Competition Law Focus on Healthcare Markets Continues with Welcome (but Limited) CMA Guidance on Collaboration for Combination Therapies


On 17 November 2023, the Competition and Markets Authority (CMA) published guidance offering reassurance that collaborations between medicine manufactures to make combination therapies available on the NHS will not face competition law challenge, provided certain conditions are fulfilled.

The guidance, which comes in the form of a “Prioritisation statement on combination therapies” has been published after a long period of engagement by the Association of the British Pharmaceutical Industry (ABPI) and its members. Given the importance of combination therapies, and the difficulties faced in obtaining NHS reimbursement recognition for them, it is a welcome (and highly unusual) development.

However, the guidance is limited in a number of ways. It applies only to collaborations limited to agreeing and implementing a ‘contribution payment’ between the manufacturers of the different components of a combination therapy. The manufacturers must adopt a specific negotiation framework and abide by limits on the information they exchange. Certain market conditions must also apply.

Even where all these conditions are fulfilled, the CMA states only that it will not prioritise enforcement action against the collaboration. Despite recognising that collaborations of this type have the potential to generate significant improvements in patient outcomes and that their negative impact on competition is likely to be limited, the guidance does not indicate that they will comply with UK competition law. In effect, the guidance creates a ‘soft’ safe harbour without offering legal certainty.

In the circumstances, at the same time as offering comfort, the guidance emphasises both:

  • The risks that potentially competing undertakings can run when engaged in projects involving the exchange of confidential information; and
  • The extent to which the healthcare sector remains a focus for competition law authorities including (but not limited to) the CMA.

Importantly, the guidance recognises that there may be other approaches to making combination therapies available to NHS patients and that is guidance is unlikely to be the last word on the issue of brining combination therapies to market.

What is a Combination Therapy and Why do they Matter?

Combination therapies are treatments involving two or more medicines in combination. Typically, combination therapies will involve a ‘backbone’ treatment that is already approved for NHS reimbursement (as a stand-alone monotherapy) which is used in combination with an ‘add-on’ treatment. The add-on treatment will frequently have been developed by a different supplier. Together, the treatments have the potential to bring additional therapeutic benefits, for example in reducing the duration of treatment or managing side-effects.

Increasing numbers of treatments involve combination therapies. They play a particularly important role in treatments for cancer, but also HIV and Covid-19. The ABPI estimates that up to 50% of the cancer medicines in development by its members are intended for combination therapies.  According to the CMA guidance, ensuring that combination therapies are available on the NHS is considered of “fundamental importance”.

The Problem Being Addressed

Despite their importance, many combination therapies are failing to gain the regulatory approval necessary to be made available on the NHS. In particular, they are not being recognized as ‘cost effective’ by the National Institute for Health and Care Excellence (NICE). Since the start of 2017, it seems that 50% of combination therapies for cancer treatments put forward for NHS reimbursement approval involving two or more patented or branded components have either been found not to be cost effective or the appraisal process has been terminated.

The reasons relate to the applicable NHS pricing and approvals mechanisms. In the UK, medicines typically have two different prices: (i) a public list price and (ii) a confidential net price paid by the NHS that reflects an agreed discount and ensures the treatment is cost-effective. Once the confidential net price has been agreed, it typically does not increase over time and cannot be increased unilaterally by the manufacturer. It therefore acts as an upper limit on the price paid by the NHS. Moreover, the NHS operates a uniform pricing policy that generally requires a medicine’s confidential net price to apply across all its uses, including combination therapies.

The confidential net price of the backbone medicine will already have been set in the context of its use as a monotherapy, often close to the cost-effectiveness threshold. However, it is the supplier of the add-on medicine that is usually solely responsible for obtaining a reimbursement recommendation. Acting alone, the only way for the supplier of the add-on component to reach the cost-effectiveness threshold is to reduce the price of its own product. In many cases, the extent of the required price reduction is not commercially viable.

At the same time, collaborations between suppliers of backbone and add-on components to resolve the pricing issue potentially involve significant competition law risk. Where the component suppliers are actual or potential competitors, any agreed solution could potentially involve price coordination, particularly given the NHS uniform pricing rule, and even the negotiation of a solution could involve the exchange of competitive sensitive information.[1]

The Negotiation Framework

To address the potential competition concerns, the ABPI proposed a negotiation framework under which the supplier of the backbone component could agree an amount per patient to be paid to the add-on component supplier in cases where the combination therapy is used (a contribution payment). The purpose being to allow the add-on supplier to offer a price for its component low enough to allow the combination therapy to achieve cost-effectiveness.

The negotiation framework involves the add-on component supplier contacting the backbone component supplier with a proposal. If the backbone supplier agrees to discussions, the parties put in place a confidentiality agreement, share limited information and meet to negotiate a commercial agreement. All correspondence between the two parties must be fully documented and retained.

The Soft Safe Harbour and Conditions for its Application

Where parties adopt the negotiation framework in a good faith attempt to agree a contribution payment, the CMA will not take enforcement action, provided certain other conditions are fulfilled (see below). This forbearance covers both any information exchanges between the parties during commercial negotiations and any subsequent agreement related to contribution payments.

For this guidance to apply, the following five conditions must apply:

  • market conditions: the confidential net price for the relevant medicines must represent the upper limit of the price paid by the NHS and decisions regarding the use of the combination therapy must be taken by clinicians without further focus on cost;
  • negotiations framework: the parties must follow negotiation framework set out in the guidance, including entering into appropriate confidentiality arrangements and retaining all correspondence;
  • information exchange: the information exchanged between the parties must be limited to that reasonably necessary to agree contribution payments and must not include the confidential net price of component medicines (or information that would allow such prices to be calculated through reverse-engineering);[2]
  • information controls: any information that is exchanged between the parties must not be disseminated more widely than is necessary or used for other purposes; and
  • terms of agreement: the terms of any agreement reached between the parties must:
    • be directly related to and necessary for the calculation or operation of contribution payments;
    • not involve an agreement to fix the price of any component medicine; and
    • not extend to any collective action outside the scope of obtaining reimbursement approval.

It is worth noting that these conditions are extensive and may not always be straightforward to apply.  Parties wishing to rely on the guidance may well require support from their external advisors to ensure that they are, and remain, in compliance.

[1] In principle, it might have been possible to address these issues through regulatory changes, but NICE and NHS England informed the CMA that there was no administratively feasible regulatory solution to the problem.

[2] The information prima facie considered necessary for these purposes is listed a paragraph 4.4 of the guidance.

Sophie Lawrance


Sean-Paul Brankin