Whether the HSE was justified in refusing to fully grant a request for records relating to reimbursement approvals for novel drugs since October 2016

13/04/2018

Background

On 17 April 2017, the applicant made an FOI request to the HSE for:

Copies of all internal and external correspondence between/from the office of the DG, the HSE primary care division, the HSE corporate pharmaceutical unit and the PCRS that referenced or concerned Orkambi/Vertex and/or new drug approvals since October 2016 to date.

Copies of any communication between any of the above and the Department of Health as well as the Office of the Minister for Health that referenced or concerned Orkambi/Vertex and/or new drug approvals since October 2016 to date.

Copies of any communication from the HSE drugs committee to the HSE leadership team and/or HSE directorate that referenced or concerned Orkambi/Vertex and/or new drug approvals, as well as any related papers for consideration since October 2016.

Directorate minutes (since October 2016 to date) relating to any new drug approvals.

Any correspondence related to Orkambi within the HSE primary care division since October 2016.

The HSE did not issue a decision on the request within the statutory timeframe, effectively refusing it. The applicant sought an internal review of this effective decision on 22 June 2017. On 19 July 2017, the HSE issued its internal review decision, in which it granted full and partial access to some of the 70 records to which it had given individual consideration (the 70 records). It refused access to the rest of the 70 records under sections 15(1)(d) (information in the public domain), 30 (negotiations of an FOI body), 35 (confidential information), 36 (commercially sensitive information) and 37 (personal information). It refused access to other records relevant to parts of the request under section 15(1)(c) (voluminous records). It also referred to other records (the other records) that it said it was refusing under sections 31(1)(a) (legal professional privilege), 35 and 36. On 4 August 2017, the applicant sought a review by this Office of the HSE's decision.

I am now concluding the review by way of binding decision. In carrying out my review, I have had regard to the above correspondence; to details of contacts between this Office, the HSE, and the applicant; to the content of the 70 records, copies of which were provided to this Office for the purposes of this review; and to the provisions of the FOI Act. In the course of the review, members of my staff met with the HSE in order to get a better understanding of the process the subject of the records in this case. Material issues arising from the review in this case were put to the applicant for comment in this Office's email to her of 24 January 2018. I note that she did not reply to this email.

Scope of the Review

This review is confined to whether or not the HSE has justified its refusal to fully grant the applicant's request.

The Reimbursement Approval Process

To give this decision some context, it is useful to set out the following background information provided by the HSE:

While there is a private market for medicines in Ireland, most pharmaceutical companies also want a HSE approved maximum reimbursement price for their medicine so that the medicine can be made available to patients who benefit from full or partial cover for their medicines' costs under various State schemes such as the General Medical Card Scheme and the High Tech Medicines Scheme. A maximum reimbursement price is the maximum price the State is willing to pay for a medicine that is so covered.

Section 21(2) of the Health (Pricing and Supply of Medical Goods) Act 2013 sets out seven factors that the HSE must take into account when considering the price submitted by a pharmaceutical company. One such factor is the agreement between the HSE and the Departments of Health and Public Expenditure and Reform, and the pharmaceutical industry (which is represented by the Irish Pharmaceutical Healthcare Association (IPHA)), regarding the setting of prices for medicines (the IPHA Agreement).

In essence, a pharmaceutical company submits an application form for a maximum reimbursement price to the HSE.  The applicant specifies a maximum reimbursement price, which is calculated in accordance with the requirements of the IPHA Agreement (i.e. an average of the maximum reimbursement price for the same medicine in a number of specified EU member states).

If the cost is expensive (in the thousands of euro per patient), the HSE can send the medicine for health technology assessment (HTA). HTA is carried out by the National Centre for Pharmacoeconomics (NCPE), which is part of the Department of Health and based in St James' Hospital. It assesses the cost-benefit of the medicine based on clinical and cost-benefit data supplied by the pharmaceutical company. The NCPE sends the HTA results and its recommendation to the HSE. The HSE may still consider the medicine for reimbursement even if the HTA assessment is negative on cost grounds versus the patient benefit, but must follow the criteria set out in section 21(2) and Schedule 3, Part 3 of the Health (Pricing and Supply of Medical Goods) Act 2013. Schedule 3, Part 3 requires the HSE to consider nine criteria in deciding on the application, including the health needs of the public, the potential or actual budget impact of the medicine, the clinical need for it, and the resources available to the HSE.

The HSE's Director General has delegated his authority for deciding on reimbursement applications to a member of the HSE Directorate team. The HSE has also established a "Drugs Group" consisting of medical experts, who assess reimbursement applications for expensive medicines based on the documents and submissions made by the applicant companies, any summaries of information prepared by the HSE Corporate Pharmaceutical Unit, and the HTA results and recommendations. The Drugs Group makes a recommendation to the Directorate, which, including the Director General, is given full copies of the documents that were before the Drugs Group. The HSE Primary Care Reimbursement Service (PCRS) administers the reimbursement applications, the decisions and the prices.

Generally, where the main issue with an application is the proposed maximum reimbursement price (as opposed to any efficacy concerns), and before the final decision is made by the Directorate, there can be negotiations between the applicant company and the HSE, with the intention of reducing the price originally applied for. As noted above, that price is not freely determined by the applicant but is based on an average of the maximum reimbursement price for the same medicine in a number of specified EU member states. The HSE says that the pharmaceutical companies will not engage in price negotiations unless their pricing proposals and related information, and the general content of the negotiations, are kept confidential.

The HSE did not grant reimbursement approval to Vertex for its medicines (including Orkambi) upon the first application. Discussions took place between the HSE and Vertex in 2016 and 2017, on the basis that the negotiations and information disclosed in them would be treated as confidential, to see if better terms could be arrived at. Further to the agreement reached, Orkambi (and another Vertex drug, Kalydeco) was added to the HSE's High Tech List on 1 June 2017.

Findings

Section 15(1)(c) - retrieval of records/unreasonable interference with work due to volume and nature of records

While that part of the HSE's internal review decision dealing with section 15(1)(c) says that the applicant had used the term "and/or new drug approvals since October 2016" throughout her request, it seems to rely on section 15(1)(c) only in so far as part 3 of the request included the term. However, the HSE's submission to this Office says it relied on section 15(1)(c) in so far as parts 1 to 3 contained the phrase "and/or new drug approvals since October 2016". This Office informed the applicant of this in its email to her of 24 January 2018.

Section 15(1)(c) of the FOI Act provides that a request may be refused where "in the opinion of the head, granting the request would, by reason of the number or nature of the records concerned or the nature of the information concerned, require the retrieval and examination of such number of records or an examination of such kind of the records concerned as to cause a substantial and unreasonable interference with or disruption of work (including disruption of work in a particular functional area) of the FOI body concerned.

Section 15(4) provides that section 15(1)(c) shall not be applied unless the FOI body has assisted, or offered to assist, the requester to amend the request for re-submission such that it no longer falls within the provision.

The HSE's email to the applicant of 30 June 2017 says it needed

"clarification ... on an aspect of [the] request, specifically "and/or new drug approvals since October 2016"" and asked her to explain what she meant by the term. The applicant's reply of 7 July 2017 says "[j]ust novel drugs."

The HSE's submission argues that searches for records covered by parts 1 to 3 of the applicant's request, even relating only to novel drugs, are such that section 15(1)(c) applies. It says it gets 30-50 reimbursement applications per year, and holds both hard copy and electronic records. While it is difficult to estimate how many records would be involved, it says that a preliminary search of electronic records in relation to four reimbursement applications resulted in more than 400 emails, with attachments containing 304MB of data, being located.

It supplied this Office with the details of the novel drugs that had been added to the HSE Reimbursement List of Items (which I understand to be reimbursed under the General Medical Card Scheme) and the High Tech List between October 2016 and 17 April 2017 (the Lists) i.e. 24 entries referring to different dosages of 10 drugs or tablets. I understand that the HSE also provided these details to the applicant with its internal review decision.

The HSE says that the Corporate Pharmaceutical Unit (with a staff of seven which, as the applicant knows, is responsible for the negotiation process itself), the Drugs Group, the Directorate, and the PCRS would hold records. It estimates that up two staff in each section would be involved in searching for records, for at least one or two days each, and that the examination process would require two or three staff (most likely from the PCRS) to be diverted to the task. Finally, it says that additional searches would be needed to look for records held by staff who do not work in these areas/divisions.

Section 15(1)(c) is an administrative provision that recognises the burden that certain FOI requests can place on FOI bodies, and provides that such requests can be refused. Noting that the preliminary search for records relating to four applications resulted in 304MB of attachments, it is reasonable to assume that even if only 10 applications had been made in relation to the drugs added to the Lists from October 2016 and 17 April 2017, over 700MB of electronic records would be in scope of the applicant's request. I accept that this would be a considerable volume of records and does not include whatever other paper records may exist. It also seems to me that the diversion of staff within the Corporate Pharmaceutical Unit for the search and examination process described above could have a considerable impact on the usual work of that unit in particular. Thus, I accept that it would be unreasonable to direct the HSE to retrieve and examine the records it holds concerning the novel drugs added to the Lists between October 2016 and 17 April 2017.

However, before I can affirm the HSE's application of section 15(1)(c) to parts 1 to 3 of the request in so far as they concern "new [i.e. "just novel"] drug approvals since October 2016", I must consider if it has complied with section 15(4). The HSE considers the email to the applicant of 30 June 2017 to be sufficient and argues that section 15(4) does not require it to refer to or describe section 15(1)(c).

It is not reasonable to refuse a request under section 15(1)(c) when the requester does not know that the provision is likely to be relied on in the first instance and where they have not at least been offered some assistance to amend their request. I consider the HSE's email of 30 June 2017 to be simply an attempt to clarify what the applicant is seeking, and I find that it does not meet the requirements of section 15(4).

I cannot affirm the HSE's application of section 15(1)(c) in these circumstances, but neither do I consider it appropriate to direct it to search for and examine the records concerned. Accordingly, I annul the HSE's decision to rely on section 15(1)(c) in relation to parts 1 to 3 of the request in so far as they contained the phrase "and/or new [i.e. "just novel"] drug approvals since October 2016. Subject to the applicant's confirmation to the HSE that she wishes it to do so, I direct it to make a fresh decision on these parts of the request. Should the HSE wish to rely on section 15(1)(c), which it is entitled to do, it must properly comply with section 15(4) and, if relevant, consider any attempt that the applicant may make to amend the scope of these parts of her request before relying on section 15(1)(c). Any decision by the HSE to rely on section 15(1)(c), or any other FOI Act provision, is subject to the statutory rights of internal and external review.

Section 15(1)(d) - information already in the public domain

Section 15(1)(d) may be relied on to refuse records where the information is already in the public domain. The HSE's internal review decision gave the applicant details of where records covered by part 4, and some records that seem to me to be relevant to part 1, are available online. I accept that the records concerned are in the public domain. I find that section 15(1)(d) applies to them. 

Section 37 - personal information

The HSE has refused access to three of the 70 records on the basis that they contain personal information and are exempt under section 37(1). Records 23, 49 and 52 (in part) concern contacts with the HSE by advocacy groups regarding the funding of Orkambi with reference to particular individuals. I accept that granting access to the relevant details would identify the individuals concerned. I find that the details concerned contain personal information and are exempt under section 37(1) of the FOI Act, which requires personal information to be protected. I do not consider the exceptions to section 37(1) (including the public interest test at section 37(5), having regard to the weight of the public interest in protecting Constitutional rights to privacy) to apply.

Section 40(1)(a) - information having a serious, adverse effect on the financial interests of the State

The HSE has relied on a number of provisions of the FOI Act in relation to the remainder of the 70 records i.e. sections 30(1)(c) (positions or procedures for negotiations of the Government or an FOI body), 35(1)(b) (information subject to a duty of confidence), 36(1)(b) (information resulting in a material financial loss or gain to, or prejudice to the competitive position of, the person to whom it relates), and 36(1)(c) (information prejudicial to negotiations of the person to whom it relates). I do not necessarily disagree with the HSE's decision to rely on these provisions. However, based on its arguments set out below, in my view section 40(1)(a) is the more appropriate exemption to consider in the circumstances of this case.

Section 40(1)(a) provides that a request may be refused if the head of the body is of the opinion that "access to the record could reasonably be expected to have a serious, adverse effect ... on the financial interests of the State". For section 40(1)(a) to apply, the potential harm that might arise from disclosure must be identified - a serious, adverse effect on the financial interests of the State - and the expectation that the harm will occur must be reasonable.

The HSE says that:

It has a limited budget to spend on novel drugs. Pharmaceutical companies have a monopoly on new and unique drugs, and they make 30-50 reimbursement applications each year.

It is possible for the HSE to be transparent if it agrees to pay the initial price quoted by the companies in their applications. While the companies will enter into negotiations with the HSE about its first price/offer, which result in better overall deals from a public expenditure perspective, these are contingent on confidentiality. Confidentiality is a feature of all deals the HSE has made with pharmaceutical companies, as it is of Patient Access Schemes made by health authorities in other countries. It has achieved savings of, conservatively, over €500m over the next decade as a result of such deals.

Various oversight mechanisms are in place, such as the Comptroller and Auditor General, who would have access to relevant records but would also be required to observe the confidentiality requirements imposed by the companies on the HSE.

If the HSE disclosed the details of any confidential negotiations and their outcome to the world at large (which is understood to be the equivalent of a grant of access to a record under FOI), other pharmaceutical companies would refuse to negotiate with it. The increased expenditure on the drugs that these companies supply would either impact on budgets for other parts of the health service or result in fewer drugs receiving reimbursement approval.

Analysis

I accept the HSE's position that the manufacturers of novel drugs have a monopoly. It seems to me that the circumstances are completely different to those of the typical case of an FOI body tendering for the supply of goods or services in a competitive market.

I also accept the HSE's position that, in the circumstances, it has no scope to negotiate better deals with pharmaceutical companies other than in complete confidence. In addition, I accept its position that disclosure of records covered by this request could reasonably be expected to result in pharmaceutical companies refusing to enter into negotiations with the HSE in future. The content of the records, which I have examined, supports the position outlined. There is no doubt that difficult and protracted negotiations take place and that the conflicting demands pose a dilemma for all involved, not least the patients who will benefit from access to the novel drugs.

As the applicant knows, I understand that the published Lists comprise the price that the HSE would have to pay for the relevant drugs if no deal was done. In the case of Orkambi, for instance, I note that one packet has a list price of €12,144 (a 28 day supply). Based on 700 patients needing 13 packets a year, this drug alone would cost €110,510,400 based on its list price. While Orkambi may be a particularly expensive drug, I have no reason to dispute the amount the HSE says it has saved as a result of deals it has struck with drug manufacturers. It follows that I accept that the annual cost of treatment using novel drugs, in the absence of such deals, would be at considerable additional cost to the Exchequer. 

In the circumstances, it seems to me to be reasonable to expect that granting access to the records "could have a serious, adverse effect ... on the financial interests of the State". I find that section 40(1)(a) applies in the particular circumstances of this case. This is subject to the consideration of the public interest test at section 40(3), however.

Section 40(3)

Section 40(3) must be considered regarding a record to which section 40(1)(a) applies. It provides that section 40(1) does not apply in a case where the public interest would, on balance, be better served by granting than by refusing to grant the FOI request concerned.

On the matter of where the public interest lies, I have had regard to the comments of the Supreme Court in  The Governors and Guardians of the Hospital for the Relief of Poor Lying-In Women v. the Information Commissioner[2011] IESC 26 (the Rotunda case). In particular, the Supreme Court indicated that a public interest is "a true public interest recognised by means of a well known and established policy, adopted by the Oireachtas, or by law". Although these comments were made in relation to another provision of the FOI Act, I consider them to be relevant to consideration of public interest tests generally.

The FOI Act itself recognises a public interest in ensuring that FOI bodies are open about, and can be held accountable for, how they carry out their functions. However, the Act also recognises a public interest in protecting information that is exempt under its provisions. Specifically in this case, there is a public interest in not granting access to information that could have a serious, adverse effect on the financial interests of the State.

The applicant says that there is much concern about the medicines approval process at present, which she describes as opaque and lacking in transparency.

The HSE argues that the procedures for seeking reimbursement approval (including the details of the IPHA agreement), as set out in the Health (Pricing and Supply of Medical Goods) Act 2013, are transparent. It also says that summaries of the HTA recommendations, along with list prices and the minutes of the HSE Directorate board meetings recording outline decisions taken on reimbursement applications, are published on the NCPE and HSE websites, respectively.

The HSE also refers to sections 7(1) and 7(5) of the Health Act 2004. Section 7(1) provides that the object of the HSE is "to use the resources available to it in the most beneficial, effective and efficient manner to improve, promote and protect the health and welfare of the public." Section 7(5) obliges the HSE to have regard to the resources, wherever originating, that are available to it for the purpose of performing its functions, and the need to secure the most beneficial, effective and efficient use of those resources. The HSE argues that there is, accordingly, a clear statutory public interest in it using resources efficiently and achieving value for money.

It seems to me that the information already in the public domain serves the public interest in openness and accountability in this case to some extent. I accept that granting access to the records would further serve that public interest in that it would reveal the ultimate cost to the State of funding the various drugs, disclose the positions taken by the HSE in the negotiations, and promote accountability for the HSE's overall decision making process on reimbursement approvals. This public interest is entitled to significant weight, particularly when one considers the amount of public monies that are spent on novel drugs.

It must be recognised, however, that such details, by their nature, also disclose information about the negotiation tactics of the pharmaceutical companies and the deals they ultimately did with the State, which is information they require the State to keep confidential in order to do those deals. I also accept that there is a significant public interest in ensuring that the State, through the HSE, can continue to negotiate better terms with pharmaceutical companies, which reduce the overall costs of funding novel drugs and thus make funds available for other novel drugs or other health services.

I am conscious of the fact that the current system of arriving at a reimbursement process for medicines in order for the State to secure the best possible terms may not be ideal in terms of transparency and determining the value for money resulting from the particular deals struck. However, I can only consider the situation as it exists at present where there cannot be alternative suppliers.

Having considered the matter, I consider that the public interest in granting access to the records does not outweigh the public interest in refusing access to them. I also accept that sections 7(1) and (5) of the Health Act 2004 represent "a true public interest recognised by means of a well known and established policy, adopted by the Oireachtas, or by law" that weighs in favour of not granting access to the records.

Finally, section 18(1) provides, that "if it is practicable to do so", access to an otherwise exempt record shall be granted by preparing a copy, in such form as the head of the public body concerned considers appropriate, of the record with the exempt information removed. Section 18(1) does not apply, however, if the copy provided for thereby would be misleading (section 18(2) refers). Generally speaking, I take the view that neither the definition of a record nor the provisions of section 18 envisage or require the extracting of particular sentences or occasional paragraphs from the remaining withheld details for the purpose of granting access to those particular sentences or paragraphs.

I do not consider it practicable to attempt to extract any details in the records that might not qualify under section 40(1)(a) while at the same time ensuring that the redacted copies are not misleading under section 18 of the Act.

Other Records - withheld because of their general nature

The HSE withheld more than 1,000 other records that it did not list in the schedule to its internal review decision, on the basis that they are exempt under sections 31(1)(a) (legal professional privilege), 35 and 36. It has said that, given their general nature, the internal reviewer did not consider it necessary to conduct a detailed examination of the contents of each record.

It is not appropriate for this Office to decide on access to records in such circumstances. The most appropriate decision for me to make on these records is to annul the HSE's refusal of them and to require the HSE to undertake a fresh decision making process on them, subject to the applicant confirming to the HSE that she wishes it to do so. While not pre-empting any decision that the HSE may make, it is open to it to rely on section 15(1)(c) in relation to the records (subject to compliance with section 15(4)) in the first instance. Any decision to this effect, or under any other FOI Act exemption provision, is subject to the statutory rights of internal and external review.

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby vary the HSE's decision.

I affirm its refusal of the records it refused under sections 15(1)(d) and 37. I affirm its refusal to grant full access to the remainder of the 70 records, albeit under section 40(1)(a) rather than the provisions explicitly relied on.

I annul its application of section 15(1)(c) to those parts of the request seeking records of "new [i.e. "just novel"] drug approvals since October 2016", and its refusal of access to the 1000+ records that it withheld having regard to their general nature. I direct the HSE to undertake a fresh decision making process on these parts of the request/records, subject to the applicant confirming to the HSE that she wishes it to do so, and to inform the applicant of the outcome in accordance with section 13 of the FOI Act.

I specify that, subject to sections 24 and 26 of the FOI Act, effect shall be given by the HSE to my decision within five working days of the expiration of the 4 week period for the bringing of an appeal to the High Court from this decision as provided for at section 24(4) of the FOI Act.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

Peter Tyndall

Information Commissioner