Legal Developments 2018

Legal Developments 2018


The Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) Order 2018 (SI 2018 No.93) [Link]

The revised code of practice (in force on 31st Jan 2018) relates to the exercise of functions under Chapter 2 of Part 8 of the Act by the  DPP, the Director of the SFO and the DPP for Northern Ireland, as well as officers of the Serious Fraud Office.  It revokes the Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) (England and Wales and Northern Ireland) Order 2016.

The Proceeds of Crime Act 2002 (Recovery of Listed Assets: Code of Practice) (EW&S) Regulations 2018 (SI 2018 No 85) [Link]

The Regulations come into operation on the 16th April 2018

The Proceeds of Crime Act 2002 (Investigations: Code of Practice) Order 2018 (SI 2018 No.84) (Link)

The Order comes into force on the 31st January 2018

The Proceeds of Crime Act 2002 (Cash Searches: Code of Practice) Order 2018 (SI 2018 No. 83) (Link)

The Order comes into operation on 16th April 2018

The Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) Order 2018 (SI 2018 No.82) (Link)

The Order comes into operation on 31st January 2018.

The Criminal Finances Act 2017 (Consequential Amendment) Regulations 2018 (SI 2018 No.80) (Link)

The Regulations come into force on the 31st January 2018.

The Criminal Finances Act 2017 (Commencement No. 4) Regulations 2018 (SI 2018 No.78) (Link)

The Regulations come into force at different times.


Bayer Plc and Novartis Pharmaceuticals UK Ltd v NHS Darlington CCG and Oths [2018] EWHC 2465 (Admin).

On 21 September 2018, an important judgment was handed down by Whipple J (Administrative Court) in Bayer Plc and Novartis Pharmaceuticals UK Ltd v NHS Darlington CCG and Oths [2018] EWHC 2465 (Admin).  The Court rejected an application for Judicial Review by Bayer and Novartis who challenged the lawfulness of the policy of 12 Clinical Commission Groups (CCGs) that offered a drug known as Avastin (bevacumizab) “as the preferred treatment option [under certain conditions]” for the neovascular form of Age-related Macular Degeneration known as “wet AMD”.  The policy was realistically capable of implementation by the NHS Trusts in a way that did not lead to, or permit or encourage, unlawful acts being committed.

Avastin (Roche Products) was considerably cheaper than “Eylea” (Bayer) and “Lucentis” (Novartis).  Studies showed that there was no significant difference between Avastin and Lucentis in terms of safety or effectiveness.  But, whereas a marketing authorisation had been granted in respect of Eylea and Lucentis for ophthalmic use, Avastin was not so authorised (it was licensed for certain cancer treatments).  In any event, it was unlicensed in its compounded form (i.e. vials of Avastin repackaged into smaller doses, usually into plastic syringes, which were then chilled or frozen before being sent to the eye treatment facility).

The case has been widely reported as a “landmark battle against drug giants”.  Although the judgment has implications for “medicinal products” other than Avastin, the following points should be noted:

  1. The judgment may be the subject of appeal to the Court of Appeal (Civil Division), or higher.
  2. NHS England was named as an “interested party” but it did not participate in the action beyond filing written Observations [judgment, 50]. Similarly, the Medicines and Healthcare Products Regulatory Agency (MHRA) did not participate beyond filing an Acknowledgement of Service [55].
  3. For the purposes of the judgment, the Court accepted the MHRA’s view that compounded Avastin was an “unlicensed product” [judgment, 192].
  4. Whether compounded Avastin was an “off-label” medicine (i.e. authorised for a specified medicinal purpose but applied for another medicinal purpose) or an unlicensed medicine was not important to the Court’s conclusions as to the lawfulness or otherwise of the Policy of the 12 CCGs [judgment, 192].

As to the law, the judgment details a number of points of which only some are mentioned here:

General matters

  1. Section 10 of the Medicines Act 1968 provides a number of exemptions for things done in a registered pharmacy, hospital or care home service, or a health centre; and exemptions for medicines prepared in accordance with a prescription by a practitioner or a specification.
  2. By regulation 17(1)(a) of the Human Medicines Regulations 2012 (HMRegs), a person may not manufacture, assemble or import from a state (other than an EEA State) any medicinal product without a “manufacturer’s licence”.
  3. By regulation 46 HMRegs., a person may not sell or supply, or offer to sell or supply, an unauthorised medicinal product without (or to do so otherwise than in accordance with the terms of) a marketing authorisation. A breach of regulation 46 is a criminal offence (reg.47).
  4. Any domestic provisions which are designed to implement the Directive must be read in the light of and construed consistently – so far as is possible – with the EU Directive 2001/83/EC [judgment, 98].
  5. EU Directive 2001/83/EC (as amended) applies to medicinal products for human consumption to be “placed on the market” in Member States and “either prepared industrially or manufactured by a method involving an industrial process” (Art.2.1).
  6. No medicinal product may be “placed on the market of a Member State unless a marketing authorisation has been issued by the [MHRA]…” (Art.6.1) or the product must come within one of the derogations within the Directive.
  7. Member States may not introduce a national measure which abrogates the requirement for a marketing authorisation (Commission v Poland) [judgment, 107(iii)].
  8. The compounding of Avastin did not give rise to a new medicine. The medicine is not altered in its composition when used for ophthalmic use [judgment, 187].  However, for the purposes of the judgment in Bayer Plc and Novartis Pharmaceuticals case, the Court proceeded on the basis of the view of the MHRA that compounded Avastin was an unlicensed medicine [judgment, 192].
  9. Any “additional strengths, pharmaceutical forms, administration routes, presentations, as well as any variations and extensions shall also be granted an authorisation in accordance with the first subparagraph or be included in the initial marketing authorisation” (Art.6.1; and see Regulation EC 1234/2008 that governs variation of marketing authorisations).
  10. In specified cases, an application for a “medicinal product” must be made to the European Medicines Agency via the “centralised procedure” governed by Regulation EC 726/2004.
  11. Certain products may only be authorised under the centralised procedure, including products derived from biotechnology (known as “biological medicines”). Avastin, Lucentis and Eylea fell into that category [judgment, 87].


  1. The Directive does not apply:
    • To medicinal products prepared in a pharmacy in accordance with a medical prescription for an individual patient (Art.3.1).
    • To medicinal products prepared in a pharmacy in accordance with the prescriptions of a pharmacopoeia that are intended to be supplied directly to patients served by the pharmacy (Art.3.2; this article was not in issue in the Bayer/Novartis case).
  2. A Member State may – in accordance with domestic legislation – “fulfil a special need” – by excluding from the Directive “medicinal products supplied in response to a bona fide unsolicited order, formulated in accordance with the specifications of an authorised health-care professional and for use by an individual patient under his direct personal responsibility” (“the named patient exception”: 5.1; emphasis added).
    • The exception only applied in exceptional cases where the specific needs of the patient required it (citing Case C-185/10, Commission v Poland).
    • The exception provided for in that provision can only concern situations in which the doctor considers that the state of health of his individual patients requires that a medicinal product be administered for which there is no authorised equivalent on the national market or which is unavailable on that market (C-179/16 Hoffman-La Roche v Autorita Garante Della Concorrenza E Del Mercato [2018] 4 CMLR 13, citing European Commission v Poland (C-185/10) at [36], and Abcur AB v Apoteket Farmaci (C-544/13 and C-545/13) at [56]). {For the purposes of the Bayer and Novartis case, the Court concluded that the issue of safety was irrelevant to the claim for judicial review [judgment, 159] and proceeded on the basis that Avastin was of equivalent effectiveness and safety to Lucentis or Eylea when used to treat wet AMD by intravitreal injection [judgment, 161]}
  3. As for “off-label” use”, the Advocate General opined in C-179/16 Hoffman-La Roche v Autorita Garante Della Concorrenza E Del Mercato [2018] 4 CMLR 13 that EU law does not govern the prescribing of medicinal products for off-label use which is a practice that falls within the scope of the therapeutic freedom of medical practitioners, “subject to any restrictions imposed on that freedom by the Member States in the exercise of their power to define their health policies” [judgment, 127]. {It is submitted that the precise meaning of “off-label is unclear.  It seems implicit in the Bayer Plc and Novartis Pharmaceuticals case, that the Court proceeded on the basis that “off-label” related to products having a marketing authorisation for one specified medicinal purpose but applied (without altering the composition of the medicine) for another medicinal purpose}.  The distinction between unlicensed and off-label use appears to depend on the extent to which the product has been modified (if at all) [judgment, 182].

Manufacturing of medicinal products

  1. Member States shall take all appropriate measures to ensure that the manufacture (whether total or partial) of the medicinal products within their territory is subject to the holding of a manufacturing authorization (Art.40, EU Directive 2001/83/EC). This encompasses “the various processes of dividing up, packaging or presentation” of medicinal products (Art.40.2).  However, such authorization “shall not be required for preparation, dividing up, changes in packaging or presentation where these processes are carried out, solely for retail supply, by pharmacists in dispensing pharmacies or by persons legally authorized in the Member States to carry out such processes” (Art.40).  In Case C-535/11 Novartis Pharma GmbH v Apozyt GmbH, the Court did not consider that the process of dividing up the medicines into smaller doses amounted to a “modification of the medicinal product”.  Thus, there was no “new placing” of either product when supplied, and no new marketing authorisation was required [judgment, 118].
  2. The requirement for a “manufacturing authorisation” is separate from the requirement for a “marketing authorisation”.

Choice of drugs to purchase: implications of cost

  1. As long as the provisions of the Directive are not breached the domestic authorities are free to choose which drugs they wish to purchase or offer to patients or reimburse on behalf of patients [judgment, 107(iv)].
  2. The cost of medicines can properly be taken into account by the national authorities of a Member State in making recommendations about the clinical effectiveness of particular drugs, and by medical practitioners at the point of prescribing a particular treatment (judgment, 107(v), citing Case C-62/09 R (Association of the British Pharmaceutical Industry) v MHRA [2011] PTSR 391).
  3. There are limits on what a Member State can do in the pursuit of saving costs, and Member States must abide by EU law in devising cost-saving measures (Commission v Poland) [judgment, 107(ii)).

As to the policy of the CCGs, the modes by which compounded Avastin could be sourced by the NHS Trusts were not necessarily unlawful:

  1. Original vial use (no compounding involved) would not, in the opinion of the Court, require a fresh marketing authorisation and would not be prohibited by EU law. It would be an example of “off-label” use. Regulation and oversight would be a matter for the domestic authorities [judgment, 220].
  2. Supplies of compounded Avastin by a hospital’s own pharmacy would not be within the reach of the Directive because, among other things, it is a stretch to suggest that the hospital pharmacist is putting the substance “on the market” in the UK. The pharmacist will be preparing Avastin for despatch to a different part of the same hospital, for use by hospital staff, in the treatment of patients at that hospital. This is an entirely “in-house” operation and a paradigm example of “downstream” activity within the domestic area of competence. The hospital pharmacy would not require a marketing authorisation before supplying the CB to clinicians in the same hospital or Trust [judgment, 226].
  3. Alternatively, by the language of Article 2(1), a marketing authorisation is only required (and the Directive would only apply) if the product is “prepared industrially or manufactured by a method involving an industrial process”. It was at least possible (without the Court expressing a concluded view) that supplies of Avastin to one of the NHS Trusts might be “non-industrial” [judgment, 229, 231].

R v Rochester [2018] EWCA Crim 1936

In R v Rochester [2018] EWCA Crim 1936, decided on 17th August 2018, the Court of Appeal (Criminal Division) concluded that the Psychoactive Substances Act 2016 does not require a “psychoactive substance” to be capable of producing its “psychoactive effect” by directly stimulating or depressing the central nervous system. Indirect effect is sufficient.  The substance in that case was nitrous oxide, commonly known as “laughing gas”.

The appellant’s contention was that the effect must be direct.  The argument was largely fuelled by events after the Act appeared on the statute book (28 January 2016) but before it came into force (26 May 2016).  Concern had been raised in Parliament that alkyl nitrites (“poppers”) – when used as a sexual aid – would be caught by the PSA.  The Home Office commissioned the Advisory Council on the Misuse of Drugs (AMCD) to provide an assessment of the harms and psychoactivity of alkyl nitrites when used in that way.

On 16 March 2016, the ACMD provided a report stating that poppers dilate blood vessels and relax muscles, including the bladder, digestive tract, vagina and anal sphincter. The Council remarked that “The brain receives a transient ‘rush’ or ‘high’ as an indirect effect caused by increased blood flow caused by the dilation of blood vessels in the brain and periphery.” [Link]  Importantly, the ACMD said:

“The [Council’s] consensus view is that a psychoactive substance has a direct action on the brain and that substances having peripheral effects, such as those caused by alkyl nitrites, do not directly stimulate or depress the central nervous system.”

It was therefore unnecessary to add alkyl nitrites to the list of exempted substances and products in schedule 1 to the Act.  By letter dated 22 March 2016, the Minister for Preventing Abuse, Exploitation and Crime wrote to the ACMD “…Having given due consideration, the Government agrees with your advice and interpretation of the definitionWe do so in the understanding that ‘poppers’ have these unique indirect effects.” [Emphasis added]  See, to similar effect, a letter from the Minister to Mike Freer MP [Link].

The issue raised on appeal was foreshadowed in an article written by this commentator in Criminal Law Review ([2018] Crim. L.R. 329, Issue 3).

The question now is: “where does this case leave the legal status of poppers when produced, supplied, imported or exported for recreational use?”  The answer may be that unless Parliament makes an exemption in the PSA, poppers may fall within the Act as a ‘psychoactive substance’”.

This commentator has previously warned that statements made in correspondence between the ACMD and the Minister do not have the force of law.  The Court of Appeal cannot be criticised for noting and placing reliance on the fact that the PSA does not expressly require a “psychoactive effect” to be direct.  The ACMD had also noted that the definition of a ‘psychoactive substance’ in the PSA “is not explicit with respect to direct or indirect effects on the central nervous system” (para.2.5).

As for the ACMD’s view on the meaning of a “psychoactive substance”, the Court remarked that this was “not an admissible aid to construction; neither is the minister’s acceptance of that view”.   Limits are placed on the use of out-of-court statements as an aid to statutory interpretation.  The Courts tend to analyse the language and structure of the statute under consideration.  In any event, despite the Minister’s reassuring statement, there was a time when the Government was minded to bring “poppers” within the terms of the PSA (see Hansard, House of Commons, 27th Oct 2015, e.g., col.38).

The Court said that the “precise boundaries between direct and indirect effect” had not been explored in the materials before it and “may not be free from difficulty”.  It added, “Were a distinction to be drawn between direct and indirect effects, we see considerable scope for expert disagreement about where those boundaries lie.”

The problem with the PSA is that it sets no clear boundaries and is laced with conceptual and forensic difficulties.

R (on the application of Gibson) (Appellant) v Secretary of State for Justice (Respondent) [2018] UKSC 2 [Link]

The UK Supreme Court held that the default term in the case of Crown Court orders (including those imposed in respect of confiscation orders) must be the term that court imposed at the time of making its order.  The words of  s.79(2) of the  Magistrates’ Courts Act 1980 suggest the natural construction that the starting point for the arithmetical calculation of  the reduction in days of imprisonment, is the sum outstanding at the time of the Crown Court order.  Before the UKSC, the parties were agreed that in the case of a Crown Court confiscation order or fine, the period of imprisonment in default of payment was “imposed”, for the purposes of s.79, when the Crown Court discharged its statutory duty under s.139(2) of the 2000 Sentencing Act and fixed the (anticipatory) term in default.