S 20 of the Cth Act provides: "It is prohibited to manufacture any stipulated drug for export overseas unless the manufacturer:

(1) is registered with the Therapeutic Goods Administration Board that it is a manufacturer of such drugs for export and complies with Regulations 5 and 6 herein; and

(2) complies with the annual quotas imposed upon that manufacturer by the Therapeutic Goods Administration Board as to the minimum percentage of each type of drug which must be manufactured for export. The quota must be calculated by reference to the total manufacture of each drug on an annual basis by each manufacturer, including those manufactured for purely intra-State sale. When setting these quotas, the Board must only take into account the need to protect the viability and enhance the export trade in palliative care drugs while maintaining supply for the market in Australia."

Regulation 5 under the Act specifies which chemical elements must be used with respect to each stipulated drug in order to ensure the quality and safety of the drugs. Regulation 6 prescribes the processes which must be put in place to safeguard their purity from any contamination. Regulation 6 also requires that an extra ingredient be added to those drugs which will be exported overseas in order to allow them to have a longer "use-by" date than those sold in Australia in order to enhance their marketability overseas. The latter production method was in any event common practice amongst Australian pharmaceutical companies whereby, in the final stage of production, those drugs destined to be exported were separated out in order to add this extra ingredient and were then stored separately for export.

The Palliative Care Act 2020 (NSW) ("the NSW Act") is concerned with all aspects of the provision of palliative care in NSW, to ensure the comfort and safety of patients, the rights of patients relating to access to such care, the provision of such care to the indigent and the regulation of all hospitals and other institutions which provide palliative care. It is very comprehensive in this regard. It thus also makes special provision for palliative care drugs in Division 4 of the Act which contains:

Section 55: "All manufacturers of drugs used in palliative care in the State must reserve 3% of their total production of these drugs, whether intended for sale overseas or in Australia, for use by charitable and religious institutions within the State specified in this Act which provide palliative care to indigent patients free of charge. This reserve quota will be provided to the [NSW] Department of Health for distribution to these institutions and manufacturers shall be reimbursed from the State Treasury to cover their costs. Penalty: A fine of $50,000, or the total value of drugs not so reserved, whichever is higher, and a prohibition from manufacturing any palliative care drugs for 5 years."

Section 60: "It is prohibited to manufacture the drug Paregoricon until such time as the manufacturer has informed the Chief Medical Officer ["CMO" of NSW] of the location of the premises of manufacture so that an accurate register of manufacturers can be maintained and the manufacturer is certified in writing by the Chief Medical Officer [of NSW] as a fit and proper person to manufacture this drug for palliative care purposes only and not for use as a performance-enhancing drug. Penalty: A fine of $250,000, or the total value of drugs produced in breach of this section, whichever is higher."

Hygeia Pharmaceuticals Ltd ("Hygeia") manufactures Paregoricon in NSW but does not reserve any of its drugs for charitable use as required by s 55 of the NSW Act. It has not registered with the CMO as required by s 60 of the Act and nor has it been certified as a fit and proper person by the CMO under that section. It is charged in NSW for breaching both these sections of the NSW Act. However, it does comply with all the requirements of s 20 of the Cth Act.

Hygeia argues that ss 55 and 60 of the NSW Act are invalid. By reference to the provisions of the NSW and Cth Acts in this question, is it correct? Would your answer differ if United States law applied?

Answer rating: 100% (QA)

ANSWER In evaluating the validity of sections 55 and 60 of the NSW Palliative Care Act 2020 NSW Act in relation to Hygeia Pharmaceuticals Ltd Hygeia i... View the full answer