Arrotex Pharmaceuticals Pty Limited v Minister for Health and Aged Care

Introduction 1 This case is concerned only with the proper construction of a single subsection of the National Health Act 1953 (Cth) and the circumstances in which that subsection applies to certain medicines or "pharmaceutical items". 2 The specific question is whether the fact that a price reduction took effect for 84 pharmaceutical items (Relevant Items) on 1 October 2022 means that the "12.5% average unadjusted price reduction test" (12.5% test) set out in s 99ADH(6) of the Act was not satisfied at 1 April 2024. That question turns on construing what is meant by the phrase in s 99ADH(6)(b) "this section did not apply to the brand of the pharmaceutical item in relation to any of those data collection periods". 3 That question must be understood in the context of the price disclosure regime in Div 3B of Pt VII of the Act. The purpose of the price disclosure regime in the Act is to provide for mandatory price reductions to the cost of medicines which is aimed at ensuring that the subsidy paid by the Commonwealth under the pharmaceutical benefits scheme (PBS) for a particular medicine more closely reflects the price actually paid for a medicine by a pharmacist or other dispenser. The operation of the scheme and the relevant terms will be defined below. 4 Put simply, a price reduction can be made pursuant to the 12.5% test in s 99ADH(6) if there have been three consecutive data collection periods, with each collection period being six months, where the "weighted average disclosure price" (WADP) for an item has been at least 12.5%. The data collection periods occur on a rolling basis each year from 1 April to 30 September and 1 October to 31 March. The price reduction can only be made on 1 April or 1 October, or another prescribed day: s 99ADH(2). However, there is a time lag (around two to three months) between the three consecutive data collection periods and the date on which the price reduction can be made because it takes time for the Commonwealth to analyse the data collected from the last collection period and determine the WADP for that period. 5 The applicants are related companies that supply generic brand medicines that are included on the PBS to wholesaler suppliers of medicine. On the applicants' construction, s 99ADH "applies" within the meaning of subs (6)(b) to the immediately preceding data collection period before a price reduction was made even if the data from that collection period did not form part of the calculation for that price reduction. The applicants contend that because a price reduction was made on 1 October 2022, a price reduction could not be validly made on 1 April 2024 because there had not been three data collection periods immediately prior to 1 April 2024 where s 99ADH did not apply (ie, a price reduction had not been made). The applicants commenced this proceeding seeking a declaration to that effect. 6 The respondent (Minister) rejects that construction and contends that the 12.5% test was satisfied on 1 April 2024, notwithstanding the price reduction on 1 October 2022. On the applicants' case, the next date on which a price reduction could be made if the 12.5% test is satisfied, is 1 October 2024. 7 For the reasons explained below, I agree with the Minister's construction. Therefore, the application should be dismissed with costs.

DEFINED TERMS AND LEGISLATION 8 Section 99ADH of the Act relevantly provides: 99ADH Price reduction based on information provided under the price disclosure requirements When this section applies (1) This section applies if: (a) under section 99ADB, the Minister determines the weighted average disclosed price of a brand of a pharmaceutical item (the WADP brand) in respect of a data collection period for the brand; and (aa) the Minister, by legislative instrument, determines a day (the reduction day) for the purposes of this section in relation to the brand of the pharmaceutical item; and (b) a price agreement or price determination is in force in relation to the brand of the pharmaceutical item on the reduction day; and (c) the unadjusted price reduction for the brand of the pharmaceutical item is: (i) if section 99ADHC does not apply to the brand of the pharmaceutical item - at least 10%; or (ii) subject to subparagraph (iii), if section 99ADHC applies to the brand of the pharmaceutical item and the approved ex-manufacturer price [AEMP] of the brand of the pharmaceutical item is more than $4 - at least 30%; or (iii) if section 99ADHC applies to the brand of the pharmaceutical item, the approved ex-manufacturer price of the brand of the pharmaceutical item is more than $4, and the brand of the pharmaceutical item has passed the 12.5% average unadjusted price reduction test set out in subsection (6) of this section - at least 10%. (2) For the purposes of paragraph (1)(aa), the reduction day must be: (a) 1 April or 1 October in any year; or (b) another prescribed day. … 12.5% average unadjusted price reduction test (6) For the purposes of this section, a brand of a pharmaceutical item passes the 12.5% average unadjusted price reduction test if there have been 3 consecutive data collection periods in respect of which a weighted average disclosed price has been determined for any brand of the pharmaceutical item, where: (a) the percentage obtained by dividing the total of the unadjusted price reductions for a brand of the pharmaceutical item in respect of each of those data collection periods by 3 is at least 12.5%; and (b) this section did not apply to the brand of the pharmaceutical item in relation to any of those data collection periods; and (c) those data collection periods include the data collection period mentioned in paragraph (1)(a). 9 Section 99ADH(1)(c) sets out the three different ways a price reduction can occur under s 99ADH. First, a price reduction will occur under subs (i) for certain brands to which s 99ADHC does not apply if the unadjusted price is at least 10% for the data collection period. Second, for those brands to which s 99ADHC applies, there may be a price reduction if the AEMP is more than $4 and the unadjusted price reduction is at least 30% for a data collection period. The price reductions under subs (i) and (ii) may occur on a rolling basis every six months if the respective 10% or 30% threshold is met for the relevant data collection period. 10 Third, a price reduction occurs under subs (iii) if the 12.5% test set out in s 99ADH(6) is met for those brands to which s 99ADHC applies, and for which the approved ex-manufacturer price is more than $4. The purpose of the 12.5% test is to capture brands that are discounted over a prolonged period but are not covered by the mechanisms in subs (i) or (ii): either because s 99ADHC applies to those brands, or because they do not meet the 30% threshold. Subsection (iii) is at issue here. 11 Subsections (1)(c)(iii) and (6) of s 99ADH, which provide for price reductions by way of the 12.5% test, were inserted by the National Health Amendment (Enhancing the Pharmaceutical Benefits Scheme) Act 2021 (Cth) (Amendment Act) taking effect from 1 July 2022. According to the Explanatory Memorandum to the Bill for the Amendment Act (Explanatory Memorandum), the Act was amended to implement two "strategic agreements", both dated 6 September 2021, between: 1) the Minister and the Generic and Biosimilar Medicines Association (GBMA); and 2) the Minister and Medicines Australia (together the Strategic Agreements). 12 The key relevant concepts for understanding the aspects of the price reduction regime reflected in s 99ADH(6) of the Act, which were helpfully summarised by the Minister in his Concise Response, are as follows: Approved ex-manufacturer price or AEMP - defined in s 84(1) to be an amount agreed or determined by the Minister which is the equivalent to the appropriate maximum price and is subject to certain increases or reductions from time to time. The payments that the Commonwealth makes to pharmacists for dispensing pharmaceutical items under the PBS is determined by reference to, among other things, the AEMP. Weighted average disclosure price or WADP - an amount calculated using a formula prescribed in s 99ADB(4) of the Act and regs 70-81 of the National Health (Pharmaceutical Benefits) Regulations 2017 (Cth) that takes into account (1) the volume of sales of each brand of a particular PBS listed medicine; and (2) the extent to which the responsible persons of those brands offered discounts and other incentives which resulted in the price actually paid by pharmacists being less than the AEMP plus the applicable wholesale mark-up. Unadjusted price reduction or UPR - defined in s 99ADB(1) as the difference between the AEMP on the day following the end of the data collection period and the WADP for that data collection period, expressed as a percentage of the relevant AEMP. For example, if the AEMP is $10 and the WADP is $9, the UPR will be 10% (ie, if the AEMP is $10 and the WADP is $9, the UPR will be 10%).

BACKGROUND 13 The following background facts are not controversial and are largely taken from the applicants' Concise Statement. 14 The second applicant, or one of its wholly owned subsidiaries, is the "responsible person" for the Relevant Items within the meaning of s 84AF. The responsible person for certain brands of pharmaceutical items must comply with the price disclosure requirements for those items under s 99ADC of the Act, including providing to the Commonwealth information as to the price, volume and any benefits in relation to the supply of those items. 15 A delegate of the Minister made the National Health (Weighted average disclosed price - April 2024 reduction day) Determination 2023 (Cth) on 19 December 2023. 16 In relation to each of the Relevant Items, there was a price disclosure reduction under s 99ADH of the Act on 1 October 2022. There was no price disclosure reduction under s 99ADH on 1 April 2023 or 1 October 2023 (or on any relevant prescribed reduction day). 17 A WADP has been determined in respect of the following data collection periods: (1) 1 April 2022 to 30 September 2022; (2) 1 October 2022 to 31 March 2023; (3) 1 April 2023 to 30 September 2023; (4) 1 October 2023 to 31 March 2024; and the UPR in respect of each of those periods is at least 12.5%. 18 The applicants accept that the elements of s 99ADH other than subs (6)(b) were satisfied in relation to the Determination.

Submissions 19 The Minister provided the following table in his Concise Response which helpfully illustrates the parties' respective positions: 20 The table shows that there is a minimum of 18 months between each possible price reduction determination on the Minister's construction whereas there is a minimum of two years between each price reduction on the applicants' construction. 21 The critical dispute is whether DCP 4 can be included as one of the "3 data collection periods" in the 12.5% test.

Applicants 22 The applicants say that a price reduction occurred on 1 October 2022 immediately following the end of DCP 4 and therefore DCP 4 cannot be included as one of the "3 data collection periods". This is despite the fact that the data used for the 1 October 2022 price reduction came from DCP 1, DCP 2 and DCP 3, not DCP 4. The applicants contend that the Act contemplates that the period in which data from the previous data collection period is analysed and calculated must be included as one of the relevant "3 consecutive data collection periods". 23 The applicants rely on text, context and purpose to support that construction. 24 Starting with text, the applicants draw a distinction between the relational words "in respect of" in subs (1)(a) and (6)(a) of s 99ADH and "in relation to" in subs (6)(b). The parties agree that "in respect of" refers to the relationship between the data collected in a relevant data collection period and the WADP. That is, the WADP for DCP 1 will be "in respect of", or as a result of, the data collected in DCP 1. 25 However, the applicants submit that "in relation to" means something different. Subs (6)(b) requires that s 99ADH "did not apply to the brand of the pharmaceutical item in relation to any of those data collection periods" (Emphasis added.). The applicants submit that Parliament used different words in subs (6)(b) than in the rest of the section and therefore it must be presumed that Parliament intended "in relation to" to have a different meaning than "in respect of": see Paul v Cooke (2013) 85 NSWLR 167 at [44]-[51] (per Leeming JA, Basten and Ward JJA agreeing). That different meaning is expanded upon below but, in short, the applicants contends that s 99ADH will have applied "in relation to a data collection period" for the purposes of subs (6)(b) if a price disclosure reduction took effect on the day after the end of the data collection period. This construction is based on the purported purpose of s 99ADH(6)(b) being to ensure that price reductions do not occur more frequently than every two years. 26 The applicants rely on several authorities to support the proposition that the meaning of ambulatory phrases such as "in relation to" and "in respect of" depend on purpose and context, including extrinsic material: see, eg, Halal Certification Authority v Flujo Sanguineo Holdings (2023) 176 IPR 45 at [91]-[92] (per Nicholas, Burley and Cheeseman JJ). Those principles are not in dispute. 27 According to the applicants, the Strategic Agreements can be relied upon to construe subs (6) because the purpose of the Amendment Act, which inserted subs (6), was stated in the Explanatory Memorandum to be to implement the Strategic Agreements. 28 According to the applicants, the Explanatory Memorandum makes clear that the purpose of s 99ADH(6) is to prevent price reductions occurring to frequently which may threaten the reliable supply of medicines. 29 Clause 3.5.2 of the strategic agreement with GMBMA (cll 11.32 of the Medicines Australia Agreement, hereafter referred to as cl 3.5.2) provides that it is "intended that Listed Brands with a [AEMP] of $4 or less, will not be subject to Price Disclosure Reductions … unless there is discounting equal to or greater than …. 12.5%, on average, over 3 successive Price Disclosure Cycles without a Price Disclosure reduction". "Price Disclosure Cycle" is defined in the Strategic Agreements as a "Data Collection Period plus its associated calculation period resulting in the Minister making a determination of a Weighted Average Disclosed Price under subsection 99ADB(4) of the Act" (Emphasis added.). 30 The applicants explain that the three Price Disclosure Cycles are each one year long and therefore, because they overlap, three Price Disclosure Cycles amount to two years when stacked together. The applicants contend that the unambiguous effect of cl 3.5.2 of the Strategic Agreements was that there would be no price reductions under s 99ADH(1)(c)(iii) and (6) unless there had been a two-year period without price reductions. As Parliament's unambiguous purpose in inserting those subsections into the Act was to implement the Strategic Agreements, the applicants submit those subsections should be construed to give effect to that purpose. 31 The Minister criticises the applicants' reliance upon cl 3.5.2 of the Strategic Agreements. The Minister says that the Strategic Agreements contemplate that Price Disclosure Cycles and data collection periods are distinct concepts, with the latter forming part of the former. 32 The Minister points to cl 3.3.1 of the Strategic Agreements which relates to the removal of originator brand information from the WADP calculation where there is no price reduction "during (or with respect to)" the first three Price Disclosure Cycles for certain drugs. Clause 3.3.2(a) says that, following removal, information provided about the originator brand "will not be taken into account after 18 months". These clauses therefore seem to contemplate that "Price Disclosure Cycles" refers to a time period of 18 months. This suggests that the focus is on the data collection period within the relevant Price Disclosure Cycle. That is reflected in the definition of Price Disclosure Cycle which, despite covering a period of one year, expressly notes that such cycles are made up of both the data collection period and its associated calculation period. The data collection period is the relevant period for price reductions pursuant to the language of s 99ADH(6) whereas the associated calculation period is not. 33 Further, the applicants contend that, unlike the Minister's construction, their construction is faithful to the past tense used in subs (6)(b) that "this section did not apply" in relation to data collection periods. 34 The applicants suggest that subs (6)(b) assesses whether, on the price reduction days (1 April or 1 October), a price reduction occurred on the preceding three possible price reduction days before the actual reduction day rather than assessing whether a price reduction occurred in relation to the data collected in the previous three periods. 35 The applicants contend that to assess whether a price reduction was made "in relation to any of those [three] data collection periods" prior to the reduction day on 1 April 2024, you must examine whether a reduction occurred on 1 October 2023, 1 April 2023 or 1 October 2022. A price reduction occurred on 1 October 2022 and therefore s 99ADH applied within the meaning of subs (6)(b) to one of the three preceding data collection periods. Accordingly, the price reduction on 1 April 2024 was invalid. 36 The applicants contend that, on the Minister's construction, in making the price reduction on 1 April 2024, you assess whether a price reduction occurred on 1 April 2024, 1 October 2023 and 1 April 2023. That reasoning is circular because it asks whether the section applied on a reduction day to work out whether the section will apply on that reduction day. However, I do not consider that it is, in fact, the Minister's construction.

Minister 37 According to the Minister, all that s 99ADH(6) asks is whether the data from any of the relevant three data collection periods has resulted in a price reduction. If not, the 12.5% test may be satisfied by reference to those three data collection periods. 38 Each data collection period is six months and s 99ADH(6) requires that there have been "3 consecutive data collection periods" where the WADP has been determined. The price reduction on 1 April 2024 was calculated by reference to DCP 4, DCP 5 and DCP 6. The price reduction could not rely upon the data collected in DCP 7 because the end of that collection period was the day prior to 1 April 2024 and had not yet been analysed. 39 The Minister accepts that subs (6)(b) cannot be construed to mean that the section did not apply in relation to the reduction day and data collection period on which that question is asked (in this case, 1 April 2024) as that would be circular. The Minister maintains that his construction is consistent with the backward-looking test envisioned by the use of the past tense "did not apply" in that subsection. 40 The Minister submits that there had been 18 months between the last price reduction on 1 October 2022 and the next price reduction on 1 April 2024. Therefore, there had been at least 18 months, or three data collection periods, with no price reduction where the AEMP remained the same amount. The Minister relies on the following part of the Explanatory Memorandum to support his position that 18 months, not two years, is the minimum amount of time between price reductions: For brands subject to the price reduction floor with an AEMP that is greater than $4.00, there will be no further price reductions under the Act unless, over a period of three consecutive data collection periods (1.5 years), the brand is discounted on average by 12.5% or more without taking a price reduction, or if the brand is discounted by more than 30% in any one Price Disclosure Cycle. 41 The Minister contends that the reference to "1.5 years" in this part of the Explanatory Memorandum cannot be reconciled with the applicants' construction. 42 The applicants submit that the Explanatory Memorandum is "wrong" to the extent that it suggests that price reductions can occur within 18 months. It says the reference to "1.5 years" is either a miscalculation or a misunderstanding of the Strategic Agreements. 43 The applicants say that, in any event, their construction is not inconsistent with this extract of the Explanatory Memorandum. They contend that this paragraph provides that there cannot be further price reductions unless there is a period of three consecutive data collection periods without a price reduction. The focus is on the data collection periods and not the period of time. 44 The Minister further contends that "in respect of" and "in relation to" have effectively the same meaning in the context of s 99ADH. That meaning is to denote a relationship between two or more events or concepts. The presumption relied upon by the applicants that a different form of words is intended to have a different meaning is a "relatively weak consideration": see Taheri v Vitek (2014) 87 NSWLR 403 at [124] (per Leeming JA, Bathurst CJ agreeing). 45 The Minister nonetheless accepts that the two phrases have a difference in meaning, albeit a very slight one. He says that "in respect of" is used to describe a relationship between specific calculations (ie, WADP) and a specific data collection period, whereas "in relation to" is used more broadly to describe the application of a specific section of the Act to particular circumstances. The Minister says that this difference is of limited significance and is better characterised as a "stylistic choice".

Consideration 46 The principles with respect to statutory interpretation were not in dispute. The axiomatic approach was described by Kiefel CJ, Nettle and Gordon JJ in SZTAL v Minister v Immigration and Border Protection (2017) 262 CLR 362 at [14]: The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected. 47 For the reasons set out below, I agree with the Minister's construction of s 99ADH(6)(b). 48 Subs (6)(b) provides that the 12.5% test is satisfied "if there have been 3 consecutive data collection periods" where the WADP has been determined and, critically, "this section did not apply to the brand of the pharmaceutical item in relation to any of those data collection periods". Section 99ADH will have applied to a data collection period if a price reduction has been made in relation to that period. I consider that the section will have applied "in relation to" a data collection period if the data from that collection period was used to form part of the calculation of the 12.5% test that led to the price reduction. 49 I accept the Minister's explanation of the differences in meaning between "in respect of" and "in relation to". The test in s 99ADH(6) is not a specific calculation "in respect of" a specific data collection period; rather, it asks whether the section applied to the preceding data collection periods. That is a slightly different and broader question than a simple calculation in respect of a certain period. That understanding of how "in relation to" is used in s 99ADH(6) is consistent with its use in other parts of the Act such as ss 85(2), 85(5), 90A(1), 99ABC(5), 99ACB(2) and 99ACD(1A). For example, s 85(2) provides that "[t]he drugs and medicinal preparations in relation to which this Part applies are drugs and medicinal preparations that are declared by the Minister". Section 90A(1) similarly provides "[t]his section applies in relation to a decision of the Secretary under section 90…". I give this slight difference in meaning only some weight in construing s 99ADH(6)(b). However, it explains the difference in language whilst otherwise maintaining fidelity to the operation of the section (which the applicants' explanation of the difference in meaning does not). 50 "Data collection period" is defined in s 99ADBA(4) such that there are two data collection periods: one period is from 1 April to 30 September, the other period is from 1 October to 31 March. Section 99ADBA does not refer to "Price Disclosure Cycles" or a data collections period's "associated calculation period". 51 The price reduction at issue in this proceeding was made on 1 April 2024. The data collection period immediately prior to 1 April 2024, DCP 7, could not be included as one of the three data collection periods as the data from DCP 7 had not by 1 April 2024 been analysed to calculate the WADP for that period. There is no dispute that s 99ADH did not apply to DCP 5 or DCP 6 as no price reduction was made in relation to either of those periods. In my view, s 99ADH also did not apply to DCP 4. 52 The price reduction on 1 October 2022, the last price reduction before the impugned reduction on 1 April 2024, was made in relation to DCP 1, DCP 2 and DCP 3. The price reduction could not have been made "in respect of" data collected from DCP 4 because, on 1 October 2022, the data from DCP 4 had not yet been analysed. Therefore, no price reduction was made based on the data from DCP 4 and therefore s 99ADH did not apply "in relation to" that period. That construction of s 99ADH(6)(b) is consistent with the text of the provision, when considering its context and purpose. 53 The applicants' reliance on the definition of "Price Disclosure Cycles" in the Strategic Agreements is the clearest support of their construction that a price reduction under s 99ADH(6) can only occur if there have been "3 consecutive data collection periods" and a further associated calculation period in which there was no price reduction (and therefore a minimum of two years between price reductions). There are a number of problems with that approach. 54 First, not only does the text of the Act not say that price reductions must be at least two years apart, but nor does the Explanatory Memorandum to the Amendment Act explicitly say this. 55 The language of "Price Disclosure Cycles" is also not language picked up by the Act. The applicants' construction replaces the statutory words "data collection periods", which are six months each, with "Price Disclosure Cycles" which are 12 months each. That is how on the applicants' construction the price reduction on 1 October 2022 fell within DCP 4: DCP 4 does not simply run from 1 April 2022 to 30 September 2022 but runs from 1 April 2022 to 1 April 2023 when taking into account the associated calculation period (and thus, perhaps, would be more aptly named "Price Disclosure Cycle 4" instead of "DCP 4"). 56 I consider that the applicants' construction is inconsistent with the text of s 99ADH(6). Their construction essentially seeks to add the following bolded words into that provision: a brand of a pharmaceutical item passes the 12.5% average unadjusted price reduction test if there have been 3 consecutive data collection periods plus their associated calculation periods in respect of which a weighted average disclosed price has been determined for any brand of the pharmaceutical item, where: 57 Such a construction based on implication should be rejected. 58 The applicants' focus on the relevant "reduction day" as the basis for assessing whether "this section did not apply" pursuant to subs (6)(b) is also not supported by the text of s 99ADH. Subs (1)(aa) refers to "reduction day". However, subs (6)(b) does not pick up this language of "reduction day". Subsection (6)(b) describes the relevant relationship for the purposes of the 12.5% test as between the section and the data collection periods, not between the section and reduction days. 59 Second, the applicants' heavy reliance on the Strategic Agreements is misplaced. The Strategic Agreements are contractual documents that, although as the Explanatory Memorandum notes they are sought to be implemented by the Amendment Act, cannot prevail over the language of the text of the statute to the extent of any inconsistency. The Minister also pointed to parts of the Strategic Agreements that support his construction. In my view, the Strategic Agreements have crumbs for both sides to latch onto: the reference to "(1.5 years)" for the Minister or the definition of "Price Disclosure Cycles" including the "associated calculation period" for the applicants. The Strategic Agreements do not unambiguously support one parties' construction over the other and ultimately the Minister's construction, unlike the applicants' construction, is not dependent on the Strategic Agreements. 60 Third, the applicants' reliance on purpose does not assist their construction. The parties seemed to agree that the purpose of subs (6)(b) was to ensure the security of supply and prevent price reductions occurring too frequently. However, that purpose is neutral as to which construction should be preferred. It is not apparent from the text or context of the Act why 18 months is too short to secure supply but two years is an appropriate amount of time. 61 A further issue with the applicants' construction is that it is inconsistent with the rolling, cyclical nature of price reductions contemplated by s 99ADH(6). 62 On the applicants' construction of s 99ADH(6)(b), the data from the data collection period immediately preceding a price reduction could never be used to form part of the 12.5% test and contribute to a price reduction. Such data from these collections periods therefore becomes irrelevant or, in Senior Counsel for the Minister's words, a "zombie period". The Minister submits that companies may be able to "game" the system if a certain data collection period will never be included in the 12.5% test by deliberately selling large amounts of medicines during this period at a steep discount without such discounting leading to a price reduction under s 99ADH(1)(c)(iii). The gaming argument really goes nowhere as there was no evidence that it was even possible for companies to game the system in the way proposed by the Minister. It is unnecessary to address that argument any further as I accept the Minister's construction for other reasons. 63 It is an unusual result of the applicants' construction that the data from some data collection periods are irrelevant and cannot form part of the 12.5% test. There is no explicable or good reason for that result. The purpose of these provisions is to ensure that the subsidised price of medicine is aligned with the market price. That purpose is served by the data from every data collection period being utilised for the 12.5% test because it ensures that there is no distortion in the data by ignoring one data collection period, whether that distortion is caused by "gaming" or any other factor. The applicants' construction interrupts the rolling, cyclical approach to price reductions that is set up by s 99ADH where every data collection period can be used to inform the 12.5% test. This unusual consequence is not, on its own, a reason to reject the applicants' construction. However, it is another reason to prefer the Minister's construction which is harmonious with the rolling data collection and price reduction scheme.

CONCLUSION 64 For the reasons given above, the application should be dismissed. I will also make orders that the applicants pay the respondent's costs of the proceeding, to be taxed if not agreed. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rofe.