NHS Pharmaceutical Procurement – Top 10 Tips

05.12.2017

This article considers key public procurement issues that arise for pharmaceutical and medical device companies participating in NHS public procurement competitions.
• Innovation partnerships: This procurement model was introduced by the EU Public Procurement Directive 2014 and it could allow pharmaceutical companies and the NHS to work in collaboration to research and develop a new pharmaceutical or medical device product. The procedure is divided to into two phases: (i) the development of an innovative product; and (ii) its subsequent purchase. Interestingly, the model has recently been used by France’s central medical procurement body to design and purchase a telemedicine system.
• Experience: Companies with a long record of supplying the NHS may be handicapped in future tenders by past poor performance. Therefore, it is important that bidders who may be concerned about this ensure that the public authority follows the rules about past experience: past performance is assessed at the pre-qualification stage and/or assessed by taking up references of performance of past contracts.
• Award criteria: These must either be: the lowest price; or a best price/quality ratio. Any qualitative criteria must be clearly linked to the subject matter of the contract.
• Mandatory standstill period: not less than 10 days before the award of a contract, letters must be sent to the unsuccessful bidders setting out: (i) the reasons for the award decision; and (ii) the characteristics and relative advantages of the successful bid. These reasons must be sufficiently detailed to allow any unsuccessful tenderer to consider if it has a potential claim for breach of the procurement rules.
• Framework agreements: Frameworks are not strictly contracts and do not give rise to binding obligations on the public authority, as they do not guarantee future work. Rather, they establish the terms under which future contracts will be entered into. There is no obligation to apply a standstill period to contracts awarded under framework agreements and there are no rules on the duration of call-off contracts, so they can be extended beyond the lifespan of the framework agreement.
• Variation of contracts: Amendments to existing contracts are likely to constitute a new contract if they: (i) amount to a ‘substantial modification’ (more than 50% of the value of the original contract); (ii) introduce new conditions that would have allowed other bidders to compete or would have changed the outcome of the tender; or (iii) significantly change the economic balance of the contract either in favour of the public authority or the winning tenderer.
• Voluntary Ex-Ante Transparency notice (“VEAT”): Publication of a VEAT in the Official Journal of the EU allows a public authority to alert interested parties to: (i) its intention to award a contract without advertising the opportunity; or (ii) substantially vary an existing contract, provided it has valid grounds for not holding a procurement competition. However, a VEAT may also invite a legal challenge in situations where new a contract, or an amendment to an existing contract, might otherwise have gone unnoticed by the market.
• Challenges to a procurement decision: An unsuccessful tenderer has 30 days to bring a challenge from the date when it knew, or ought to have known, of a procurement law breach, i.e. from when the unsuccessful bidder received the contract award notice. However, there is a six month long-stop date for bringing a post-award challenge for cases where the public authority has awarded a contract without advertising the contract or has published a VEAT.
• Declarations of Ineffectiveness: Unsuccessful bidders can apply to the court for a ‘Declaration of Ineffectiveness’ once a contract has been entered into, which has the effect of expunging the contract award.
• Damages: In the UK damages are (currently) only available if the breach of the procurement rules is ‘sufficiently serious’. The restrictiveness of this positon is based on a recent Supreme Court Decision (Nuclear Decommissioning Authority v EnergySolutions EU Ltd, 2017). However, there is considerable speculation about the compatibility of this ruling with EU law.