Back Home 5 News 5 High Court finds five Countdown pharmacies are illegal

High Court finds five Countdown pharmacies are illegal

23 Jun 2023

| Author: Fiona Wu

Judicial review – public health and disability – Judicial Review Procedure Act 2016 – reviewability of decisions by District Health Boards – obligations under Treaty of Waitangi – Medicines Act 1981

New Zealand Independent Community Pharmacy Group v Te Whatu Ora – Health New Zealand [2023] NZHC 1486 per Gwyn J.

The New Zealand Independent Community Pharmacy Group (ICPG), a group of community pharmacists, sought judicial review of a decision by the Ministry of Health to issue licences under the Medicines Act 1981 to a pharmacist-shareholding company, RX8, allowing it operate new pharmacies in Countdown stores in Gisborne and Wainuiomata.

The ICPG also challenged decisions by the Hutt Valley District Health Board (HVDHB) and Hauora Tairāwhiti (now Te Whatu Ora) to grant “integrated community pharmacy services agreements” (ICPSAs) to RX8. Key to the ICPG’s challenge was that Countdown pharmacies discounted the co-payment on funded prescription medicines.

The ICPSA is a nationalised services agreement between a DHB and a pharmacy that sets out service and quality requirements of the pharmacy, and provides the basis for funding. DHBs decide themselves whether to enter into an ICPSA with a particular provider.

ICPG pleaded four grounds of review in relation to the HVDHB and Hauora Tairāwhiti’s decisions to enter into ICPSAs with RX8.

The first three related to the DHBs’ assessments of RX8’s discount proposal as “pro-equity”, in helping to support efforts to eliminate health inequalities. The DHBs erred by failing to identify the discount as a commercial loss-leading strategy, and proceeded as if Countdown was benevolently removing fees in the public interest.

This argument also coloured the fourth ground of review, which related to the DHBs’ obligations under the Treaty of Waitangi.

The High Court held the case demanded a narrow scope of review as the DHBs’ decisions were commercial and not reviewable except on narrow grounds of fraud, corruption and bad faith – which were not alleged. As statutory entities, DHBs are legally distinct from the Crown and exercise considerable independence in their decision-making.

However, even if reviewable, the three grounds of review would fail on the merits. The criteria applied by the DHBs, including the effects on equity, were outcome-focussed. Even if the removal of co-payments was a commercial marketing strategy, the outcome was nevertheless pro-equity and consistent with the Treaty of Waitangi, by reducing the cost barrier and increasing access to everyone.

The fourth ground of review was dismissed. Gwyn J was satisfied that the DHBs’ decisions to enter into ICPSAs followed their own policies and processes, which included receiving and reflecting Māori-specific advice.

The fifth ground of review, relating to the allegation that  Hauora Tairāwhiti failed to monitor the delivery and performance of the services provided by the pharmacies, was dismissed. The court rejected the ICPG’s submission that the monitoring duty specific to service agreements, under s 25(3) of the New Zealand Public Health and Disability Act 2000, required “systematic, continuous, regular checking” of promised services. Gwyn J said the Act did not impose any procedural or substantive requirements on DHBs in relation to monitoring.

The sixth ground of review was brought against the ministry on the basis its decision to grant pharmacy licences was unlawful. This ground was upheld: s 55D(2)(a) of the Medicines Act states a company granted a pharmacy licence must be majority-owned by pharmacists and the pharmacist shareholders must have positive control over the company, or the ability to make the company do as they wish. This requirement was not met.

Held:  Decisions by HVDHB and Hauora Tairawhiti to enter into ICPSAs are not reviewable and, in the alternative, grounds of review would be dismissed on the merits. The ground of review against the Ministry of Health is upheld.

NZIPG v Te Whatu Ora 2023-NZHC-1486

Subscribe to


The weekly online publication is full of journalistic articles written for those in the legal profession. With interviews, thought pieces, case notes and analysis of current legal events, LawNews is a key source of news and insights for anyone working within or alongside the legal field.

Sign in or
become a Member
to join the discussion.


Submit a Comment

Your email address will not be published. Required fields are marked *

Latest Articles