Decision

Dispute resolution panel decision June 2025: DHSC and Haleon UK Ltd

Published 7 August 2025

Case number: VPAGDRP/June/2025/02

In the matter of Haleon UK Ltd (‘Haleon’) and the Department of Health and Social Care (‘DHSC’).

VPAG dispute resolution panel

This is a decision of the dispute resolution panel (‘the panel’ or ‘DRP’) appointed under the 2024 voluntary scheme for branded medicines pricing, access and growth (VPAG) to consider and provide reasoned decisions in respect of disputes arising under the 2024, 2019, 2014, 2009, 2008 and 2005 voluntary schemes.

This dispute arises and is referred to the panel under the 2024 scheme. The panel consists of:

• Jayne Salt (Chair)
• Stephen Brown
• Alison Clough

Ms Clough informed the parties at the start of the hearing that she had previously worked for GlaxoSmithKline before its demerger from Haleon. She did not consider this to create a conflict of interest. Neither of the parties raised any concern about this.

Issues

This dispute concerns the provisions of VPAG relating to joining and leaving the scheme following the submission by a representative of Haleon of an application form to join VPAG in January 2024, and whether it is bound by the terms of VPAG if the form was submitted in error, including whether it is subject to the VPAG payment rebate mechanism.

Background

Haleon was notified in December 2023 of the terms of VPAG (replacing the previous voluntary scheme for suppliers of branded medicines) effective from 1 January 2024 inviting it to decide whether to join the scheme by 15 January 2024. Haleon had not been a member of the predecessor 2019 ‘voluntary scheme for branded medicines pricing and access’, and so, by default, its sales of relevant branded medicines were governed by the statutory scheme.

A member of Haleon’s staff arranged for a director of Haleon to sign the form indicating Haleon’s wish to join the VPAG scheme. DHSC confirmed Haleon’s membership of VPAG by email in January 2024. There was some correspondence between DHSC and Haleon in the period January to April 2024 but there was no recognition by Haleon during that time that any error had occurred.

An email from DHSC in April 2024 triggered an investigation by Haleon which led it to contact DHSC in May 2024 to explain that it had mistakenly submitted the form to join VPAG. It requested that its membership be cancelled and that it be allowed to revert to membership of the statutory scheme, on the basis that it had not intended to join VPAG, had intended to remain in the statutory scheme and that the provisions of VPAG did not suit its business. This request was refused on the basis that withdrawal from VPAG can only be done in accordance with the provisions of VPAG regarding timing of exit and on notice.  

Definitions (from legislation and the terms of VPAG)

National Health Service Act 2006 (‘the NHS Act’)

Section 261(1) of the NHS Act provides:

(1) The powers under this section may be exercised where there is in existence a scheme (referred to in this section and sections 262, 263 and 264A as a “voluntary scheme”) made by the Secretary of State and the industry body for one or more of the following purposes –

(a) limiting the prices which may be charged by any manufacturer or supplier to whom the scheme relates for the supply of any health service medicines,

(b) limiting the profits which may accrue to any manufacturer or supplier to whom the scheme relates in connection with the manufacture or supply of any health service medicines,

(c) providing for any manufacturer or supplier to whom the scheme relates to pay to the Secretary of State an amount calculated by reference to sales or estimated sales of any health service medicines (whether on the basis of net prices, average selling prices or otherwise).

Section 261(2) provides:

(2) For the purposes of this section and sections 262 and 263, a voluntary scheme must be treated as applying to a manufacturer or supplier to whom it relates if–

(a) he has consented to the scheme being so treated (and has not withdrawn that consent), and

(b) no notice is in force in his case under subsection (4).

Section 261(4) provides:

If any acts or omissions of any manufacturer to whom a voluntary scheme applies (“a scheme member”) have shown that, in the scheme member’s case, the scheme is ineffective for any of the purposes mentioned in subsection (1), the Secretary of State may by a written notice given to the scheme member determine that the scheme does not apply to him.

Section 261(6) provides that:

Consent under subsection (2)(a) must be given, or withdrawn, in the manner required by the Secretary of State.

2024 voluntary scheme for branded medicines pricing, access and growth (VPAG)

Introduction

“The 2024 Voluntary Scheme is a voluntary scheme as described under section 261(1) of the NHS Act which is not binding under the law of contract.”

Joining the 2024 voluntary scheme

“A manufacturer or supplier of a Branded Health Service Medicine wishing to join the 2024 Voluntary Scheme with effect from 1 January 2024 must complete and submit ‘Form A’ (as set out at Annex 1) and where applicable ‘Form A1’ (as set out at Annex 1) to the Department such that the deemed delivery date is no later than 15 January 2024.”

Leaving the 2024 voluntary scheme

“A Scheme Member may, at any time, give notice of its intention to leave the 2024 Voluntary Scheme by completing and submitting to the Department ‘Form B’ (as set out at Annex 1). If a Scheme Member wishes to leave the 2024 Voluntary Scheme, it may do so on the last calendar day of the calendar year provided that the deemed date of delivery of ‘Form B’ is at least three (3) months prior to the last calendar day of the year. If the deemed date of delivery of ‘Form B’ is less than three (3) months prior to the last calendar day of the year, the Scheme Member will continue to be a member of the 2024 Voluntary Scheme until the last calendar day of the following calendar year. Notice given by a Scheme Member under this paragraph is irrevocable.”

Disapplication of the 2024 voluntary scheme

“Under the NHS Act, the Department has powers to determine that the 2024 Voluntary Scheme does not apply to a Scheme Member in certain circumstances. The Department may exercise those powers by written notice either immediately or on such date specified in the notice if any acts or omissions of a Scheme Member have shown that, in the Scheme Member’s case, the 2024 Voluntary Scheme is ineffective for any of the purposes mentioned in s.261(1) of the NHS Act. The Parties agree that this will be the case in the following (non-exhaustive) circumstances:

• the Scheme Member fails to pay all sums due under the 2024 Voluntary Scheme and/or the 2019 Voluntary Scheme (where applicable) within sixty (60) calendar days of a written demand (excluding, in respect of sums due under the 2024 Voluntary Scheme, any amount(s) that is the subject of a bona fide dispute which (as at the date the payment period of any written demand expires) has been referred to the dispute resolution procedure of the 2024 Voluntary Scheme);
• the Scheme Member fails to pay any sum as directed by the dispute resolution panel (DRP) under the 2024 Voluntary Scheme within sixty (60) calendar days of a written demand;
• in relation to any dispute between the Department and the Scheme Member arising out of or in connection with the 2005, 2008, 2009 or 2014 pharmaceutical price regulation schemes or the 2019 Voluntary Scheme, the Scheme Member fails to pay any sum as directed by the relevant dispute resolution panel under the relevant scheme within sixty (60) calendar days of a written demand;
• in relation to any dispute between the Department and the Scheme Member arising out of or in connection with the 2005, 2008, 2009 or 2014 pharmaceutical price regulation schemes or the 2019 Voluntary Scheme, the Scheme Member fails to comply with any decision of the relevant dispute resolution panel under the relevant scheme within sixty (60) calendar days of the decision of the relevant dispute resolution panel;
• the Scheme Member materially fails to comply with the requirements of the 2024 Voluntary Scheme and/or the 2019 Voluntary Scheme (where applicable); and/or
• the Scheme Member has entered into an arrangement, whether or not legally enforceable, whose main purpose or one of whose main purposes is to reduce or avoid a payment in respect of a sale of a Branded Presentation that either that Scheme Member or another manufacturer or supplier would otherwise be liable to make under the 2024 Voluntary Scheme or the Statutory Scheme.”

Powers of the DRP (annex 15)

“The DRP shall either refer a matter to the Department for reconsideration under direction or substitute its own decision in respect of that matter.”

Points in dispute (from the position statements and skeleton arguments)

DHSC’s position, in summary, is that Haleon joined VPAG by submitting the relevant form and was subject to its provisions during 2024 as the provisions of VPAG did not allow it to exit the scheme other than on the last day of the calendar year, provided at least 3 months prior notice is given.

Haleon’s position, in summary, is that it should be treated as having remained in the statutory scheme as it never intended to or consented to join VPAG as ‘Form A’ was submitted in error.

An initial point of dispute had been whether Haleon’s submission of ‘Form A’ could properly be categorised as a ‘mistake’. During oral submissions at the hearing, DHSC clarified its position as follows: that it did not doubt the credibility of Haleon’s personnel when they said that in submitting ‘Form A’ there was no intention to join VPAG, but there was no mistake of fact as the form was submitted intentionally, but it accepted a mistake of intention. It distinguished between a mistake of fact and a mistake of intention and submitted that a mistake solely in the mind of Haleon did not entitle it to a remedy.

Evidence relied upon

Haleon relied upon witness statements from personnel at Haleon, namely:

• a member of administrative staff who submitted the form without knowledge of either of the schemes governing branded medicines
• a director who signed the form who also had no knowledge of the different schemes
• a senior member of the finance team, who did have some knowledge of the existence of 2 schemes and was copied into the correspondence submitting the form to join VPAG, but who did not pay attention to it

It relied also on:

• correspondence between Haleon and DHSC
• the ‘voluntary’ nature of the scheme
• legislation
• case law

DHSC relied principally upon the provisions of VPAG. It disputed Haleon’s interpretation of and reliance on legislation. It referred to case law on the issue of liability in the event of mistake.

Principal arguments (from the position statements, skeleton arguments and oral submissions)

On behalf of Haleon (in summary):

• a voluntary scheme can only be applied by consent - relying on section 261(2) of the NHS Act, so in this case Haleon did not consent, so the scheme cannot be applied
• the Secretary of State should exercise his or her discretion to disapply VPAG under the provisions of VPAG and should exercise the discretion fairly, reasonably and in a way compatible with the European Convention on Human Rights (ECHR)
• the Secretary of State, through the DHSC decision committee, acted unlawfully in rejecting Haleon’s request for reversal of its mistaken application to join VPAG and to confirm it as a member of the statutory scheme throughout 2024 by failing to take into account:
  • the background and circumstances of the mistaken submission of the form
  • the financial impact on Haleon of membership of VPAG
  • the interference with ECHR Article 1 of Protocol 1 rights (peaceful enjoyment of possessions - relying on case law establishing the principle that a price cap constitutes a control on the use of property)
• a voluntary scheme cannot be applied after withdrawal of consent relying on section 261(2) of the NHS Act, so could not be effective after notice of withdrawal was sent, dated 26 July 2024

On behalf of DHSC (in summary):

• ‘Form A’ was clearly labelled as a form to join VPAG, was signed and returned to the correct email address. Therefore there was no mistake as to fact in its submission. The mistake was as to the intention in submitting ‘Form A’
• the defence of mistake cannot be relied upon as the mistake was solely as to Haleon’s own understanding and was due to a failure to scrutinise or understand the consent form
• DHSC was entitled to rely on the consent form and was under no obligation to investigate the validity of the consent as there was nothing on the face of the form to indicate that the consent was not valid as it was signed by a director of Haleon
• it was not irrational to refuse to exercise the discretion to disapply the scheme in the circumstances of this case as there was no reason under the provisions of VPAG that would require or justify DHSC to treat VPAG as not applying to Haleon
• the power to disapply the provisions of VPAG applies prospectively, only relying on the wording of section 261(4) of the NHS Act (“does not apply to it”) indicating the disapplication from a certain date onwards and not retrospectively
• consent must be withdrawn in the manner required by the Secretary of State, relying on section 261(2)(a) of the NHS Act and section 261(6). This means that there is no provision for exiting the scheme prior to the last day of the calendar year on 3 months’ notice. This provision was specifically negotiated as part of VPAG to maintain the stability and integrity of VPAG, and to make an exception for Haleon would undermine the integrity of the scheme and be inconsistent and irrational
• there was no interference with Haleon’s right to enjoy its possessions as it was Haleon’s voluntary act which subjected it to the terms of VPAG. In any event, any interference had a legitimate aim of fulfilling the aims of VPAG

Conclusions

Based on its interpretation of the provisions of VPAG, the written statements of position with supporting evidence from Haleon and DHSC, the oral submissions at the hearing, and the discussions arising from the presentations, the panel reached the following conclusions. It structured its decisions around the list of questions that the parties submitted and agreed in advance as needing to be addressed by the DRP.

Question 1

Did Haleon UK sign and submit ‘Form A’ (consent to join the 2024 VPAG scheme) given for the purposes of section 261(2)(a) of the NHS Act in error on 12 January 2024?

Panel decision

Based on the witness statements from Haleon personnel, the internal correspondence within Haleon in the hearing bundle, the prior participation in the Statutory Scheme and the evidence from Haleon personnel of the nature of Haleon’s business as unsuitable for the 2024 VPAG Scheme, the panel concluded that ‘Form A’ was submitted in error on the basis of a mistaken understanding as to its nature and effect and due to a lack of scrutiny of its contents.

Question 2

After being informed of the alleged error on 7 May 2024, was the Secretary of State obliged to treat the 2024 VPAG scheme as applying to Haleon UK from 1 January 2024 following receipt of ‘Form A’?

Panel decision

Based on the provisions in VPAG for joining the scheme, the Secretary of State was obliged to treat the 2024 VPAG scheme as applying to Haleon UK from 1 January 2024 following receipt of a completed ‘Form A’, since the required mechanism for joining the scheme had been followed and no reason was apparent for rejecting the application form. There is no provision for exiting the scheme where an applicant has failed to exercise due diligence regarding the process for joining the scheme.

Question 2a

Was the Secretary of State required to consider, or did he have discretion to consider, whether effective consent had been given for the purposes of section 261(2) of the NHS Act?

Panel decision

The Secretary of State was entitled to infer from the submission of a completed ‘Form A’ that effective consent had been given. Since it was signed by a director of Haleon, there was nothing to cause DHSC to question the authenticity of ‘Form A’ and nothing to indicate that it was not a valid consent (such as, for example, a lack of signature). In the absence of any indication to the contrary, there was no obligation or discretion to consider whether effective consent was given. The panel also noted that nothing in section 261(2) of the NHS Act requires the Secretary of State to make further investigation beyond the contents of the consent form.

Question 2b

Did the Secretary of State have the power or discretion to treat the 2024 VPAG scheme as not applying to Haleon UK, from 1 January 2024 to 31 December 2024, or for some other period?

Panel decision

Based on the provisions of VPAG for exiting the scheme, and for disapplying the scheme, the Secretary of State had no power or discretion to treat the scheme as not applying to Haleon for all or part of the calendar year 2024. The terms are clear that the scheme, once joined, cannot be exited before the end of the calendar year and only upon service of 3 months’ notice.

The power to disapply the scheme in certain circumstances did not give the Secretary of State the power to treat the scheme as not applying to Haleon because, while the criteria for disapplication are expressed to be ‘non exhaustive’, it is clear that they are aimed at payment issues and not at a situation where a participant simply wishes to leave the scheme mid-year. Otherwise the exit provisions, negotiated to maintain the integrity of the scheme, would be defeated.

Question 2c

Did the Secretary of State, through the decision committee, act unlawfully in either:

• failing to consider whether effective consent had been given for the purposes of section 261(2) of the NHS Act
• failing to exercise his discretion to treat the 2024 VPAG scheme as not applying to Haleon UK, from 1 January 2024 to 31 December 2024, or for some other period?

Panel decision

It follows from the answers to question 2a and 2b that the answer to 2c must be in the negative for the same reasons.

Question 3

Did the Secretary of State, acting through the decision committee, act unlawfully in concluding that Haleon UK could not withdraw from the 2024 VPAG scheme with immediate effect, either:

• from 26 July 2024 (once Haleon UK submitted its certificate of notice of withdrawal of consent for the 2024 VPAG scheme to be treated as applying)
• from some earlier date?

Panel decision

Based on the provisions of leaving the scheme contained within VPAG to which Haleon consented by submission of its application to join the scheme, the Secretary of State, acting through the decision committee, did not act unlawfully in concluding that Haleon could not withdraw from the scheme with immediate effect from 26 July 2024 or some earlier date because the earliest date permitted under the exit provisions is the last day of the calendar year.

Question 4

Should the DRP remit the matter back to the decision committee or substitute its own decision?

If the latter:

Should the DRP conclude that Haleon UK did not give effective consent to join the 2024 VPAG scheme for the purposes of section 261(2)(a) of the NHS Act because Haleon UK submitted ‘Form A’ in error and did not intend to consent to the 2024 VPAG scheme applying to it?

Panel decision

The panel’s decision is to uphold the decision made by DHSC that Haleon was subject to the VPAG scheme for the calendar year 2024. Reference was made by DHSC to the provisions of the Senior Courts Act 1981 in terms of not granting relief if a decision is likely to be the same and Haleon submitted that the provisions had no relevance to the DRP. The panel did not consider that remitting the decision or substituting its own decision arises in view of its decision to uphold the decision of DHSC.

Question 5

If the Secretary of State has a power or discretion to decide that a voluntary scheme does not apply where a manufacturer or supplier has given consent to join that scheme in error, should the DRP exercise that discretion to determine that the 2024 VPAG scheme should not apply to Haleon UK from 1 January to 31 December 2024, or some other period, in all the circumstances of this case?

Panel decision

The Secretary of State does not have a power or discretion to decide that a voluntary scheme does not apply where consent was given in error as this would defeat terms specifically negotiated into the scheme to ensure the integrity of the scheme. It follows that the DRP is not in a position to exercise such discretion.

Question 6

Would the application of the 2024 VPAG scheme to Haleon UK constitute an interference with its property, namely branded pharmacy and general sales list medicines manufactured and supplied by Haleon UK and the bundle of rights and interests associated with them (including without limitation their investments and goodwill in their businesses), under Article 1 of Protocol 1 of the ECHR? If so:

Did the interference have a legitimate aim?

Was the interference proportionate to the aim pursued?

Panel decision

The application of the VPAG scheme to Haleon did not constitute an interference with its property because by joining the scheme it voluntarily submitted to the terms of the scheme. Article 1 of Protocol 1 of the ECHR (the right to peaceful enjoyment of property) is a qualified and not an absolute right:

The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

It follows from the panel’s earlier conclusions that Haleon should be treated as a member of the scheme and that payments due under the scheme did not constitute an interference with its property.

General conclusions

The panel considered that its remit and purpose is to correctly apply the provisions of VPAG according to the natural meaning of its terms and provisions and not to be responsible for analysis of the lawfulness of the VPAG provisions. This is because the law allows for the establishment of voluntary schemes (section 261 of the NHS Act) and participants then have an option as to whether to join the scheme or not.

The panel were referred to the law of contract and the doctrine of ‘non est factum’ (‘it is not the deed’). The panel did not consider this to be relevant because VPAG expressly states that it is not binding under the law of contract.

The panel was referred to the Secretary of State acting ‘ultra vires’ (‘beyond the powers’) on the basis that once consent was withdrawn there was no lawful basis to apply the scheme. It was submitted on behalf of Haleon that the provision to restrict exit from the scheme to the end of a calendar year is unlawful on the basis that consent is required. The panel considered it to be outside its remit to make a judgement on the veracity of such arguments as it considered that its remit was confined to applying the terms of VPAG. 

The panel heard the argument that the submission of a form is not determinative of consent under section 261(6) of the NHS Act, which states that consent must be given, or withdrawn “in the manner required by the Secretary of State”, because there are circumstances in which a form may not be accepted - for example, if it is not signed. The panel was not persuaded that this argument had any relevance in this case in view of its conclusion that there was no reason for DHSC to question the validity of the form of consent. 

The panel was referred to case law on interference with property rights. The panel concluded that the DHSC action did not constitute an interference with Haleon property because by joining the scheme Haleon voluntarily submitted to the terms of VPAG, and that further analysis of the lawfulness of the approach was outside the remit of the panel.

There was reference in Haleon’s submissions to an error in correspondence by DHSC in referring to the company as a member of the statutory scheme. Although DHSC conceded an error in one piece of correspondence, the panel did not consider this to be of significant importance since it appeared to be a minor administrative error after the submission of ‘Form A’ by Haleon, and the company had received other communications confirming its membership of the voluntary scheme.

There was reference in submissions to consistency in application of the scheme and details of other cases. The panel concluded that although the consistent application of the VPAG scheme is of high importance, the details of other previous cases were not relevant in view of the issues of this particular case. The panel’s conclusions were based on the provisions of VPAG governing joining, leaving and disapplying the scheme, and these provisions are clearly specified.

The panel was grateful for the engagement of the parties in extensive and well-meaning discussions to try to resolve the dispute before the hearing, albeit unsuccessfully. It was also grateful to both parties for the detailed and considered position statements, skeleton arguments and oral submissions at the hearing which were of great assistance to the panel in clarifying the issues to be addressed and the positions being proposed.