This article was last updated on April 16, 2022
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The Supreme Court of Canada has upheld the ban imposed by Ontario government on drug-store chains, which disallows them from offering their own house-brand generic drugs, asserting that the ban is a legitimate attempt to lower drug prices. In the 7-0 majority ruling, Justice Rosalie Abella wrote that “if pharmacies were permitted to create their own affiliated manufacturers whom they controlled, they would be directly involved in setting the [drug] Formulary prices and have strong incentives to keep those prices high.”
Justice Abella alleged that the ban can also be justified as part of Ontario’s strategy of transparent drug pricing “by ensuring that pharmacies make money exclusively from providing professional health care services, instead of sharing in the revenues of drug manufacturers by setting up their own private label subsidiaries.” From the federal government’s perspective, the provinces are attempting to keep prices down for consumers and the government itself, as they spend an estimated $4-billion a year on pharmaceuticals, especially at a time of massive government deficit.
The parties that challenged the ban in Supreme Court, Shoppers Drug Mart and Katz Group, owner of Pharma Plus and Rexall, alleged that the case is about the rights of businesses to be free from undue government interference. In a court filing, Shoppers stated that “this is a classic case about the limits of executive power.” The drug chains informed the court that federal government’s ban on house-brand generic drugs was not in line with provincial drug laws, adding that they said there is no evidence that the house brands lead to higher prices.
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