Those drugs cost how much?? Chemist Warehouse price list misleading– but not for the reasons you might think

Last Monday the Supreme Court of Queensland held that a price list published by various Chemist Warehouse pharmacies in Cairns, Nerang, Coolangatta and other parts of Queensland was likely to mislead or deceive and therefore contravene clause 18 of the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), schedule 2, section 18).  The issue was not the bargain prices per se, but rather the failure to identify to consumers that because of the discount price, the relevant medicines would not be treated as PBS medicines and therefore would not count towards a patient’s yearly spend on PBS medicines.

In June 2012 the relevant Chemist Warehouse pharmacies placed an advertisement in The Cairns Post and The Gold Coast Bulletin for generic atorvastatin products.

The advertisement included a price list offering various atorvastatin products for different prices:

  • Lipitor (originator atorvastatin) was offered for sale at a price of $35.40;
  • Atorvastatin Sandoz (of any strength) was free for the first 30 tablets and after that was offered from $14.99 per pack; and
  • Trovas (Ranbaxy’s generic atorvastatin) was offered for sale at $19.99 per pack for all strengths save the 80mg, which was offered for sale at $35.40.

The maximum price payable by general patients for PBS products as at June 2012 was $35.40.

The problem was the failure to identify in the advertisement that the discount generic products would not count towards the patient’s spend on PBS medicines.  This is relevant because, if a general patient (ie not a concession patient) spends more than the “general patient safety net” in a year on PBS medicines (being $1,363.30 in June 2012), they are entitled to a safety net concession card which reduces the maximum cost of PBS medicines to that patient for the remainder of the year from $35.40 down to $5.80.

Unhelpfully, the Chemist Warehouse price list also had a note stating that the frequency of supply of the generic atorvastatin products would be governed by standard PBS regulations.  This was a problem because supplies of those products at those prices would not be supplies under the PBS.

Justice McMurdo found that the price lists were likely to mislead or deceive as they were likely to give the impression that the only financial difference between the generic atorvastatin products and Lipitor was the price of the product.  The problem was described by his Honour at paragraph [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.”

Justice McMurdo declared that the Chemist Warehouse parties had engaged in conduct that was likely to mislead or deceive in contravention of section 18 of the Australian Consumer Law, however declined to issue the injunction that was sought by the Applicants, which he said was not required to prevent further contraventions of the legislation.

The case reinforces that advertisers must disclose all relevant aspects of the price of a product.