Pfizer Pty Ltd v Birkett

Case [2001] FCA 828

FEDERAL COURT OF AUSTRALIA

PFIZER PTY LTD v BIRKETT

[2001] FCA 828
N328 of 2000

Black 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…

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Pfizer Pty Ltd v Birkett [2001] FCA 828
Case
[2001] FCA 828
Decision Date

CaseChat Overview and Summary

Pfizer Pty Ltd sought to appeal a decision made by the Pharmaceutical Benefits Advisory Committee (PBAC) not to recommend that the drug sildenafil citrate be declared a pharmaceutical benefit under the National Health Act 1953 (Cth). The dispute centred on whether the PBAC could take into account the overall cost to the Pharmaceutical Benefits Scheme when making recommendations under section 101(3) of the Act. The case was heard by the Federal Court of Australia.

The primary legal issue was whether the PBAC had the authority to consider the overall cost to the Pharmaceutical Benefits Scheme when making recommendations under section 101(3) of the Act. Pfizer argued that the PBAC's role was limited to assessing the comparative effectiveness and cost of therapies, and that it could not consider the overall cost to the Scheme. The Court had to determine the scope of the power conferred on the PBAC by section 101 of the Act and whether the PBAC's decision to not recommend sildenafil as a pharmaceutical benefit was lawful.

The Court examined the structure of Part VII of the Act, the respective roles of the Minister, Parliament, the Pharmaceutical Benefits Review Tribunal, and the PBAC. It noted that the PBAC's members, other than the consumer representative, are required to have medical, pharmaceutical, or pharmacological experience. The Court found that the PBAC is not in a position to estimate the likely total Commonwealth expenditure involved in providing a drug as a pharmaceutical benefit, as it is dependent on various factors including the Minister's decisions on drug pricing, prescription limits, and quantities. The Court concluded that the PBAC's decision to not recommend sildenafil as a pharmaceutical benefit was not a reviewable error. However, the Court allowed the appeal and set aside the orders of the primary judge, referring the matter back to the PBAC for further consideration in accordance with law.

The final orders of the Court were to allow the appeal, set aside the orders of the primary judge, and refer the matter back to the PBAC for further consideration in accordance with law.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Her Honour concluded that no reviewable error had been identified in the decision of the PBAC. She ordered that the application be dismissed.CONSIDERATIONFunction 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]”.