Global Pharmacy Canada (“GPC”) is an online prescription drug retailer that sells drugs sourced in India to customers in the United States.
GPC is a Belize company, but has a contractual agreement with an Ontario corporation located in Mississauga, RX Processing Services Inc. (“RXP Ontario”), which takes customer orders, processes payments for drugs, and ensures that the orders are filled in India and shipped to customers.The drugs never enter Canada. The Ontario College of Pharmacists (“the College”) is entrusted with regulating and policing the retail sale of prescription drugs in Ontario.
The College applied for and obtained an injunction preventing GPC from selling prescription drugs from any location in Ontario and to stop using the terms “pharmacy”, “pharmacist”, “drug”, or “drugs” in relation to their business.
The Ontario Court of Appeal recently heard GPC’s appeal of the injunction order.
The two issues on appeal were whether GPC was selling prescription drugs, by retail, in Ontario, and whether GPC was subject to the College’s jurisdiction. The Court dismissed the appeal, upholding the application judge’s findings that GPC was selling drugs in Ontario, and that GPC was subject to the College’s jurisdiction. See Ontario College of Pharmacists v. 1724665 Ontario Inc. (Global Pharmacy Canada).
The Canadian statutory framework for pharmaceutical drug sales
The Court stated that three Ontario statutes regulate pharmacists, pharmacies, and the retail sale of prescription drugs in Ontario: the Pharmacy Act, the Drug and Pharmacies Regulation Act, and the Regulated Health Professions Act.
This framework requires that all retail pharmacies be accredited and owned by registered pharmacists. The College polices these requirements in a manner that best serves and protects the public interest.
In doing so, the College alleged that GPC was selling drugs without being an authorized health professional, was operating a pharmacy without accreditation, and was selling prescription drugs without a valid prescription, among others.
The sale of prescription drugs in Ontario
GPC argued that it was not selling drugs in Ontario, as all significant aspects of its business involved activities outside of Ontario.
The Court of Appeal rejected this argument and upheld the application judge’s finding that GPC was selling drugs in Ontario.
Rather than adopt a strict commercial definition of “sale”, the Court applied a purposive approach to determine the issue.
Given the College’s duty to serve and protect the public interest, the Court stated that it was the “substance, and not the form, which is relevant when determining whether the sale of prescription drugs takes place in Ontario.”
Because all GPC documentation contained the Mississauga address, and RXP conducted critical aspects of the sale transaction, the Court found it was clear that the substance of the sale transaction took place through RXP in Ontario.
The Ontario College of Pharmacist’s jurisdiction
GPC also argued that there were “few and relatively insignificant points of contact” between GPC and Ontario, and as such, it was not subject to the College’s jurisdiction.
The Court of Appeal rejected this argument and upheld the application judge’s finding that the College properly exercised its jurisdiction based on the sufficient connection between Ontario and GPC.
The connection was based on the factual findings that the organizational distinctions between RXP and GPC were blurred. In fact, the Court found that RXP served as GPC’s agent, or its “sales force”, in matters relating to GPC’s business.
The Court of Appeal also rejected GPC’s submission that the College was “overreaching” by assuming jurisdiction over GPC.
The Court found the College was fulfilling its legislated duty “to serve and protect the public interest”, and that:
[t]he College’s reach is not defined as, or limited to, the Ontario public.” Finally, the Court noted “[i]n the domain of pharmaceutical drugs, reputation is based on regulation. If a company trades on Ontario’s reputation for quality and strong regulatory standards, and sites [sic] a critical part of the sale process in Ontario, it will be subject to Ontario’s regulation.
Ontario College of Pharmacists v. 1724665 Ontario Inc., 2013 ONCA 381
This update was prepared by Adrienne M. Blanchard ( +1 514 847 4750)
and Jill Daley (+1 416 216 1930) of Norton Rose Fulbright Canada’s Intellectual property group.