NEW ZEALAND HEALTH TRUST & ANOR v ATTORNEY-GENERAL [2020] NZCA 166

NEW ZEALAND HEALTH TRUST & ANOR v ATTORNEY-GENERAL [2020] NZCA 166 [15 May 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA132/2020[2020] NZCA 166BETWEEN NEW ZEALAND HEALTH TRUSTFirst ApplicantAND PROMISIA INTEGRATIVE LIMITEDSecond ApplicantAND ATTORNEY-GENERALRespondentCourt: Miller and Goddard JJCounsel: L Hansen for ApplicantsK Wevers and E Dowse for RespondentJudgment:(On the papers)15 May 2020 at 11.00 amJUDGMENT OF THE COURTA We decline the application for leave to appeal.B The applicants must pay the respondent costs for a standard appeal on aband B basis plus usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)[1] This is an application for leave to appeal from an interlocutory judgment of theHigh Court refusing the applicants, whom we will call NZ Health Trust and Promisia,an interim order on judicial review.1 The decision under attack is that of the Ministerof Health, who intends to Gazette a plant extract, artemisia annua extract (AAE), as aprescription-only medicine.2 The decision was made by the Minister's delegate,Christopher James, who is the Group Manager of Medsafe, the New ZealandMedicines and Medical Devices Safety Authority.3[2] Promisia has for some six years sold called a product called Arthrem throughpharmacies and an online sales channel. Arthrem contains AAE. Until now it hasbeen sold as a dietary supplement that is not a medicine and does not require aprescription. NZ Health Trust is a charitable trust with, as we understand it, noposition to preserve that need be taken into account for present purposes.[3] The applicants say that AAE is not a medicine, and as such cannot be classifiedas a prescription medicine. They also say that Medsafe did not undertake the necessaryprocess of describing known undesirable effects and risks associated with AAE beforethe decision was made to Gazette it as a prescription-only medicine.4 Rather, Medsafefocused only on Arthrem and used data that did not justify its conclusion that AAEmay cause liver damage. In fact, they say, there are no known liver toxicity effectsassociated with any form of AAE and any risk that there is can be managed via thewarning label on Arthrem, as it is with other products such as paracetamol, which issold without prescription but has known liver toxicity risks. For these reasons, thereare no compelling public safety risks to justify the haste with which Medsafe has acted;rather, it could continue to wait until the application for judicial review is finallydetermined.[4] In the High Court Doogue J declined interim relief and further declined leaveto appeal.5 She reasoned that the application for review is not strong; the evidencedoes justify the inference that AAE causes liver damage; the risk to public health and1 Senior Courts Act 2016, s 56(5).2 The decision was made under s 106 of the Medicines Act 1981, which allows the Minister todeclare any medicine a prescription medicine by notice in the Gazette.3 Medsafe is a business unit of the Ministry of Health responsible for the regulation of therapeuticproducts in New Zealand.4 See Medsafe How to change the legal classification of a medicine in New Zealand (Ministry ofHealth, guidance document, March 2019) at 8.5 New Zealand Health Trust v Attorney-General [2020] NZHC 433 [Interlocutory judgment]; andNew Zealand Health Trust v Attorney-General [2020] NZHC 500 [Leave decision].safety is material; and the balance of convenience or fairness clearly favours therespondent,6 partly because Promisia, a listed company, has advised shareholders thatit has exited the natural products market and the decision to classify Arthrem as aprescription medicine will have "minimal impact" on the company.7[5] Arthrem remains on sale in the meantime. Medsafe has urged haste, bothbelow and in this Court, on the ground that gazetting is necessary to mitigate risks topublic health and safety.[6] The central question concerns the merits. It is whether Arthrem is a medicineas defined. Section 3(1) of the Medicines Act 1981 provides that:3 Meaning of medicine, new medicine, prescription medicine, andrestricted medicine(1) In this Act, unless the context otherwise requires, medicine—(a) means any substance or article that—(i) is manufactured, imported, sold, or supplied whollyor principally for administering to 1 or more humanbeings for a therapeutic purpose; and(ii) achieves, or is likely to achieve, its principal intendedaction in or on the human body by pharmacological,immunological, or metabolic means; and(b) includes any substance or article—(i) that is manufactured, imported, sold, or suppliedwholly or principally for use as a therapeuticallyactive ingredient in the preparation of any substanceor article that falls within paragraph (a); or(ii) of a kind or belonging to a class that is declared byregulations to be a medicine for the purposes of thisAct; but(c) does not include—(i) a medical device; or(ii) any food within the meaning of section 2 of the FoodAct 1981;8 or6 Interlocutory judgment, above n 5, at [79]–[81].7 At [23].8 The more recent Food Act 2014 should be read in here.(iii) any radioactive material within the meaning ofsection 5(1) of the Radiation Safety Act 2016; or(iv) any animal food in which a medicine (within themeaning of paragraph (a) or (b)) is incorporated; or(v) any animal remedy; or(vi) any substance or article of a kind or belonging to aclass that is declared by regulations not to be amedicine for the purposes of this Act.[7] Promisia says that Arthrem is plant material intended for human consumptionand is not marketed as having any therapeutic purpose; rather, it is a food as definedby the Food Act 2014:9 Meaning of food(1) In this Act, unless the context otherwise requires, food—(a) means anything that is used, capable of being used, orrepresented as being for use, for human consumption(whether raw, prepared, or partly prepared); and(b) includes—(i) seeds, plants, or plant material intended for humanconsumption, including seeds that are intended to besprouted and consumed as sprouts, but not otherseeds, plants, or plant material intended for planting;and(c) does not include—(iii) any substance that—(A) is used only as a medicine or is a controlleddrug or psychoactive substance; [8] Medsafe responds that Arthrem is a medicine because it is sold foradministering to people for a therapeutic purpose and achieves its intended action onthe human body by pharmacological means. A therapeutic purpose is defined asincluding a purpose of, or connected with, "preventing, diagnosing, monitoring,alleviating, treating, curing, or compensating for, a disease, ailment, defect, orinjury".9 It appears to be common ground that artemisia annua has been used inChinese medical practice for many centuries.[9] Doogue J considered the evidence and concluded that Arthrem is sold fortherapeutic purposes — maintenance of joint health and mobility, and Promisia'smarketing materials seem to imply that Arthrem is a "medication".10 She concludedthat there is a strongly arguable case that Arthrem is a medicine.11[10] We accept that the case involves private and public interests of someimportance. There is an arguable case that Arthrem is a food as defined, and not amedicine. However, a decision on that point must await a substantive hearing.The material before us at this preliminary stage does not support the applicants'contention that their case is strong. The statutory definitions have a purposivecomponent; food means things for human consumption, while medicines areadministered for therapeutic purposes. There is prima facie evidence that Arthrem issold for therapeutic purposes and otherwise meets the statutory definition of amedicine. AAE is a plant extract, rather than the plant itself, and as Doogue J notedthat may detract from the applicants' argument that it is a food.12[11] There is a vigorous dispute about the claimed causal connection between AAEand liver damage. Promisia maintains that no such connection exists.Its Chief Executive Officer, Rene de Wit, characterises Medsafe's claim as recklessand untrue. He maintains that Medsafe has had a closed mind throughout and has notconducted a fair process. These criticisms may prove valid, but it is not currentlypossible to say that the evidence Medsafe relied on is unreliable. Mr James appearsto have followed established processes, which included recommendations from theMedicines Classification Committee, which advises on classification, and theMedicines Adverse Reactions Committee, which advises on the safety of medicines.Both are expert committees. They relied on data from the Centre for AdverseReactions Monitoring, which collects voluntary reports on adverse reactions tomedicines. Further, it may suffice in law if there is evidence to justify a precautionary9 Medicines Act, s 4(a).10 Interlocutory judgment, above n 5, at [33]–[37].11 At [38].12 At [39]–[40].approach to risk. It is not for the court to say whether product labelling that referencesthe risk of liver damage will suffice to manage any risk.[12] Doogue J found that the balance of convenience or fairness clearly favouredMedsafe.13 The key consideration was the evidence of liver damage, which is plainlya serious public health concern if correct.14 Against that, if relief is declinedconsumers will not be able to buy Arthrem, which may have modest therapeuticbenefits, without a prescription and Promisia risks immediate losses of perhaps$1.3 million if it cannot process raw materials and must compensate pharmacistsholding stocks of Arthrem.15 Mr de Wit says that sales dropped to 10 per cent of theirformer level when the Director-General of Health published an alert. He claims thatlosses may exceed $50 million, without detailing how that figure is calculated.[13] We accept for present purposes that classification will likely cause Promisiafinancial loss. The loss should not be discounted merely because it may not muchaffect Promisia's overall financial performance. But it does not outweigh the publichealth risk which, as we have said, cannot be discounted at this stage.[14] We are not persuaded that the Judge erred in the balancing exercise.[15] For these reasons, we decline the application for leave to appeal.[16] The applicants must pay costs to the respondent for a standard application ona band B basis plus usual disbursements.Solicitors:Bartlett Law, Wellington for ApplicantsCrown Law Office, Wellington for Respondent13 At [80].14 At [72]–[74].15 At [22].