In 2010, regulations were made pursuant to each of the Ontario
Drug Benefit Act (ODBA) and the Drug Interchangeability
and Dispensing Fee Act (DIDFA). The ODBA regulates the payment
by the Ontario government for prescription drugs for eligible
persons by listing reimbursable drugs on a Formulary. The DIDFA
relates to the designation of generic drugs as interchangeable for
brand name drugs. The impugned sections of the regulations, Section
12.0.2 of the ODBA Regulation and Section 9 of the DIDFA
Regulation, prevent private label generic drugs from being
designated as interchangeable under the DIDFA and listed on the
Formulary under the ODBA. The Court described a private label
generic drug as being essentially from a manufacturer that is not
arms length from the pharmacy selling the generic drug. The
Applicants challenged the validity of this prohibition.
The Court indicated that the standard of review is one of
correctness. The Court first considered the scope of the enabling
legislation, the ODBA and the DIDFA, to make regulations. Both Acts
allow regulations to be made that prescribe conditions to be met in
order for a product to be designated as interchangeable under the
DIDFA or to be designated as a listed drug product under the ODBA.
The Court found that the impugned sections sought to prohibit the
sale of private label generics, not prescribe the conditions that
could be met by private label generics. Specifically, the Court
found that the enabling legislation provides only a power to
regulate, not a power to prohibit, and therefore the impugned
sections are ultra vires. The Court also considered the
general power to make regulations contained in the ODBA, but found
this provision was not specific enough to support the
Furthermore, the Court found that the impugned sections were not
consistent with the purposes of the OBDA and the DIDFA, which the
Court found to be to control the cost of prescription drugs in
Ontario without compromising safety. Finally, the Court found that
the impugned sections interfere with property rights and commercial
freedom. The Court ordered that section 12.01 of Ontario Regulation
201-96 made under the ODBA and section 9 of Ontario Regulation 935
made under the DIDFA are declared ultra vires and of no
force and effect.
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