Canada: Ontario Court Of Appeal Upholds Injunction Preventing Online Prescription Drug Retailer Selling Drugs In The United States From Operating Call And Processing Facilities In Ontario

Global Pharmacy Canada ("GPC-Belize") sells drugs to customers in the United States — the drugs are sourced in India and never enter Canada. Advertising is done online and through promotional materials distributed in the United States. Although GPC-Belize is a Belize company, it has a contractual agreement with an Ontario corporation, RX Processing Services Inc. ("RXP"), which takes customer orders, processes payments for drugs, and ensures that the orders are filled in India and shipped to customers, all out of its call and processing facilities in Mississauga, Ontario.

The Ontario College of Pharmacists (the "College") is entrusted with policing violations of Ontario legislation regulating the retail sale of prescription drugs in Ontario.  

The College sought and obtained an injunction preventing, inter alia, GPC-Belize and RXP from selling by retail, prescription drugs from any location in Ontario and to cease using the designated terms "pharmacy," "drug" or "drugs" in relation to their business.

The Ontario Court of Appeal described the statutory framework as follows:

[12]    Three Ontario statutes, taken together, closely regulate pharmacists, pharmacies, and the retail sale of prescription drugs in Ontario: the Pharmacy Act, 1991, S.O. 1991, c. 36 ("PA"); the Drug and Pharmacies Regulation Act, R.S.O. 1990, c. H.4 (the "DPRA"); and the Regulated Health Professions Act, 1991, S.O. 1991, c. 18 ("RHPA").  The Health Professions Procedural Code (the "Code"), which is Schedule 2 to the RHPA and is also incorporated into the PA, and the regulations under these statutes are also part of the statutory scheme.  

[13]    The sale of prescription drugs in Ontario is highly regulated.  For example, all pharmacies – meaning all premises from which drugs are sold by retail – must be accredited: see ss. 1(1) and 139, DPRA.  Only a registered pharmacist can own or operate a pharmacy: see ss. 142 and 144, DPRA.  Further, drugs can only be sold by certain qualified individuals under specific conditions: see ss. 27(1) and 27(2)(8), RHPA; s. 149, DPRA.

[14]    The College is tasked with the regulation of drugs and pharmacies in accordance with the DPRA: see s. 6, PA.  It is also responsible for regulating the practice of the pharmacy profession and governing its members in accordance with the RHPA, the PA, the Code, and any regulations passed thereunder: see s. 3(1), the Code. This includes the establishment, development and maintenance of standards of practice, professional ethics, and qualifications required of those operating pharmacies and acting as pharmacists within the province: see s. 3(1), the Code; s. 6, PA.  In carrying out its legislative objects, the College is required to serve and protect the public interest: see s. 3(2), the Code. 

There were two issues on appeal: (1) did the sales of prescription drugs take place in Ontario; and (2) did the College have jurisdiction over the parties?

The Ontario Court of Appeal upheld the Applications Judge's determination that the sale of prescription drugs takes place in Ontario.

The Court of Appeal further found that the College properly exercised its jurisdiction over the sales based on the sufficiency of the connection between Ontario and the parties. The connection was based on the factual findings that GPC-Belize and RXP do not operate separately and that RXP acts as GPC-Belize's agent. The Court of Appeal noted that "[t]he College is not overreaching – it is fulfilling its legislated duty to serve and protect the public interest" with regard to the sales of prescription drugs in Ontario pursuant to section 3(2) of the Health Professionals Procedural Code, which is a Schedule to the Regulated Health Professionals Act. The Court of Appeal further noted that "[if] a company trades on Ontario's reputation for quality and strong regulatory standards, and sites [sic] a critical part of the sales process in Ontario, it is subject to Ontario's regulation."

Ontario College of Pharmacists v 1724665 Ontario Inc (Global Pharmacy Canada), June 10, 2013.
Ontario Superior Court Decision – 2012 ONSC 4295.
Ontario Court of Appeal Decision – 2013 ONCA 381.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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