Canada: Supreme Court Of Canada To Consider Legality Of Ontario Regulations Banning Listing Of "Private Label" Generic Drugs

Last Updated: September 26 2012
Article by David Rosenbaum

The Supreme Court of Canada has granted leave to Katz Group Canada Inc. ("Katz Group") and Shoppers Drug Mart Inc. ("Shoppers") and related entities to appeal a decision of the Court of Appeal for Ontario, which upheld as lawful the banning by the Ontario government by regulation of the designation in the public formulary of so-called "private label" generic drugs.  The appeal, which is to be heard in May 2013, raises important issues concerning the respective roles of the legislative, executive and judicial branches of government in a major area of health and finance policy.

Subsidiaries of Katz Group and Shoppers applied to the Executive Officer, an Ontario government official, for listing, on the public drug formulary, of certain generic prescription drugs of which they were the "manufacturer".  (A "manufacturer" of  drugs does not necessarily make the drugs but is responsible under the applicable federal legislation for all licensing, reporting and recall obligations.)  The companies in question had outsourced the fabrication of the drugs to third parties, and intended to sell the drugs under their own labels.  The Executive Officer declined to list the drugs on the formulary because the Ontario government had announced that it intended to ban the listing of private label generic drugs.  That ban was subsequently effected by way of regulations, effective July 1, 2010, under the Ontario Drug Benefit Act (the "ODBA") and the Drug Interchangeability and Dispensing Fee Act  (the "DIDFA").

Both the Katz Group and Shoppers applied for judicial review of the regulations.  Initially, a three-judge panel of the Divisional Court unanimously found the private label ban to be ultra vires both the ODBA and the DIDFA as (i) falling outside the authority to enact regulations under those statutes because they purported to "prohibit" rather than "regulate", (ii) falling outside the purpose of the statutes and (iii) interfering with property and commercial rights without express authority under the statutes.

The Province of Ontario sought and obtained leave to appeal to the Ontario Court of Appeal from the decision of the Divisional Court.  On December 23, 2011, the Court of Appeal allowed the appeal in a 2-1 decision.  The majority held that a private label ban was authorized under the ODBA and the DIDFA, was consistent with the purposes of both statutes, and interfered with property and commercial rights only to the extent "necessarily implied" by the statutes.  The majority also held, in relation to an issue that the Divisional Court did not deal with, that the private label ban did not discriminate in the administrative law sense.  Justice Epstein wrote a strong dissent in which she opined that the ban was neither consistent with, nor rationally connected to the purpose of the statutes; was prohibitive, not regulatory; interfered with property and commercial rights without legislative authority; and discriminated without authority.

In their materials supporting their successful applications for leave to appeal to the Supreme Court of Canada, both Katz Group and Shoppers emphasized the important legal issues raised by the decision of the Court of Appeal.  These issues are obviously of interest to multiple players in the drug market across Canada, but are also of central importance in articulating the respective roles of the legislature and the executive in enacting regulations.

Among the "important questions of administrative law implicating the scope of executive power and the rule of law" raised by Shoppers and Katz Group in their leave applications were:

  1. How should a court determine whether a regulation falls within the object and purpose of a parent statute?  Does there have to be evidence before the court as to what the object and purpose are?
  2. How should a court distinguish between a regulatory prohibition and a condition?  (The enabling provisions of the ODBA and the DIDFA authorize regulations "prescribing conditions to be met" for listing drug products.  Shoppers and Katz Group argued that a regulation that bans the listing of private label drug products does not prescribe conditions to be met.)
  3. How clear must legislation be to authorize an interference with property and commercial rights by regulation?  Is it sufficient that the authority be "necessarily implied", as found by the Court of Appeal?
  4. What is the test for administrative law discrimination, and does the principle apply to regulations?
  5. Does a court owe deference or restraint to the government in reviewing whether a regulation is intra vires a parent statute?

Given these important legal issues, as well as the huge economic impact of the regulations on the generic drug industry, this case will undoubtedly be closely watched across the country.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions