Definition of ‘community’ under spotlight


tribunal hearing legal case

A pharmacy has failed in its bid to have a new competitor’s PBS approval reviewed, after it was approved to open less than 100m away

The Health Minister had approved an application to supply pharmaceutical benefits from premises at the Blacktown Mega Centre in western Sydney, under section 90A (2) of the Health Act, which allows for the Minister to consider exercising his discretion over such approvals.

The premises are located in a medical centre within the Mega Centre.

Freedom Pharmaceuticals Pty Ltd already operated the TerryWhite Chemmart Blacktown, located at the St Martins Village shopping centre, adjacent to the Mega Centre.

It applied for a judicial review of the decision to approve the pharmacy in the Mega Centre, which is around 60m away, the Federal Court of Australia heard.

The Court noted that “there is no dispute that Freedom is a person aggrieved” within the requirements of the relevant Act.

Freedom sought a review of the decision to allow the new competitor on several grounds, including that “the making of the decision was an improper exercise of the power conferred by… the Act in that it was so unreasonable that no reasonable person could have so exercised the power”.

It claimed that required procedures regarding the decision had not been followed, and that the decision involved errors of law, including equating “reasonable access to pharmaceutical benefits” with “members of the community would not need to leave the Medical Centre [in the Mega Centre] to obtain PBS medicines” and/or convenience.

Freedom said that the making of the decision was an improper exercise of the power conferred by the relevant section of the act, in finding that the Medical Centre had the equivalent of four full-time doctors, and was expected to eventually have eight, within 12 to 18 months, the Minister took into account an irrelevant consideration.

The Mega Centre premises’ initial application had been rejected, and in August 2019 the owner wrote to the Department of Health, applying for the Health Minister to exercise his discretionary power to approve the supply of PBS items there.

The Minister decided to consider the application, and his delegate wrote to both owners to let them know, inviting Freedom to make submissions in regard to whether rejecting the application would result in a community being left without reasonable access to pharmaceutical benefits supplied by an approved pharmacist, and whether it was in the public interest to approve the pharmacist.

The owner of Freedom responded by submitting that the Minister should not exercise his discretion to approve the new pharmacy.

The owner of another pharmacy in an adjacent suburb also made a submission supporting rejecting the new pharmacy.

In November 2019, the Minister decided to approve the Mega Centre pharmacy to supply pharmaceutical benefits, and the owner of Freedom was informed the next day.

Freedom’s owner asked the Minister to explain why he had made the decision, and he was sent a statement of reasons in January 2020.

Among the reasons listed, Mr Hunt noted that the Blacktown Mega Centre is a “bulky goods centre,” whereas the St Martins Village shopping centre is a neighbourhood centre, and that access between the two is in the form of a concrete footpath which crosses one driveway.

The Mega Centre’s pharmacy would have significantly shorter opening hours than the existing TerryWhite Chemmart.

He said that the prior decision to not approve the application “would result in a community being left without reasonable access to PBS medicines supplied by an approved pharmacist… and it was in the public interest to approve the Applicant”.

“I formed the view that there is a relevant community that would be affected by the proposed pharmacy not being approved. That community is the group of people who attend the Medical Centre,” he said.

He said he acknowledged that the two pharmacies would be very close together, with TerryWhite Chemmart less than 60m from the medical centre, and that there were 14 more approved pharmacies within 2km of the proposed new pharmacy.

“However, I weighed these points against the fact that, were the proposed pharmacy approved, members of the community would not need to leave the Medical Centre to obtain PBS medicines.

“I found that there is a public interest in the community having access to PBS medicines in the proposed location which is co-located with the medical centre from which members of the community receive medical attention, I considered that the pharmacy is in a location that will allow convenient access to PBS medicines for the community,” he said.

“Current patients of the Medical Centre who require access to PBS medicines from [the] existing approved pharmacy need to leave the Medical Centre and travel a distance of approximately 60m to the nearest pharmacy, or further to access an alternative approved pharmacy.”

He said that on balance it was in the public interest to approve the Mega Centre pharmacy.

In February 2020, Freedom filed for a review.

In Federal Court The Honourable Justice Burley noted that “the purpose of the discretion under s 90A is not simply to address anomalies or unforeseen consequences arising from the strict application of the [Location] Rules”.

“Indeed, in my view it would be incorrect to consider that for the purposes of s 90A the Rules embody a geographic baseline for ascertaining what amounts to ‘reasonable access’ and accordingly that the discretion under s 90A is only available to remedy situations where the direct application of the Rules leads to a community being left without reasonable access to pharmaceutical benefits.”

In examining Freedom’s claim that the Minister’s definition of “community” was “legally unreasonable and illogical,” the Court said that the Minister had identified the relevant “community” as “likely to consist of regular users of the Medical Centre”.

“In my view Freedom has not established that that conclusion on the part of the Minister was unreasonable. Nor has it established that the decision to so define the community was unintelligible or irrational.

“The Minister was entitled to consider that patients of the Medical Centre are likely to be regular users of the proposed pharmacy, and that that group of people constituted a community. There is a rational connection between that community and the existence of a pharmacy supplying pharmaceutical benefits at the proposed premises.”

In looking at the issue of patients having to leave the Mega Centre to have scripts filled, the Court noted that he had looked at “aerial photographs of the Mega Centre and the neighbouring St Martins Village shopping centre”.

“The arrangement of parking and access to the Mega Centre relative to the St Martins Village shopping centre indicates that convenient parking access can be secured immediately proximate to the Medical Centre, without any need to attend St Martins Village.

“Matters of convenience, proximity and alternative pharmacies available are plainly considerations that the Minister was entitled to take into account in reaching the conclusion that a decision not to grant the approval would result in a community being left without reasonable access to PBS medicines.”

The Honourable Justice Burley also found that the other grounds for application had failed.

He decided that the application for review should be dismissed, and that Freedom should pay the Minister’s costs, though Freedom contended it should not.

Justice Burley asked the parties to make submissions about costs.

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