Decision

Dispute resolution panel decision February 2025: DHSC and B. Braun Medical Ltd  

Published 27 March 2025

Case number: VPAGDRP/February/2025/01

In the matter of B. Braun Medical Ltd (‘B. Braun’) and the Department of Health and Social Care (‘DHSC’).

VPAG dispute resolution panel

This is a decision of the dispute resolution panel (‘the panel’), appointed under the 2024 voluntary scheme for branded medicines pricing, access and growth (VPAG) to consider and provide reasoned decisions in respect of disputes arising under the 2024, 2019, 2014, 2009, 2008 and 2005 voluntary schemes.

This dispute arises and is referred to the panel under the 2019 voluntary scheme for branded medicines pricing and access (VPAS). The panel consists of:

• Jayne Salt (Chair)
• Stephen Brown
• Alison Clough

Mr Brown informed the parties at the start of the hearing that he had personal knowledge of some of the personnel referred to in correspondence through his role during the relevant period in NHS England, including in medicines supply, and as one of the authors of A Guide to Managing Medicines Supply and Shortages (2019). He did not consider this to create a conflict of interests. Neither of the parties raised any issue about this.  

Issues

This dispute concerns the correct classification of off-contract sales by B. Braun of the medicinal product [product name removed] during the COVID-19 pandemic period of 2021 to 2022. Specifically, whether the sales fell within the exceptional central procurement exemption (the ‘ECP exemption’), as defined in the 2019 VPAS, and thus whether they fell outside the scope of the VPAS payment rebate mechanism.

Background

During 2021 to 2022, B. Braun responded to increased demand for one of its products, [product name removed], a branded name for the medicinal product [product name removed], which is an intravenous sedative. Demand for [product name removed] increased during the COVID-19 pandemic because of an increased need for invasive respiratory support, which [product name removed] facilitates. Due to the increased demand, B. Braun made sales outside its normal supply arrangements. Its normal arrangements were under an NHS England framework agreement. Sales outside normal arrangements are referred to as ‘off contract sales’.

According to DHSC calculations, as set out in its position statement, the relevant off contract sales qualified under VPAS for a rebate payment by B. Braun of [amount removed] for the 2021 sales and [amount removed] for the 2022 sales. B. Braun did not make such a payment, claiming that the sales were exempt under VPAS on the basis of B. Braun’s application for ECP exemption.

Definitions

The glossary for the VPAS agreement defines ‘exceptional central procurement’ as:

Exceptional procurements conducted by a Central Government Body and managed by Public Health England (or any successor body) for the purposes of emergency preparedness (such as national stockpiles for the security of the nation or pandemic preparation).

It defines ‘central government body’ as:

… a Government Department, Non-ministerial Department or Executive Agency (but, for the avoidance of doubt, excludes a Non-Departmental Public Body such as, without limit, NHS England) as defined in the Central Government classification of the Public Sector Classification Guide, as published and amended from time to time by the Office for National Statistics.

The health improvement functions of Public Health England were taken on by the UK Health Security Agency (UKHSA) in 2021, following Public Health England’s dissolution.

Points in dispute (from the position statements)

DHSC’s position is that the sales are not exempt because the purchases were not conducted by a central government body (CGB), but rather by NHS England, which is specifically excluded from the definition.

B. Braun’s position is that it was directed with regard to the sales by a CGB or its equivalent, as those leading the procurement were acting under the instructions of a CGB.

Evidence relied upon

B. Braun relied on a body of correspondence, mainly by way of email, which it claimed showed that the sales were effectively procured by DHSC, which comes within the definition of a CGB.

The correspondence supplied by B. Braun included email exchanges between representatives of B. Braun and individuals in organisations involved in medicine supply including:

• [name and position removed]
• [name and position removed]
• representatives of individual hospital trusts
• various points of contact within NHS England
• points of contact in the Commercial Medicines Unit (CMU) or directorate

B. Braun also relied upon:

• ‘A Guide to Managing Medicines Supply and Shortages’, published in 2019, which states that it is prepared by NHS England and NHS Improvement Medicines and Diagnostics Policy Unit and DHSC Supply Team
• a definition of CMU on a government website (from 4 March 2011) where CMU is described as ‘part of the Medicine, Pharmacy and Industry Group of DHSC which looks at supply and procurement in hospitals’

DHSC relied principally upon the definitions in the glossary to VPAS. It also relied upon a statutory instrument: the National Health Service Commissioning Board (Additional Functions) Regulations 2017, which it said transferred the functions of the CMU from DHSC to NHS England with effect from 1 April 2017.

Points of clarification

In its position statement, DHSC said that B. Braun was the “exclusive supplier of [product name removed] - sold under the branded name [product name removed] - to the UK”. It also highlighted the importance of the consistent application of VPAS to all scheme members to avoid unfair commercial advantage. The panel sought clarification on this before the hearing by posing questions based on its understanding of the existence of other suppliers of [product name removed] during the relevant period, to establish whether other suppliers had sought exemption for off contract sales, and also whether the suppliers of other critical medicines during the COVID-19 period had sought ECP exemption.

The response from DHSC clarified that B. Braun was the only supplier of [product name removed] under the brand name [product name removed], but that there were other suppliers of branded [product name removed], none of which had sought an ECP exemption for off contract sales. In the time available it had not been possible to check for other suppliers of other branded medicines regarded as critical during COVID-19, but DHSC said that if any had applied for the exemption they would have been treated consistently with B. Braun. The response disclosed the successful claim for exemption by one company in 2022 following confirmation that the company supplied a central stockpile, which did fall within the definition of ECP.

During oral submissions, one of the representatives of B. Braun referred to [name and position removed], suggesting that this was relevant to the process being in effect conducted by a CGB. After the hearing, the panel asked for additional information on this under the provision to request supplementary written information in annex 15 of VPAS. The response was that, although [name removed] worked closely with [name removed] during the COVID-19 pandemic, he did not report to him at any stage. The response provided details of personnel within the NHS to whom [name removed] reported at the relevant time. It also provided a link to published data on organisational structures that showed that neither [name removed] nor his job title appears on the DHSC organisational structure but that his post [position removed] does appear on the NHS England organisational structure (reporting to [position removed]).

During oral submissions, the process for sales sent to a centrally controlled stockpile was raised. [Name removed], who attended the hearing on behalf of DHSC, stated that the central stockpile was managed by DHSC. Reference was made by B. Braun to correspondence between B. Braun and DHSC about sales to the stockpile, in the context of redirecting products originally designated for the stockpile into available stocks for NHS trusts. In panel questions after oral submissions, [name removed] was asked about the order, the subject of correspondence at page 81 of the hearings bundle - an email exchange between B. Braun and [name removed] of DHSC about whether a delivery due for the stockpile should be partially held back to deal with potential market shortfall, and [name removed] was asked whether that would meet the criteria for ECP.

[Name removed] said that it looked as if the stockpile order would have been paid for by the government, and B. Braun would have been able to exclude all the sales as ECP, which meant that there was potential for overclaim of ECP exemption by B. Braun for those products which did not go towards the stockpile. In response, B. Braun said that it had not been able to trace this particular order and referred to changes in arrangements for stockpile orders during the pandemic and invoicing to the NHS supply chain. It was not part of the panel’s remit to look at deliveries to the stockpile. However, the relevance of the stockpile issue is that it was common ground between the parties that items sent to the stockpile were centrally procured and therefore subject to ECP exemption.

The CMU was referred to by B. Braun as being part of DHSC. Reliance was placed by B. Braun on the description on the government website. DHSC said that this had changed and the information on the website (from 2011) was out of date. In ‘A Guide to Managing Medicines Supply and Shortages’, produced by NHS England and NHS Improvement in 2019, CMU is referred to as part of NHS England and NHS Improvement.

Oral submissions

Submissions on behalf of B. Braun at the hearing are summarised as follows:

• the sales did not fall under the usual framework, nor the stockpile
• [product name removed] is not a typical branded medicine of the type for which the VPAS scheme is designed, and sales of it had never before triggered the rebate payment mechanism of VPAS
• DHSC had applied too literal an interpretation to CGB and ECP. Account had not been taken of the fact that in the emergency situation of the COVID-19 pandemic there was not time for a CGB to develop processes to procure [product name removed] and so bodies acting as agents for DHSC had been used. The underlying intention of the process was centrally directed for a national purpose of saving lives. B. Braun was directed with regard to the off contract sales by a CGB, or its equivalent in the circumstances
• the case of Lambert London Borough Council v Secretary of State for Housing, Communities and Local Government and Others (2019 UKSC 33) is authority for a common sense interpretation of the provisions of VPAS. The underlying purpose of VPAS should be given weight rather than it being regarded solely as a commercial contract (noting that VPAS is explicitly stated to not be a contract in the VPAS text)
• regard should be given to the purpose of VPAS, as set out in paragraphs 1.6, 1.7, 1.12 and 1.13, to support innovation, which did not apply to [product name removed], and to 4.1 to cap branded medicines sales at an agreed level of growth - which did not apply to the situation in question
• the scheme was not designed with the situation in question (the pandemic) in mind. This is because, although it envisaged exceptional circumstances, it envisaged them only together with preparedness and did not envisage the reality of what occurred when there was no time to prepare. This is reflected in changes to the 2024 scheme which provides an expanded definition of ECP
• it would be wrong for B. Braun to be penalised for following direction on a centralised supply when it felt it had no choice, and no alternative method of dealing with the situation has been proposed by DHSC. B. Braun went to great lengths to meet demand: reopened one of its plants, cancelled staff leave and worked with the Medicines and Healthcare products Regulatory Agency (MHRA) and DHSC to save lives
• the interaction between a number of different departments and B. Braun taken as a whole amounts to a process conducted by a CGB. In the exceptional circumstances that arose as a result of the pandemic, the agencies used were the only available channels of communication. The CMU is still advertised on the government website as being part of DHSC and the statutory instrument referred to does not deal with its transfer to DHSC, as claimed
• the bundle provided by B. Braun contained direct correspondence with members of staff at DHSC - specifically at page 85 in the hearings bundle, an email exchange between B. Braun and [name removed] of DHSC dated 24 February 2021 regarding items for the stockpile; and at page 80 an email exchange between B. Braun and [name removed] of DHSC titled ‘[product name removed] stockpile’. This was evidence of direction from DHSC, which is a CGB
• the argument in DHSC’s position statement that a decision in favour of B. Braun could lead to other companies claiming the exemption retrospectively should be disregarded as the panel’s role is to decide only the facts of the case relating to B. Braun

Submissions on behalf of DHSC at the hearing are summarised as follows:

• the proper approach to interpretation - references in the Lambeth case to context and common sense - help only in cases where the natural meaning of words may be ambiguous. This approach is not required with interpreting the provisions of VPAS where the words are so obvious that there can be only one interpretation
• key considerations when interpreting the meaning of VPAS:
  • there were lengthy and detailed negotiations between DHSC and the Association of the British Pharmaceutical Industry (ABPI) before agreeing the provisions of VPAS
  • VPAS is a public document that affects the interests of many third parties and its plain wording must be relied upon
  • the commercial context means there is more need for a clear and consistent approach
• application of VPAS to the facts of this case - DHSC rejects the argument on behalf of B. Braun that the VPAS objectives and purpose as set out in paragraphs 1.6 and 1.7 of VPAS are not applicable in the circumstances in question. B. Braun had the option not to sign up to the scheme and so the provisions must apply equally to it as to other scheme members
• there are clear and tight definitions of CGB and ECP which the panel should apply to ensure consistent and fair application avoiding an unduly expansive meaning
• the definition of the ECP exemption breaks down into 3 parts and all 3 parts must be met to qualify for the exemption. The sale must have been:
  • conducted by a CGB
  • managed by Public Health England (now by UKHSA)
  • exceptional and for the purpose of emergency preparedness
• DHSC accepted only that the sales were exceptional. The rest of the criteria could not be met as the sales were procured by NHS England, which is specifically excluded from the definition of CGB
• if the sales were conducted by a CGB they would have been paid for by the Secretary of State, which was not the case as they were paid for by NHS England. It is important to understand the distinction between sales sent to the stockpile and business as usual sales

Conclusions

Based on its interpretation of the provisions of VPAS, the written statements of position with supporting evidence from B. Braun, and the oral submissions at the hearing, the panel reached the following conclusions:

• the impact of any decision on other potential claimants for ECP exemption was not a relevant consideration in itself, as each case must be considered on its own facts. The panel applied VPAS to the facts of this case. The only relevance to other cases was that the panel accepted the need to apply the scheme accurately and as specified in VPAS 2019, and to do this fairly and consistently to all members. Also, any decision reached could potentially inform future decisions if the same or similar issues were in dispute
• the wording of the relevant exemption from eligible and measured sales is clear. The panel was not persuaded that the wording of the relevant provisions could be interpreted in any other way than the plain meaning of the words. It was not persuaded that the meaning of CGB could be expanded to add ‘or equivalent in the circumstances’. This was particularly so when the ‘equivalent’ was essentially a body specifically excluded in the definition
• the panel concluded that the wording of the definitions is clear and deliberately designed and that therefore the guidance in the case of Lambert did not assist, in that the panel was not required to take into account context or common sense interpretation where the meaning was so clear as to be unambiguous. The panel did not accept the argument of B. Braun that CGB could be interpreted as including a specifically excluded body ‘acting on behalf’ of a CGB
• the panel was not persuaded that [name removed] ‘not being a typical branded medicine of the type for which the VPAS is designed’ was of any material relevance. VPAS was (and is) a voluntary scheme, so B. Braun was able to decide whether or not to enter into the defined arrangements
• the correspondence provided by B. Braun does not support its case that it was directed by a CGB. The bulk of the correspondence is with those acting for NHS England. The 2 people referred to as acting for DHSC were corresponding about the stockpile, accepted by both parties to be outside the provisions of VPAS and to qualify for ECP exemption
• the panel accepted that the CMU fell under NHS England because, despite the information on the website, the CMU is clearly labelled as part of NHS England and NHS Improvement in a number of emails from correspondents, and in ‘A Guide to Managing Medicines Supply and Shortages’. (Although DHSC relied on the National Health Service Commissioning Board (Additional Functions) Regulations 2017 as authority for the transfer of CMU from DHSC to NHS England, the panel could not identify provision for the transfer in this statutory instrument. It therefore relied on the description of CMU in correspondence supplied by B. Braun and ‘A Guide to Managing Medicines Supply and Shortages’, together with a general awareness of the location of operation of the CMU at this time)
• the panel was not persuaded that [name removed] could be seen as acting on behalf of a CGB because in email correspondence supplied by B. Braun as being from [name removed] his role is labelled as ‘[position removed]’. Furthermore, the additional information provided after the hearing, as referred to above in paragraph 16, confirmed that [name removed] was line managed by a manager within NHS England ([position removed], NHS England)
• the panel accepted that there was ample evidence of extensive collaboration and co-operation between B. Braun and a variety of personnel involved in the provision of a critical medicine at a time of emergency due to the COVID-19 pandemic and that the urgency of supply arrangements took precedence over scrutiny of the process. However, it was not persuaded that this allowed for the clear provisions of VPAS to be overridden
• the panel recognised, and greatly appreciated, the lengths to which B. Braun went to meet demand during the COVID-19 pandemic period, but it did not feel that this was of material relevance to the dispute resolution

The panel concludes that the sales of [product name removed], which are the subject of this dispute, did not meet the definition of ECP as defined in VPAS. The panel therefore rules in favour of DHSC.

The panel was grateful for the engagement of the parties in extensive and well-meaning discussions to try to resolve the dispute before the hearing, albeit unsuccessfully. It was also grateful to both parties for the detailed and considered position statements and oral submissions at the hearing, which were of great assistance to the panel.