POA Enterprises Pty Ltd v Chemist Warehouse Southport
[2012] QSC 316
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- POA Enterprises Pty Ltd v Chemist Warehouse Southport[2012] QSC 316
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POA Enterprises Pty Ltd v Chemist Warehouse Southport[2012] QSC 316
POA Enterprises Pty Ltd v Chemist Warehouse Southport[2012] QSC 316
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Trial Division | |
PROCEEDING: | Hearing |
ORIGINATING COURT: | |
DELIVERED ON: | 22 October 2012 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 31 July 2012 |
JUDGE: | Philip McMurdo J |
ORDER: | (1) In 5355 of 2012 it is declared that: The respondents, in trade or commerce, engaged in conduct likely to mislead or deceive, in contravention of section 18 of the Australian Consumer Law, by causing an advertisement to be published in The Cairns Post newspaper on 14 June 2012: (a)listing prices for the supply of Atorvastatin Sandoz, Lipitor and Trovas, being medicines on the Pharmaceutical Benefits Scheme (PBS) Schedule, to members of the public without identifying that: (i)while the supply of Lipitor to a person at the listed price of $35.40 could be taken into account for the purposes of determining the person’s (and the person’s family’s) eligibility to be issued with a concession card under Division 1A of the National Health Act 1953 (Cth); (ii)the supply of Atorvastatin Sandoz at $14.99 or Trovas at $19.99 could not be taken into account for that purpose; and (b)stating that the frequency of supply of Atorvastatin Sandoz or Trovas at those prices would be governed by standard PBS regulations, when supplies of those products at those prices would not be supplies under the PBS. (2) In 5359 of 2012 it is declared that: The respondents, in trade or commerce, engaged in conduct likely to mislead or deceive, in contravention of section 18 of the Australian Consumer Law, by causing an advertisement to be published in The Gold Coast Bulletin newspaper on 2 June 2012: (a)listing prices for the supply of Atorvastatin Sandoz, Lipitor and Trovas, being medicines on the Pharmaceutical Benefits Scheme (PBS) Schedule, to members of the public without identifying that: (i)while the supply of Lipitor to a person at the listed price of $35.40 could be taken into account for the purposes of determining the person’s (and the person’s family’s) eligibility to be issued with a concession card under Division 1A of the National Health Act 1953 (Cth); (ii)the supply of Atorvastatin Sandoz at $14.99 or Trovas at $19.99 could not be taken into account for that purpose; and (b)stating that the frequency of supply of Atorvastatin Sandoz or Trovas at those prices would be governed by standard PBS regulations, when supplies of those products at those prices would not be supplies under the PBS. |
CATCHWORDS: | TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – MISLEADING OR DECEPTIVE CONDUCT GENERALLY – MISLEADING OR DECEPTIVE: WHAT CONSTITUTES – where the respondents published advertisements advertising certain drugs at prices below the relevant Commonwealth price under the Pharmaceutical Benefits Scheme (PBS) – where the advertisements appeared not to disclose to consumers that the products purchased at the discounted price would not count towards consumers’ eligibility for the PBS safety net concession card – whether the publication of these advertisements constituted conduct by silence which was likely to mislead and deceive Competition and Consumer Act 2010 (Cth), sch 2, s 18, s 232 National Health Act 1953 (Cth) s 84, s 84 AAA, s 84C, s 87, s 99, s 99F, s 99G Trade Practices Act 1974 (Cth), s 52, s 80 Australian Competition and Consumer Commission v Dermalogica Pty Ltd [2005] FCA 152, cited |
COUNSEL: | P L O'Shea SC and T J Bradley counsel for the applicants G M Egan and T G Lambert counsel for the respondents |
SOLICITORS: | Minter Ellison for the applicants Rotstein Lockwood Reddy for the respondents |
[1] In each of these proceedings, the applicants and the respondents are the operators of competing pharmacies. The issues, which are identical between the two cases, are whether the respondents, by certain newspaper advertisements, have engaged in conduct which is likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law (“ACL”) and, if so, whether there should be an injunction to restrain any further contravention. In one case, the parties have pharmacies close to each other at the Gold Coast, and the complaint is about an advertisement published in the Gold Coast Bulletin on 2 June 2012. In the other case, the parties have pharmacies in Cairns and the complaint is about an advertisement in The Cairns Post on 14 June 2012. The respondents are a part of a group of retail pharmacies trading as “Chemist Warehouse” across Australia. Relatively identical advertisements were published for other pharmacies within the group at about the same time, the advertisements appearing in newspapers which included The Courier-Mail and the Herald Sun. But the extent of the publication of relevantly identical material is relevant, if at all, only to the question of the appropriate relief, if a contravention is established.
[2] The applicants’ complaint is about a published price list which showed prices for a medicine called Lipitor and bio-equivalent products, each described as “Lipitor generic”. The generic products were listed at much lower prices than the Lipitor. There was no inaccuracy in the prices which were published. It is not suggested that there is any material difference, as a medicine, between Lipitor and the so-called Lipitor generic. The complaint is that the price list was misleading for what it did not disclose, which was that the purchase of the generic product would not count towards the potential availability of prescription drugs at concessional prices under the Pharmaceutical Benefits Scheme (“the PBS”).
[3] The PBS is established by Part VII of the National Health Act 1953 (Cth) (“the Act”). In essence, it is a scheme by which the Commonwealth government subsidises the supply of certain medicines, as identified in the so-called PBS schedule. Both Lipitor and the generic products are medicines on the PBS schedule. The PBS applies not only to the supply of medicines by pharmacists, but also, in certain circumstances, by hospitals or medical practitioners. For present purposes only supplies by pharmacists need be considered.
[4] Where a subsidy is paid by the Commonwealth, its payment is made to the pharmacist, meeting sometimes all and at other times part of the price for which the medicine is being supplied by the pharmacist to the patient. The extent of the subsidy varies between different categories of patients. There are concessional patients,[1] such as holders of a Commonwealth Seniors Health Card or a Pensioner Concession Card. And there are general patients, made up of everyone who holds a Medicare card but who is not a concessional patient. The Act fixes the maximum cost of a pharmaceutical benefit item for each category. Originally, that cost for concessional patients, described as the “concessional beneficiary charge”, was $4.60 and the cost for general patients, described as the “general patient charge”, was $28.60.[2] Each year these amounts are increased, according to movements in a Consumer Price Index, by operation of the Act.[3] As at June 2012, the concessional beneficiary charge was $5.80 and the general patient charge was $35.40.
[5] That maximum contribution by a general patient is reduced if and when the amount spent by the patient, or by the patient’s family in aggregate, in a calendar year reaches a certain threshold, which is described in the Act as the “general patient safety net”.[4] As at June 2012, this threshold was $1,363.30. Upon reaching that point, the patient (and his or her family) is entitled to what is described as a safety net concession card, the practical consequence of which is that supplies of PBS medicines from then until the end of that calendar year are upon the basis that the charge to the patient will not exceed the concessional rate, ie $5.80. Similarly, there is a threshold for concessional patients, described as the concessional beneficiary safety net,[5] which at June 2012 was $336. Once that threshold is reached, the patient may apply for what is described as a safety net entitlement card, the practical consequence of which is that the patient (and his or her family) is entitled to the supply of medicines under the PBS at no charge.
[6] A further element of the PBS is what the Act defines as the “Commonwealth price”.[6] There is a Commonwealth price, assessed under the Act, for each medicine which is the subject of the PBS. Each of the medicines the subject of these cases has the same Commonwealth price for a given strength. For 30 tablets each of 10mg, the price is $37.13. For the same number of 20mg tablets it is $50.31, for 40mg tablets it is $67.44 and for 80mg tablets it is $93.64. A pharmacist is able to supply a medicine for as much as the Commonwealth price. If the Commonwealth price exceeds the maximum amount which must be paid by the patient, the excess is paid to the pharmacist by the Commonwealth.[7]
[7] The price list published by the respondents offered Lipitor tablets (of any strength) for $35.40, which is equal to the general patient charge. It offered one of the generic products, described as Atorvastatin Sandoz (of any strength) as free for the first 30 tablets and after that “from $14.99”. It offered another generic product, described as Trovas, at $19.99 for 10mg, 20mg or 40mg strength and at $35.40 for 80mg strength. Therefore with the exception of Trovas 80mg, each of the generic products was offered for less than the general patient charge, which in turn was less than the Commonwealth price.
[8] It is not suggested that any of the transactions offered by the price list would contravene the Act. The complication, however, is in the way in which the Act would operate differently upon those transactions at a price of less than $35.40. It is common ground that they would not be counted towards the achievement of the general patient safety net, whereas those at $35.40 would be counted. That difference was not apparent from the respondents’ publications.
[9] Section 84C of the Act sets out the eligibility for safety net concession and entitlement cards. The relevant card here is the concession card which, as I have said, can be issued to a patient who (either alone or in combination with supplies to family members) has reached the general patient safety net within a calendar year. Section 84C(1AA) relevantly provides:
“(1AA)A person who is both a general patient and an eligible person at any time during a relevant entitlement period is eligible to be issued with a concession card if:
(a)the total of the amounts charged … to the person for supplies of pharmaceutical benefits (including supplies taken, because of subsection 99(2A) to be supplies otherwise than under this Part) … made to the person during the period … or
(b)the total of the amounts charged … to the person and to the person’s family for supplies of pharmaceutical benefits (including supplies taken, because of subsection 99(2A) to be supplies otherwise than under this Part) … during the period …;
is the amount of the general patient safety net … .”
[10] Section 99(2A), relevantly for present purposes, provides for a case where a pharmaceutical benefit is supplied and the Commonwealth price for that benefit does not then exceed the general patient charge (in this case $35.40). It provides that “the supply and receipt of that pharmaceutical benefit shall, for all purposes of this Part (other than for the purposes of Division 1A), be deemed to be a supply and receipt otherwise than under this Part VII. Section 84C is within Division 1A of that Part of the Act. The result is that where the Commonwealth price is no more than $35.40, the amount spent by a general patient, whether that amount was equal to or less than the Commonwealth price, would be counted towards the attainment of the safety net. But the present cases were not affected by s 99(2A), because each of the Commonwealth prices exceeded $35.40.
[11] Section 84C(4) applies, relevantly here, to cases where a supply is made upon a general benefit prescription, and where the Commonwealth price exceeds the general patient charge. It provides:
“(4)The supply … of a pharmaceutical benefit to a person shall not be taken into account for the purposes of this section unless:
(a)…
(b)…
(c)in a case where the supply is made upon a general benefit prescription, the Commonwealth price for the pharmaceutical benefit exceeds [$35.40] … - the amount received in respect of the supply is equal to or exceeds … [$35.40] …”
So for all but one of the generic products offered by the respondents’ price list, the amount which would be “received in respect of the supply” would be less than $35.40, with the consequence, by s 84C(4), that the supply would not be taken into account for the attainment of the safety net. A supply to a general patient of Lipitor at the price offered by the respondents would advance the patient (and the patient’s family) towards the threshold by $35.40. By paying instead $14.99 or $19.99 for one of the generic products, the patient would spend less but the transaction would not count for the threshold.
[12] Transactions to which s 84C(4) applies, were described by an officer from the Department of Health and Ageing as “PBS prescriptions … dispensed as private items”.[8] As that description indicates, such a transaction would be outside the operation of the PBS. It would not attract a subsidy and nor would it be counted for the threshold.
[13] The applicants say that the price list was likely to mislead the consumer, because it said nothing about the differences insofar as expenditure counting for the safety net was concerned, and was likely to give the impression that the only difference, or at least financial difference, between the products of any given strength was the price.
[14] For many consumers in the general patient category, this difference for the safety net would not have mattered. Some might have considered that they were in any event unlikely to reach the safety net by the end of 2012. Others might have considered that they would be likely to arrive at that threshold only so late in the year that they would be better off by paying the lower price rather than being concerned with the threshold. Some consumers could have been aware of how far they had advanced towards the threshold, particularly if they patronised only one pharmacy and it kept a record of their purchases. But others might have been unaware of how much they or their families had spent on PBS medicines.
[15] The likelihood of a general patient, or that person’s family, spending to the threshold would be affected by many things, in particular the health and the particular need for medicines of that person or his or her family. According to the evidence of Associate Professor Simons, a consultant physician practising in Sydney and who gave evidence in the applicants’ case, Atorvastatins are used in two circumstances. They are used for primary cardiovascular disease prevention, typically for patients with high cholesterol levels and other risk factors for cardiovascular disease. They are also used for patients who have already manifested cardiovascular disease, as a secondary protection against further cardiovascular events. Professor Simons described the need for long term treatment with Atorvastatins for patients in these categories. He believes that Atorvastatins are used by about one million Australians. He estimates that between 10 and 30 per cent of the patients at his clinic who are Atorvastatin users reached the PBS safety net threshold in any year, because a substantial proportion of them are prescribed with other PBS medicines and many have a spouse who is also taking PBS medicines. And the evidence for the respondents is that there were over 4,000 patients who reached the general patient safety net in 2011 and who purchased Lipitor from Chemist Warehouse stores in that year.
[16] There can be little doubt then that there are many potential consumers who read these price lists who were in the general patient category and whose health and circumstances were such that they were likely to reach the safety net. For them, a choice between Lipitor and the generic products, if informed by the differing operation of the Act might have been a fine one, balancing the price saving from purchasing the generic product against the postponement or loss of a period during this year in which they could acquire PBS medicines for no more than the concessional beneficiary charge of $5.40.
[17] One other element of the PBS must be considered. It is the so-called “20 day rule”, which denies the patient the benefit of the PBS for a supply of a specified pharmaceutical benefit within 20 days of the previous supply to that person of the same benefit. Such a supply is defined to be an “early supply of a specified pharmaceutical benefit”.[9] Transactions involving an early supply in this sense are outside the limitations as to the amounts to be paid by the patient[10] and do not count towards the threshold.[11]
[18] The 20 day rule was referred to in the subject publications by the respondents. A footnote within each publication, in relatively small print, included this statement:
“Frequency of supply to be governed by standard PBS regulations.”
Of the products which were listed, that would be relevant only to those which were offered at a price of $35.40. Because the other products were relevantly outside the operation of the PBS, the 20 day rule was not relevant to them.
[19] The sentence referring to “Frequency of supply” appeared within this line in the publication:
“*Maximum quantity supplied to be limited to prescribing doctors directions as per prescription. Frequency of supply to be governed by standard PBS regulations. *Initial supply per patient at $0.00 and all subsequent supplies from $14.99.”
In the price list, where a price of “$0.00” appeared against Atorvastatin Sandoz tablets, there was an asterisk. The last sentence of that footnote was clearly referable to that asterisk. The rest of the footnote was apparently referable to all of the products listed. The sentence beginning “Frequency of supply” had no asterisk.
[20] Section 18 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. This provision, of course, is in identical terms to s 52 of the Trade Practices Act 1974 (Cth), which it replaced. The cases upon s 52, and in particular those relating to what is sometimes described as misleading conduct by silence, must therefore be applied.
[21] In Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited, French CJ and Kiefel J said that for conduct to be misleading or deceptive it is not necessary that it convey express or implied representations but that it was sufficient that it leads or is likely to lead into error. They added that the circumstances in which silence or non-disclosure of information can be misleading or deceptive are various.[12] Sitting in the Federal Court, French J said in Kimberly NZI Finance Ltd v Torero Pty Ltd:
“If in a particular case silence would, as a matter of fact, constitute misleading or deceptive conduct, s 52 by virtue of its prohibition of such conduct imposes its own statutory duty to make disclosure. The cases in which silence may be so characterised are no doubt many and various and it would be dangerous to essay any principle by which they might be exhaustively defined. However, unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist.”[13]
[22] In Miller & Associates Insurance Broking Pty Ltd, French CJ and Kiefel J, referring to that passage, said:
“The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52.
To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than to direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute.”[14]
[23] As several judgments have noted, the relevant conduct is never constituted solely by silence, rather it is conduct of which silence is an element. In Demagogue Pty Ltd v Ramensky, Black CJ said that:
“… There is in truth no such thing as ‘mere silence’ because the significance of silence always falls to be considered in the context in which it occurs.”[15]
Similarly in Brunninghausen v Glavanics, Priestly JA said that a case of “mere” silence is “very hard to imagine.[16]
[24] The question here is whether these publications were likely to give the impression that there is no difference between a purchase of Lipitor and one of the generic products, at the prices listed, apart from the differences in those prices. In my conclusion, they were likely to give that impression and in that way they were likely to mislead or deceive in contravention of s 18. My reasons are as follows.
[25] The PBS, and the Act by which it operates, is relatively complex. It cannot be thought that it would be well understood by consumers. Some consumers may have no understanding at all of the PBS. But others, perhaps those more frequently in receipt of prescribed medicines, would be likely to understand that there is a safety net or threshold, which can be reached by aggregating payments for medicines supplied under the PBS. It is unlikely that they would be aware that some drugs which are on the PBS list would not count for the threshold if sold below a certain price. The respondents did not suggest otherwise. Their submissions acknowledged the complexity of the PBS, from which it was argued that pharmacists should not be burdened with a duty to explain it. However, the question is not whether the applicants’ case, if upheld, would impose an unreasonable burden upon pharmacists. It is whether these particular publications were likely to mislead or deceive.
[26] An important feature of these publications was the reference to the PBS in that footnote relating to the subject of “frequency of supply”. Of course, these publications are not to be construed as if they were wills. Rather, it is the impression which was likely to arise from the publication which is relevant. But that reference to the PBS regulations, in my view, was important. It did not distinguish between those products which, as can be seen with a detailed consideration of the Act, were offered as supplies under the PBS and those which were not. It was likely to indicate that each of the products which was offered would be supplied under the PBS. For at least many readers, that reference, coupled with the absence of any contrary indication, was likely to give the impression that any of these products, if purchased, will be added to the patient’s tally for the safety net.
[27] The next question concerns the appropriate relief. The applicants seek firstly a declaration. Some declaratory relief is appropriate, especially as, in my conclusion, an injunction should not be granted.
[28] The power to grant an injunction in this context is conferred by s 232 of the ACL, which is in relevantly identical terms to s 80 of the Trade Practices Act. The court may grant an injunction if satisfied that a person has engaged or is proposing to engage in conduct that constitutes or would constitute a contravention of, relevantly here, s 18. Where a contravention has occurred, the power to grant an injunction may be exercised whether or not it appears that the person intends to engage again in conduct of that kind.
[29] The publications of which complaint is made were widespread but were for a specific marketing campaign. The prices which were offered had a time limit of the end of June. As should appear from these reasons, the publications contravened s 18 because of what they did not disclose in the very specific context of what they did state. The injunction sought by the applicants is in terms which would not reflect these reasons. The injunction sought is in these terms:
“Pursuant to s 232 of the Australian Consumer Law, the respondents are restrained from causing an advertisement or price list to be published listing prices for the supply of medicines on the PBS Schedule, which have a Commonwealth price greater than the applicable general patient co-payment, to members of the public if the prices are less than the general patient co-payment:
(a)without identifying that the supply of the medicines at the listed prices will not be taken into account for the purposes of determining the person’s (and the person’s family’s) eligibility to be issued with a concession card under Division 1A of the National Health Act 1953; and
(b)without identifying that the supply of the medicines at the listed prices would not be a supply under the PBS.”
[30] I am unpersuaded that every publication as would be defined by that injunction would contravene s 18. Rather, it would depend upon all of the circumstances that together constitute the conduct in question, most particularly the other terms of the publication.
[31] Further, the court must be satisfied that it is appropriate to grant an injunction with regard to the consequence for the party which is enjoined should there be a repetition of the conduct. In BMW Australia Ltd v Australian Competition and Consumer Commission, Gray, Goldberg and Weinberg JJ said:
“A relevant factor to consider in determining whether to grant an injunction pursuant to s 80 of the Trade Practices Act is whether the existing sanctions for the conduct to be the subject of the injunction, found in the Trade Practices Act itself, require to be supplemented by the availability of the range of sanctions applicable to contempt of court. The purpose of granting an injunction to restrain conduct already prohibited by legislation can only be to add to whatever consequences the legislation attaches to that conduct the additional consequences of a possible finding of contempt of court by failure to comply with an injunction. In each case, it is a question whether the conduct concerned warrants the application of those more stringent consequences.”[17]
[32] Especially with the benefit of the evidence given by Mr Gance, the Group Commercial Manager for the Chemist Warehouse Group, it can be seen that the respondents had no intention to mislead or deceive. There is no basis for inferring that the respondents will not give proper regard to this judgment in any future publications. The applicants have not demonstrated that an injunction is reasonably required to prevent further contraventions. The respondents should not be exposed to the additional consequences of a possible finding of contempt of court by some further publication breaching an injunction.
[33] The applicants should have declarations largely as sought. In proceedings 5355 of 2012, it will be declared that:
“1.The respondents, in trade or commerce, engaged in conduct likely to mislead or deceive, in contravention of section 18 of the Australian Consumer Law, by causing an advertisement to be published in The Cairns Post newspaper on 14 June 2012:
(a)listing prices for the supply of Atorvastatin Sandoz, Lipitor and Trovas, being medicines on the Pharmaceutical Benefits Scheme (PBS) Schedule, to members of the public without identifying that:
(i)while the supply of Lipitor to a person at the listed price of $35.40 could be taken into account for the purposes of determining the person’s (and the person’s family’s) eligibility to be issued with a concession card under Division 1A of the National Health Act 1953 (Cth);
(ii)the supply of Atorvastatin Sandoz at $14.99 or Trovas at $19.99 could not be taken into account for that purpose; and
(b)stating that the frequency of supply of Atorvastatin Sandoz or Trovas at those prices would be governed by standard PBS regulations, when supplies of those products at those prices would not be supplies under the PBS.”
[34] There will be an identical order in the other proceedings, substituting a reference to the publication in the Gold Coast Bulletin on 2 June 2012.
Footnotes
[1] Described in the Act as concessional beneficiaries, a term defined in s 84.
[2] s 99F.
[3] s 99G.
[4] s 99F.
[5] s 99F.
[6] s 84.
[7] s 99(2) of the Act.
[8] Exhibit TJL-1 to the affidavit of TJ Logan in each proceeding.
[9] s 84AAA.
[10] s 87.
[11] s 84C(4AA).
[12] (2010) 241 CLR 357 at [15]-[16], 368.
[13] (1989) ATPR (Digest) 46-054 at 53,195.
[14] (2010) 241 CLR 357 at [21], 370.
[15] (1992) 39 FCR 31 at 32.
[16] (1999) 46 NSWLR 538.
[17] (2004) 207 ALR 452 at [39]. See also Australian Competition and Consumer Commission v Francis [2004] FCA 487 at [122] and Australian Competition and Consumer Commission v Dermalogica Pty Ltd [2005] FCA 152 at [107]-[111].