Pfizer Pty Ltd v Birkett [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 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 www.fedcourt.gov.au.