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A Right Royal Deadlock: Can "Crown" use unlock patented drug?

12 March 2019. Published by Charlie Gould, Trainee Solicitor

Campaigners have argued that the cystic fibrosis drug, Orkambi, is prohibitively overpriced, depriving children of access to life-changing treatment. Can the Government intervene, and should it?

Following a two year deadlock between the NHS and Vertex Pharmaceuticals,   the NHS, in July 2018, offered to make the 'largest ever' financial commitment in its 70-year history. This commitment concerned the drug Orkambi, manufactured by Vertex, which is prescribed to children with cystic fibrosis to improve their lung functions. In order to break the deadlock (during which the drug has not been available from the NHS for those in need), the NHS offered Vertex around £500 million over five years. Vertex rejected this offer, arguing the NHS should pay £105,000 per patient per year.

 

Vertex have defended the price of the drug as they argue that NICE's "cost-effectiveness threshold" does not take into account the frequency of the disease and, therefore, the number of patients who use and pay for the drug. Whilst this may be true, the main reason Vertex can suggest such a hefty price is because they have patented Orkambi and therefore have a monopoly. The NHS simply has nowhere else to buy Orkambi. It is this monopoly that has led campaigners to call for the Government to invoke "Crown" use and bring the deadlock to an end.

 

So, what is "Crown" use and will the Government be able to rely on it?

 

Crown use is found within the Patents Act 1977. Section 55(1) 'Use of patented inventions for services of the Crown,' allows a government department to sell, or offer to sell, a patented product, without the consent of the proprietor of the patent. Crucially, this will not be considered an infringement of the patent concerned, although the Government would have to pay compensation to the proprietor of that patent.

 

Crown use has been invoked before, such as in Pfizer v Ministry of Health, where it was held that the Minister of Health was able to authorise a company to import drugs from Italy for NHS patients. However, the Pharmacy Minister, Steve Brine, is less certain that it can be used in this situation. In an adjournment debate on 4 February, he argued that 'Crown use has only really been intended to deal with emergencies.' Although the impact on patients is significant, it is not clear that the deadlock would be considered an "emergency". The Government would simply be authorising Crown use as a means of bypassing the commercial deadlock between Vertex and the NHS.

 

If Crown use was used, the cost would, according to section 57A of the Act, include a sum for the loss of profits that the proprietor of the patent has incurred through not securing a contract providing the drug. This cost is likely to be expensive and would be decided by the Court, meaning the NHS may end up paying what Vertex has asked for in any event.

 

In addition, the impact on future pharmaceutical companies of invoking Crown use should not be underestimated. The loss of profits, if not compensated properly by the Court, may hinder Vertex from developing new treatments, which would be detrimental to patients. Such a step may also lead to pharmaceutical companies viewing the UK as a volatile and unpredictable market, leading them to focus their attention elsewhere. Amidst the current Brexit uncertainty, this is to be avoided if possible.

 

Finally, whilst invoking Crown use might be a short term fix, it is likely that it will result in litigation between Vertex and the Government meaning a delay in the drug being manufactured and released via the NHS, thereby defeating the ultimate aim.

 

Whilst the Minister is correct to have concerns over the invoking of Crown use and its potential future impact, at the very least its threat could lead to Vertex lowering the price, and other pharmaceutical companies considering making their drugs cheaper and more widely available to the NHS (which would be a win for patients).