Minister of Health v New Clicks

The Constitutional Court held that the Promotion of Administrative Justice Act 3 of 2000 (PAJA) applies to the making of subordinate legislation by executive organs of state. The Court declared certain pricing regulations for medicines invalid on procedural grounds for failing to comply with PAJA's requirements for rational decision-making and proper consultation. This landmark judgment clarified the scope of administrative action under PAJA and established important principles for judicial review of executive rule-making.

The Minister of Health promulgated regulations under the Medicines and Related Substances Control Act fixing a single exit price and dispensing fee for medicines. New Clicks and the Pharmaceutical Society challenged the regulations on various grounds, including that the Minister failed to conduct adequate consultation and that the pricing methodology was irrational. The High Court declared the regulations invalid and the matter reached the Constitutional Court on appeal and cross-appeal.

Whether PAJA applies to the making of subordinate legislation and whether the impugned pricing regulations were validly made.

The Constitutional Court held that PAJA does apply to subordinate legislation made by executive organs of state. The Court declared certain provisions of the pricing regulations invalid for failure to comply with PAJA's procedural fairness requirements, including inadequate consultation with affected parties and irrational decision-making, but suspended the order of invalidity to allow the Minister to remedy the defects.

Executive rule-making constitutes administrative action subject to PAJA review; subordinate legislation must comply with procedural fairness requirements including meaningful consultation and rational decision-making processes.

The Court reasoned that the definition of administrative action in PAJA is broad enough to encompass the making of subordinate legislation by members of the executive, distinguishing this from legislation by Parliament. The Court emphasized that procedural fairness, including proper consultation with affected stakeholders, is essential to lawful administrative action. The pricing methodology adopted by the Minister was found to lack a rational basis because insufficient information was gathered and considered before making decisions that significantly affected the pharmaceutical industry.

The Court discussed the distinction between the legislative and executive functions of government, noting that while Parliament's law-making is not subject to PAJA, subordinate legislation by executive officials falls within the Act's ambit as it involves implementation rather than primary policy formulation.

New Clicks is foundational for administrative law students because it authoritatively resolved the debate over whether PAJA applies to subordinate legislation, established key principles for procedural fairness in executive rule-making, and demonstrated how courts review the rationality of administrative decisions affecting economic regulation. It remains the leading case on the scope of administrative action under PAJA.

Minister of Health v New Clicks 2006 (2) SA 311 (CC) [2005] ZACC 14