FEDERAL COURT OF AUSTRALIA

Minister for Health & Aged Care v Pharmacia & Upjohn Pty Ltd

[2000] FCA 1278

PRACTICE AND PROCEDURE – application for an extension of time in which to apply for judicial review.

ADMINISTRATIVE LAW – review of decisions rejecting an application to register a drug under the Therapeutic Goods Act 1989 (Cth)

Therapeutic Goods Act 1989 (Cth)

Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5, 6

Therapeutic Goods Regulations 1990, Reg 36

Wyeth Australia Pty Ltd v Minister for Health & Aged Care [2000] FCA 330 referred to

Re Eli Lilly Australia Pty Ltd v Minister for Health & Family Services (No2) [1999] AATA 565, (1999) 56 ALD 541 referred to

Re Eli Lilly Australia Pty Ltd v Minister for Health & Family Services (1999) 28 AAR 514, (1999) 53 ALD 453 referred to

Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FLR 344 referred to

Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 referred to

MINISTER FOR HEALTH AND AGED CARE v PHARMACIA AND UPJOHN PTY LTD & ORS

N177 OF 2000

BEAUMONT J

8 SEPTEMBER 2000

SYDNEY

THE COURT ORDERS THAT:

1,         Application dismissed, with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

iNTRODUCTION

1                     Section 20 of the Therapeutic Goods Act 1989 (Cth) (“TGA”) provides, relevantly, that a person must not supply “therapeutic goods” in Australia for use in humans, unless the goods are registered in relation to the person.  Part 3 of the TGA makes provision for the lodgement of an application to the Department of Health for registration (s 23) and for the evaluation of the goods, and their registration (s 25).  The Secretary for the Department may impose conditions on the registration of goods (s 28).  The relevant operation of the statutory scheme will be further described below (see also Wyeth Australia Pty Ltd v Minister for Health & Aged Care [2000] FCA 330, per Finn J at pars 4 and following).

2                     By an application lodged with the Department in September 1996, Pharmacia and Upjohn Pty Ltd (“P and U”), the first respondents, sought registration of a product named “Genotropin” for use in adults.  Genotropin, a growth hormone, had already been registered, but only upon the condition that it be used by children suffering from growth hormone deficiency.  P and U sought to extend its use to adults.

3                     This application was referred to the Australian Drug Evaluation Committee (“ADEC”), pursuant to Reg 36 of the Therapeutic Goods Regulations.  On 7 or 8 August 1997, ADEC recommended approval of the application, that is for treatment of adults, yet only in certain specified circumstances.  However, on 18 August 1997, the Secretary refused the application.

4                     Pursuant to s 60(2) of the TGA, P and U sought internal review by the Minister’s delegate of this decision.  On 1 December 1997 the delegate affirmed the decision.

5                     In another matter, on 2 August 1999, upon application of Eli Lilly Australia Pty Limited (“Eli Lilly”) (a trade rival of P and U), the Administrative Appeals Tribunal (“the Tribunal”) set aside a decision of the Minister’s delegate refusing registration of a similar product named “Humatrope” for use in therapy for adults with growth hormone deficiencies.  The Tribunal directed approval of this registration in Re Eli Lilly Australia Pty Ltd v Minister for Health & Family Services (No 2) [1999] AATA 565, (1999) 56 ALD 541 (“Eli Lilly (No 2”)).

6                     By s 29 of the AAT Act it is provided that any application to the Tribunal to review a decision must be made within twenty-eight days after service of reasons.  On 14 December 1999, P and U lodged with the Tribunal an application under s 29(7) of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”), for an extension of time in which to seek review of the Minister’s delegate’s decision dated 1 December 1997.  By s 29(7), it is provided that the Tribunal may extend the time in which an application may be made to it for review of a reviewable decision.  On 7 February 2000 Senior Tribunal Member M D Allen, the second respondent, granted the extension.  The Minister now applies for judicial review of the Tribunal’s decision.  For this purpose, it will be necessary to explain the Tribunal’s reasoning as follows.

The Tribunal’s reasoning

7                     The Tribunal initially referred to the reasoning of the differently constituted Tribunal (Deputy President McMahon, Dr J Campbell and Professor G Johnston) in Eli Lilly (No 2), observing that the two products, “Genotropin” and “Humatrope”, were “[t]o all intents and purposes, … identical”.  The Tribunal stated that, given the approval of the Tribunal in Eli Lilly (No 2), “it can be accepted that were [P and U’s] case before the AAT, it would have reasonable prospects for success.”

8                     However, the Tribunal noted, the likelihood of success was not the sole criterion here.  The Tribunal referred to the well-known yet “non-exhaustive” statement of principles governing extensions expressed by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-9.  The Tribunal also noted the observations of Hill J in Comcare v A’Hearn  - affirmed by a Full Court (Black CJ, Gray and Burchett JJ (1993) 119 ALR 85), and in Brown v Commissioner of Taxation [1999] FCA 563, adopted by a Full Court in Zizza v Commissioner of Taxation [1999] FCA 848 -  that, although any explanation given for delay in making an application is a relevant consideration to be taken into account, the giving of such an explanation is not an essential pre-condition to the exercise of the discretion to grant an extension.

9                     However, citing Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 547 and 551, the Tribunal accepted that an applicant seeking an extension of time carries the ultimate onus of satisfying the Court (or Tribunal) that the justice of the case requires that time should be extended.

10                  The Tribunal referred to evidence in a written statement of Dr Feeney, P and U’s Clinical and Regulatory Affairs Director, as follows:

“4.       On 5 December 1997 I received a letter from Dr Alex Proudfoot, delegate of the Minister for Health and Family Services in which he advised that he had decided to confirm the initial decision.

5.                  On 23 December 1997 I wrote to Dr Proudfoot requesting a statement of reasons under section 28 of the Administrative Appeals Tribunal Act 1975 (‘AAT Act’).

6.                  On 24 December 1997 I received a facsimile from Dr Proudfoot in which he advised that section 28(4) of the AAT Act applied, and that P&U was not entitled to make a request for a statement of reasons.

7.                  At that time P&U considered lodging an application for review by the Administrative Appeals Tribunal (‘AAT’).  However, P&U did not consider that an appeal to the AAT would be successful, and a decision was made not to pursue a further appeal.  This decision was made internally by P&U management.  P&U did not seek external legal advice.

8.                  I recall being aware that Eli Lilly Australia Pty Limited (‘Eli Lilly’) had lodged an application for review by the AAT of a similar decision to refuse an application for approval of an additional indication for Eli Lilly’s identical product, Humatrope.

9.                  I did not think Eli Lilly’s appeal to the AAT would succeed.  It was only after, contrary to my expectation, Eli Lilly succeeded in its appeal to the AAT that P&U decided to consider a similar appeal to the AAT.

10.              I have been advised by Susan Yule, Regulatory Affairs Manager that if P&U lodged a new application for approval of an additional application under section 25 of the Therapeutic Goods Act 1989;

(a)               the application would take approximately 12 months to be considered by the TGA;

(b)               would cost approximately $70,000 to $80,000 in fees imposed by the TGA;

(c)                would require approximately 300 to 500 hours work in preparing the application for resubmission, at a cost to P&U of between $38,000 and $63,000.”

            The Tribunal noted that, in his cross-examination, Dr Feeney had stated that “[a] large part of the costs which would be incurred by [P and U] would be cross-referencing this new information to material previously submitted to the [Department]”;  and Dr Feeney had accepted that there was a significant amount of new material.

11                  The Tribunal went on to note that Dr Feeney had also accepted that, when the decision of the Minister’s delegate was received (on 5 December 1997), he was aware that there was a statutory time-frame in which to seek review of that decision and that P and U had taken no step until 14 December 1999 to make the Department aware that P and U disputed the Minister’s decision.  However, the Tribunal proceeded to draw the inference that shortly after Eli Lilly (No 2), the Department had become aware, from discussions with the Department, that P and U was again agitating for the registration of its product. The Tribunal stated that it did not consider that anything done, or omitted to be done, in the period between 2 August 1999 and 14 December 1999 should affect the Tribunal’s approach to the extension application.

12                  The Tribunal stated that it was not satisfied that any prejudice would accrue to the Department if the extension were granted.  The Tribunal noted a suggestion made on behalf of the Minister of prejudice because the Department would have been at liberty to charge “not insubstantial fees” for processing the information placed before it, whereas, the contention went, if the matter is before the Tribunal, the Department would have to consider new material, but would be unable to charge any fee.  The Tribunal relied in this connection, upon the observations of Deputy President McMahon in Re Eli Lilly Australia Pty Ltd v Minister for Health & Family Services (1999) 28 AAR 514, (1999) 53 ALD 453 (“the Eli Lilly interlocutory decision”)at 520 AAR, in rejecting a submission said to be similar, advanced on behalf of the Department.  The Tribunal noted that questions of the memory of witnesses or unavailable documents did not appear to be a relevant consideration in the application for extension.

13                  The Tribunal then referred to the provisions of 60A of the TGA, as follows:

“60A New Information on Review--Discretion to Remit

(1)       This section applies only if the Secretary or an authorised delegate makes a decision under section 25 in relation to therapeutic goods.

(2)       If a person (the appellant) whose interests are affected by the decision requests the Minister to reconsider the decision, and lodges new information in support of that request, the Minister must either:

(a)        take that information into account when he or she reconsiders the decision; or

(b)        remit the matter to an authorised delegate for a fresh decision.

(3)       If the appellant applies to the Administrative Appeals Tribunal for review of the decision on reconsideration, and lodges new information in support of that application, the Tribunal may, if the Tribunal thinks fit, remit the matter to an authorised delegate for a fresh decision.

(4)       The Tribunal must not remit the matter under subsection (3) if all of the new information is information that the Minister took into account under paragraph (2)(a) in making the decision on reconsideration.

(5)       If:

(a)       the appellant lodges new information in support of an application to the Administrative Appeals Tribunal for review of the decision on reconsideration; and

(b)       the Tribunal does not remit the matter under subsection (3); the Tribunal, in reviewing the decision on reconsideration:

(c)        may consider new information (if any) that the Minister took into account under paragraph (2)(a) in making the decision on reconsideration; and

(d)       must not consider any other new information, except new information that indicates that the quality, safety or efficacy of the therapeutic goods is unacceptable.

(6)       If:

(a)        the Minister or the Tribunal remits the matter; and

(b)       the appellant has paid, as a further evaluation fee, the evaluation fee that the appellant would have to pay under section 24 on making a new application for registration of the therapeutic goods;

the authorised delegate must make a decision under section 25, taking into account the new information, as if a fresh application for registration had been made.

(7)       To remove any doubt, the authorised delegate's fresh decision is to be treated, for the purposes of subsequent applications of section 60 and this section, as a decision under Part 3.

(8)        In this section:

authorised delegate means a delegate of the Secretary exercising a power to decide whether to register therapeutic goods.

new information means information that:

(a)       was in existence at the time the decision referred to in subsection (1) was made; and

(b)       was not made available to the Secretary or authorised delegate for the purpose of making the decision; and

(c)        is relevant to that decision;

and includes any opinions that are wholly or substantially based on such information (whether or not the opinions were formed before or after the decision was made).”

14                  The Tribunal said:

“…… it was agreed by both counsel in these proceedings that s 60A only refers to material which was in existence at the time the delegate made his decision but not made available to him.  The section has no relevance to material which has come into existence after that date.  This concession is in line with the reasons of Deputy President McMahon  in [the Eli Lilly interlocutory decision].”

15                  Referring again to the judgment of Wilcox J in Hunter Valley Developments, his Honour noted that lack of prejudice was not enough to justify the grant of an extension, but that “public considerations intrude”.  The Tribunal said:

“In this matter I consider that public considerations support the grant of an extension.  The decision of the Tribunal in the [Eli Lilly (No 2)] matter demonstrates that the decision-making process by the Respondent’s delegate and the delegate of the Department Secretary, were deeply flawed.  That there should be available for prescription to those requiring treatment an alternative drug, to that manufactured by Eli Lilly Australia Pty Ltd, surely advances the common good.  It is not only a matter of competition but of therapeutic choice, for example the Applicant’s drug may be more suitable to or better tolerated by would-be recipients of the treatment.

As to the merits of the substantial application, as I have stated previously, given the Tribunal’s decision in [Eli Lilly (No 2)], the Applicant must have reasonable prospects for success."

16                  The Tribunal went on to say:

“The only unfairness I can envisage is that Eli Lilly Australia Pty Ltd undertook the expenses of an appeal to this Tribunal and now the present Applicant wishes to take advantage of its success.  Commercial considerations must, however, be outweighed by administrative fairness and perceived public benefit.”

17                  The Tribunal next considered the general rationale for the imposition of limitation periods explained by McHugh J in Brisbane South Regional Health Authority, above, at
552-3.  The Tribunal said:

“Recent decisions have subtracted from the absolute statement of Fitzgerald J (as he then was) in Lucic v Nolan and Others 45 ALR 411 at 416 that prima facie proceedings commenced outside the limitation period will not be entertained.  However, as pointed out by McHugh J, a limitation period is the legislature’s judgment as to what best serves the welfare of society.  In Administrative Law the third and fourth rationales, referred to in the passage above from the judgment of McHugh J, are important, namely that a Government Department or body should, after the expiry of a limited period of time, be able to manage its affairs on the basis that a particular decision is final and operative.  To resurrect a matter which a Department had been entitled to regard as closed, can adversely affect budgets, the operations of a scheme, and on-going programmes, entitlements or licences.  As was pointed out by Fitzgerald J in Lucic v Nolan supra at p 416 where His Honour said:

‘… Other matters of proper public concern which are readily identifiable as relevant to the review of administrative acts and decisions include the need for finality in disputes, the efficient use of public resources, the appropriate allocation and expenditure of public funds, and also where what is in question involves promotion and discipline in the Australian Public Service, the orderly administration of that vast body.  Further, the impact of an act or decision is often not confined to a particular individual who is adversely affected and wishes to challenge it ….’ ”

18                  The Tribunal noted that the AAT Act had created methods to review Government decisions, but had also imposed a strict time limit; and, the Tribunal said, this legislative directive “should not lightly be set aside”.

19                  The Tribunal expressed its final conclusion thus:

“Had this matter [ie the existence of the statutory time limit] stood alone, I would have had no hesitation in refusing the application for an extension of time.  The Applicant company, through its responsible officers, made a deliberate decision not to seek review by the AAT.   Normally they should be held to that decision and the administrators of the Department concerned not have to deal with a matter they quite properly regarded as finalised over two years ago.

However, a similar application was before the AAT in August 1999.  That application involved a drug with identical properties to the Applicant’s and was for the same therapeutic purposes.  The same officers in the Respondent’s Department made the decisions in both cases.  Both drugs were considered by the ADEC at its 7, 8 August 1997 meeting and both drugs were approved by that body.

In these circumstances, I intend to exercise my discretion to extend the time in which to file an application for review.  The matter being before the Tribunal, both parties will have the advantage of conferences listed pursuant to s34 of the AAT  Act 1975.  The Respondent already has the advice of the ADEC and the benefit of the Tribunal’s reasons in the Eli Lilly matter.”

The application for an order of review

20                  The Minister now applies under ss 5 and 6) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“AD(JR) Act”) for judicial review of the Tribunal’s decision or conduct.

21                  In his application, the Minister relies upon the following grounds:

Ground 1

The decision or conduct was an improper exercise of the power conferred by s 29(7) of the AAT Act in that it involved the taking into account of irrelevant considerations.  Particulars of this ground are that (i) the Tribunal erred in taking into account the fact that the decision in Eli Lilly (No 2) demonstrated that the decision of the delegate in that case was “deeply flawed”; and (ii) the Tribunal erred in taking into account that an alternative drug to that manufactured by Eli Lilly would be available.

Ground 2        

The decision or conduct was an improper exercise of the power conferred by s 29(7) of the AAT Act in that it involved a failure to take into account relevant considerations.  Particulars of this ground are that the Tribunal erred in failing to take into account (i) the delay of P and U between December 1997 and December 1999 in bringing the application, and the absence of any reasonable excuse for that delay; (ii) the delay of P and U between 2 August 1999 and 14 December 1999 in bringing the application for an extension of time; (iii) the absence of any explanation by P and U for the delay between 2 August 1999 and 14 December 1999 in bringing the application for an extension of time; (iv) that the scheme of the TGA, as evidenced by s 60A, is that in the first instance there is to be an evaluation of information by or on behalf of the Minister; (v) that no commercial advantage accrued to P and U from an extension of time to bring an application for review to the Tribunal; (vi) that the effect of extending time was to exclude the Minister from the process of a current evaluation of P and U’s information which was before the decision-maker in 1997; (vii) that the effect of extending time was to exclude the Minister from any evaluation of P and U’s information which was not before the decision-maker in 1997; (viii) the prejudice occasioned to the Minister in not being able to apply the cost recovery provisions of the TGA Act to the material to be relied on by P and U which was not before the delegate at the time of the making of their decision; and (ix) the prejudice occasioned to the Minister in having to determine whether the material to be relied on by P and U which was not before the delegate was “new material” within the meaning of s 60A.

Ground 3

The decision or conduct was an improper exercise of the power conferred by s 29(7) of the AAT Act in that it was an exercise of power so unreasonable that no reasonable person could so exercise the power.  The Minister repeats here the particulars given in respect of grounds 1 and 2 above.

Ground 4

The decision or conduct involved an error of law in that there was no evidence upon which the Tribunal could conclude that “shortly after” 2 August 1999 the Minister “became aware the [P and U] was again agitating for the registration of [its] Product.”

Ground 5

The Tribunal erred in law in that it misunderstood the nature of the task conferred on the Tribunal by s 29 of the AAT Act when read with the TGA Act.  Particulars of this ground are that (i) no commercial advantage accrued to P and U from an extension of time to bring an application for review to the Tribunal; (ii) the effect of extending time was to exclude the Minister from the process of a current evaluation of P and U’s information which was before the decision-maker in 1977; (iii) the effect of extending time was to exclude the Minister from any evaluation of P and U’s information which was not before the decision-maker in 1997;  and (iv) the Tribunal had therefore excluded the Minister from his statutory function and had assumed the role of primary decision-maker.

Further application by the Minister under the Judiciary Act and the Federal Court of Australia Act.

On the same grounds, and pursuant to s 39B of the Judiciary Act 1903 (Cth) and s 22 of the Federal Court of Australia Act 1976 (Cth), the Minister further claims a writ of certiorari quashing the decision of the Tribunal; a writ of prohibition prohibiting the second respondent from proceeding to hear and determine P and U’s application for review; and a writ of mandamus directed to the President of the Tribunal to allocate the matter to a member of the Tribunal other than the second respondent.

The Minister’s submissions

22                  In support of his applications, the arguments advanced upon behalf of the Minister were developed as follows (and in the following sequence):

Ground 5 ( ie Error of Law submission)

·                    Dr Feeney had accepted that if P and U were allowed to proceed with its application to the Tribunal for review of the decision of December 1997, it would provide to the Tribunal a significant amount of scientific material which had come into existence since the decision of 1 December 1997; and that it was possible that some of the information that would then be provided to the Tribunal was scientific information or data that was available in late 1996 or 1997, but for one reason or another, was not then submitted to the Department.

·                    It had been submitted to the Tribunal on behalf of the Minister that to allow P and U’s application to proceed would, in effect, constitute an inversion of the processes envisaged by the TGA, because the Tribunal would be confronted by an entirely new application, and the Tribunal would not have the benefit of the Department’s evaluation, which should occur prior to an application for review.  It was also submitted that if the application were now allowed to proceed in this manner, the taxpayer would fail to obtain the benefit of the cost recovery mechanisms provided for in ss 24A to D of the TGA.  The Tribunal expressly dealt with the latter submission, erroneously, it is submitted, but did not expressly deal with the former.  The failure to address this submission and/or to accept it, reveals that the Tribunal misunderstood the nature of the review task it was undertaking under s 29 of the AAT Act, when read with the provisions of the TGA.  This is an error of law (see s 5(1)(f) and/or s 6(1)(f) of the AD(JR) Act).  It is an error of the same kind as that identified by the Full Court in Lees v Comcare (1999) 29 AAR 350, 56 ALD 54 where it was held that, in substance, the Tribunal had assumed the role of a primary decision-maker.  It is also similar to the error of law identified in Repatriation Commission v Morris & Breen (1997) 79 FCR 455 where it was held that the Tribunal had abdicated its statutory function.  It had done this, essentially by becoming involved in primary decision-making, motivated by its wish that the applicant should not have to go back to the Department or through the Veterans’ Review Board.  In the present case, the motivation of the Tribunal was the same although, instead of abdicating its function, the error was manifested in an assumption of function, that function being that of the primary decision-maker.  The factors pointing to this conclusion are these: no commercial advantage accrued to P and U from the grant of an extension of time to bring an application for review to the AAT; the effect of extending time was to exclude the Minister from the process of a current evaluation of P and U’s information which was not before the decision-maker in 1997; the effect of extending time was to exclude the Minister from any evaluation of P and U’s information which was before the decision-maker in 1997; the Tribunal’s finding that the primary decision-making process in 1997 was “deeply flawed” and the corresponding assumption that the result of a fresh application by P and U would be the same in 1999 as it was in 1997, or that the Minister should be denied his statutory role in evaluating P and U’s material; the further assumption that the Tribunal’s decision in relation to P and U’s application to it would be that registration would be approved and that therefore there would be available for prescription an alternative drug to that manufactured by Eli Lilly.  This also involved the incorrect assumption that there is precedent value in fact-finding (see North Australian Cement Ltd v Federal Commissioner of Taxation (1989) 89 ATC 4765 per Spender J).  Further, because no commercial advantage would accrue to P and U, there was no injustice to it in requiring compliance with the ordinary time limits and no such injustice was referred to by the Tribunal (see Gallo v Dawson (1990) 64 ALJR 458 at 459 per McHugh J).

·                    The TGA, particularly s 60A, contemplates that the Department and/or the Minister will evaluate material lodged in support of an application for registration prior to the matter being reviewed by the Tribunal.  This is clearly the import of s 60A.  The Tribunal did note here that s 60A had no application to the extra material that Dr Feeney was referring to, as it only referred to material that was in existence at the time the delegate made his decision.  This is correct.  However, that is not an end of the analysis.  In the ordinary course, where an application for review is filed within twenty-eight days of the reviewable decision, one would not expect a significant amount of material to be brought forth by an applicant for review which is not available at the time the application was lodged, ie there will be little extra material before the Tribunal which was not “new material” within the meaning of s 60A.  Thus, in the ordinary course, the Department will have had the opportunity to evaluate the material brought forward by an applicant at the time of the primary decision and of the review decision.  To the extent that there is “new information” within s 60A, the Tribunal will be obliged to deal with it in accordance with that provision.  If the application for review before the Tribunal proceeds expeditiously, then there will be very little, if any, extra material before it.  However, where an applicant engages in gross delay, as P and U did in this case, then it is to be expected that there will be a significant amount of factual material which will have come into existence since the time of the Minister’s decision.  In  that event, the normal process contemplated by the Act, namely that the Minister has the opportunity to evaluate it first, will not occur.  This point was expressly made to the Tribunal here, but was not addressed.

Ground 4 (ie No Evidence submission)

·                    It was common ground before the Tribunal that one of the factors to be considered by it in the exercise of its discretion under s 29(7), was the delay between the notification of the decision under review and the application to the Tribunal, as well as whether the applicant for an extension of time had made the Minister aware that the decision was disputed (see Hunter Valley Developments, above, at 348-349).  The Tribunal accepted that there was no evidence that P and U had advised the Minister that the relevant decision was disputed up to the date of the publication of the Eli Lilly (No 2) decision.  However, the Tribunal then stated:

“There was also a delay between the publication of the Tribunal’s decision in [Eli Lilly (No 2)] and the application for an extension of time which was lodged with the Tribunal on 14 December 1999.  My understanding is that during that period the Applicant was having discussions with Dr Mitchell.  No doubt in those discussions the applicant sought to advance its case on the basis of the Eli Lilly decision and that advance was rejected, hence this application.  However, I infer that shortly after the Eli Lilly decision the Respondent, through Dr Mitchell, became aware that the Applicant was again agitating for the registration of its product.  I do not consider that anything done or not done in the period between 2 August 1999 and 14 December 1999 should affect my decision in this matter.” (reasons at par 23) (Emphasis added by Minister)

·                    The only evidence that a representative of the Minister was advised, after the publication of the Eli Lilly (No 2) decision, that P and U was seeking to have the refusal decision reconsidered was set out on page 2 of the amended application for an extension of time and in par 13 of a letter from the Minister’s solicitors to the Tribunal dated 24 December 1999.  But all this revealed was that a request to reconsider the initial decision on an informal basis was made of Dr Mitchell from the Department on 20 October 1999 and was rejected, Dr Mitchell indicating that there could be no reconsideration on an informal basis.  There was no evidence of any other discussion.  This matter was raised during submissions to the Tribunal but there was no concession by the Minister of any discussion prior to or after 20 October.

·                    Accordingly, there was no evidence upon which the Tribunal could infer that, shortly after the Eli Lilly (No 2) decision, the Minister or the Department again became aware that P and U was agitating for the registration of its product.  The inference was not one that was reasonably capable of being drawn from the material before the Tribunal. (see ABT v Bond (1990) 170 CLR 321, 356.)  The drawing of that inference in those circumstances was an “error of law” (see s 5(1)(f) and s 6(1)(f) of the AD(JR) Act): ABT v Bond, above at 357.  Further, this was not immaterial.  It led the Tribunal to conclude that the further period of delay between 2 August and 14 December 1999 should not affect the decision.  In a finely balanced matter such as this, it can be said that, but for this error of law, the decision might have been different: see ABT v Bond, above, at 353 (per Mason CJ).  That is sufficient for the decision to be set aside.

Ground 1 (ie Irrelevant Considerations submission)

·                    In its reasons, the Tribunal summarised the Eli Lilly (No 2) decision and concluded that “it can be accepted that were the applicant’s case before the AAT, it would have reasonable prospects for success”.  Clearly, that was a relevant matter to be considered when assessing the discretion to extend time conferred by s 29(7) of the AAT Act.  However, later in its reasons, the Tribunal said:

            “Principle 4, of the principles referred to Wilcox J [in Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344], refers to the lack of prejudice not being enough to justify the grant of an extension but that public considerations intrude.  In this matter I consider that public considerations support the grant of an extension.  The decision of the Tribunal in [Eli Lilly (No 2)] demonstrates that the decision-making process by the Respondent’s delegate and the delegate of the Departmental Secretary, were deeply flawed.  That there should be available for prescription to those requiring treatment an alternative drug, to that manufactured by Eli Lilly Australia Pty Limited, surely advances the common good.  It is not only a matter of competition but of therapeutic choice, for example the Applicant’s drug may be more suitable to or better tolerated by would be recipients of the treatment.”

            (Emphasis added by the Minister)

·                    This passage reveals that the Tribunal took into account a number of irrelevant considerations:  first, whether or not the decision-making process of the Minister’s delegates and the delegate of the Secretary was “deeply flawed”, or not, was entirely irrelevant.  The Tribunal had already concluded that P and U had reasonable prospects of success in the application for review.  The “flaws”, or otherwise, in the decision under review were not relevant to any ultimate decision to be made by the Tribunal on the application for review, and could not be relevant to any application by the Tribunal to allow an extension of time.  Secondly, it was irrelevant to the application for extension that there be available an alternative drug to that manufactured by Eli Lilly.  There was very little evidence as to the similarity or the differences between Genotropin and Humatrope. However, a review of the TGA reveals that Parliament has emphasised the need for there to be a proper evaluation of any drug which is sought to be made available to members of the public.  The relevant “common good” was ensuring that that process was properly undertaken, not that there ultimately be competition or therapeutic choice for drugs that may provide similar treatments.  Thirdly, this reasoning appears to misunderstand the issue for the Tribunal to resolve.  If the application for an extension were to be refused, then it was still open to P and U to make a fresh application to the Secretary, and to seek review of any refusal by the Minister and then by the Tribunal.  There is no reason to believe that any fresh application would necessarily have been refused, that is to say, there was no reason to believe that refusal of the application for an extension of time would add any further obstacle to Genotropin’s is becoming available.   Accordingly, there was no reason for the Tribunal to conclude that allowing the extension advanced the common good it identified.

Ground 2 (ie Failure to take into account relevant considerations submission)

·                    Ground 2 specified a number of considerations that the Tribunal allegedly failed to take into account.  Grounds 2(i), (ii), (iv), (v), (vi) and (vii) have mentioned already.  In relation to the remaining grounds:

2(iii)     At no stage did P and U attempt to explain the further delay between the publication of the Eli Lilly (No 2) decision in August 1999 and the lodging of an application for review in December 1999.  Although this delay was referred to in the reasons, there was no reference to the failure of P and U to give any such explanation.  The existence, or otherwise, of an adequate explanation for the delay is clearly a relevant consideration in relation to the exercise of the power conferred by s 29(7): Hunter Valley Developments supra at 348-9; see also Brown v Commissioner of Taxation [1999] FCA 563; (1999) 99 ATC 4516 (Hill J) at par 47.

2(viii)    As noted above, it was submitted to the Tribunal that the Minister would be prejudiced by allowing the application to proceed in that it (and ultimately the taxpayer) would lose the opportunity to apply the cost recovery provisions of ss 24A to 24D to the material which was to be relied on by P and U which was not before the delegate at the time of the making of the decision.  The Tribunal rejected this submission (and therefore did not take this factor into account) and in doing so purported to rely on reasons set out in the Eli Lilly interlocutory decision.  However, a reading of that passage reveals that the passage was addressing (and rejecting) a submission that the legislature’s intent when inserting s 60A was to obtain cost-recovery for the assessment of “new evidence”.  However, that is an entirely different point from the question whether a party would be prejudiced by allowing a grossly late application for review relying on a significant amount of further evidence to proceed, as opposed to it being refused, and the relevant applicant making a fresh application.  By incorrectly relying on the reasons in the Elly Lilly interlocutory decision as a response to a different point, the Tribunal failed to take into account the prejudice to the Minister that was identified;

2(ix)     It was common ground before the Tribunal that the phrase “new material” in s 60A of the TGA referred to material which was available at the time of the delegate’s decision and the review by the Minister’s delegate, but which was not provided.  Accordingly, in any review proceedings before the Tribunal, where material is produced which was not before the primary decision-maker or the Minister’s delegate, a threshold question arises whether that material was “new material” within the meaning of s 60A or whether it is material that has come into existence since the delegate's decision.  It was submitted before the Tribunal that the greater the delay between the timing of the Minister’s decision and the hearing by the Tribunal, the more difficult it is to apply s 60A to extra material that is produced by the applicant for review because, of necessity, it is more difficult to determine what is “new material” within the meaning of s 60A, and what is not.  This submission was not addressed by the Tribunal.

Ground 3 (ie Unreasonableness submission)

·                    The decision made by the Tribunal under s 29(7) was the exercise of a discretionary power.  In the ordinary course, it is a matter for the Tribunal to determine the weight that is to be given to the matters which are required to be taken into account in exercising that power.  However, where the Tribunal has not given adequate weight to a factor of great importance, or has given excessive weight to a factor of no importance, then the exercise of that discretionary power may be reviewed on the basis that it is manifestly unreasonable: Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 41 (per Mason J). 

·                    The Minister here points to the matters set out under grounds 1 and 2 above; in particular, it is said, a combination of the grossly excessive delay on the part of P and U, its deliberate decision at the time of the decision not to appeal, its failure to bring the application within a reasonable time of the publication of the Eli Lilly (No 2) decision and the fact it would not have suffered any real prejudice if the application had been refused, all lead to the result that the decision was manifestly unreasonable.  The Tribunal did note that should the application be refused, it was open to P and U to lodge a further application for registration.  This contrasts with many other cases where the refusal of the decision by the Tribunal effectively determines the relevant applicant’s final rights.  However, the Tribunal proceeded on the basis that, because of its perception of the inadequacies of the primary decision-making which would lead to the rejection of a fresh application by P and U, and because of its assumption that the application to the Tribunal would be granted by the Tribunal, P and U should be allowed to proceed directly in the Tribunal.  There was no basis for either assumption.

·                    Further, the Tribunal purported to take into account “public considerations”, an approach said to be derived from the judgment of Wilcox J in Hunter Valley Developments at 349.  But the matters which the Tribunal described as referable to “the common good” were not within “public considerations” of the kind contemplated by Wilcox J in referring to Lucic v Nolan (1982) 45 ALR 411 at 416 and Hickey v Australian Telecommunications Commission (1983) 47 ALR 517 at 522.  Wilcox J contemplated considerations broader than the mere interests of the applicant, in light of the fact that justice is the ultimate object to be obtained by the exercise of the discretion. See also Gallo v Dawson (1990) 64 ALJR 458 at 459 where McHugh J held that the corresponding discretion in O 60 r 6 of the High Court Rules could only be exercised in favour of an applicant upon proof that compliance with the rules would work an injustice upon the applicant, the sole purpose of the discretion being to enable the Court to do justice between parties.  (Appeal dismissed: (1992) 66 ALJR 859.)  Indeed, the irrelevance of competition, referred to by the Tribunal, underlies the decision of this Court in relation to questions of standing under the TGA: see Alphapharm Pty Ltd v Smithkline Beecham (Australia) Pty Ltd (1994) 49 FCR 250.  Alternatively, in approaching the question of “the common good” as the Tribunal did, the Tribunal made it clear that this object could, in the Tribunal’s view, only be attained only by the grant of an extension of time.  Again, the unfounded and erroneous assumptions of the Tribunal must be either that a fresh application by P and U to the primary decision-maker would have been rejected; whilst an application to the Tribunal would succeed, and/or that the Tribunal should assume the role of a primary decision-maker.  Yet the factual similarities between the two drugs, and when and by whom they were considered in 1997, could only form the basis for decision if it were founded on these erroneous assumptions.

Conclusions on the Minister’s APPLICATION FOR REVIEW

23                  It will be necessary to recall at this stage the provisions of the TGA which appear to be material for present purposes.  They are as follows.

·                    The objects of the TGA include: providing 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 used in Australia (s 4(1)(a)).

·                    Provision is made for an Australian Register of Therapeutic Goods (Part 3).

·                    Subject to certain immediate exceptions, a person must not intentionally or recklessly supply therapeutic goods for use in humans (s 20(1)(d)).

·                    An application for registration must (a) be made in accordance with a form approved by the Secretary and (b) be delivered to an office of the Department specified by the Secretary (s 23(1)).

·                    An application is not effective unless (a) the prescribed application fee has been paid; and (b) the applicant has delivered such information, in an approved form, as will allow its determination (s 23(2)).

·                    Where an application is made for the registration of therapeutic goods in accordance with s 23 and the goods are goods that are required to be registered, a fee specified in or determined in accordance with the regulations is payable by the applicant in respect of the evaluation of the goods for registration; and the Secretary must notify each such applicant of the amount of the evaluation fee (s 24(1)).

·                    Subject to some exceptions immaterial here, an evaluation fee is payable on the day on which the applicant is notified of its amount (s 24A).

·                    Provision is made for the process of evaluation and registration of therapeutic goods by s 25 (see below).

·                    The regulations may provide for the periods within which evaluations under s 25 in relation to specified therapeutic goods or classes of such goods are to be completed (s 63(2)(da)).

·                    If, where a period is prescribed, an evaluation has not been completed at the end of the period, the applicant may give the Secretary written notice that the applicant wishes to treat the application as having been refused (s 24E(2)).  Where a notice has been given, the Act (except for s 60(5), which deals with reconsideration by the Minister (see below)) has effect as if the Secretary had decided not to register the goods and the Minister had confirmed that decision (s 24E(4))

·                    The Secretary may require information of an applicant (s 31) (see below).

·                    Where (a) an application is made in accordance with s 23; and (b) no part of an evaluation fee is due but unpaid; and (c) the applicant has complied with s 31, the goods are to be evaluated, having regard to a number of specified matters (including whether the quality, safety and efficacy of the goods have been satisfactorily established) and such other matters (if any) as the Secretary considers relevant (s 25(1)).

·                    After the goods have been evaluated, the Secretary must (a) notify the applicant in writing of the decision on the evaluation within twenty-eight days of the making of the decision, and in the case of a decision not to register, notify the reasons; and (b) if the decision is to register – include the goods in the Register (s 25(3)).

·                    The secretary may require the applicant to give, within a reasonable time, information or documents relating to a number of specified matters, including the safety and efficacy of the goods (s 31(1)).

·                    A person whose interests are affected by a decision of the Secretary may, within 90 days, request the Minister to reconsider (s 60(2)).

·                    Subject to s 60A(2)(b) (see below), the Minister must, as soon as practicable, reconsider (s 60(3)).

·                    Where notice of the Minister’s decision is not received within 60 days, the Minister is to be taken to have confirmed the original decision (s 60(4)).

·                    An application may be made to the tribunal for review of the Minister’s decision (s 60(8)).

24                  The provisions for s 60A, dealing with “new information” on review, and discretion to remit where a decision has been made under s 25, are important for present purposes, and, it will be remembered, are as follows.

·                    If the Minister is required to reconsider and lodges “new information” (see below), the Minister must either take that information into account on reconsideration (s 60A(2)(a)); or remit the matter to a delegate of the Secretary for a fresh decision (s 60A(2)(b)).

·                    “New information” means information that (a) was in existence at the time the revision under s 25 was made and (b) was not then available to the Secretary (or delegate)  and includes any opinions that are wholly or substantially based on such information (s 60A(8)).

·                    If application is made to the Tribunal for review of a decision made on a reconsideration, and new information in support of the application is lodged, the Tribunal may, if it thinks fit, remit the matter to the Secretary’s delegate for a fresh decision (s 60A(3)).

·                    The Tribunal must not remit the matter if all the new information is information that the Minister took into account upon the reconsideration (s 60A(4)).

·                    If new information is lodged with the Tribunal and the Tribunal does not remit, the Tribunal, in reviewing the decision on reconsideration (i) may consider new information (if any) that the Minister took into account; and (ii) must not consider any other new information, except new information that the quality, safety or efficacy of the goods is unacceptable (s 60A(5)).

·                    If the Minister or the Tribunal remits and the applicant (appellant) has paid a further evaluation fee, the Secretary’s delegate must make a decision under s 25, taking into account the new information, as if a fresh application for registration had been made (s 60A(6)).

25                  The insertion of s 60A into the TGA review procedures in 1996 was designed to tighten those procedures.  According to the second reading speech:

“This [tightening] will ensure that technical and scientific data that should be lodged in connection with a general marketing application will be evaluated before a review on merits is undertaken by the Administrative Appeals Tribunal.”

26                  The Explanatory Memorandum accompanying the Bill for the 1966 amendment stated:

“The effect of this amendment is to encourage sponsors applying for general marketing of therapeutic goods to lodge all relevant material with the Secretary so that the vigorous evaluation process employed in processing the product may be conducted properly in respect of all material sought to be relied upon by the applicant, and that when review of a decision is undertaken by the Administrative Appeals Tribunal any technical and scientific data not previously evaluated by the Secretary would first undergo proper evaluation before the matter is considered by the Tribunal and a decision on merits is made.”

27                  As Finn J said in Wyeth, above (at par 17);

“The legislative scheme then is clear enough - even though it may require some foresight, if not power of prophecy, on an applicant's part as to what may be ‘relevant’ to the decision actually taken.  Information available at the time of the decision is to be subjected to proper evaluation before the Secretary's (or delegate's) decision.  If it is brought forward in the appeal/review process, and if it is to be used, the whole matter will be likely to be (s 60A(2), (3), (5)) remitted back to a delegate of the Secretary for decision.  And such a delegate's decision under s 25 is to be made after, and ‘on’, the s 25(1)(d) evaluation of the goods in question:  s 25(3).”

28                  In concluding the description of the material in the legislative scheme, reference should be made to the status of the Australia Drug Evaluation Committee previously mentioned (ADEC).  This committee is not mentioned in the TGA, but s 63 of the TGA authorises regulations that make provision for the establishment of committees to advise the Minister or the Secretary on matters relating to therapeutic goods.  Regulation 36(2) authorises the establishment of ADEC to make medical and scientific evaluations and to advise the Minister or the Secretary in this connection.  The Minister must appoint to ADEC (a) as core members (i) at least 3 persons, each of whom is a medical practitioner eminent in the medical profession, of whom at least 2 are specialists in clinical medicine; and (ii) at least 1 person who is a pharmacologist, or who holds a university degree in science and has specialised in pharmaceutical science; and (b) as associate members (i) at least 1 person who is a pharmaceutical chemist with recent experience in the manufacturing of therapeutic goods; and (ii) at least 1 person who is a toxicologist; and (iii) at least 1 person who is a medical practitioner currently engaged in general practice; and (iv) other persons, each of whom either satisfied one of criteria (i), (ii) or (iii), above, or is a medical practitioner with specialist qualifications and experience in a field of medicine that complements the expertise of core members with medical qualifications (Reg 36(4)).  As Finn J noted in Wyeth (at par 2), the composition of ADEC is an important factor in the operation of the TGA.

29                  In the light of the following statutory scheme, I find that, essentially for the reaons advanced on behalf of P and U, mentioned below, it is difficult to accept that the Minister has made out any case for judicial review, either under the AD(JR) Act, or under the general law.  I will consider the Minister’s grounds in his own sequence as follows, but in short, the Minister has not persuaded me that the Tribunal made any relevant error of law.  In particular, there was nothing in the Tribunal’s reasons or approach in granting the extension that was inconsistent with any aspect of the legislative scheme of the TGA.

The Minister’s Ground 5: Error of Law Submission

30                  I cannot accept the submission that the Tribunal failed to address the Minister’s argument as to the claimed “inversion of processes”, or that the Tribunal itself had erroneously assumed the role of “primary decision-maker”.  Any suggested “inversion of process” in this context could only arise during the course of determining the substantial application.  The Tribunal did not assume the role of “primary decision-maker” in granting the extension.  It clearly took into account the unchallenged evidence that Genotropin and Humatrope were essentially identical, and also the Eli Lilly (No 2) decision;  but it did so consistently with the regulatory framework of the TGA, in particular the provisions dealing with “new information” contained in s 60A.  The Tribunal was entitled to consider the Eli Lilly (No 2) decision as it concerned the identical substance somatropin found in Genotropin.  The Tribunal did not make an incorrect assumption concerning “precedent value in fact finding”.  I cannot accept the Minister’s submission that the Tribunal should have found that P and U could not gain a commercial advantage by the grant of an extension.  As a matter of fact for it, the Tribunal was entitled to find that, because of its reasonable prospects of success, approval would obviate further delay and significant expenditure being incurred by a new application by P and U.  Moreover, the Minister’s contentions concerning estimates of the amount of any new material which might be placed before the Tribunal are speculation, and without specific evidentiary support.  Further, I cannot accept the Minister’s argument on the question of costs recovery.  I agree with P and U’s submission that this should not be viewed as an end in itself.

The Minister’s Ground One: Irrelevant Considerations Submission

31                  It is true that the Tribunal noted the criticisms made in the Eli Lilly (No 2) decision of the reasoning and methods adopted by both Dr Mitchell and Dr Proudfoot, and that their decision-making processes were “deeply flawed”.  But the Tribunal’s reference to these decision-making processes was, as P and U now submits, merely an observation upon the findings actually made in the Eli Lilly (No 2) decision.  In any event, the Tribunal correctly identified these features of those decision-making processes as a relevant consideration, bearing as it did, upon the merits of P and U’s substantive application.  This is a relevant matter, as identified by Wilcox J in Hunter Valley Developments, above.  The “common good” cited by the Tribunal which the Minister submits to be irrelevant was, in truth, that contemplated by s 4 of the TGA, in furthering the object of “timely availability” of medicines that are of sufficient quality, safety and efficacy.  Quality is not in issue here, nor was it in issue in Eli Lilly (No 2).  The “common good”, in the context of the TGA, was a relelvant consideration for the Tribunal here.

The Minister’s Ground Three:  Unreasonableness Argument

32                  In my opinion, the delay by P and U, in these special circumstances, where an application for AAT review had already been made by the manufacturer of Humatrope, does not lead to a conclusion that the Tribunal’s exercise of discretion was “manifestly unreasonable” that is, perverse and irrational, and thus an error of law.  The evidence before the Tribunal was capable of supporting two permissible decisions;  either a decision to exercise its discretion to grant an extension of time; or a decision to exercise its discretion and refuse the extension of time.  The actual decision will only be manifestly unreasonable if there was no proper basis for the decision.  P and U conceded before the Tribunal that, with the benefit of hindsight, it should have filed an application for Tribunal review within the relevant time, and awaited the outcome of the Humatrope application.  However, P and U had, until the Eli Lilly (No 2) decision was given, believed that is own prospects of success before the Tribunal were not sufficient to justify the institution of proceedings in the Tribunal.  This was a reasonable attitude, and it could hardly be criticised, especially given the substantial private and public resources implications in seeking review before the Tribunal.  Whether the Minister was prejudiced by the extension of time, or by any delay of  P and U, were essentially factual issues for the Tribunal.  On the face of it, although questions of degree could arise in this context, the delay here was not of such inordinate dimensions as to justify a conclusion that it was “manifestly unreasonable” to allow the review to go forward.

The Minister’s Ground Four:  No Evidence Contention

33                  There was before the Tribunal some evidence to suggest a meeting between P and U and Dr Mitchell on 20 October 1999 upon which the Tribunal could draw an inference that P and U was “again agitating for the registration of its product”.  This inference was also available from evidence led by P and U that Dr Mitchell advised P and U that the initial decision could not be reconsidered on an informal basis.  There was also an absence of any evidence from the Minister that he was not aware that P and U was “again agitating for the registration of its product”.  Further, the Tribunal’s conclusion that the delay between 2 August and 14 December 1999 should not be itself decisive was in the circumstances not inappropriate, and was reasonably open to the Tribunal in the exercise of its discretion.

ORDERS

34                  It follows that the application, will be dismissed, with costs.

Associate:

Dated:              8 September 2000