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No Loyalty Program for Drugs: Court Confirms Prohibition on Pharmacy Inducements
Professional Regulatory Alert

The Alberta Court of Appeal recently confirmed that professional regulators have significant discretion to implement rules and policies intended to protect the public interest. Specifically, rules and policies may include the regulation of activities which have a commercial aspect, like inducements associated with the dispensing and sale of drugs and the provision of professional services.

In Alberta College of Pharmacists v Sobeys West Inc., 2017 ABCA 306, the Court of Appeal overturned a decision of the Alberta Court of Queen’s Bench which held that amendments to the College of Pharmacists’ Codes of Ethics and Standards of Practice prohibiting inducements to customers for the purchase of drugs and other products and services went beyond the College’s authority under the Health Professions Act (a decision we previously reported on).

In overturning the decision, the Court of Appeal confirmed that a court will review rules and policies passed by a regulator, like the prohibition on inducements, on a reasonableness standard. This means that in reviewing a rule or policy passed by a regulator, a court will only examine:

  1. Whether the regulator had jurisdiction to pass the policy? If the substance of the rule/policy conforms to the rationale of the statutory regime set up by the legislature and is not “irrelevant”, “extraneous” or “completely unrelated” to the statutory purpose, it will be within the regulator’s jurisdiction.
  2. Whether the policy is reasonable? A rule/policy will only be set aside if it is one that no reasonable body, informed by the relevant factors, could have enacted.

In reviewing the College of Pharmacists’ prohibition on inducements, the Court of Appeal found:

  1. The College of Pharmacists had jurisdiction to pass the policy. Regulation consistent with the “public interest”, one of the statutory purposes of the Health Professions Act, extends to the maintenance of high ethical standards and professionalism on the part of the profession. This includes the regulation of activities that have a commercial aspect like inducements associated with the dispensing and sale of drugs and the provision of professional services. Accordingly, the policy conformed to the rationale of the statutory regime set up by the legislature.
  2. The policy was reasonable. The Court of Appeal agreed with the comments of the British Columbia Court of Appeal in Sobeys West Inc v College of Pharmacists of British Columbia (which we also previously reported on) and held that, given the expertise of Council members and their concerns, the policy represented a reasonable response. The College of Pharmacists was not required to wait until there was empirical evidence demonstrating the harm of customer incentive programs and was entitled to proceed with a reasonable measure to address their concerns.

As a result of the Court of Appeal’s decision, pharmacists or pharmacy technicians are now prohibited from offering inducements to customers to purchase drugs and other products and services from a particular pharmacist or at a particular time.

In the context of reviewing this type of policy, the British Columbia and Alberta Courts of Appeal have both recognized that deference is owed to regulators when they are enacting rules or policies to protect the public, even in the absence of empirical evidence demonstrating that harm exists. Regulators have been recognized as having particular expertise in governing the profession and protecting the public.

This decision is one of many recent examples of the courts respecting the decisions made by professional regulators. While regulators do not have carte blanche, policies or rules enacted by a regulator in the public interest will be very difficult to set aside.

Field Law will continue to monitor the proceedings and will report on any future decision from the Supreme Court of Canada if an appeal is sought.