AstraZeneca Pty Ltd v Minister for Health and Ageing
[2011] FCA 487
•12 May 2011
FEDERAL COURT OF AUSTRALIA
AstraZeneca Pty Ltd v Minister for Health and Ageing [2011] FCA 487
Citation: AstraZeneca Pty Ltd v Minister for Health and Ageing [2011] FCA 487 Parties: ASTRAZENECA PTY LTD v MINISTER FOR HEALTH AND AGEING & ORS (REFER TO SCHEDULE) File number: NSD 1034 of 2010 Judge: BUCHANAN J Date of judgment: 12 May 2011 Catchwords: ADMINISTRATIVE LAW – declarations sought that various advices provided to the Minister from the Pharmaceutical Benefits Advisory Committee did not contain advice as to whether two drugs were interchangeable on an individual patient basis – declarations sought that two determinations made by the Minister to determine a therapeutic group under the National Health Act 1953 (Cth) are invalid
HEALTH LAW – therapeutic groups – interchangeable on an individual patient basis – difference between “drug” and “pharmaceutical item” under the National Health Act 1953 (Cth)
Legislation: National Health Act 1953 (Cth) ss 84AB, 84AG, 85, 101 Date of hearing: 25 March 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 23 Counsel for the Applicant: Mr S Lloyd SC with Mr S Free Solicitor for the Applicant: Clayton Utz Counsel for the Respondents: Mr M Leeming SC with Ms M Allars Solicitor for the Respondents: Corrs Chambers Westgarth
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1034 of 2010
BETWEEN: ASTRAZENECA PTY LTD
ApplicantAND: MINISTER FOR HEALTH AND AGEING & ORS (REFER TO SCHEDULE)
Respondents
JUDGE:
BUCHANAN J
DATE OF ORDER:
12 MAY 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The second amended application is dismissed with costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1034 of 2010
BETWEEN: ASTRAZENECA PTY LTD
ApplicantAND: MINISTER FOR HEALTH AND AGEING & ORS (REFER TO SCHEDULE)
Respondents
JUDGE:
BUCHANAN J
DATE:
12 MAY 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
These proceedings have their origins in a complaint that a particular formulation of a cholesterol lowering drug (rosuvastatin 40 mg, sold as Crestor 40 mg tablets) was included with other formulations of the same and a similar drug in a “therapeutic group” (the Statins-HP therapeutic group) for the purpose of the Pharmaceutical Benefits Scheme (“the PBS”), which is governed by the National Health Act 1953 (Cth) (“the Act”). The two drugs comprising the group are atorvastatin and rosuvastatin. Atorvastatin tablets (sold as Lipitor) are available and listed on the PBS in 10, 20, 40 and 80 mg forms. Rosuvastatin tablets (sold as Crestor) are available and listed on the PBS in 5, 10, 20 and 40 mg forms. The drugs are each used to lower cholesterol in patients. They are not “bio-equivalent”. However, for present purposes, Crestor in a 40 mg form may be regarded as broadly equivalent to a 120 mg dose of Lipitor, which is not an approved dose in a single tablet. At the heart of the present proceedings is the contention that 40 mg Crestor tablets are not “interchangeable on an individual patient basis” with any formulated dose available in Lipitor tablets. The applicant argues, from this proposition, that 40 mg Crestor tablets should have been excluded from the Statins-HP therapeutic group.
The contention has major commercial significance for the applicant. The price that may be charged for a particular form of a listed drug is directly affected by the PBS listed price. PBS listed prices are affected by the lowest priced drug within a therapeutic group. Prices which may be charged for a drug are affected by whether the drug is protected by a patent. Atorvastatin and rosuvastatin are each protected by a patent but the patent for atorvastatin expires in Australia in May 2012. The applicant predicts that, upon the expiry of the patent, generic forms of atorvastatin will become available, which will lead to a 16% reduction in the price of rosuvastatin on the PBS.
The ultimate purpose of the present application seems to be, therefore, to quarantine at least 40 mg Crestor tablets from such a price reduction. In my view, the attempt to bring about such a result is based on a false premise, which was exposed early in the written submissions of the respondents in these terms:
5.The central error in AstraZeneca’s submissions is the conflation of the statutory terms “drug” and “pharmaceutical item”. Atorvastatin and rosuvastatin are drugs. The 40mg strength rosuvastatin tablet to be taken orally is a pharmaceutical item (because there are declarations under s85(2), (3) and (5) in relation to (a) the drug, (b) its form and (c) its manner of administration). The comparison involved in the PBAC advising whether two things may be “treated as interchangeable on an individual patient basis” is a comparison between drugs, not pharmaceutical items. For that short reason alone, this proceeding should be dismissed.
(Emphasis added)
This contention and the reason why it should be accepted require explanation. Part VII of the Act deals with “pharmaceutical benefits”. Division 5 – “General” – of Part VII includes provision for the establishment of the Pharmaceutical Benefits Advisory Committee (“the PBAC”). The functions of the PBAC are set out in s 101 of the Act. Relevantly, for present purposes, they include the following:
101(3)The Pharmaceutical Benefits Advisory Committee shall make recommendations to the Minister from time to time as to the drugs and medicinal preparations which it considers should be made available as pharmaceutical benefits under this Part and shall advise the Minister upon any other matter concerning the operation of this Part referred to it by the Minister.
…
(3BA)If the Committee is of the opinion that a drug or medicinal preparation should be made available as a pharmaceutical benefit under this Part, the Committee must, in its recommendation under subsection (3), specify whether the drug or medicinal preparation and another drug or medicinal preparation should be treated as interchangeable on an individual patient basis.
(3C)Where the Committee is of the opinion that a drug or medicinal preparation, or a class of drugs and medicinal preparations, should be made available as pharmaceutical benefits under this Part, but only in certain circumstances, the Committee shall, in its recommendation under subsection (3), specify those circumstances.
…
(4AA)If the Committee is of the opinion that the Minister should, or should not, determine a therapeutic group, the Committee must advise the Minister accordingly.
Correspondingly, s 84AG imposes functions and obligations upon the Minister with respect to the determination of therapeutic groups as follows:
84AG(1) The Minister may, by legislative instrument, determine:
(a) one or more therapeutic groups; and
(b) that 2 or more listed drugs are in the same therapeutic group.(1A)If the Minister proposes to make a determination under paragraph (1)(a), the Minister must obtain the advice in writing of the Pharmaceutical Benefits Advisory Committee in relation to the proposed determination.
(2)A determination for the purposes of paragraph (1)(b) may specify the circumstances in which a listed drug is, or is not, in a therapeutic group.
(3)In making a determination for the purposes of paragraph (1)(b), the Minister may have regard to advice (if any) given (whether before or after the commencement of this section) to the Minister by the Pharmaceutical Benefits Advisory Committee to the effect that a drug or medicinal preparation should, or should not, be treated as interchangeable on an individual patient basis with another drug or medicinal preparation.
The applicant’s argument is that the inclusion of the 40 mg formulation of rosuvastatin in the Statins-HP therapeutic group reveals that the PBAC and a delegate of the Minister each misunderstood the nature of functions given to them by the Act and failed to perform their functions as required by the Act. That argument should not be accepted.
One issue may be identified at the outset and put aside. It is clear that the Minister must obtain the advice of the PBAC before determining a therapeutic group and may have regard to advice from the PBAC when including two drugs in the same group. The Minister is neither bound by that advice, nor is the Minister bound by any view expressed by the PBAC as to the “circumstances” in which a listed drug is, or is not, in a therapeutic group. I will assume that such a “circumstance” might include the excision of a particular pharmaceutical item such as 40 mg rosuvastatin tablets. It does not automatically follow, therefore, that an error by the PBAC necessarily infects any decision by the Minister, or a delegate of the Minister, about those matters. On the other hand, as counsel for the Minister accepted, erroneous advice by the PBAC might, in some circumstances, have that consequence. In the present case there is no need to examine this question further because, for reasons to be explained, there is no reason to find that the PBAC misunderstood its own functions or failed to perform them in accordance with the Act. Nor is there any basis for a conclusion that the Minister’s delegate failed in either respect.
Division 2 of Part VII of the Act deals with the “supply of pharmaceutical benefits”. Such benefits are provided by the Commonwealth in relation to “drugs and medicinal preparations” which are “declared” by the Minister (s 85). Section 84AB provides:
84AB If:
(a)a declaration under subsection 85(2) is in force in relation to a drug or medicinal preparation (the drug); and
(b)a determination under subsection 85(3) is in force in relation to a form of the drug; and
(c)a determination under subsection 85(5) is in force in relation to a manner of administration of that form of the drug;
then the drug in that form with that manner of administration is a pharmaceutical item.
(Emphasis in original)
It may thus be seen that a clear distinction is made between a “drug” (defined in s 84AB(a) by reference to a declaration under s 85(2)) and a “pharmaceutical item” (defined as having three distinct features). The distinction is reflected in a number of provisions of the Act. It is one which is integral to the operation of Part VII of the Act. The argument for the applicant tended to gloss over this distinction, but I am satisfied it is an important one, which is central to the question requiring examination in the present case.
The additional features required before a drug in a particular form with a particular manner of administration is regarded as a pharmaceutical item are identified in s 85(3) and (5) as follows:
85(3)The Minister may, by legislative instrument, determine, by reference to strength, type of unit, size of unit or otherwise, the form or forms of a listed drug.
…
(5)The Minister may, by legislative instrument, determine the manner of administration of a form of a listed drug, being a form of the drug in relation to which a determination under subsection (3) is in force.
Relevantly for present purposes, the availability of rosuvastatin (Crestor tablets) in a 40 mg tablet form leads separately to declarations about the form and administration of the drug which, in turn, permit identification of tablets of that dose as a pharmaceutical item. These are separate and additional elements to declaration of the drug itself (in this case rosuvastatin).
Section 101(3BA) (in the case of the PBAC) and s 84AG(3) (in the case of the Minister) each direct attention to the question of whether a drug should “be treated as interchangeable on an individual patient basis” with another drug. In the case of the PBAC attention to the issue is mandatory (although the obligation arises in the context of an opinion on whether the drug should be made available as a pharmaceutical benefit). By contrast, the Minister “may” have regard to advice by the PBAC about that issue. Again, it is necessary to note that the opinion to be formed relates to a drug and not to a pharmaceutical item. In the present case the drugs in question were rosuvastatin and atorvastatin. There was no obligation on the PBAC or the Minister, in my view, to give consideration at this point to the possible interchangeability of particular doses of either drug. Furthermore, to the extent that it is relevant, it is clear that the PBAC did consider (but did not accept) submissions by the applicant about that very issue and that its conclusions and advice in that respect were put before the Minister.
In March 2009 the PBAC met to consider whether atorvastatin and rosuvastatin should together comprise a new therapeutic group for pharmaceutical benefits. The PBAC advised:
In accordance with subsection 101(4AA) of the National Health Act 1953, PBAC advises the Minister that the two drugs atorvastatin and rosuvastatin should together comprise a new therapeutic group. In doing so, and in accordance with Subsection 101(3BA), PBAC also advises that the Committee is of the opinion that these two drugs are interchangeable on an individual patient basis.
In May 2009 the applicant made a submission to the PBAC suggesting that Crestor 40 mg tablets should not be included in the new therapeutic group because there was no equivalent dosage of atorvastatin (Lipitor) available. The contention was based on earlier acceptance by the PBAC of a broad equivalence between the two drugs, for therapeutic purposes, in the ratio of 1 mg: 3 mg rosuvastatin to atorvastatin. It may be noted that, at this equivalence ratio, there is no direct correspondence between any of the dosage levels of Crestor and Lipitor. One way of looking at the matter is that the Lipitor dosages may be seen as graduated in doses equating to two-thirds of the Crestor dosages. Another way of looking at the matter is to regard the two drugs as providing the following range of doses of increasing strength: Lipitor 10 mg, Crestor 5 mg (15 mg Lipitor equivalent); Lipitor 20 mg, Crestor 10 mg (30 mg Lipitor equivalent); Lipitor 40 mg, Crestor 20 mg (60 mg Lipitor equivalent); and Lipitor 80 mg and Crestor 40 mg (120 mg Lipitor equivalent). Seen in this way the Crestor 40 mg tablet is the strongest dose available for prescription in an individual tablet in a range of doses from 10 mg to 120 mg (Lipitor equivalent).
The burden of the argument made by the applicant to the PBAC did not focus upon any general lack of equivalence. Rather, it sought to make the point that atorvastatin (Lipitor) was not available in a single dose equivalent to the highest dose of rosuvastatin (Crestor) 40 mg. It is not necessary to deal with the merits (or any lack of merit) of the argument advanced to the PBAC by the applicant. It is quite apparent that the PBAC gave it attention and that its conclusions were conveyed to the Minister. In an advice to the Minister in July 2009 the PBAC stated:
In relation to the submission’s request to consider the interchangeability of a specific pharmaceutical item of rosuvastatin (the 40 mg strength tablet) with pharmaceutical items of atorvastatin, the PBAC formed the view that the legislation obliged the Committee to consider the interchangeability on an individual patient basis of the drugs forming a therapeutic group, ie not necessarily the interchangeability on an individual patient basis of each individual pharmaceutical item of these drugs. The PBAC retained its view that, consistent with the overall policy for therapeutic groups and when considering all pharmaceutical items of both drugs, the two drugs rosuvastatin and atorvastatin are interchangeable on an individual patient basis.
Contrary to the submissions of the applicant, this passage does not reveal any misunderstanding by the PBAC of the legislative scheme. It is also apparent that, in the Minister’s office, the submission was treated as embodying a request that 40 mg rosuvastatin tablets should be excluded from the therapeutic group to be formed. A Minute to the Minister, received on 17 August 2009, recorded:
The sponsor submitted a minor submission requesting that 40 mg tablet strength be omitted from the new Therapeutic Group consisting of the two lipid lowering medicines atorvastatin and rosuvastatin announced in the 2009/2010 budget.
The PBAC reiterated its advice that the two drugs atorvastatin and rosuvastatin should comprise a new Therapeutic Group and that the 40 mg rosuvastatin tablet should be included in this new group.
Following the advices from the PBAC in March and July 2009, the new Statins-HP therapeutic group was determined in Legislative Instrument PB 80 of 2009, which commenced on 1 September 2009. On 21 January 2010 PB 80 of 2009 was revoked by Legislative Instrument PB 1 of 2010 which, at the same time, re-established the Statins-HP group from that date. The new legislative instrument also determined three new therapeutic groups and determined that six therapeutic groups which had earlier been prescribed in the National Health (Pharmaceutical Benefits) Regulations 1960 now be determined under that instrument. The PBAC supported the inclusion of all the groups in one legislative instrument. No further substantive advice about the Statins-HP group was sought or given, but, so far as that group was concerned, the change was only a change in formal instrument and no new decision or determination was required concerning the establishment of the group or the drugs to be included in it.
The relief sought by the applicant, based upon its second amended statement of claim, was set out in its second amended application as follows:
1.A declaration that the March 2009 Advice of the Pharmaceutical Benefits Advisory Committee (PBAC) was not, for the purposes of the National Health Act 1953 (Cth) (NH Act), advice as to whether atorvastatin and rosuvastatin should, or should not, be treated as interchangeable on an individual patient basis.
2.Further and in the alternative to 1, a declaration that, in providing the March 2009 Advice, PBAC erred in law by failing to consider whether it should recommend to the Minister that, pursuant to s. 84AG(2) of the NH Act, rosuvastatin in its 40mg form should not be included in the proposed Statins-HP Group.
3.A declaration that the July 2009 Advice of PBAC was not, for the purposes of the NH Act, advice as to whether atorvastatin and rosuvastatin should, or should not, be treated as interchangeable on an individual patient basis.
4.Further and in the alternative to 3, a declaration that, in providing the July 2009 Advice, PBAC erred in law by failing to consider whether it should recommend to the Minister that, pursuant to s. 84AG(2) of the NH Act, rosuvastatin in its 40mg form should not be included in the proposed Statins-HP therapeutic group.
5.A declaration that the determination made by the Minister’s delegate on 28 August 2009 purporting to determine the existence of a Statins-HP therapeutic group (2009 TG Instrument) was invalid and of no effect.
6.A declaration that the determination made by the Minister’s delegate on 19 January 2010 purporting to determine the existence of a Statins-HP therapeutic group (2010 TG Instrument) is invalid and of no effect.
7.An order setting aside the 2010 TG Instrument.
8.Costs
Contrary to the submissions of the applicant in the present case, neither the PBAC nor the Minister was obliged, in my view, to consider whether particular doses of rosuvastatin or atorvastatin were interchangeable on an individual patient basis. An assessment of interchangeability, where necessary, must consider the interchangeability of drugs, not particular doses of drugs or of individual pharmaceutical items. Accepting that it was open to the PBAC to recommend the exclusion of a particular dose of a particular drug from a therapeutic group by way of specifying the circumstances in which a listed drug is, or is not, in a therapeutic group (s 84AG(2) and s 101(3C)), nevertheless there was no failure by the PBAC to understand the nature of its functions, or to perform those functions, constituted or evidenced by the fact that it did not accept the applicant’s submission to it that Crestor 40 mg tablets should be excluded from the Statins-HP therapeutic group.
The Minister’s attention was drawn, by briefing notes at the relevant time, to the various advices of the PBAC, to the applicant’s submission that 40 mg rosuvastatin tablets be omitted from the therapeutic group and to the PBAC’s reiteration of its previous advice that the 40 mg rosuvastatin tablet should be included. There is no basis to conclude that the Minister, those advising the Minister, or the Minister’s delegate misunderstood the nature of the functions given to the Minister by the Act or that those functions were not performed in accordance with the Act. The challenge to the validity of PB 80 of 2009 does not succeed.
The challenge to the validity of PB 1 of 2010 depends upon a successful challenge to the validity of PB 80 of 2009. As a challenge to the validity to PB 80 of 2009 does not succeed there is no further issue arising with respect to PB 1 of 2010.
There were other reasons advanced by the respondent as to why the application should not succeed. One such reason was that the applicant had unreasonably delayed in bringing the present application. There was no statutory limit on the commencement of the proceedings. The proceedings were commenced less than 12 months after PB 1 of 2010 was made. During that period representations were made by the applicant, but without success. I do not accept the contention that relief would be withheld in this case as an exercise of discretion, if it was otherwise justified, on the ground of delay in commencing the proceedings. The other reasons advanced sought to quarantine the Minister’s actions from any flaw in the deliberations of the PBAC, or provided “technical” arguments why PB 1 of 2010 was beyond challenge. Those other reasons would only arise for consideration if the primary ground of resistance to the present application was not accepted. In other words, they would require evaluation in circumstances where it was clear that the PBAC had misunderstood its functions or proceeded upon a misunderstanding of the Act. That would not, necessarily, be fatal to a further argument that, nevertheless, the application should be rejected but it is difficult to evaluate arguments of that kind upon an hypothesis which has been neither accepted nor its precise features and consequences identified. None of the additional arguments struck me as so persuasive that they could be usefully discussed in the abstract, without some concrete findings of error, on the part of the PBAC, from which to proceed. Accordingly, I will not lengthen this judgment by dealing with them.
For reasons earlier stated, none of the relief sought should be granted. The second amended application must be dismissed. Costs should follow the result.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate:
Dated: 12 May 2011
SCHEDULE OF PARTIES
AstraZeneca Pty Ltd
Applicant
Minister for Health and Ageing
First Respondent
Professor Lloyd Sansom (In his capacity as Chairman of the Pharmaceutical Benefits Advisory Committee)
Second Respondent
Dr Jim Buttery (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Third Respondent
Professor Terry Campbell (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Fourth Respondent
Professor Jennifer Doust (In her capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Fifth Respondent
Professor Albert Frauman (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Sixth Respondent
Professor Michael Frommer (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Seventh Respondent
Professor David Isaacs (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Eighth Respondent
Professor Claire Jackson (In her capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Ninth Respondent
Professor David Le Couteur (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Tenth Respondent
Professor Geoff McColl (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Eleventh Respondent
Mr Mitch Messer (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Twelfth Respondent
Dr Karen Peachey (In her capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Thirteenth Respondent
Dr Andrew Roberts (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Fourteenth Respondent
Dr Rashmi Sharma (In her capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Fifteenth Respondent
Associate Professor Rosalie Viney (In her capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Sixteenth Respondent
Professor Robyn Ward (In her capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Seventeenth Respondent
Dr Steven Hambleton (In his capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Eighteenth Respondent
Ms Frances Wilson (In her capacity as a member of the Pharmaceutical Benefits Advisory Committee)
Nineteenth Respondent
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