High Court: Pharmacy group accused of duplicate medicine claiming loses challenge to HSE decision

About this case:

• Citation:
  [2018] IEHC 691
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Garrett Simons

Due to inspections carried out at two other pharmacies owned by the group which alleged, inter alia, duplicate cross pharmacy claiming, the HSE refused its application to enter into a new agreement.

Finding that the HSE enjoyed discretion to consider the inspections in making its decision refuse the application, Mr Justice Garrett Simons was satisfied that the HSE did not have a duty to enter into a contractual arrangement with any particular individual pharmacist.

Community Pharmacy Contractor Agreement 

Section 59 of the Health Act 1970 provides that the Health Service Executive shall make arrangements for the supply without charge of drugs, medicines and medical and surgical appliances to persons with full eligibility (i.e. a medical card holder). One way the HSE discharges its duty under section 59 is by entering into contracts with individual pharmacists.

In 1996, the Minister for Health and the representative of the pharmacists, the Irish Pharmaceutical Union, negotiated a standard form agreement entitled “Community Pharmacy Contractor Agreement for Provision of Services under the Health Acts” (CPC Agreement).

The CPC Agreement is the key agreement between the HSE and pharmacists regulating the manner in which they provide services to the public on behalf of the HSE.

Notably for the purpose of the present proceedings, the CPC Agreement:

1. expressly addresses the issue of beneficial ownership of a pharmacy and allows for termination of the agreement in the event of a change in beneficial ownership;
2. does not address the position of a superintendent pharmacist (as opposed to supervisingpharmacist). 

Darastream’s application for CPC Agreement

Pursuant to the standard application form, in January 2017, Darastream Ltd made an application for a CPC Agreement in respect of a new pharmacy located at Quarry Road, Cabra.

In the application form, the beneficial owner of Darastream was identified as Jack McPolin.

Mr Justice Simons explained that Mr McPolin is also the beneficial owner of two other companies which operate pharmacies in Blanchardstown and North Circular Road, both of which have entered into CPC Agreements with the HSE. In respect of these pharmacies, both trading as Smith’s Pharmacy Group, the HSE invoked clause 15 of the CPC Agreement, which allows for the carrying out of an investigation pursuant to clauses 16 to 18.

Mr McPolin was the superintendent pharmacist of these two pharmacies, and was to be the superintendent for the Cabra pharmacy also.

Mr Justice Simons explained that the clause 15 procedure was ongoing, but that the interaction between this ongoing investigation and the Applicant’s application for the pharmacy at Cabra that gives rise to much of the complaints in these proceedings.

In March 2017, the HSE wrote to Mr McPolin in reference to Darastream’s application. The letter referred to the investigations being carried out at the pharmacies in Blanchardstown and North Circular Road, stating that the inspections supported concerns in relation to inducements offered, and various claiming and practice issues arising. The letter also stated that the HSE would not ‘finalise contractor agreements at new locations’ until the matters were ‘addressed to the satisfaction of the HSE’.

In December 2017, the HSE issued a letter pursuant to clause 15 in respect of the Blanchardstown pharmacy, alleging the following breaches as a result of the investigation:

1. Duplicate cross pharmacy claiming – i.e. multiple claims being entered for the same people in a short timeframe, with records showing that some patients appeared to attend other Smith’s pharmacies in the same moth to access a duplicate supply of medicines.
2. Owings
3. DPS claims without copy prescriptions in the pharmacy
4. Failure to maintain appropriate pharmacy records
5. Failure to maintain appropriate Patient Medication Records (PMRs)
6. Data protection
7. Inducements to place an order for medicines in breach of clause 4 (4) 

Mr Justice Simons explained that a similar letter was issued in respect of the North Circular Road pharmacy.

In February 2018, the HSE issued a preliminary recommendation in respect of Darastream’s application, recording the complaints received by the HSE in respect of the pharmacies in Blanchardstown and North Circular Road, and the inspections carried out there.

In April 2018, the HSE made a final decision to refuse to enter into a CPC with Darastram in respect of the new pharmacy at Cabra.

Judicial review

In the High Court, Darastream contended that the HSE’s decision to refuse to enter into a CPC Agreement with it was ultra vires.

Darastream also contended the HSE took into account irrelevant considerations by having regard to:

1. The existence of an ongoing investigation into two related pharmacies;
2. The role of the superintendent pharmacist (as opposed to a supervising pharmacist).

Mr Justice Simons said that the dispute turned on the correct interpretation of section 59 of the Health Act 1970 (as amended).

Darastream contended that the discretion enjoyed by the HSE under section 59 was very limited, and that the role of the Minister for Health precluded the HSE from specifying conditions.

Considering the legislation, Mr Justice Simons was satisfied that section 59 did ‘not impose a duty on the HSE to enter into a contractual arrangement with any particular individual pharmacist’ and that instead the HSE enjoyed a discretion to do so. In exercising this discretion, Mr Justice Simons said that the HSE was ‘entitled to have regard to inter alia the financial probity and professional qualifications of the party seeking to enter into a contract with it’ (consistent with the overarching obligation of the HSE under section 7 of the Health Act 2004).

Mr Justice Simons said that the HSE was entitled to have regard to the existence of the ongoing clause 15 procedure in respect of the two related pharmacies, and that all three pharmacies would have a common superintendent pharmacist.

In relation to the issue of there being reference to supervising pharmacists in the standard application form, rather than superintendent pharmacist (a term introduced under the Pharmacy Act 2007), Mr Justice Simons said that he did not think any weight could be attached to the lack of an express reference to the role of a superintendent pharmacist in either the application form or the agreement, and that the discretion enjoyed by the HSE ‘can neither be expanded nor reduced by the content of a non-statutory document which it has drawn up itself’.

Finding that there was no breach of fair procedures or transparency, Mr Justice Simons dismissed the application for judicial review in its entirety.

• by Seosamh Gráinséir for Irish Legal News