Pharmacia & Upjohn Pty Ltd and Minister for Health and Aged Care [2000] AATA 72 (7 February 2000)

Last Updated: 15 February 2000

DECISION AND REASONS FOR DECISION [2000] AATA 72

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/1883

GENERAL ADMINISTRATIVE DIVISION )

Re PHARMACIA & UPJOHN PTY LIMITED

Applicant

And MINISTER FOR HEALTH AND AGED CARE

Respondent

DECISION

Tribunal Senior Member M D Allen

Date 7 February 2000

Place Sydney

Decision Pursuant to subsection 29(7) of the Administrative Appeals Tribunal Act 1975 the time in which to lodge with the Tribunal an application to review a decision of the delegate of the Respondent made 1 December 1997 is extended until the close of business on the day seven days from to-day's date.

(Sgd) M D ALLEN

..............................................

Senior Member

CATCHWORDS

PRACTICE AND PROCEDURE - Application for extension of time. Reviewable decision made two years previously. Deliberate decision not to seek review at that stage. Respondent having benefit of recent decision by Tribunal in respect of an identical drug. No prejudice to Respondent demonstrated and application granted.

Administrative Appeals Tribunal Act 1975 - subs29(7)

Therapeutic Goods Act 1989 - ss14, 25, 60 and 60A

Eli Lilly Australia Pty Ltd and Minister for Health and Family Services [1999] (AATA 565)

Brisbane South Regional Health Authority and Taylor 186 CLR 541

Hunter Valley Developments Pty Ltd v Cohen 3 FCR 344

Comcare v A'Hearn 119 ALR 85

Brown v Commissioner of Taxation [1999] FCA 563

Zizza v Commissioner of Taxation [1999] FCA 848

Commissioner of Taxation v Brown [1999] FCA 1198

Zizza v Federal Commissioner of Taxation 55 ALD 451

Lucic v Nolan and Others 45 ALR 411

Re Eli Lilly Australia Pty Ltd and Minister for Health and Family Services 28 AAR 514

REASONS FOR DECISION

7 February 2000 Senior Member M D Allen

1. On 14 December 1999 the Applicant lodged with the Tribunal an application, pursuant to subs 29(7) of Administrative Appeals Tribunal Act 1975 (AAT Act), to extend the time in which to lodge an application to review a decision of a delegate of the Respondent made 1 December 1997 pursuant to subs 60(3) of the Therapeutic Goods Act 1989 (as amended).

2. The said application was amended by an application dated 28 January 2000 and lodged with the Tribunal at the hearing of this matter on 1 February 2000. That amended document sets out the decision to be reviewed in more detail.

3. Section 14 of the Therapeutic Goods Act 1989 provides that a person must not supply therapeutic goods in Australia without the consent in writing of the Secretary of the now Department of Health and Aged Care. Section 25 of the said Act then provides for the evaluation and registration of such goods. If registration is refused, the Applicant for registration may seek review by the Minister for Health and Aged Care (subs 60(2)). If the Minister (or his delegate) affirms the refusal to register, subs60(8) gives a right to appeal that decision to the Administrative Appeals Tribunal (AAT). The application for review is subject to the AAT Act including s29 which states inter alia that any application for review of a decision subject to review by the AAT must be made within 28 days after the reasons for the said decision have been served on the applicant for review.

4. This application concerns the non-registration of the Applicant's product bearing the trade name Genotropin. The said product is a growth hormone and the particular indication sought under the Act was its availability for use for adults. I was informed from the bar table, without objection, that the said product is currently available for prescription to children.

5. On 2 August 1999 the AAT (Deputy President McMahon, Dr J Campbell, Professor G Johnston) brought down its decision in the matter of Eli Lilly Australia Pty Ltd and Minister for Health and Family Services [1999] (AATA 565). That decision concerned a similar product under the trade name Humatrope manufactured by a commercial rival of the present Applicant. To all intents and purposes, the Applicant's product Genotropin and Humatrope are identical.

6. The Tribunal set aside the decision of the Minister's delegate and remitted the matter to the Respondent with directions that registration of Humatrope be approved, subject to conditions as to product information.

7. As pointed out in the Tribunal's decision, Humatrope was considered by the Australian Drug Evaluation Committee (ADEC) at its meeting of 7 and 8 August 1997. That committee recommended that registration of Humatrope for replacement therapy in adults with growth hormone deficiency be approved.

8. Exhibit A3 in these proceedings is a copy of minutes of the ADEC at its 7-8 August 1997 meeting. That meeting also considered registration of the Applicant's product, Genotropin. As with Humatrope, the delegate of the Secretary, Dr Mitchell, declined to follow the recommendation of ADEC and refused registration. On appeal to the Minister, the same delegate, Dr Proudfoot, considered both products and affirmed the refusal to register. In the Applicant's case, Dr Proudfoot's decision was dated 1 December 1997, the same date as he affirmed the refusal of the Eli Lilly Australia Pty Ltd product.

9. There is very little use in canvassing the reasons of the Tribunal in the Eli Lilly matter, except to say the Tribunal was critical of the reasoning and methods adopted by both Drs Mitchell and Proudfoot. In paragraphs 23 and 24 of its reasons, the Tribunal said:

"23. ... Dr Proudfoot relied upon parts of a circular letter sent by Pharmacia and Upjohn. ...

24. Genotropin is the somatropin trade name under which Pharmacia and Upjohn, a competitor of the applicant, markets its product. Read together, the materials from that company give a significantly different perception from that intended to be conveyed by Dr Proudfoot. ... "

And at paragraph 33, the Tribunal continued:

"33. ... And it has to be said that the medical evidence overwhelmingly favours the safety and efficacy which, the applicant sought to establish. That evidence came from those best qualified to give opinions on this subject and was supported by appropriate learned articles."

10. Given the above comments by the Tribunal it can be accepted that were the Applicant's case before the AAT, it would have reasonable prospects for success.

11. The likelihood of success or otherwise is not the sole criterion upon which an application for extension of time may be granted.

12. The starting point for any consideration regarding whether time should be extended or not is the non-exhaustive principles set forth by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen 3 FCR 344 at 348, 349, namely:

"1. Although the section does not, in terms, place any onus of proof upon an applicant for extension an application has to be made. Special circumstances need not be shown but the court will not grant the application unless positively satisfied that it is proper so to do. The 'prescribed period' of twenty-eight days is not to be ignored ... Indeed, it is the prima facie rule that proceedings commenced outside that period will not be entertained . It is a pre-condition to the exercise of discretion in his favour that the applicant for extension show an 'acceptable explanation of the delay' and that it is 'fair and equitable in the circumstances' to extend time ....

2. Action taken by the applicant, other than by making an application for review under the Act, is relevant to the consideration of the question whether an acceptable explanation for the delay has been furnished. A distinction is to be made between the case of a person who, by non-curial means, has continued to make the decision-maker aware that he contests the finality of the decision (who has not 'rested on his rights' ...) and a case where the decision-maker was allowed to believe that the matter was finally concluded. ...

3. Any prejudice to the respondent including any prejudice in defending the proceedings occasioned by the delay is a material factor militating against the grant of an extension ...

4. However, the mere absence of prejudice is not enough to justify the grant of an extension ... In this context, public considerations often intrude ... A delay which may result, if the application is successful, in the unsettling of other people ... or of established practices ... is likely to prove fatal to the application.

5. The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted ...

6. Considerations of fairness as between the applicants and other persons otherwise in a like position are relevant to the manner of exercise of the court's discretion ..."

13. Those principles have received some modification. In Comcare v A'Hearn 119 ALR 85 the Full Court of the Federal Court upheld the decision of Hill J at first instance and stated that the delays of a solicitor are not to be visited upon the client and that there is no rule that an explanation for delay must be given as an essential precondition to the exercise of the discretion although it is expected that an explanation will be given as a relevant matter to be considered.

14. In both Zizza v Commissioner of Taxation [1999] FCA 848 and Commissioner of Taxation v Brown [1999] FCA 1198, the Full Court of the Federal Court specifically approved the discussion of the Hunter Valley Developments Pty Ltd principles by Hill J in Brown v Commissioner of Taxation [1999] FCA 563 commencing at para 41 et seq.

15. The discussion by Hill J was relied upon by the Applicant in these proceedings. Whilst His Honour's discussion is, strictly speaking obiter, it has been specifically approved by two differently constituted Full Courts so that the principles discussed by Wilcox J in Hunter Valley Developments Pty Ltd supra must now be considered in the light of the commentary by Hill J. See also the comprehensive discussion of the said principles by Katz J in Zizza v Federal Commissioner of Taxation 55 ALD 451, commencing at page 455 paragraph 16.

16. That having been said, it must be kept in mind that in Brown's case supra, Hill J was dealing with an objection to a taxation assessment. As His Honour said, at paragraph 41:

"In the comments which follow I propose to examine the matters raised by Wilcox J and their relevance to taxation objections generally and to the present case in particular."

17. For the Respondent it was submitted that in both Zizza supra and Brown supra, the request for an extension of time was to be considered in the context of a taxation objection where, if the extension were not granted, the applicant was shut out from any relief. In the present matter, as with many matters before this Tribunal, the Applicant may make a fresh application to the determining body. I consider that there is considerable force in that submission.

18. I also note that in none of the recent cases has the Federal Court taken issue with the decision of the High Court in Brisbane South Regional Health Authority and Taylor 186 CLR 541. In particular, the decision of the majority that the discretion is one to grant the extension not one to refuse. For example, at p547 Toohey and Gummow JJ said:

"... the ultimate onus of satisfying the court that time should be extended remains on the applicant."

Cf McHugh J (with whose reasons Dawson J agreed) at p551:

"An applicant for an extension of time who satisfies those conditions (two preconditions laid down by the specific legislation) is entitled to ask the court to exercise its discretion in his or her favour. But the applicant still bears the onus of showing that the justice of the case requires the exercise of the discretion in his or her favour."

19. In this matter evidence explaining the delay was given by Mr Feeney, a Director of the Applicant company. Exhibit A1 is Mr Feeney's statement in this matter and reads inter alia:

"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."

20. Cross-examined Mr Feeney stated that there was information relative to his company's application which would have become available since 1997. A large part of the costs which would be incurred by his company would be cross referencing this new information to material previously submitted to the Respondent. In particular, he stated, in answer to a question in cross-examination, that he "would expect there is a significant amount of new material".

21. Mr Feeney also conceded that when the decision of Dr Proudfoot, the Minister's delegate, was received he was aware of the provision for an appeal to the AAT and that there was a statutory time-frame in which to appeal.

22. There was no evidence that in the period between the decision of Dr Proudfoot on 1 December 1997 and the decision in the matter of Eli Lilly Australia Pty Ltd supra by the Tribunal that the present Applicant continued to make the decision-maker aware that the decision was disputed. Indeed Mr Feeney's evidence indicates that up until the Eli Lilly decision, the Applicant accepted the determination of the Minister's delegate.

23. There was also a delay between the publication of the Tribunal's decision in the Eli Lilly matter (2 August 1999) 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.

24. I am not satisfied, on the material before me, that any prejudice would accrue to the Respondent by granting the extension. If I understand the Respondent's submissions properly, it is alleged that there will be some prejudice in that if the Applicant makes a new application to the Department, the Department can charge not insubstantial fees for processing the information placed before it whereas if the matter is before the Tribunal, it will have to consider new material but be unable to charge any fee. A similar submission was rejected by Deputy President McMahon in Re Eli Lilly Australia Pty Ltd and Minister for Health and Family Services 28 AAR 514 at 520, and with respect I concur with the Deputy President's reasons for rejecting that submission.

25. No evidence was advanced which indicated that the Respondent would suffer any prejudice through the effluxion of time. Questions of witnesses' memory or unavailable documents are apparently not germane to these proceedings.

26. During the course of submissions, reference was made to s60A of the Therapeutic Goods Act 1989. That section was dealt with by Deputy President McMahon in the decision reported at 28 AAR 514. Although the interlocutory decision by Deputy President McMahon was subject to an application pursuant to the Administrative Decisions (Judicial Review) Act 1977, it was agreed by both counsel in these proceedings that s60A 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 proceedings reported at 28 AAR 514.

27. Principle 4, of the principles referred to by Wilcox J, 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 the Eli Lilly matter 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 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.

28. As to the merits of the substantial application, as I have stated previously, given the Tribunal's decision in Eli Lilly Australia Pty Ltd and Minister for Health v Family Services, the Applicant must have reasonable prospects for success.

29. 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.

30. McHugh J in Brisbane South Regional Health Authority supra at p552, 553 discussed the rationale for limitation periods, namely:

"The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second, it is oppressive, even 'cruel', to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period. As the New South Wales Law Reform Commission has pointed out:

'The potential defendant is thus able to make the most productive use of his or her resources and the disruptive effect of unsettled claims on commercial intercourse is thereby avoided. To that extent the public interest is also served.'

... The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible.

In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated."

31. 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 p416 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 ..."

Both the AAT Act 1975 and the Administrative Decisions (Judicial Review) Act 1977 created methods to review Government decisions but imposed a strict time limit in which to seek that review. This legislative directive should not lightly be set aside.

32. Had this matter 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.

33. 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.

34. 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. In addition, as an aside, I would commend to the parties, as this matter largely concerns the exchange of scientific information, the Tribunal's powers under s34A of its Act to conduct mediation.

35. Currently there is no actual application before the Tribunal, so time will be extended to seven days from the date of the publication of these reasons for decision.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of:

Senior Member M D Allen

Signed: Ivanka Mamic .....................................................................................

Associate

Date/s of Hearing 1 February 2000

Date of Decision 7 February 2000

Counsel for the Applicant Mr P Braham

Solicitor for Applicant Minter Ellison

Counsel for the Respondent Mr R Beech-Jones

Solicitor for the Respondent Australian Government Solicitor