Dispute over pharmacy approval

Two NSW pharmacies have battled it out in court over the definition of a ‘large medical centre’ and the impact of public holidays on operating hours

A pharmacy based on the South Coast of NSW has had a legal victory in the Federal Court of Australia against another local pharmacy over a dispute about an approval to supply pharmaceutical benefits.

Choice Pharmacy Vincentia brought the case against Vincentia MC Pharmacy as well as the Australian Community Pharmacy Authority and the Secretary of the Department of Health.

On 30 March 2017, MC Pharmacy applied to the Secretary pursuant to s 90 of the National Health Act for approval to supply pharmaceutical benefits from premises at the Vincentia Medical Centre and, after referral, the Authority recommended that it be approved.

The application was for approval in accordance with the provision of Item 136 (New pharmacy in a facility (large medical centre)) of Part 2, Sch 1 to the National Health (Australian Community Pharmacy Authority Rules) Determination 2011.

The medical centre is located approximately 150 metres from where Choice Pharmacy operates its business.

Choice Pharmacy sought judicial review of the Authority’s decision, and orders quashing both the Authority’s recommendation and the Secretary’s approval based on three grounds.

Under Item 136 of the 2011 Rules, a ‘large medical centre’ is defined as one that operates for at least 70 hours each week, and has one or more prescribing medical practitioners for at least 70 hours each week.

Choice Pharmacy contended that the medical centre in question did not in fact operate for 70 hours each week, as rosters provided demonstrated that in the evidence period, the centre did not operate at least 70 hours in those weeks in which a public holiday fell.

Counsel for MC Pharmacy had conceded that the evidence before the Authority was that the medical centre was not open on public holidays between 30 January 2017 and the first week of June 2017, including Easter and Anzac Day.

They also conceded that as a matter of fact, the medical centre was also not open on any public holidays which fell on 25 and 26 December 2016, the 1, 2 and 26 January 2017, and the Queen’s Birthday on 12 June 2017, but that information was not before the Authority when it made its recommendation.

Counsel for Choice Pharmacy submitted that the phrase “each week” was clear and unambiguous, going beyond “a week” to mean “each and every week”.

Meanwhile MC Pharmacy submitted that the expression “X hours each week” can be used to mean, “generally, in the ordinary course, or habitually, even though the number of hours in a given week may vary and may, in some weeks, be less than ‘X’”.

It used an example of a full-time employee that says she or he works “37.5 hours each week”, even though, in particular weeks, due to public holidays or the taking of annual or sick leave, she or he may in fact work fewer hours than that.

“Fulfilling the purpose set out in the Explanatory Statement ([of the 2011 Rules] does not require that the medical centre be open at least 70 hours every single week, ‘irrespective of illness, public holidays or other contingencies’,” MC Pharmacy submitted.

Federal Court judge Justice Kathleen Farrell found that the Explanatory Statements to the 2009 and 2011 Rules revealed features indicative of an intention that “at least 70 hours each week” be read strictly.

“The purpose of creating a category for approvals related to ‘large medical centres’ is to meet the demand for dispensing of PBS medicines that such centres generate,” said Justice Farrell.

“That purpose would be undermined if the ‘at least 70 hours each week’ criterion is not strictly interpreted.”

Justice Farrell noted the medical centre’s stated intention to operate on some “selected” public holidays, when the usual hours are only 70.5 each week, had the result that on up to eight weeks in a year the medical centre would not operate at least 70 hours each week where there was no intention expressed to make up lost hours at other times during the relevant weeks.

“It demonstrates that the medical centre’s operating hours are not ordinarily or habitually at least 70 hours each week,” found Justice Farrell.

An absence of comment about public holidays in its statement of reasons indicates the Authority failed to appreciate the significance of the evidence concerning public holidays, she said, adding that this was an error of law.

Once there was evidence that the medical centre did not open on public holidays, the Authority was required to recommend that MC Pharmacy’s application not be approved since it did not meet the definition of a “large medical centre”, Justice Farrell found.

The Court was satisfied that the three grounds of Choice Pharmacy’s application were made out.

It will allow parties 14 days to bring in agreed orders reflecting the reasons and addressing the issues of relief and costs, or alternatively to provide orders for which each party contends in light of the reasons.

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