Case law update – a spotlight on equal treatment – AbbVie v NHS England [2019]

The issues of equal treatment has been looked at by the Courts on several occasions recently. We look at a recent case from earlier in 2019 on equal treatment and the proper extent of a contracting authority’s discretion, and distil the principles for you.

Equal treatment is one of the core EC Treaty principles to keep in mind when thinking about applying procurement law.

Case law has given us the following pointers about equal treatment:

  • An authority has a wide discretion in devising an evaluation methodology and applying in it in practice
  • A court will not intrude generally on the authority’s right to conduct its affairs and make its decisions UNLESS a core principle such as equal treatment is breached, in which case the court may step in
  • Treat the same situations in the same way, and different situations differently e.g. the position of an incumbent is different to that of a new bidder

However, while it is often easy to understand all this on a conceptual level it can be harder to apply the principle in the real life situations we find ourselves in. Recently a case has looked at equal treatment in the context a procurement in the health sector.

The case was AbbVie v NHS England [2019] and concerned a £1bn contract for Hepatitis C drugs. It involved a sophisticated evaluation methodology. Different sub-markets exist for these drugs, with some suppliers being unable supply across all of these sub-markets, and others not. However the evaluation took a whole-market approach, with suppliers required to submit a single bid for a share of the whole market. Where a supplier was unable to supply a part of the market, a “dummy price mechanism” (“DPM”) attributed a price to it. In addition, the evaluation used an “unmetered access model” (“UAM”) which calculated a fixed fee to be paid to each supplier, which was not based on the amount of drugs it in actual fact supplied.

AbbVie claimed that the DPM and UAM amounted to unequal treatment, because (1) suppliers unable to supply would be credited with the lowest price offered by competitors thanks to the DPM - suppliers with limited supply range were thereby at an advantage (e.g. one supplier would have 50% of its price attributed in this way); and (2) under the UAM, suppliers with better drugs would be in greater demand to supply and would end up “out-supplying” the nominal forecast in the fixed fee, and thus lose out. Suppliers with less good drugs would under-supply the nominal forecast and thereby be at a financial advantage.

In relation to the DPM, the court took as its guide the principles set out in the Fabricom case, namely that comparable situations must not be treated differently and different situations must not be treated in the same way. With this in mind, it decided that these two bidders were not in comparable situations: one had drugs capable of treating the whole market, other did not. The DPM therefore simply involved different treatment of bidders in different situations, hence there was no breach of the equal treatment principle. Significant, too, was the fact that there was no real world advantage – at no point would a supplier be given a market share it could not in fact supply. Given there was no breach, the court would not intervene in NHS England’s discretion to use the DPM model.

In relation to the UAM, the Court said a difference in the popularity of the drugs of supplier A compared to those of supplier B did not mean that A and B were not in a comparable position for the purposes of the tendering exercise. Putting it another way, it would be an odd approach for the Court to insist that A and B ought to be subject to different tender rules merely because A’s drugs were the more attractive. Therefore, if each were in a comparable position, it could not be a breach of equal treatment to apply the same rules in the UAM to each.

The use of the DPM and UAM mechanisms might at first glance have looked rather like unequal treatment. The case illustrates how it can be easy to miscategorise an approach, when the rule is more complicated than “treat everyone alike”. If thought is not given to the relative positions of the bidders and the Fabricom rule, it is easy to forget the some bidders ought to be treated differently due to their occupying different positions in relation to the procurement and the authority.

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