The High Court has ruled that six pharmacy companies are entitled to substantive damages and interest after finding that the Health Service Executive breached their contracts by cutting medicine reimbursement rates without the required ministerial approval or direction following consultation with the Pharmaceutical Contractors’ Committee.
In a damages judgment delivered on 19 December 2008, Ms Justice Finlay Geoghegan held that the damages should cover the difference between the former and reduced rates for eligible medicines and other items supplied between September 2006 and 30 September 2008. The court did not calculate the final amount. The parties had agreed that the judge would decide entitlement and the basis for damages without hearing evidence on detailed quantification, which they anticipated might be agreed later.
The ruling followed a September 2008 judgment that had declared the rate cuts in September 2006 and September 2007 to be breaches of contract. The relevant agreements required payment at rates approved or directed by the Minister for Health and Children after consultation with the Pharmaceutical Contractors’ Committee. The judge found no evidence that the required consultation had taken place or that the Minister had approved or directed a new rate by the time covered by the claims.
The HSE argued that the breach was procedural and that, had the required consultation occurred, the Minister would probably have approved the cuts. Alternatively, it said damages should cover only the time needed to complete consultation. The judge rejected both arguments, finding no evidential basis to predict the Minister’s decision or limit the damages period. She said a later decision following consultation could have been relevant, but none had been shown.
The judgment also addressed two developments after the September ruling: the HSE had resumed payments at the former rate from 1 October 2008, and the Minister had told an Oireachtas health sub-committee on 4 December that a consultation process would begin shortly. The judge treated the proposed consultation as an announced future process, not evidence that a new rate had been approved or directed.
The six companies with claims under the relevant agreements were entitled to interest under section 22 of the Courts Act 1981, on the periods and basis they had claimed. The judgment specified the basis for damages and interest but did not set out a total award. The HSE had decided not to appeal the September ruling on the contract issues; a separate appeal concerning costs was not relevant to this damages decision.