutory corporations, responsible for the commissioning of health services from individual hospitals and clinics so that they can be offered as part of the NHS. CCGs mostly commission services from NHS Trusts. CCGs (as 'customers') expected their NHS Trusts to comply with the CCG Policy. 

Bayer and Novartis' case was that the CCG Policy is unlawful. It was dismissed by the High Court and came before the Court of Appeal in March 2020.

What the law says

It was central to the Appellants' case that implementation of the CCG Policy would lead to breaches of EU law (and UK implementing legislation) regulating marketing and manufacturing of medicines. 

In particular, the Court of Appeal considered the Directive 2001/83/EC (implemented in the UK by the Human Medicines Regulations 2012) which, together with Regulation (EC) 726/2004, establishes the regulatory framework for medicinal products in the EU (and the UK).

The question was whether activities contemplated under the CCG Policy offended any of the following requirements:

• Marketing authorisation requirement: No medicinal product may be placed on the market without a marketing authorisation (Directive 2001/83/EC, Article 6(1) and Regulation (EC) 726/2004, Article 3(1)³). 
• Manufacturing authorisation requirement: Manufacture of medicinal products is also subject to an authorisation (Directive 2001/83/EC, Article 40(1)). Such authorisation is required for both total and partial manufacture, and for the various processes of dividing up, packaging or presentation, unless such preparation, dividing up, changes in packaging or presentation "are carried out, solely for retail supply, by pharmacists in dispensing pharmacies or by persons legally authorised in the Member States to carry out such processes" (Directive 2001/83/EC, Article 40(2)bis). 
• Wholesale dealer authorisation requirement: Wholesale distribution is subject to an authorisation to engage in activity as a wholesaler in medicinal products (Directive 2001/83/EC, Article 77(1)). 

Part of a European dispute

It is important to realise that this case was part of a long-running European dispute. Health providers across Europe realised the cost differential between Avastin and licensed alternatives, and the use of Avastin for WAMD off-label became widespread. 

This led to two cases in Italy and one in Germany, which were referred to the CJEU for preliminary ruling. In the first of those cases, Novartis v Apozyt, C-535/11, which came before the CJEU in 2013, the CJEU developed the "Apozyt exemption" on which the Court of Appeal based its reasoning in the UK proceedings. 

Apozyt was a compounder - a commercial entity, preparing and supplying single doses of Avastin in pre-filled syringes to pharmacies in Germany who then supplied it to doctors for treatment of WAMD. Apozyt was not a pharmacy, but argued that they are, under Directive 2001/83/EC, Article 40(2)bis, a person "legally authorised" in Germany to carry out their activities, and, in any event, their compounding was carried out "in each case on the instructions of a pharmacy which has a doctor's prescription for each patient."

The CJEU ruled that the supply of Avastin by a compounder to a clinician: 

• does not constitute "placing on the market" and therefore does not require a marketing authorisation, provided it: does not result in any modification of the medicinal product, and is carried out solely on the basis of individual prescriptions, and 
• does not require a manufacturing authorisation, provided that it meets the requirements of Article 40(2)bis –  ie the compounding is carried out: in a "dispensing pharmacy" or by a person legally authorised to carry it out, and it is carried out solely for retail supply. 

Meeting the second requirement meant also that the requirement for a wholesale dealing authorisation fell away. 

When the case came back from the CJEU to the German court, the court ruled that aliquoting does not result in any modification of the medicinal product, as it does not result in a "modification in its composition". The German court indicated that they would accept there was a modification if Novartis could prove "modification in the biological, chemical or physical properties of the product […] if as a result quality, efficacy and safety […] would be significantly impacted."  

Applying the Apozyt exemption in the UK

Contamination is not modification

When applying the Apozyt decision to this case, the Court of Appeal found that the compounding of Avastin (ie aliquoting) involves no modification that would take it outside the Apozyt exemption⁴. The court dismissed the Appellants' arguments that compounding may result in unintended modifications arising from quality control failures – eg as a result of contamination, saying that such failures would be governed by the domestic quality control regime governing compounding activities, where EU law has no legislative competence. 

Prescription is the limit 

The Court of Appeal also helpfully interpreted the CJEU ruling in Apozyt with regards to whether the prescription must exist at the moment of compounding, or at the moment of supply. Since the CJEU said the activity must be carried out "on the basis" of an individual prescription, the Court of Appeal ruled that the compounding should not be carried out unless and until a prescription is in existence. 

This, in itself, does not prevent mass-production, but requires the compounder to have appropriate processes in place. 

Vague is good

The CCGs did not specify, how the NHS Trusts should source Avastin for treatment of WAMD – and they must have counted their lucky stars when it came to these proceedings. The Court of Appeal confirmed the High Court's finding that as long as there was one lawful way to comply with the policy, the CCG Policy was lawful. 

It did not matter that the CCGs did not contemplate the lawful way to implement the policy at the time. For example, there was some evidence that the CCGs did not think that Avastin may only be compounded in response to an individual prescription. 

The Court of Appeal found that the CCG Policy can be lawfully implemented in three ways, provided the requirements of the Apozyt exemption are satisfied:

• In-house pharmacy: where Avastin is compounded by an NHS hospital pharmacy to treat a patient within the same hospital.
• Intra-NHS pharmacy: where Avastin is compounded by an NHS hospital pharmacy to treat a patient in another NHS hospital.
• Single-vial use: where the required dose is drawn out of the Avastin vial and the rest of the product discarded (this was not contested by the Appellants). 

The court also considered one further scenario:

• Non-pharmacy compounder: where Avastin is compounded by a commercial provider who is not a pharmacy. In this case, the court concluded on the basis of the evidence before it (there was not enough evidence on what commercial provider could be used), that it is unclear whether this mode of operation is lawful. The Court was able to conclude that such a compounder could rely on the Apozyt exemption in relation to the marketing authorisation requirement, but the parties did not refer the court to any UK legislation that would authorise compounders, other than pharmacies, to undertake this activity within the meaning of Directive 2001/83/EC, Article 40(2)bis, contrary to what was the case in Germany.

Reminder: regulation of medicinal products does not extend to delivery of medical care

The Court of Appeal highlighted that prescribing decisions are made within the relationship between the patient and the treating healthcare professional and the definition of health policy and delivery of health services and medical care is the competence of the Member States. 

Article 4(3) of the Directive 2001/83/EC makes it clear that the EU's harmonising legislation "shall not affect the powers of the Member States' authorities either as regards the setting of prices for medicinal products or their inclusion in the scope of national health insurance schemes, on the basis of health, economic and social conditions." Almost identical wording can be found in Regulation (EC) 726/2004, Article 1. 

Point to consider: cost-benefit analysis of pursuing second medical use patents

Second medical use patents (where the invention is the use of a known active substance for a new indication) exist to incentivise pharmaceutical companies to continue looking for new uses for their products: the benefits include 20+ years of monopoly for use of that substance.

Pharmaceutical companies may now want to give more weight to established off-label use, when evaluating targets for development of medicines for second medical use.

¹ EWCA Civ 449

² Avastin is commercially supplied in 4ml glass vials, whereas the amount required for WAMD is no more than 0.1ml. Before it is used for WAMD, the Avastin vial is divided between a large number of syringes. The process of doing so is known as "aliquoting", but in the judgment and EU law it is referred to as "compounding" (which in EU law broadly means re-packaging of medicines), and the entities that perform it are referred to as "compounders".

³ In Apozyt, CJEU ruled that even though Avastin is a biotechnological medicine falling within scope of Regulation (EC) 726/2004, since compounding does not involve any of the biotechnological processes listed in Annex 1 to that regulation, compounded Avastin does not require authorisation under Regulation (EC) 726/2004. It is still subject to requirements of Directive 2001/83/EC.