Bristol-Myers Squibb Pharmaceuticals Pty Ltd & Anor v Minister for Human Services & Health & Ors [1996] FCA 837

CATCHWORDS ADMINISTRATIVE LAW - guidelines for Government grants of industry assistance - scheme not established by statute - natural justice and fairness in considering application for grant - whether Commonwealth estopped from denying obligation to offer grant. Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Attorney-General for NSW v Quinn (1990) 170 CLR 1 S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637 Sunshine Coast Broadcasters Ltd v Duncan (1988) 83 ALR 121 BRISTOL-MYERS SQUIBB PHARMACEUTICALS PTY LIMITED & ANOR v MINISTER FOR HUMAN SERVICES AND HEALTH & ORS No. NG 213 of 1994 Coram: Whitlam J Place: Sydney Date: 18 September 1996

IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No. NG 213 of 1994 ) GENERAL DIVISION ) BRISTOL-MYERS SQUIBB PHARMACEUTICALS PTY LIMITED BRISTOL-MYERS SQUIBB COMPANY Applicants

MINISTER FOR HUMAN SERVICES AND HEALTH MINISTER FOR INDUSTRY, SCIENCE AND TECHNOLOGY COMMONWEALTH OF AUSTRALIA Respondents

Coram: Whitlam J Place: Sydney Date: 18 September 1996

MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application be dismissed with costs. 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) No. NG 213 of 1994 ) GENERAL DIVISION ) BRISTOL-MYERS SQUIBB PHARMACEUTICALS PTY LIMITED BRISTOL-MYERS SQUIBB COMPANY Applicants

MINISTER FOR HUMAN SERVICES AND HEALTH MINISTER FOR INDUSTRY, SCIENCE AND TECHNOLOGY COMMONWEALTH OF AUSTRALIA Respondents Coram: Whitlam J Place: Sydney Date: 18 September 1996 REASONS FOR JUDGMENT

Introduction

This proceeding was commenced by Bristol-Myers Squibb Pharmaceuticals Pty Limited ("BMSP") as an application for an order of review under the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") and for relief under s 39B of the Judiciary Act 1903. The respondents were the Minister for Human Services and Health and the Minister for Industry, Science and Technology. BMSP filed a letter dated 9 December 1993 from the Pharmaceutical Benefits Pricing Authority ("PBPA") as a statement of the terms of the decision the subject of its application. That letter concerned a program of Government grants known as the Factor (f) Scheme. Both respondents objected to the competency of the application under the ADJR Act. BMSP's parent company, Bristol-Myers Squibb Company ("BMS"), was then added as an applicant to the proceeding, and the application was amended to add a new claim in estoppel against the Commonwealth, which was also added as third respondent to the proceeding. Consideration of the nature of the applicants' claims may be deferred at this stage. It is convenient to begin by tracing the development of the Factor (f) Scheme and the applicants' involvement with it. Pharmaceutical Benefits Pricing Authority On 13 September 1987 the Minister for Industry, Technology and Commerce and the Minister for Community Services and Health announced the Government's decision to replace the Pharmaceutical Benefits Pricing Bureau with an independent authority and to require the new authority to take into account the level of an individual company's Australian pharmaceutical manufacturing activity when setting or making recommendations on prices for products listed under the Pharmaceutical Benefits Scheme ("PBS"). The Bureau had been part of the Department of Community Services and Health. The new authority was to be non-statutory and to report to the Minister for Community Services and Health. The Ministers published the following details of the new pricing authority: "Terms of Reference The Authority will: (a) maintain a continuous review of the prices for items listed as pharmaceutical benefits (b) examine prices submitted by manufacturers and conduct negotiations with manufacturers, where necessary, on proposed price changes (c) determine prices for items listed, or recommended for listing, as pharmaceutical benefits where annual expenditure on these items, either individually or as a group, falls within limits advised by the Minister; in other cases, recommend prices to the Minister (d) examine and report on such matters in relation to prices of pharmaceutical benefits as the Minister may direct or request (e) report on an annual basis to the Minister on its operations and on its interpretation of its guidelines. Factors Considered in Setting Prices The Authority will take account of: (a) the prices of alternative brands of a drug (b) comparative prices of drugs in the same therapeutic group (c) costs information, when supplied by the manufacturer or estimated by the Authority (d) prescription volumes, economies of scale and other factors such as expiry dating, storage requirements, product stability and special manufacturing requirements