UPDATE 1-Canada's top court upholds Ontario ban on private-label drugs

Fri Nov 22, 2013 10:45am EST
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* Decision is blow to pharmacies like Shoppers Drug Mart

* Ban had been brought in to try to lower prices

* Ontario ban could be imitated by other provinces

By Randall Palmer

OTTAWA, Nov 22 (Reuters) - The Supreme Court of Canada dealt a blow to pharmacy chains on Friday when it upheld the province of Ontario's ban on drugstores' sales of their own private-label generic prescription drugs.

Pharmacy companies saw the private-label drugs as a way to reduce the impact of Ontario regulations designed to lower the cost of generic drugs. A lower court ruled that the store brand drugs circumvent bans on professional allowances and rebates.

The Ontario rules have weighed on the earnings of the drugstore chains, including Shoppers Drug Mart Corp, a principal appellant in this case. Shoppers' share price edged lower after Friday's ruling, down 7 Canadian cents at C$59.04.

In the 7-0 decision, Justice Rosalie Abella noted that Canada spends more on prescription drugs per capita than almost any other industrialized country and she highlighted "Ontario's totemic struggle to control generic drug prices."

She pointed out the proportion of government health care expenses that went for drugs had risen to 15.9 percent in 2010 from 9.5 percent in 1985.   Continued...