Pfizer Pty Ltd v Birkett
[2001] FCA 828
•2 JULY 2001
FEDERAL COURT OF AUSTRALIA
PFIZER PTY LTD v BIRKETT
[2001] FCA 828
N328 of 2000Black CJ, Branson and Katz JJ
1 In accordance with the practice of the Federal Court in certain cases of public interest, the members of the Full Court who decided this appeal (Black CJ, Branson and Katz JJ) have prepared this brief summary of their reasons for judgment. The summary is intended to assist in the understanding of the Court’s reasons but is not intended to be a substitute for the Court’s reasons, which remain the only authoritative pronouncement.
2. In this case, Pfizer Pty Ltd (“Pfizer”), the importer of the drug Viagra, challenged the decision of the Pharmaceutical Benefits Advisory Committee (“the Committee”) not to recommend to the Minister for Health and Aged Care that Viagra be declared a pharmaceutical benefit and thus be available under the Commonwealth’s Pharmaceutical Benefits Scheme.
3. That decision meant that Viagra, although available upon prescription, cannot be made available to the public under Commonwealth subsidy. Under the National Health Act 1953 (Cth) a drug attracts a Commonwealth subsidy only if the Minister has declared it to be a pharmaceutical benefit under the Scheme, and the Minister cannot make such a declaration unless the Committee has so recommended. Accordingly, the Committee’s decision not to recommend that Viagra be included in the Pharmaceutical Benefits Scheme meant that it did not reach the stage of ministerial consideration.
4. Pfizer sought judicial review of the Committee’s decision in this Court. It challenged the way in which the Committee reached its decision, claiming that the Committee did not act according to the law. Amongst other things, Pfizer claimed that the Committee wrongly took into account the fact that, in its view, the cost of subsidising Viagra under the Scheme was likely to be unacceptably high, particularly as the Committee thought that there was a risk that the usage of the drug could not effectively be limited to the people for whom it was medically indicated. Pfizer also claimed that the Committee had acted unfairly in taking into account some particular information without first disclosing that information to Pfizer and giving it a chance to respond.
5. The trial judge, Justice Mathews, rejected all of Pfizer’s arguments and dismissed the application for judicial review. Pfizer then appealed to a Full Court of the Federal Court challenging most, but not all, of her Honour’s conclusions.
6. The members of the Full Court, in a joint judgment, have concluded that on the main points upon which the case was decided by Justice Mathews, her Honour was correct. In particular, they consider that Mathews J was correct in rejecting Pfizer’s contention that the Committee was wrong in taking into account the likely overall cost of subsiding Viagra under the Scheme.
7. On one point, however, the Full Court has come to a different conclusion to the trial judge. That point concerns the obligation of the Committee to accord ‘procedural fairness’ or ‘natural justice’ to Pfizer. Although a borderline case, the Full Court considers that the requirements of procedural fairness in this context mean that the Committee was obliged both to inform Pfizer that it intended to take into account certain information that was potentially detrimental to Pfizer’s interests, and to allow Pfizer an opportunity to respond to that information. In essence, that information concerned the fact that another drug for the same condition was used at a considerably higher rate than originally predicted. This information contributed to the Committee’s conclusion that Viagra would be used at a greater rate than that estimated by Pfizer and hence cost the Commonwealth more than the figures submitted by Pfizer. The Full Court has concluded that the Committee’s failure to inform Pfizer that it intended to rely on this information with respect to the alternative drug, and to allow Pfizer to respond to that information, deprived Pfizer of natural justice, and so the Court has allowed Pfizer’s appeal.
8. The Full Court’s conclusion that the Committee failed to accord natural justice to Pfizer means that the Committee is now obliged to reconsider, in a manner consistent with the law as the Court has interpreted and applied it, whether to make a recommendation to the Minister that Viagra should be declared a pharmaceutical benefit.
9. As the Court’s reasons for judgment make clear, the function of the Court in a case of judicial review is to determine whether a decision such as that made by the Committee in this case was made according to law. It is not the function of the Court to say whether or not Viagra “should” be listed on the Pharmaceutical Benefits Scheme.
10. The Full Court’s reasons for judgment and this summary are available on the Internet at align="center">FEDERAL COURT OF AUSTRALIA
Pfizer Pty Ltd v Birkett [2001] FCA 828
ADMINISTRATIVE LAW – Administrative Decisions (Judicial Review) Act 1977 (Cth) – judicial review – decision of Pharmaceutical Benefits Advisory Committee (PBAC) under s 101(3) of the National Health Act 1953 (Cth) not to make recommendation to Minister that sildenafil should be declared a pharmaceutical benefit – whether the PBAC took irrelevant considerations into account – whether the PBAC is limited to considering medical factors when deciding whether to make a recommendation – whether the PBAC can take into account the overall cost to the Government – whether the PBAC failed to take relevant considerations into account – whether the PBAC breached the rules of natural justice – whether natural justice required that the appellant be informed of details of potentially adverse information
National Health Act 1953 (Cth) ss 85, 101, 101A, Pt VII
Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 13, 16
Therapeutic Goods Act 1989 (Cth) s 4
Acts Interpretation Act 1901 (Cth) s 33(1)Bristol-Myers Squibb Pharmaceuticals Pty Ltd v Minister for Human Services and Health (1997) 42 ALD 540, referred to
Murphyores Incorporated Pty Ltd v Commonwealth (1976) 136 CLR 1, applied
Hughes and Vale Pty Ltd v New South Wales [No 2] (1955) 93 CLR 127, applied
Re Bolton; Ex parte Beane (1987) 162 CLR 514, referred to
The Queen v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322, applied
Stead v State Government Insurance Commission (1986) 161 CLR 141, followed
Re Refugee Review Tribunal; Ex parteAala (2000) 176 ALR 219, referred to
John v Rees [1970] Ch 345, referred to
Mahon v Air New Zealand Ltd [1984] AC 808, distinguishedPFIZER PTY LIMITED v DONALD JOHN BIRKETT & ORS
N 328 of 2000BLACK CJ, BRANSON and KATZ JJ
SYDNEY
2 JULY 2001
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N328 of 2000 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
PFIZER PTY LIMITED
APPELLANTAND:
DONALD JOHN BIRKETT & ORS
RESPONDENTSJUDGES:
BLACK CJ, BRANSON and KATZ JJ
DATE OF ORDER:
2 JULY 2001
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be allowed;
2.The orders of Mathews J made on 20 March 2000 be set aside and in lieu thereof it be ordered that:
(1)The decision of the respondents in their capacity as members of the Pharmaceutical Benefits Advisory Committee not to recommend to the Minister that the drug sildenafil citrate be declared, pursuant to par 85(2)(a) of the National Health Act 1953 (Cth), a drug to which Pt VII of the Act applies, be set aside from the date of the decision;
(2)The matter to which the decision relates be referred to the Pharmaceutical Benefits Advisory Committee for further consideration in accordance with law.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N328 of 2000
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
PFIZER PTY LIMITED
APPELLANTAND:
DONALD JOHN BIRKETT & ORS
RESPONDENTS
JUDGES:
BLACK CJ, BRANSON and KATZ JJ
DATE:
2 JULY 2001
PLACE:
SYDNEY
REASONS FOR JUDGMENT
THE COURT:
INTRODUCTION
This is an appeal from a judgment of Mathews J, dismissing an application for judicial review of a decision by the Pharmaceutical Benefits Advisory Committee (“the PBAC” or “the Committee”) constituted by the respondents by which the PBAC decided not to recommend to the Minister for Health (“the Minister”) that sildenafil citrate (“sildenafil”) should be declared to be a drug to which Pt VII of the National Health Act 1953 (Cth) (“the Act”) applies. Sildenafil is a drug for the treatment of erectile dysfunction of certain types which the appellant Pfizer Pty Ltd (“Pfizer”) had sought to have declared a pharmaceutical benefit. Sildenafil is commonly known as Viagra and is sold under that trade mark.
The judgment at first instance is reported: Pfizer Pty Ltd v Birkett & Ors [2000] FCA 303; (2000) 171 ALR 427, and much of what we say about the legislative scheme and about the facts of the case is taken from her Honour’s reasons.
Although reference is frequently made to a drug being “listed” on the “pharmaceutical benefits scheme” (“the PBS”) the legal basis for “listing” is a declaration by the Minister under s 85(2) of the Act. It should also be mentioned that although the term “pharmaceutical benefits scheme” is a convenient one to describe, according to context, the legislative scheme contained in Pt VII of the Act or the funds provided for the operation of the legislative scheme, there appears to be no separate entity that is the pharmaceutical benefits scheme.
THE LEGISLATIVE SCHEME
The pharmaceutical benefits scheme established under Pt VII enables the supply of drugs and medicinal preparations under Commonwealth subsidy. Members of the public can obtain a drug to which, by virtue of s 85, Pt VII of the Act applies (“a pharmaceutical benefit”) from approved pharmacists on presentation of prescriptions written by approved medical practitioners and on payment of a statutorily fixed charge. The pharmacist may then receive from the Commonwealth the difference, if any, between the fixed charge and the “Commonwealth price” for the pharmaceutical benefit. This Commonwealth price is determined by the Pharmaceutical Benefits Remuneration Tribunal (“the PBRT”), a body established under s 98A of the Act.
The central provision of Pt VII is s 85, which includes the following:
“85 Pharmaceutical benefits
(1) Benefits shall be provided by the Commonwealth, in accordance with this Part, in respect of the drugs and medicinal preparations in relation to which this Part applies.
(2)Subject to subsection (3), the drugs and medicinal preparations in relation to which this Part applies are:
(a)drugs and medicinal preparations that are:
(i)declared by the Minister, in writing, to be drugs and medicinal preparations to which this Part applies; or
(ii)included in a class of drugs and medicinal preparations declared by the Minister, in writing, to be a class of drugs and medicinal preparations to which this Part applies; and
(b) ….”
Accordingly, for a drug or medicinal preparation to become a “pharmaceutical benefit”, ie a drug to which Pt VII of the Act and the subsidy system it entails applies, it is necessary for the Minister to so “declare”. But the Minister may not declare that Pt VII applies to a drug or medicinal preparation unless the PBAC has recommended to the Minister that it be so declared (s 101(4)(b)).
The Minister can decline to make a declaration notwithstanding a recommendation by the PBAC and, further, even if the Minister does make a declaration it may be disallowed by the Parliament: s 85(2B), and see and compare s 85(2AC). This is to be contrasted with the position where the PBAC declines to make a recommendation to the Minister that the drug be declared; in such a case the matter does not reach the Minister for decision. A recommendation from the PBAC is thus critical to the making of a declaration but it does not guarantee that a declaration will be made, or if made, that it will withstand Parliamentary scrutiny.
Before turning to the provisions of the Act that are concerned with the PBAC and its functions, some other aspects of the legislative scheme should be noted. The subsidised supply may be limited to certain embodiments of the drug, such as particular strengths, types, sizes of units (s 85(3)), to certain brands (s 85(6)), to prescription by a certain class of persons (s 85A), or to prescription only in particular circumstances (s 88A). The Minister may also, in certain circumstances, specify that there shall be a “special patient contribution” such that the person obtaining the relevant drug or medicinal preparation on a PBS prescription will pay an amount greater than the usual “limited charges” (see s 87), which amount represents the difference between the sale price sought by the manufacturer and the extent to which the Commonwealth is prepared to subsidise the supply of that particular substance (“the Commonwealth price”) (s 85B). This is invoked when the manufacturer and the Minister have been unable to agree on the maximum price for sales of the drug as a pharmaceutical benefit.
The PBAC was established by s 101(1) of the Act which provides that the Committee shall consist of an officer, being a pharmacist, of the Department of Health, six medical practitioners appointed by the Minister from among ten medical practitioners nominated by Federal Council of the Australian Medical Association, a pharmacist appointed by the Minister from among three pharmacists nominated by the Pharmacy Guild of Australia and a person appointed by the Minister to represent consumers. By s 101(2) the Minister may also appoint as members of the Committee a pharmacologist and not more than three additional medical practitioners. The Minister must not, however, appoint a person under s 101(1)(d) to represent consumers unless the Minister is satisfied that the person has “such qualifications or experience as would enable the person to contribute meaningfully to the deliberations of the Committee”: s 101(2AAA).
The power of the Committee to make recommendations to the Minister is conferred by s 101(3) of the Act, which provides:
“(3)The 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.”
It will be seen that as well as empowering the Committee to make recommendations, s 101(3) also imposes upon the Committee a duty to advise the Minister in particular circumstances.
The power conferred by s 101(3) is subject to subss 101(3A), (3B) and (3C), which are in the following terms:
“(3A)For the purpose of deciding whether to recommend to the Minister that a drug or medicinal preparation, or a class of drugs and medicinal preparations, be made available as pharmaceutical benefits under this Part, the Committee shall give consideration to the effectiveness and cost of therapy involving the use of the drug, preparation or class, including by comparing the effectiveness and cost of that therapy with that of alternative therapies, whether or not involving the use of other drugs or preparations.
(3B)Without limiting the generality of subsection (3A), where therapy involving the use of a particular drug or medicinal preparation, or a class of drugs and medicinal preparations, is substantially more costly than an alternative therapy or alternative therapies, whether or not involving the use of other drugs or preparations, the Committee:
(a) shall not recommend to the Minister that the drug, preparation or class be made available as pharmaceutical benefits under this Part unless the Committee is satisfied that the first‑mentioned therapy, for some patients, provides a significant improvement in efficacy or reduction of toxicity over the alternative therapy or therapies; and
(b) if the Committee does recommend to the Minister that the drug, preparation or class be made available as pharmaceutical benefits under this Part, the Committee shall include in its recommendation a statement that the Committee is satisfied as mentioned in paragraph (a).
(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.”
Subsections 101(3A), (3B) and (3C) were inserted into the Act in 1987. The same amending legislation also introduced a provision, s 101A, that enables the PBAC to establish sub-committees “to assist it in performing its functions”. Section 101A has a further element in that, if the Minister so requires in writing, the PBAC must establish a sub-committee to assist it in advising the Minister on a particular matter referred to it by the Minister under s 101(3). Section 101A thus reflects the two distinct roles conferred upon the Committee by s 101(3): recommendations about drugs and medicinal preparations and advice to the Minister.
We have already drawn attention to the fact that the “Commonwealth price” is determined by the PBRT, a body established under the Act but quite separate in composition and function from the PBAC. It is also important to note that the PBAC performs its functions within a context in which questions of the quality, safety, efficacy and availability of therapeutic goods are dealt with primarily by other legislation.
The question whether a drug should be made available as a pharmaceutical benefit, which the PBAC must consider under s 101(3), is likely to be considered in circumstances in which questions going to whether the drug should be on the market at all in Australia have been determined in favour of the drug under other legislation. Although the Act contains provisions for the testing of drugs (s 102) and empowers the making of regulations concerning standards of purity (s 105), questions of quality and safety are primarily dealt with by the Therapeutic Goods Act 1989 (Cth) and complementary State legislation such as the Therapeutic Goods (Victoria) Act 1994 (Vic). The objects of the Commonwealth Act are set out in s 4 of that Act in the following terms:
“(1)The objects of this Act are to do the following, so far as the Constitution permits:
(a)provide for the establishment and maintenance of a national system of controls relating to the quality, safety, efficacy and timely availability of therapeutic goods that are:
(i)used in Australia, whether produced in Australia or elsewhere; or
(ii)exported from Australia;
(b)to provide a framework for the States and Territories to adopt a uniform approach to control the availability and accessibility, and ensure the safe handling, of poisons in Australia.
(2) This Act is therefore not intended to apply to the exclusion of a law of a State, of the Australian Capital Territory or of the Northern Territory to the extent that the law is capable of operating concurrently with this Act.”
There is a helpful overview of the complex regulatory framework for therapeutic goods in Australia in The Laws of Australia (LBC) Volume 20, Subtitle 20.11, “Regulation of Drugs”.
For completeness, we should mention that there is also a body called the Pharmaceutical Benefits Pricing Authority. This is a non-statutory body established in 1988 to replace the Pharmaceutical Benefits Pricing Bureau which had been part of the Department of Community Services and Health: see generally Bristol-Myers Squibb Pharmaceuticals Pty Ltd v Minister for Human Services and Health (1996) 42 ALD 540 at 541-543.
THE FACTS
The circumstances leading to the decision of the PBAC under challenge before the learned primary judge are set out in her Honour’s reasons (at [1]-[2] and at [14]-[54]) and only brief reference need be made to them here.
The drug sildenafil is, as we have noted, indicated for the treatment of certain types of erectile dysfunction. Her Honour found that it was indicated for “organic impotence of neurogenic or vasulogenic origin”. The drug is taken orally about an hour before intended sexual activity. When the drug came onto the market there was no other oral therapy for the treatment of erectile dysfunction.
The principal therapy previously available was alprostadil, commonly known as Caverject. This drug is not taken orally, but by an injection at the base of the penis and patients require medical instruction and monitoring when they use it. The side-effects of Caverject, if they occur, include priapism and penile fibrosis. Caverject has been a pharmaceutical benefit under the Act since 1996 and remains the only treatment for erectile dysfunction available under the PBS.
Sildenafil, a drug to be taken orally, requires no special medical instruction. It has no local side-effects but has been known to have some general side-effects. In the submissions lodged by Pfizer with the PBAC seeking the Committee’s recommendation under s 101(3) the company outlined what it contended were the advantages of sildenafil.
Pfizer’s submissions and the Committee’s responses to them are discussed in some detail in her Honour’s reasons. A re-submission was considered by the PBAC at a meeting on 3 and 4 June 1999 and rejected. The minutes of the meeting are reproduced at [48] of her Honour’s reasons. In essence, her Honour found, the minutes indicate that the Committee, in rejecting Pfizer’s submission, relied upon the following propositions:
(1)Given that the submission provided insufficient material to enable a direct comparison to be drawn between sildenafil and alprostadil, there was inadequate evidence to establish that sildenafil was as effective as alprostadil.
(2)The Committee was concerned with costs issues. In this regard it noted the following matters:
· given the publicity about sildenafil, it was unlikely that its use could be restricted to patients for whom it was medically indicated;
· the measures proposed by Pfizer were unlikely to effectively address this problem; and
· this being the case, the cost to the PBS of listing sildenafil would be unacceptable.
(3)That alprostadil remained effective and available and appeared to be meeting the needs of the target population. Its use was more likely to be able to be restricted to patients for whom the drug was indicated.
The company sought and was given a statement of reasons under s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”) and the portion of that document (“the statement of reasons”) headed “Reasons for Decision” reads:
“4.3In the absence of any head to head trial directly comparing sildenafil tablets with alprostadil injections and the use of different outcome measures in the trials comparing the individual drugs with placebo, the evidence did not establish that sildenafil tablets were as effective as alprostadil injections.
4.4The submission under consideration did not demonstrate that the actual cost to PBS could be confined by practicable and acceptable measures to between $10 million and $19 million as claimed by the sponsor, particularly in view of the history of use of alprostadil injections under the PBS and the current use of sildenafil tablets in the private prescription market.
4.5Alprostadil injections have been accepted by the Committee as producing a high degree of effectiveness and are available under the PBS to treat patients where use is accepted by the Committee to be clinically necessary and where use is cost effective.”
REASONS OF THE PRIMARY JUDGE
This matter formally came before the trial judge on an amended application for an order for review under s 5 of the ADJR Act and under s 39B(1A)(c) of the Judiciary Act 1903 (Cth) (“the Judiciary Act”). It appears, however, that the hearing before her Honour proceeded with little, if any, reference to the Judiciary Act.
Her Honour considered that the matters relied upon by the applicant raised the following grounds of review:
· that the PBAC took into account irrelevant considerations (ss 5(1)(e) and 5(2)(a) of the ADJR Act);
· that the PBAC failed to take into account relevant considerations (ss 5(1)(e) and 5(2)(b) of the ADJR Act);
· that a breach of the rules of natural justice occurred in connection with the making by the PBAC of its decision (s 5(1)(a) of the ADJR Act); and
· that the decision was so unreasonable that no reasonable person could have reached it (ss 5(1)(e) and 5(2)(g) of the ADJR Act).
Mathews J, after a careful consideration of the statutory scheme under which PBAC operates, and the changes that Parliament has made to the scheme, rejected the submission that the overall cost to government of the listing of sildenafil on the pharmaceutical benefits scheme was not a legitimate concern of the PBAC. Her Honour concluded that the PBAC did not err in taking into consideration the total cost to the Commonwealth of including sildenafil on the pharmaceutical benefits scheme or in giving consideration to the potential for misuse or leakage as a result of sildenafil being prescribed in circumstances where it was not clinically necessary.
It was argued before her Honour that the PBAC’s decision was tainted by reason of the PBAC having taken into account “political” considerations, namely that sildenafil can be described as a “lifestyle” drug, that erectile disfunction is not life-threatening, that a decision to declare sildenafil, even with a “special patient contribution”, would need to be defended in Parliament and that, if sildenafil were declared a pharmaceutical benefit, its price would need to be defended in Parliament. Her Honour, while doubting that these matters would have been irrelevant to the PBAC’s decision, concluded that none of them was in fact taken into account by the PBAC in the making of its decision.
Her Honour also rejected the contention that the PBAC failed to consider a relevant matter that it was bound to consider, namely the effectiveness and cost of therapy involved in the use of sildenafil (s 101(3A) of the Act). She found that the PBAC did consider the matters required by s 101(3A) to the extent that the available material enabled it to do so. Her Honour further concluded that the PBAC was not bound, in the events that happened, to consider the possibility of recommending that the Minister impose special conditions as to the circumstances in which prescriptions for sildenafil could be written (s101(3C)). Nonetheless, her Honour found that the PBAC had considered the matter but ultimately resolved the relevant issue adversely to Pfizer.
On the issue as to whether Pfizer was denied natural justice by the PBAC, her Honour reached the conclusion that the procedures adopted by the PBAC were fair and appropriate having regard to the circumstances of the case. Although her Honour found that certain information relevant to the decision made by the PBAC was withheld from Pfizer, she was satisfied that the information was incidental to the PBAC’s concern about the possible overuse of sildenafil and that Pfizer was given every opportunity to address the issue of overuse. Other information that Pfizer complained about not seeing was found by her Honour not to have been relevantly taken into account by the PBAC, or in the case of the suggestion that the expert evidence given by members of the PBAC to the PBAC had not been disclosed to Pfizer, not to exist. The complaint made by Pfizer that the PBAC had unfairly taken into account the absence of a head-to-head trial between sildenafil and alprostadil her Honour found itself to be unfair. Her Honour identified the relevant concern of the PBAC as not being the absence of head-to-head trials but the fact, which was communicated to Pfizer on numerous occasions, that the data which was made available to the PBAC did not enable direct comparisons to be drawn between the effectiveness and the cost of the two therapies.
Finally it was argued before her Honour that the decision of the PBAC was so unreasonable that no reasonable person could have made it. Her Honour rejected this submission and as it was not made the subject of specific submissions on appeal we say no more about it.
Her Honour concluded that no reviewable error had been identified in the decision of the PBAC. She ordered that the application be dismissed.
CONSIDERATION
Function of PBAC
The principal contention advanced on behalf of Pfizer on this appeal was:
“that the functions of the PBAC in making recommendations for the purposes of ss 101(3) and 101(4)(b) do not confer on the PBAC an entitlement to take into account the overall cost to the pharmaceutical benefit scheme of providing a drug as a pharmaceutical benefit. Rather, the purpose, scope and subject matter of Part VII indicate that the role of the PBAC is the more specialised one of considering the comparative effectiveness and cost of therapies.”
In support of this contention, Pfizer’s written submissions included the following:
(a)given the structure of Pt VII of the Act, and the respective roles of the Minister, the two Houses of Parliament, the PBRT and the PBAC, it is apparent that the legislature did not intend that the PBAC should be concerned with the question of the overall cost to the Commonwealth of the PBS;
(b)the function of the PBAC is indicated by the nature of its composition: its members, other than the member appointed by the Minister to represent consumers, are required to have medical, pharmaceutical or pharmacological experience and even the consumer representative is required to have such qualifications or experience as would enable the person to contribute meaningfully to the deliberation of the Committee (s 101(2AAA));
(c)the PBAC is not in a position to estimate the likely total Commonwealth expenditure involved in providing a drug as a pharmaceutical benefit since:
(i) the Minister may not declare the drug;
(ii)the PBAC will not know whether the Minister will be able to agree an acceptable maximum price with the manufacturer;
(iii)the PBAC will not know whether the Minister will make a determination under s 85(2A) to limit the circumstances in which there may be prescription of the drug;
(iii)the PBAC will not know whether the Minister will seek to limit the exposure of the PBS by determining the quantities, strength, type and size of units pursuant to the Minister’s powers under ss 85(3) or 85A;
(iv)the PBAC will not know whether the Minister will make a determination under s 85B in the event that the Minister is unable to agree a maximum price for the supply of the drug with the manufacturer;
(vi)the PBAC will not know what all the components of the Commonwealth price will be, including in particular the approved price to pharmacists;
(vii)the PBAC will not know what the Minister will determine in terms of the manner in which the Commonwealth price is to be determined for the purpose of payments to medical practitioners.
Pfizer argued that the legislative history of s 101 of the Act provided support for its submissions. The principal issue to be determined on this appeal is thus the nature and the scope of the power conferred on the PBAC by s 101 of the Act.
Section 101(3) in terms imposes a duty on the PBAC to make recommendations to the Minister “as to the drugs and medical preparations which it considers should be made available as pharmaceutical benefits under [Pt VII]”.
The duty imposed on the PBAC by s 101(3) to make recommendations to the Minister is a duty to be performed “from time to time”. It is appropriate to construe s 101(3) in the light of s 33(1) of the Acts Interpretation Act 1901 (Cth) which relevantly provides that where an Act imposes a duty, then, unless the contrary intention appears, the duty shall be performed “from time to time as occasion requires” (emphasis added). When a person calls on the PBAC to perform the duty imposed on it by s 101(3), the PBAC is obliged to consider whether the occasion requires the performance of the duty. However, the PBAC is, of course, not obliged to perform the duty unless it concludes that the occasion does require its performance. An analogy may be found in the approach to the construction of the power to grant an approval for exportation of goods taken by Mason J in Murphyores Incorporated Pty Ltd v Commonwealth (1976) 136 CLR 1 at 17-18. See also Hicks v Aboriginal Legal Service of Western Australia (Inc) (FC) [2001] FCA 483 at [11].
The subject matter of the recommendation which must be made, if the PBAC concludes that the occasion requires it, is the making available of one or more drugs or medicinal preparation as pharmaceutical benefits under Pt VII of the Act.
In deciding whether the occasion requires the making of a recommendation under s 101(3) the PBAC is required to make an evaluative judgment. It must make a recommendation that a drug or medicinal preparation “should” be made available as a pharmaceutical benefit under the Pt VII of the Act if “it considers” that it should do so. These are very broad words and prima facie it can be said of them that which was said of the broad words “fit and proper” in a different context in Hughes and Vale Pty Ltd v New South Wales [No 2] (1955) 93 CLR 127 at 156 per Dixon CJ, McTiernan and Webb JJ, namely: “their very purpose is to give the widest scope for judgment and indeed for rejection”.
Section 101(3A) provides that, for the purpose of deciding whether to make a recommendation under s 101(3), the Committee shall give consideration to certain matters. On their face, there is nothing in the words of s 101(3A) to suggest that they are intended to limit the wide scope of the PBAC’s judgment under s 101(3). Their apparent purpose is to require the PBAC to consider the matters identified in the course of making the judgment required of it by s 101(3), but not to consider those matters to the exclusion of other relevant matters.
However, notwithstanding the prima facie position, it is argued by Pfizer that the matters for the PBAC’s evaluative judgment are impliedly confined and that s 101(3A) is to be construed as though it read “… the Committee shall give consideration to and shall only give consideration to, the effectiveness and cost of therapy involving the use of the drug …”. As Pfizer’s argument is one of statutory implication, it is important that the observation of French and Beazley JJ in Austereo Ltd v Trade Practices Commission (1993) 41 FCR 1 at 37 be borne in mind, namely that “[s]tatutory implications are not to be made lightly”.
In support of its submission that the matters to which the PBAC may have regard for the purposes of s 101(3) are limited, Pfizer also relied on the legislative history of the provision, in particular a Ministerial statement when the provision was introduced in 1953 that the drugs recommended to be made available must be identified “on medical grounds alone”. There are a number of problems with such reliance. First, it is not clear what was intended by the notion of medical grounds alone. For example, would the dangers inherent in the possible leakage into the community of a highly toxic drug constitute a “medical” ground for withholding a recommendation? Secondly, that notion, if intended to limit the scope of the words of the provision, cannot prevail over those words if they are clear: compare Re Bolton; Ex parte Beane (1987) 162 CLR 514 at 518 (Mason CJ, Wilson and Dawson JJ). Thirdly, the words of s 101(3) were later supplemented by those of s 101(3A).
We see no reason why s 101(3A) should be read as confining the matters for evaluative judgment under s 101(3) to those specifically identified in s 101(3A). There is an analogy in this respect with the High Court’s treatment of s 40AA(7) of the present Act in The Queen v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322. There, the Permanent Head was obliged, in determining the scale of fees in relation to a nursing home for various purposes of the Act, to have regard to costs necessarily incurred in providing nursing home care in the nursing home. While it was accepted (see Mason J, with whom Gibbs J agreed, at 329) that the effect of the provision was to require the Permanent Head “to take those costs into account and to give weight to them as a fundamental element in making his determination”, it was also accepted that “[t]he sub-section is so generally expressed that it is not possible to say that he is confined to” that consideration.
Focusing more specifically, however, on the matters actually referred to in s 101(3A), the question arises of what is involved in considering the “effectiveness and cost of therapy involving the use of [a] drug”.
The Act does not define any of the words “effectiveness”, “cost” or “therapy”.
Beginning with the last word first, it appears to us that an adequate working definition of “therapy” is ‘treatment given for the purpose of curing, or alleviating the symptoms of, an injury or disease’. We do not accept that “therapy” within the meaning of s 101(3A) means a single usage of a drug except in circumstances in which effective treatment requires no more than a single usage of the drug. So to understand the word would, as to many drugs or medicinal preparations, render meaningless the comparison called for by the subsection.
As to “cost”, it may be said immediately that the provision is unlikely to be concerned only with the actual cost of therapy involving the use of a drug to the exclusion of potential cost. We say that because, so far as we are aware, there is no reason why any particular drug or preparation in respect of which a recommendation is sought need be in the Australian market already (as sildenafil happens to be). As to “effectiveness”, in the context of s 101(3A) it should be understood, in our view, to mean ‘tendency to achieve optimal therapeutic outcomes’.
It was argued by the PBAC that, in effect, s 101(3A) recognises the reality that the cost of a drug and the effectiveness of that drug are interrelated issues. That is, that the effectiveness of a medical treatment cannot be looked at meaningfully by examining its effectiveness in treating a particular patient. What is required, on the construction of s 101(3A) for which the PBAC contended, is an assessment of the drug’s effectiveness in respect of the total population that is likely to use it. Should such an assessment indicate a poor cost-effectiveness outcome in respect of that total population but a good cost-effectiveness outcome in respect of a limited class of potential users, issues may arise as to whether it is possible to identify that class of potential users and, if it is possible, whether it is possible to limit access under the pharmaceutical benefits scheme to the drug (if declared) to that class. We understood the PBAC to argue that where limited access is possible the effectiveness of the drug could be assessed by reference to the limited class of potential users.
The recommendation of the PBAC is, as we have mentioned, a critical step in the process by which a drug becomes available as a pharmaceutical benefit under Pt VII of the Act. It is in that context that s 101(3A) is to be construed. In our view, that context strongly suggests that “effectiveness” is not used in the subsection in the sense of actual or potential capacity to achieve an optimal therapeutic outcome in particular patients or, as Pfizer contended, in respect of each usage of the drug. Rather, we consider that the argument of the PBAC that we have outlined should be largely accepted. We accept, however, the argument advanced by Pfizer that the phrase “the cost of therapy involving the use of the drug” is not apt to include the cost of the use of the drug for non-therapeutic purposes. We conclude that the subsection is concerned with effectiveness in the sense of tendency to achieve positive therapeutic outcomes in the total population likely to gain access to the drug as a pharmaceutical benefit for therapeutic purposes.
If it be accepted that “effectiveness” within the meaning of s 101(3A) means the tendency of the drug to achieve positive therapeutic outcomes in the population likely to gain access to the drug as a pharmaceutical benefit for therapeutic purposes, it follows that the word “cost” in the same subsection must bear a meaning which will allow the PBAC to undertake sensible cost-effectiveness comparisons of alternative therapies. It seems to us that the PBAC is free to consider the issue of the cost of therapy in any way which it deems appropriate provided that the means adopted allow for the comparison for which the subsection provides. It would be legitimate for the PBAC to conduct the comparison by reference to the average or mean cost of the therapies to individual patients or by reference to the total cost of the provision of the therapies to the population likely to gain access to the drug as a pharmaceutical benefit for therapeutic purposes. As Pfizer acknowledged, “cost” in this context is apt to include the cost of associated activities necessary to allow the therapy to proceed, such as the cost of attendances to receive treatment, the cost of necessary apparatus and the cost of medical monitoring.
This conclusion as to the proper construction of s 101(3A) of the Act has, in our view, little, if any, significance so far as the construction of s 101(3) is concerned. Any Parliamentary intention to limit the wide scope for judgment given to the PBAC by s 101(3) must, assuming it to exist, be found in the subject-matter, scope and purpose of the Act as a whole or Pt VII, including s 101(3A), in particular. As is mentioned above, we do not find in s 101(3A) any intention to limit the wide scope for judgment given to the PBAC by s 101(3).
The factors identified in Pfizer’s submissions point against the PBAC having any role to play in the determination of an issue of a plainly political kind, such as the proportion of the Commonwealth budget that should be dedicated to the pharmaceutical benefits scheme. This is not to say, however, that it is inappropriate for the PBAC to have any regard to economic matters for the purposes of s 101(3) of the Act. The cost-effectiveness of therapy involving the use of a drug is, of its nature, in part an economic matter. Moreover, it is a matter to which the PBAC is particularly directed by s 101(3A) to give consideration. Nothing in the subject-matter, scope and purpose of the Act as a whole, or Pt VII in particular, indicates that in considering this issue, or indeed independently of it, the PBAC may not also give consideration to the overall cost-effectiveness of making a drug available as a pharmaceutical benefit. That will, as the PBAC recognised in this case, be affected where it proves impossible by practical and acceptable measures to restrict use of the drug to situations where its use is medically indicated. The PBAC, by reason of the qualifications which its members are required by the Act to hold, may be expected to have the competence to undertake an assessment of this kind. In any event, the PBAC is authorised to establish such sub-committees as it thinks fit to assist in the performance of its functions, and the members of such sub-committees need not be members of the PBAC (s 101A of the Act).
It is also of significance, in our view, that s 101(3) of the Act imposes on the PBAC the dual functions of making recommendations as to the drugs and medicinal preparations which it considers “should” be made available as pharmaceutical benefits and of providing advice to the Minister upon any other matter concerning the operation of Pt VII of the Act referred to it by the Minister. As leading counsel for Pfizer rightly acknowledged, the Minister could refer to the PBAC, as a matter upon which he or she required advice, the likely overall budgetary impact of a particular drug being declared as a pharmaceutical benefit. The fact that the Minister may seek advice of this kind from the PBAC is, in our view, a further factor tending to negate any implication, whether arising from the likely competence of the members of the PBAC or otherwise, that, in the exercise of its power under s 101(3) to make recommendations, the PBAC may not take into account economic matters.
The PBAC was satisfied that it would be impossible to restrict the use of sildenafil to those for whom its use is medically indicated. It was satisfied that this would result in the Commonwealth incurring considerable costs that would not be balanced by therapeutic benefits. However, the evidence does not support a conclusion that the PBAC, in deciding against making a recommendation that sildenafil be made available as a pharmaceutical benefit under Pt VII of the Act, gave consideration to matters of a plainly political kind, such as the proportion of the Commonwealth budget that should be dedicated to the pharmaceutical benefits scheme as opposed to any other legitimate public purpose. Rather, in our view, the evidence discloses that the PBAC was concerned with the impact on the overall cost-effectiveness of making sildenafil available as a pharmaceutical benefit of what it saw as the inevitability of sildenafil being obtained as a pharmaceutical benefit and used for non-therapeutic purposes. This was, in our view, an entirely legitimate consideration for the PBAC to take into account in determining, under s 101(3) of the Act, whether it considered that sildenafil “should be made available” as a pharmaceutical benefit under Pt VII of the Act. We can see no basis in the language or objects of the provisions under consideration for concluding that the PBAC would be bound to ignore what it might find to be the reality of overuse of a particular drug and bound to proceed upon a false assumption that the mechanisms in the Act directed towards the prevention of overuse were in fact effective with the drug in question. The legislature should not be taken to have deprived the PBAC of the capacity to use its knowledge and experience to make decisions based upon what it considers to be the practical reality.
Suggested Irrelevant Considerations
The trial judge was unable to find a description of sildenafil as a “lifestyle” drug, but noted that there certainly was a reference to the fact that the condition to be treated by sildenafil was not life-threatening. Her Honour said that there was no suggestion that either of these considerations, namely that sildenafil was a lifestyle drug or that the condition that it treated was not life-threatening, constituted a ground upon which the PBAC rejected Pfizer’s re-submission in June 1999. In any event, she considered, they were clearly relevant matters. In our view, to the extent, if any, that the PBAC did give consideration to sildenafil as being a “lifestyle” drug, there is no basis for concluding that it did so otherwise than in the context of giving consideration to the likelihood of the pharmaceutical benefits scheme being abused by those who wished to obtain the drug for a non-therapeutic purpose. This was, for the reasons we have given, a proper matter for consideration by the PBAC.
Similarly, in our view, the fact that erectile dysfunction is not, of itself, a life-threatening condition, was a matter appropriate for the consideration of the PBAC. It would surely be proper for the PBAC to attach particular weight to the fact that a drug would be used to save lives when considering whether it “should be made available” as a pharmaceutical benefit and – speaking generally – to adopt a more stringent approach in respect of drugs whose use is indicated in less critical circumstances.
Pfizer contended that the PBAC took into account the fact that it might be difficult for the Government to defend in Parliament the declaration of sildenafil. The evidence relied upon in support of this contention is a memorandum prepared by the Secretary of the PBAC. As to this memorandum, it may be observed, first that it appears to be a record of advice given by the Secretary to officers of Pfizer about a proposal by Pfizer that there should be a special patient contribution under s 85B of the Act. The fact that the Secretary offered advice to Pfizer on that particular issue does not carry the inference that the PBAC allowed its own decision, which had nothing to do with a special patient contribution, to be influenced by any of the difficulties that the Secretary saw with such a special patient contribution. We see no reason to doubt the learned primary judge’s conclusion that it cannot be said that the impugned consideration was in fact taken into account by the PBAC as an element leading to the formation of its decision.
Suggested Errors of Law
Pfizer further argued that the PBAC erred in law in three distinct respects in its consideration of “the effectiveness and cost of therapy involving the use of [sildenafil]” within the meaning of s 101(3A) of the Act, namely:
“(a)first, just as it wrongly took into account the likelihood of non-therapeutic use of sildenafil in determining the ‘cost’ of therapy, it wrongly took into account the likelihood of non-therapeutic use of sildenafil in determining the ‘effectiveness’ of therapy;
(b)secondly, it wrongly proceeded on the basis that the appellant needed to show that sildenafil was as effective as alprostadil before a recommendation could be made; and
(c)thirdly, when considering ‘effectiveness’ it wrongly excluded from consideration such obviously relevant matters as patient acceptability.”
The PBAC’s statement of reasons makes no explicit reference to the actual cost of therapy using sildenafil. We accept the submission of Pfizer, which the PBAC did not seek to contradict, that when PBAC considered the cost of the use of sildenafil it took into account the likely total cost of sildenafil becoming available as a pharmaceutical benefit (ie it included cost attributable to leakage). As we have mentioned, in our view, costs attributable to leakage are not relevant to the “cost of therapy involving the use of [a] drug” within the meaning of s 101(3A) of the Act. However, in this case we consider it to be clear that, even had the PBAC given consideration to the costs of therapy involving sildenafil tablets and alprostadil injections respectively, it would have found that the significant costs that would be attributable to leakage of sildenafil tablets would have made a recommendation in favour of sildenafil inappropriate. Any error that may have been made by the PBAC in the interpretation of the words “cost of therapy” was, in our view, without practical significance. We would exercise our discretion under s 16 of the ADJR Act not to grant Pfizer relief by reason of this error of law.
The PBAC’s statement of reasons under s 13 of the ADJR Act includes the statement that “the evidence did not establish that sildenafil tablets were as effective as alprostadil injections”. Pfizer argued that the explanation for this statement, and for a similar observation in the minutes of the meeting of the PBAC held on 3 and 4 June 1999, is that the PBAC erroneously required sildenafil to be at least as effective as alprostadil injections. As s 101(3A) required the PBAC, in effect, to compare the effectiveness and cost of sildenafil tablets with that of alprostadil injections as a relevant alternative therapy, there was nothing inappropriate, in our view, in the PBAC giving consideration to whether it could be satisfied that sildenafil tablets were as effective as alprostadil injections. The fact that it gave consideration to this issue does not, of itself, lead to the conclusion that it acted on the basis that it could not recommend that sildenafil be made available as a pharmaceutical benefit unless it was satisfied that sildenafil tablets were at least as effective as alprostadil injections. Nor does the evidence as a whole, in our view, suggest that the PBAC did act on that basis.
We see no reason to conclude that the PBAC misunderstood the proper test of “effectiveness” for the purposes of the comparison required by s 101(3A) of the Act. The PBAC noted in its statement of reasons that comparison between the two drugs was difficult and that no “head to head” randomised trial that directly compared the two treatments was available to it. Whether or not the argument advanced by Pfizer that patient acceptability and side-effects (and thus the likely discontinuation rates) are obviously relevant to a drug’s effectiveness is accepted, the problems identified by the PBAC in making the comparison required by s 101(3A) would remain. In the circumstances, no significance attached to the failure of the PBAC to refer specifically to patient acceptability and side-effects.
Suggested Denial of Natural Justice
Pfizer also argued that it had been denied natural justice by the PBAC. In particular, it placed reliance on the failure of the PBAC to provide to it statistics relating to alprostadil usage or to advise it that the statistics would be taken into account by the PBAC in considering whether to recommend that sildenafil be available as a pharmaceutical benefit. As her Honour found, there is little doubt that the PBAC did take the alprostadil usage statistics into account in reaching its decision concerning sildenafil. Her Honour found, in our view correctly, that some of the material available to the PBAC was confidential and could not have been released by it to Pfizer. The PBAC will, presumably, often be in possession of confidential information of drug companies and we see no intention disclosed by Pt VII of the Act that the confidentiality of such information should not be respected. However, other information in the possession of the PBAC was not confidential and was indeed openly communicated to Pfizer in the PBAC’s statement of reasons. That information was that the actual usage of alprostadil was more than double the amount predicted by its manufacturer in a submission to the PBAC. The PBAC, as her Honour found, used this information as a basis for its concern that the same thing might happen if sildenafil were to become available as a pharmaceutical benefit.
It was not contended before her Honour, nor before us, that the rules of natural justice or procedural fairness were irrelevant in this case on the footing that the Act discloses an intention that they not apply. Nonetheless, it remains necessary to identify the relevant content of the requirement that the PBAC proceed in a way which provides natural justice to Pfizer. As Mason J pointed out in Kioa v West (1985) 159 CLR 550 at 584-585:
“What is appropriate in terms of natural justice depends on the circumstances of the case and they will include, inter alia, the nature of the inquiry, the subject-matter, and the rules under which the decision-maker is acting.”
See also the observation of Deane J in Kioa v West at 632-633.
It was contended by the PBAC that the information as to the actual usage of alprostadil was relevant only to the issue of leakage. It was also emphasised that the PBAC had made it clear to Pfizer that it wished to hear from Pfizer about how leakage problems could be reduced or avoided. The PBAC further emphasised that Pfizer had been told that one of the reasons for the rejection of its original submission was that Pfizer’s estimate of cost was likely to be “a considerable underestimate given the usage of alprostadil”. That is to say, Pfizer was notified by the PBAC both that the issue of leakage was important and that experience with alprostadil had reinforced the concern of the PBAC about that issue. In addition, the PBAC placed reliance on a concession made before her Honour by Pfizer’s product manager in respect of sildenafil that “we had a fair idea how much Caverject would cost”. This was, in the context in which it was made, a concession that Pfizer was aware of the annual cost to the Commonwealth of alprostadil being available as a pharmaceutical benefit.
Pfizer argued that there is a qualitative difference between notifying a topic in general terms to the person affected, and bringing specific adverse facts to the attention of that person. It asserted that for the PBAC to express concern about the overuse of sildenafil, given the number of people using alprostadil, is different from treating Pfizer’s estimate of the expected usage of sildenafil as an underestimate because the manufacturer of alprostadil had underestimated the expected usage of alprostadil.
In essence, the dispute between the parties on the issue of natural justice was whether the PBAC was under an obligation to disclose to Pfizer that it regarded as a relevant matter for its consideration on the issue of leakage that prescriptions for the supply of alprostadil injections as a pharmaceutical benefit had been written at more than twice the level predicted by the manufacturer of the injections at the time of its application to PBAC. If the PBAC was under an obligation to make such disclosure to Pfizer, it will be immaterial that Pfizer might not have successfully negated the significance of the information so disclosed or have persuaded the PBAC to make the recommendation concerning sildenafil that it sought. It will be sufficient that the denial of natural justice deprived Pfizer of “the possibility of a successful outcome” (Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147, cited recently with approval in Re Refugee Review Tribunal; Ex parteAala (2000) 176 ALR 219; Kioa v West per Deane J at 633). As Megarry J observed in John v Rees [1970] Ch 345 at 402:
“As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change” (cited by Gaudron and Gummow JJ in Re Refugee Review Tribunal; Ex parte Aala at [81]).
This is not a case in which Pfizer was left in the dark as to the risk of the PBAC finding that leakage of sildenafil would not be able to be controlled if the drug were to become available as a pharmaceutical benefit (cf Mahon v Air New Zealand Ltd [1984] AC 808 per Lord Diplock at 821). Pfizer was well aware of this risk. What Pfizer was not aware of was that the PBAC attached significance to the disparity between the number of prescriptions for alprostadil injections actually written when it became available as a pharmaceutical benefit and the number which its manufacturer had predicted would be written.
The trial judge evidently considered that this was a borderline case: see her Honour’s reasons at [129]. She considered that the fact that the usage and cost of alprostadil was double the manufacturer’s prediction was both credible and relevant, but concluded that, overall, the dictates of fairness had been adequately met.
It is apparent from the PBAC’s statement of reasons that the failure of Pfizer’s submission to demonstrate that the cost to the scheme could be confined to the amounts claimed by Pfizer was of central importance to the decision. We have set out the relevant paragraph, par 4.4, earlier in our reasons: see at [21]. In par 4.4 of the PBAC’s statement of reasons one of the two matters set out as adding force to the Committee’s conclusion that the submission did not demonstrate that costs would be contained as claimed was “the history of use of alprostadil injections under the PBS”. That, of course, is stated in the context of Pfizer’s own claimed cost confinement figures in par 4.4 itself and the “relevant finding on [a] material question of fact” in par 3.8 about prescriptions for the subsidy of alprostadil injections under the PBS having been more than “twice the level predicted by the manufacturer of alprostadil injections at the time of application”. This finding of fact assumes particular importance in the “history of use of alprostadil injections under the PBS” when contrasted with Pfizer’s own claim on the one hand and when viewed, in a sense cumulatively, with the reference in the statement of reasons to “current use of sildenafil tablets in the private prescription market” on the other.
In these circumstances we consider that the PBAC was under an obligation, as a matter of fairness, to disclose to Pfizer that it proposed to attach significance to the matter. Because it did not do so, Pfizer was deprived of the possibility of persuading the PBAC that the experience in respect of alprostadil injections would not be repeated should sildenafil become available as a pharmaceutical benefit.
Thus whilst we too consider that this is a borderline case, we have reached a different conclusion to that reached by her Honour with respect to the natural justice ground and we would allow the appeal on that ground.
In the circumstances, the appropriate orders are:
1. The appeal be allowed;
2. The orders of Mathews J made on 20 March 2000 be set aside and in lieu thereof it be ordered
that:
(1)The decision of the respondents in their capacity as members of the Pharmaceutical Benefits Advisory Committee not to recommend to the Minister that the drug sildenafil citrate be declared, pursuant to par 85(2)(a) of the National Health Act 1953 (Cth), a drug to which Pt VII of the Act applies, be set aside from the date of the decision;
(2) The matter to which the decision relates be referred to the Pharmaceutical Benefits Advisory Committee for further consideration in accordance with law.
If the parties are unable to reach agreement on the issue of costs, the Court directs that the respondents should file and serve written submissions on the issue of costs within seven days of today’s date. The appellant should file and serve answering submissions within seven days of its receipt of the respondents’ written submissions.
I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. Associate:
Dated: 29 June 2001
Counsel for the Appellant: Mr D Jackson QC, Mr A Robertson SC, Mr S Gageler Solicitor for the Appellant: Freehills Counsel for the Respondent: Mr G Downes QC, Mr S Lloyd Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 14-15 August 2000 Date of Judgment: 2 July 2001
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