In a 7-0 decision released November 22, 2013, the Supreme Court
found that the DIDFA & ODBA regulations are valid and that
companies controlled by pharmacies who sell "private label
products" cannot have their products listed as interchangeable
on the Ontario Formulary.
Background: To control drug pricing, the
Ontario government introduced the Drug Interchangeability and
Dispensing Fee Act (DIDFA) (requiring pharmacists to dispense
interchangeable generic) and the Ontario Drug Benefit Act
(ODBA) (reimbursing listed Formulary drug) in 1985. Prior to
2006, the price which manufacturers could apply to list generic
drugs in the Formulary was capped at effectively 63% of the
brand-name drug price. To be competitive, manufacturers
would give pharmacies a substantial rebate to entice them to buy
their products. The price that customers paid was thereby
artificially increased. In 2006, the Ontario government
amended the ODBA, the DIDFA and the Regulations under them and
banned such rebates.
In 2010, the Ontario government amended the Regulations to
the DIDFA and the ODBA and, inter alia, eliminated
professional allowances and created a category designated as
"private label products". Manufacturers of
"private label products" do not directly fabricate the
products and do not have an arm's length relationship with a
company that owns, operates or franchises pharmacies. Under
the 2010 Regulations "private label products" cannot be
listed in the Formulary or designated as interchangeable.
This would essentially ban the sale of private label products in
the private and public markets in Ontario.
Sanis Health Inc., a subsidiary of Shoppers Drug Mart and
incorporated for the purpose of buying generic drugs in order to
sell them under the Sanis label to Shoppers Drug Mart stores,
applied to have several drugs listed on the Formulary. This request
was denied due to the restriction against private labels in the
2010 Regulations. Sanis brought an application for a declaration
that the provisions were ultra vires the regulations as they were
not consistent with the objectives of the 2010 Regulations. The
Ontario Court of Appeal and Supreme Court of Canada refused the
application holding the 2010 Regulations valid and proper.
The Supreme Court of Canada held that the 2010 Regulations were
intra vires because they are consistent with the statutory purposes
of transparent drug pricing and reducing drug costs. If
pharmacies were permitted to create their own affiliated
manufacturers whom they controlled, they would be directly involved
in setting the Formulary prices and have strong incentives to keep
these prices high.
The question of the vires of legislation is dependent upon
whether the legislation is consistent with the object of the
enabling statute. The intent of the two statutes and their
regulations was to control prescription drug costs in Ontario
without compromising safety. The purpose of the 2010 Regulation
amendment was consistent with these goals of reducing generic drug
prices and was but one step in the series of incremental amendments
in this direction. Further, the legistlation did not go beyond its
mandate, which was limited to private labels products which are
held by companies related to pharmacies. If pharmacies were
permitted to control their own manufacturers they would have strong
incentives to keep prices high. The 2010 Regulations in respect of
private label products prevent another possible way to circumvent
the ban on rebates that had kept generic drug prices inflated.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.
From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.
Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.
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.
This appeal relates to two generic drug submissions for two different products: exemestane and infliximab. Both submissions cross-referenced the submission of another generic company that had received a Notice of Compliance.
Two recent decisions from the Supreme Court of Canada directly affect Quebec's farm businesses by confirming La Financière Agricole du Québec's discretion in the administration of the farm income stabilization program...
On October 6, 2016, the Ontario Legislature reintroduced the Patients First Act, 2016 as Bill 41. Bill 41 is very similar to its predecessor, Bill 210, which was introduced in June 2016, but makes some important changes to the previous bill.
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).