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Supreme Court of Canada agrees to hear Ontario private label drug appeal

On August 30, 2012, the Supreme Court of Canada granted leave to appeal in Katz Group Canada  Inc. v. Minister of Health and Long Term Care and in Shoppers Drug Mart Inc. v. Minister of Health and Long Term Care. The parallel cases involve the validity of regulations dealing with private label generic drugs in the province of Ontario. Private label drugs are generic drugs that the manufacturer does not fabricate itself where the manufacturer does not have an arm’s length relationship with the wholesaler or pharmacy to which the private label drug is supplied.

The listing and interchangeability of generic drugs on the provincial formulary in Ontario is regulated by two separate but interconnected legislative regimes, the Ontario Drug Benefit Act (ODBA) and the Drug Interchangeability and Dispensing Fee Act (DIDFA). A generic drug that is not listed on the formulary as interchangeable cannot be substituted at the pharmacy for the corresponding brand-name drug.

In 2010, the Lieutenant Governor-in-Council amended the ODBA and DIDFA Regulations to, among other things, prohibit private label drugs products from being listed and designated as interchangeable. Specifically, subsection 12.0.2(1) of the ODBA Regulations and subsection 9(1) of the DIDFA Regulations provide that private label products drug “shall not be designated a listed drug product”, and “shall not be designated as interchangeable”, respectively.

The pharmacy Applicants then challenged the private label provisions on the basis that the impugned Regulations were beyond the authority provided to of the Lieutenant Governor-in-Council. At first instance, the Ontario Superior Court of Justice agreed that the impugned regulatory provisions were prohibitory and were beyond the regulation making power provided by the ODBA and DIDFA.  On appeal, Justices MacPherson and Karakatsanis allowed the government’s appeal, holding that the impugned Regulations were not prohibitory, as the pharmacies were still entitled to participate in most, but not all, components of the Ontario drug supply chain. Justice Epstein, in dissent, held that the impugned Regulations were outside the government’s regulation making authority and further held that the impugned Regulations were discriminatory as they targeted a particular corporate structure.

The Supreme Court of Canada’s bulletin announcing the grants of leave to appeal and summaries of the cases may be found here. Consistent with Supreme Court practice, the Court did not provide reasons for granting leave to appeal.