In December 2011, the Court of Appeal for Ontario reversed the
Divisional Court decision in Shoppers Drug Mart Inc. v. Ontario (Health and
Long-Term Care) and ruled that certain provisions of
the Regulations made under the Ontario Drug Benefits Act
and the Drug Interchangeability and Dispensing Fee Act
(collectively, the Regulations) preventing the listing of
"private label" generic drug products on the Ontario Drug
Benefit Formulary were within the power of the Minister under the
parent statutes. Private label generic drug products are products
that pharmacy retailers, in this case the Shoppers Drug Mart and
Katz group of companies (the Pharmacies), market under
their own trade names.
The Divisional Court had previously declared the prohibition on
listing private label generic drug products on the formulary to be
of no force and effect as, among other reasons, the provisions in
the Regulations prohibited rather than regulated private
label generic drug products and were extraneous to the purpose of
the Regulations. The Government of Ontario appealed this
In allowing the appeal, the Court of Appeal concluded that the
provisions of the Regulations were not prohibitive, but
merely imposed conditions on generic drugs. In this regard, the
Pharmacies were not precluded from engaging in the purchase and
sale of drugs in Ontario, as long as they did so in accordance with
the legislative and regulatory scheme. Specifically, even with the
limitations imposed on private label generic drug products, the
Pharmacies were still entitled to participate in many (but not all)
stages along the "fabricator / manufacturer / wholesaler /
pharmacy / patient continuum of the Ontario drug supply
The Court of Appeal went on to state that a core purpose of the
parent statutes is to achieve low prices for generic drugs and that
it is open to the Ontario Government to craft a legislative scheme
that attains this goal by directly regulating drug prices (e.g.,
banning rebates) and indirectly regulating the compensation model
for some participants, such as pharmacies (e.g., prohibiting the
listing of private label generic drug products). While the Court of
Appeal conceded that the actual effect of private labels on the
market is hard to predict, it nonetheless concluded that it would
be reasonable to find that the existence of private label generics
could reduce competition in ways that would adversely affect
long-term generic drug prices.
Notwithstanding the impact that this decision may have on
pharmacy retailers, it is notable that the Court of Appeal partly
framed its decision by recognizing that the parent statutes
constitute "'a specialized legislative scheme' in a
highly important and complex domain of public policy, namely,
health and economics." This complexity, coupled with the
"several billion dollars of public funds" required to
deliver drug products in Ontario, led the Court of Appeal to
conclude that courts, in general, must be careful in evaluating
government decisions in the area of pharmacy sales and
reimbursements for generic prescription drugs in Ontario.
In early February 2012, the Pharmacies filed applications for
leave to appeal to the Supreme Court of Canada. These applications
are currently pending.
Effective September 1, 2016, the Disposition of Surplus Real Property Regulation to the Ontario Education Act was amended with the intention to reduce barriers to the formation of health and community hubs in Ontario.
Health Canada is proposing to change the way that it regulates non-prescription drugs, natural health products and cosmetics in Canada, which will now be referred to collectively as "self-care products."
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