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The NHS legislation says the Secretary of State must determine
remuneration and prices and publish them in the Drug Tariff. That
doesn't mean the Secretary of State has a completely free hand.
Ministers must act lawfully: they must consult anyone who has a
legitimate expectation of consultation before decisions are made,
and ministers must make decisions rationally. Decisions may not be
rational if made without sufficient information, or without first
undertaking a regulatory impact assessment.
If decisions are not made lawfully, the courts may intervene and
grant judicial review. The courts will not interfere with the
discretion of ministers, but they have a supervisory jurisdiction
over executive processes. I have been involved in two recent
judicial reviews, acting for Community Pharmacy Northern Ireland
(CPNI).
Back in January 2010, the Northern Ireland High Court had ruled
that the NI Drug Tariff was unlawful because introducing Category M
without adjustment for Northern Ireland circumstances meant that
the Health Department had failed to comply with its ongoing legal
duty to pay contractors fair and reasonable remuneration. The
Health Department then had to produce a new Drug Tariff. The
Department undertook a consultation on fees, and a separate
consultation on reimbursement prices, inviting representations from
CPNI. The Department insisted that there was no need to take
comments on prices into account when dealing with fees, and vice
versa. In fact, the Department announced on 24 March 2011 the
publication of a new Drug Tariff – a day before its
consultation on fees came to an end. Since the profit margin on
prices and the fees paid for services make up total remuneration,
it is hard to see how the Department could have concluded that
remuneration was fair and reasonable by looking only at prices.
What's more, there was no impact assessment, even though
Government guidance in Northern Ireland says that one must
be prepared for "all proposals (legislative and
non-legislative), which are likely to have a direct or indirect
impact, whether benefit or cost, on business."
CPNI was forced to apply for a second judicial review, and Mr
Justice Treacy has now held that the Department again acted
unlawfully because it had not consulted adequately, had not carried
out a regulatory impact assessment, and had insufficient
information on which it could determine remuneration that would be
fair and reasonable.
The recent judgment indicates an approach that is likely to be
followed elsewhere in the UK if Governments try to slash
reimbursement without proper consultation or with insufficient
information to assess whether remuneration is fair and
reasonable.
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