Summary:

Case:

Katz Group Canada Inc. v. Minister of Health and Long Term Care, Court File No. 334/10; Shoppers Drug Mart Inc v. Minister of Health and Long Term Care, Court File No. 332/10.  

Nature of Case:

Judicial Review

Status of Decision

Under Reserve  

In October 2010, the Ontario Divisional Court heard two parallel applications for judicial review challenging the validity of recent regulations made under the Ontario Drug Benefit Act (the "OBDA") and the Drug Interchangeability and Dispensing Fee Act (the "DIDFA") (collectively, the "Regulations"). The Regulations stipulate that "private label product" generic prescription drugs cannot be designated as interchangeable or reimbursed under the province's Formulary legislation.

The term "private label product" is defined in the Regulations as a drug product sold under the name of a company that: i) is not related to the party that actually fabricates the drug; and ii) is related to a pharmacy through either a corporate or marketing arrangement.

The applicants argued in their written submissions that the impugned Regulations create an effective ban on private label drugs and are ultra vires their respective enabling statutes (ODBA and DIDFA) for the following reasons:

  1. they prohibit the interchangeability and reimbursement of private label drugs, rather than merely regulating or setting conditions;
  2. they are extraneous to the object and purpose of the ODBA and the DIDFA, namely reducing the cost of drugs to consumers, given that private label drugs will be reimbursed at the same price as all other generic products;
  3. they are an unauthorized interference with property rights and the right to trade; and
  4. they discriminate between classes of persons and are unauthorized in the absence of express authority to discriminate.

In response, the Government argued that:

  1. ODBA and DIDFA confer broad authority to regulate;
  2. the private label ban supports the object and purpose of the legislative scheme by preventing pharmacy operators from buying drugs at a price lower than the reimbursement price;
  3. the applicants are not precluded from participating in the drug supply chain or, in the alternative, any interference is necessarily implied in the authority to set conditions under the ODBA and the DIDFA respectively; and
  4. The Regulations do not distinguish between persons but rather between private label products and non private label products. The Regulations do not prevent any particular party from engaging in the purchase and sale of drug products.

LINK TO DECISIONS:

These decisions are under reserve.