Ontario to appeal ruling on private-label drugs

Fri Feb 18, 2011 4:59pm EST
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TORONTO (Reuters) - The government of Ontario plans to appeal a recent Canadian court ruling that gave a thumbs-up to plans by pharmacy chains to make and sell their own private-label generic drugs.

The move comes months after the government acted to bring down the prices of generic drugs in the province, hurting companies such as Shoppers Drug Mart and privately held Katz Group, owner of the Rexall and PharmaPlus chains.

Making their own private-label drugs could help drugstore chains save what they might otherwise have to pay drugmakers and help offset some of the weakness they're seeing in their profits.

The province did not detail on Friday why it was challenging the court ruling but appeared to be concerned that savings from lower generic drug prices would not be passed along to consumers.

"Private labeling does not benefit Ontarians and that's why, today, I am continuing to stand on the side of Ontario taxpayers and patients," Ontario Health Minister Deb Matthews said in an emailed statement on Friday.

"I know it's the right thing to do," she added.

Last April, Ontario moved to trim its annual C$800 million tab for drugs covered under its benefit program and reduce prices consumers pay for generic drugs. It also banned pharmacies from selling generic drugs under their own private labels. That portion of the plan was struck down by the Ontario Superior Court of Justice on February 4.

Shoppers and Katz have the most at stake. The other major Canadian drugstore player, Jean Coutu Group Inc, entered the generic drugmaking business three years ago.

"While we are disappointed with the government's decision. We will continue to pursue our legal options," Shoppers spokeswoman Lisa Gibson said.   Continued...

<p>A pedestrian walks past a Shoppers Drug Mart in Ottawa November 10, 2010. REUTERS/Chris Wattie</p>