Supreme Court to hear appeal of Ontario generic drug rules

A legal fight that pits major pharmacy chains against the Ontario government’s rules on private-label generic drugs is going to the Supreme Court of Canada.

The justices said Thursday they will hear a pair of appeals brought by Shoppers Drug Mart and another major pharmacy group. As usual, they gave no reasons for agreeing to hear the issue.

The companies won a lower court case last year that threw out government rules barring pharmacies from substituting their own generic versions of name-brand drugs.

But the Ontario Court of Appeal overturned that and restored the regulations.

The court battles reflect moves by the deficit-strapped Ontario government to cut health-care costs as it struggles to balance its books over the next few years. A $16-billion deficit has forced the province to review everything from soaring drug plan costs to public sector wages and financial transfers to restrain spending growth.

The initial court ruling in February 2011 said the province went too far with a regulation that barred the sale of private-label generic drugs on the same basis as other generics.

The rule had prevented pharmacies such as Shoppers and Katz Group — owner of the Rexall chain and another challenger of the ruling — from selling their own lower-priced versions in place of popular name-brand drugs.

However, the appeal judges ruled last December that the lower court’s analysis was too narrow. They said the regulations imposed by the government were not too harsh.

“Neither Shoppers nor Katz is precluded from engaging in the purchase or sale of drugs in Ontario as long as they do so in accordance with the legislative and regulatory scheme,” said the ruling.

“This is regulation; it is not a prohibition.”

The court also said it agreed that the province could reasonably conclude private label generics would reduce competitiveness and drive up prices.