Supreme Court Upholds Ontario Ban on Private-Label Drugs

Canada’s Supreme Court today upheld a provincial court ruling allowing the Ontario government to prohibit the sale of private-label generic drugs.

Katz Group Canada Inc., based in Edmonton, Alberta and Shoppers (SC) Drug Mart Corp. had appealed the Ontario Court of Appeal’s December 2011 ruling that allowed the government to prevent pharmacies from controlling manufacturers that sell generic drugs without actually making them.

Shoppers, Canada’s largest pharmaceutical chain, said in a statement that while it respects the decision, “it is disappointed with the outcome.”

Shares of Toronto-based Shoppers fell 0.3 percent, to C$58.92 at 4:01 p.m. trading in Toronto. Katz Group, owner of the Rexall drug-store chain, is closely held.

The share of generic retail prescriptions in Canada was 63.2 percent last year, representing about 353 million prescriptions, according to the Canadian Generic Pharmaceutical Association industry group. Generic drug sales accounted for 24.4 percent, or C$5.39 billion ($5.11 billion), of the Canadian prescription drug market, the industry group said.

Shoppers appealed the 2010 regulations to the Supreme Court after the appeals court in Canada’s most populous province restored the ban, reversing a lower court decision.

The Ontario Divisional Court in February 2011 had found the prohibition interfered with the property rights of Shoppers Drug Mart and Katz Group

The cases are Katz Group Canada Inc., Pharma Plus Drug Marts Ltd. and Pharmx Rexall Drug Stores Ltd. v. Ontario (34647) and Shoppers Drug Mart Inc., Shoppers Drug Mart (London) Ltd. and Sanis Health Inc. v. Ontario (34649).

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net; Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net

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