@B,00020321,OR
@1@Z20020617
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Minister of Health et al. v. Apotex Inc.
[Indexed as: Ontario (Minister of Health) v. Apotex Inc.]
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60 O.R. (3d) 209
[2002] O.J. No. 2334
Docket No. C36334
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Court of Appeal for Ontario,
Goudge, Sharpe and Cronk JJ.A.
June 17, 2002
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Administrative law ‑‑ Judicial review ‑‑ Standard of review
‑‑ Standard of review of decision of Minister of Health
refusing to recommend [page210] that certain drug prices be
increased in Formulary under Ontario's publicly funded drug
plan was that of patent unreasonableness ‑‑ Minister's decision
not patently unreasonable.
Ontario's publicly funded drug plan, which is regulated by
the Ontario Drug Benefit Act, R.S.O. 1990, c. O.10 (the "ODBA")
and the Drug Interchangeability and Dispensing Fee Act, R.S.O.
1990, c. P.23 (the "DIDFA"), provides drug products to certain
classes of persons such as senior citizens at public expense.
The prices paid by the Minister of Health for each drug product
are fixed by regulation and are listed in the Formulary, which
is amended from time to time by regulation. The Minister
refused to recommend that the prices for three sizes of a drug
manufactured by A Inc. be increased to the higher prices
asserted by A Inc. to be correct. A Inc. brought an application
for judicial review of that decision. The Divisional Court held
that the Minister's refusal could be successfully challenged on
judicial review. The court considered that the Minister's
refusal constituted the exercise of a statutory power under s.
1 of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1.
They held that while the Minister's action could be reviewed
only against a standard of unlawfulness, the Minister acted
unlawfully by taking into account an irrelevant consideration,
namely the publication of listed prices for three products of a
generic drug manufacturer (which the court said created a
fiction irrelevant or extraneous to the correction sought by A
Inc.) and by wholly omitting to take into account a relevant
consideration, the fact that the generic drug manufacturer had
advised that it was in error and had none of the three new drug
products to market. The application was allowed. The Minister
appealed.
Held, the appeal should be allowed.
Per Goudge J.A.: The Divisional Court's finding that the
Minister's refusal to recommend was the exercise of a statutory
power was somewhat problematic, since there is no statutory
provision in either the ODBA or the DIDFA requiring the
Minister to make a recommendation about possible changes in the
drug benefit prices listed in the Formulary or explicitly
providing legislative directions for the making of any such
recommendation. However, it was desirable to proceed on the
assumption that the Minister's refusal was subject to judicial
review for several reasons. As a matter of reality, the ODBA
puts the Minister at the centre of decisions made about listed
drug prices under Ontario's statutory drug plan, and provides
some guidance to her in playing that role. Second, in the
particular circumstances of this case, while the change sought
by A Inc. would be effected by the Lieutenant Governor in
Council making a regulation on the advice of the Minister, the
Minister's refusal to recommend such a change is the effective
decision determining that there will be no such regulation
changing specific listed prices for a particular drug
manufacturer. Moreover, it is an effective decision about
individual rights rather than broad policy. Third, both parties
to the appeal had proceeded on the basis that the Minister's
refusal to recommend could be subjected to judicial review.
The standard of review of the Minister's decision was that of
patent unreasonableness. The fact that there was no privative
clause applicable to the Minister's action favoured a lower
level of curial deference. More importantly, the fact that the
administrative actor was the Minister with expertise in the
administration of this specialized legislative scheme suggested
the need for very significant deference. Third, while the
Minister's refusal related directly to the rights of a single
party, it involved a very broad discretion engaging legal
principles no more precise than the open‑textured notion of
what the Minister considered to be advisable in the public
interest. This too favoured greater curial deference. Finally,
the nature of the problem facing the Minister required an
appreciation of specific [page211] facts rather than an
interpretation of definitive legal rules. The highly
discretionary and fact‑based nature of the Minister's refusal
also pointed in the direction of greater deference.
The Minister's decision was not patently unreasonable. It was
not clearly irrational, and the Divisional Court erred in
finding that the refusal was the result of wholly omitting to
take into account a relevant consideration or taking into
account some wholly irrelevant or extraneous consideration.
Per Sharpe J.A. (concurring, Cronk J.A concurring): The
question of the extent to which the Minister's refusal to make
a recommendation that a duly enacted regulation be amended is a
statutory power of decision that is subject to judicial review
should be left to another day. Assuming, without deciding, that
judicial review was available, the most favourable standard of
review that could be expected in the circumstances would be
patent unreasonableness. A Inc. failed to establish that the
Minister's decision was patently unreasonable.
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Baker v. Canada (Minister of Citizenship and Immigration),
1999 699 (SCC), [1999] 2 S.C.R. 817, 174 D.L.R. (4th) 193, 243 N.R. 22;
Pushpanathan v. Canada (Minister of Citizenship and
Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 1222, [1998] 1 S.C.R. 982, 160
D.L.R. (4th) 193, 1998 778 (SCC), 226 N.R. 201, apld
Cases referred to
Apotex Inc. v. Ontario (Attorney‑General) (1984), 47 O.R.
(2d) 176, 1984 1849 (ON SC), 11 D.L.R. (4th) 97 (H.C.J.); Apotex Inc. v.
Ontario (Minister of Health) (1989), 1989 4123 (ON SC), 71 O.R. (2d) 525, 36
O.A.C. 355, 1989 4123 (ON SC), 65 D.L.R. (4th) 622 (H.C.J.); Canada (Attorney
General) v. Public Service Alliance of Canada, [1993] 1 S.C.R.
941, 1993 125 (SCC), 101 D.L.R. (4th) 673, 150 N.R. 161, 93 C.L.L.C. 14,022;
Mount Sinai Hospital Center v. Quebec (Minister of Health and
Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281, 200 D.L.R. (4th) 193,
271 N.R. 104, 2001 SCC 41; Padfield v. Minister of Agriculture,
Fisheries & Food, [1968] 1 All E.R. 694, [1968] A.C. 1016,
[1968] 2 W.L.R. 936, 112 Sol. Jo. 171 (H.L.); Suresh v.
Canada (Minister of Citizenship and Immigration), 2002 SCC 1,
2002 SCC 1, 208 D.L.R. (4th) 1, 281 N.R. 1, 90 C.R.R. (2d) 1
Statutes referred to
Ontario Drug Benefit Act, R.S.O. 1990, c. O.10, ss. 6(1), 18,
21, 22
Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c.
P.23
Judicial Review Procedure Act, R.S.O. 1990, c. J.1, s. 1
Rules and regulations referred to
O. Reg. 201/96 ("Ontario Drug Benefit Act")
R.R.O. 1990, Reg. 935 ("Drug Interchangeability and Dispensing
Fee Act")
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APPEAL from a decision of the Divisional Court allowing an
application for a judicial review of a decision of the Minister
of Health.
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J.P. Zarudny and J. Kendik, for appellants.
H.B. Radomski and J.M. Perrin, for respondent.
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[1] GOUDGE J.A.: ‑‑ This dispute arises from the
administration of the publicly funded drug plan in Ontario by
the appellant Minister of Health. That plan provides drug
products at public [page212] expense to certain classes of
persons such as senior citizens. The prices paid by the
Minister of Health for each drug product are fixed by
regulation and are listed in a public document called the
Formulary, which is both authorized and amended from time to
time by regulation.
[2] The dispute arises because, for three sizes of a drug
manufactured by the respondent Apotex Inc., the Minister has
refused to recommend that the listed prices in the Formulary be
increased to the higher prices asserted by Apotex to be
correct.
[3] The question is whether the Minister's refusal can be
successfully challenged on judicial review. By majority, the
Divisional Court answered that question in the affirmative. It
declared that the Minister acted unlawfully in refusing to
permit the listing at the higher prices and further declared
that Formulary prices for these drug products are the higher
prices asserted by the respondent.
[4] For the reasons that follow, I have come to the opposite
conclusion. Whether scrutinized for unlawfulness or patent
unreasonableness, I think that the Minister's refusal to
recommend raising the listed prices in the Formulary
successfully withstands judicial review. I would therefore
allow the appeal.
The Legislative Context
[5] Ontario's publicly funded drug benefit regime is
regulated by two pieces of legislation, the Ontario Drug
Benefit Act, R.S.O. 1990, c. O.10 (the "ODBA") and the Drug
Interchangeability and Dispensing Fee Act, R.S.O. 1990, c. P.23
(the "DIDFA").
[6] The broad scheme provides that pharmacists are reimbursed
by the Minister of Health when they supply certain specified
drugs known as listed drug products to members of the eligible
classes of persons. The reimbursement for each drug product
includes an amount known as the drug benefit price which is to
compensate the pharmacist for his payment to the manufacturer
of that drug product. It also includes a mark‑up on that price
and a dispensing fee.
[7] The ODBA gives the Lieutenant Governor in Council the
power to make regulations designating drugs as listed drug
products. That provision is found in s. 18(1)(c):
18(1) The Lieutenant Governor in Council may make
regulations,
(c) designating a product as a listed drug product
where the Lieutenant Governor in Council considers
it advisable in the public interest to do so, but a
product shall not be so designated if it or its
manufacturer has not met the conditions described
in clause (b)[.] [page213]
[8] Section 18(1)(b) gives the Lieutenant Governor in Council
the power to prescribe by regulation the conditions to be met
for listing. It has done this by way of the general regulation
under the ODBA, Ontario Regulation 201/96, which requires that
the manufacturer provide to the Minister a large quantity of
specified information about the drug to be listed, including
the drug benefit price which the manufacturer proposes. The
Minister then, as a matter of practice, provides a
recommendation to the Lieutenant Governor in Council on the
proposed designation of the drug as a listed drug product.
[9] The schedule of all listed drug products is approved by
regulation and is published by the Minister in the document
known as the Formulary. Because of the evolving nature of
pharmacology, the Formulary is updated by regulation several
times a year.
[10] The Formulary also lists the drug benefit price for each
listed drug product. The ODBA gives the Lieutenant Governor in
Council the power to prescribe by regulation the drug benefit
price for each drug product listed. Section 22(1) of the ODBA
requires that that price be the amount submitted by the
manufacturer and agreed to by the Minister (after considering
any matter which she thinks is advisable in the public
interest). However, the ODBA also specifies (in s. 6(1)), that
if there are listed drug products which, pursuant to the DIDFA,
are deemed to be interchangeable with the particular drug
product, then the drug benefit price will be equal to the
lowest drug benefit price of the interchangeable drugs. Then,
s. 22(3) of the ODBA provides that the drug benefit price of a
listed drug product may be raised or lowered by regulation if
the manufacturer agrees and the Lieutenant Governor in Council
considers it advisable in the public interest. Finally, s. 21
of the ODBA provides inter alia that the Minister, in advising
the Lieutenant Governor in Council, may consider anything that
the latter may consider.
[11] The DIDFA provides for the regulation of interchangeable
drugs. Broadly speaking, its purpose is to permit market access
to manufacturers of generic drug products which are
therapeutically equivalent to the original brand of the same
drug products and to ensure that this market access be at a
lower price than the original brand. The DIDFA gives the
Lieutenant Governor in Council the power to make regulations
designating a product as interchangeable with one or more other
products where the Lieutenant Governor in Council considers it
advisable in the public interest to do so. The general
regulation under [the] DIDFA, R.R.O. 1990, Regulation 935,
specifies the information to be supplied to the Minister as a
precondition to the designation of [page214]
interchangeability. This information includes the drug benefit
price proposed by the manufacturer, which must be a certain
percentage below that of the original brand of the drug
product. The Minister thereafter makes a recommendation to the
Lieutenant Governor in Council which then determines whether
the drug product will be designated by regulation as
interchangeable. All drug products approved in this way are
designated as interchangeable in the Formulary as it is updated
from time to time.
[12] Thus, the Formulary sets out those drugs which have been
approved as listed drug products under the ODBA and groups them
by drug category. For any given drug category, there may be
listed one or more interchangeable brands approved as such
under [the] DIDFA. For each drug category, and for each
interchangeable brand within that category, a listed drug
benefit price will appear in the Formulary.
The Facts
[13] The drug in issue in this proceeding is the CD slow‑
release capsule form of the medicine known as diltiazem
hydrochloride. The respondent's brand of this form of diltiazem
hydrochloride is Apo‑Diltiaz CD. Its capsule sizes of 120, 180
and 240 mg of this drug have been listed as three drug products
in the Formulary since 1997.
[14] In September 1998, [Nu‑Pharm], a generic drug
manufacturer, applied to have three drug products, its Nu‑
Diltiazco capsule sizes of 120, 180 and 240 mg, designated
as listed drug products under the ODBA and as interchangeable
drug products under the DIDFA. As required, its proposed drug
benefit prices for these three drug products were lower than
those listed for the Apotex counterparts. The three sizes of
Nu‑Diltiaz CD capsule were approved for listing at those lower
prices in the next Formulary.
[15] To meet this sort of eventuality, Apotex had previously
written a letter to the Ministry of Health dated February 1,
1999, authorizing the Ministry to adjust downward Apotex's
listed prices published in the Formulary to meet the listed
prices of a competitor within the same drug category. The body
of that letter is as follows:
This letter is to authorize the Ontario Ministry to adjust
Apotex's submitted or published product prices, to that of a
competitors price, within the same drug category.
If you have any questions or concerns, please do not hesitate
to ask.
[16] The Formulary which listed the three Nu‑Pharm drug
products for the first time was approved by regulations
made[page215] under the ODBA and the DIDFA on February 24, 1999
and filed on February 25, 1999. These regulations declared that
the new Formulary would come into force on April 15, 1999.
[17] Pursuant to the respondent's standing authorization and
as a result of these three new Nu‑Pharm products, the same
regulations reduced the prices of the three comparable Apotex
drug products in the April 15, 1999 Formulary from those
appearing in the November 20, 1998 Formulary in order to match
the Nu‑Pharm prices.
[18] On April 8, 1999, Nu‑Pharm wrote to the Ministry to
advise that it would not be able to supply the three new drug
products and to ask that they be deleted from the Formulary.
That letter reached the Ministry on April 19, 1999.
[19] Apotex immediately took the position that since Nu‑Pharm
had never in fact produced the three drug products, it did not
have to meet the lower prices of any competing drug products.
It argued that the prices for its three counterpart drug
products should remain as they were in the November 20, 1998
Formulary.
[20] The Ministry's response was that the respondent's prices
had been properly lowered in the April 15, 1999 Formulary and
that it had learned of the information about the Nu‑Pharm drug
products too late to alter the April 15, 1999 Formulary given
that it was already in effect and that the processes for
obtaining the necessary regulations and for producing the
Formulary took several weeks and had to be undertaken well in
advance of its effective date.
[21] Moreover, although the three Nu‑Pharm drug products were
thereafter removed from the next Formulary (which was effective
September 15, 1999), the Minister refused to recommend that the
listed prices in the September 15, 1999 Formulary for the three
counterpart Apotex drug products be returned to those of the
November 20, 1998 Formulary.
[22] In doing so, the Minister relied on the Ministry's
policy not to consider any increase in drug benefit prices
listed in the Formulary unless these increases remained cost
neutral to the Ministry because of an equivalent price
reduction in the drug benefit prices currently listed for other
drug products of the same manufacturer.
[23] While not questioning the Ministry's right to have this
cost neutral policy, the respondent has maintained that this
policy does not apply here because Apotex is not seeking an
increase in its selling price but only of the erroneously
listed prices of its three products. It argues that it is
simply seeking to return to the correct prices, namely those at
which the three drug products were listed [page216] before they
were reduced in error in the April 15, 1999 Formulary, and it
declined to comply with the policy of cost neutrality.
[24] The Ministry has declined to accept the respondent's
position. The Minister has refused to recommend that the
Lieutenant Governor in Council make a regulation changing drug
benefit prices for the three Apotex drug products. As a result,
those prices have remained unchanged from those in the April
15, 1999 Formulary.
The Decision Appealed From
[25] The respondent sought judicial review of the Minister's
refusal to recommend that the three Apotex drug products be
listed at the prices they had been listed at, prior to the
erroneous reduction contained in the April 15, 1999 Formulary.
[26] The majority of the Divisional Court (Cosgrove and
Meehan JJ.) allowed the application. They considered that the
Minister's refusal constituted the exercise of a statutory
power under s. 1 of the Judicial Review Procedure Act, R.S.O.
1990, c. J.1. They then applied Padfield v. Minister of
Agriculture, Fisheries & Food, [1968] 1 All E.R. 694, [1968]
A.C. 1016 (H.L.) and determined that while the Minister's
action could be reviewed only against a standard of
unlawfulness, the Minister had indeed acted unlawfully in two
respects:
(a) by taking into account an irrelevant consideration, namely
the publication of listed prices for the three Nu‑Pharm
products which the majority said created a fiction
irrelevant or extraneous to the correction sought by the
respondent; and
(b) by wholly omitting to take into account a relevant
consideration which the majority described this way:
because Nu‑Pharm had advised that it was in error and had
none of the three new drug products to market, there was no
new competitor's price to trigger the Ministry's cost
neutrality policy or to engage the respondent's
authorization to the Ministry to adjust its published
product prices.
[27] In dissent, O'Leary J. concluded that the Minister had
not acted unlawfully but had simply acted according to a
bargain made with Apotex to meet the listed prices of a
competitor. Having done that, O'Leary J. determined that the
Ministry had simply and properly applied its cost neutrality
policy.
[28] In the result, the application for judicial review
succeeded and the declarations I have described above were
issued. [page217]
Analysis
[29] In my view, there are three issues that must be
addressed in deciding this appeal. First, some analysis is
required of the administrative action sought to be judicially
reviewed. Second, the appropriate standard of judicial review
must be determined. Third, that standard must be applied to the
administrative action to determine the outcome of this
proceeding. I will deal with each of these in turn.
First issue: The nature of the administrative action
[30] The essence of the respondent's complaint is that the
error in the April 15, 1999 Formulary, namely the erroneous
drug benefit prices for three of the respondent's listed drug
products, is not being corrected by replacing them with the
higher drug benefit prices for the same products listed in the
predecessor Formulary. It is the Minister's refusal to
recommend such a change to the Lieutenant Governor in Council
that is attacked.
[31] In the Divisional Court, the majority proceeded on the
basis that the Minister's refusal to recommend was the exercise
of a statutory power and thus open to judicial review.
[32] From one perspective, this is somewhat problematic.
There is no statutory provision in either the ODBA or the DIDFA
requiring the Minister to make a recommendation about possible
changes in the drug benefit prices listed in the Formulary or
explicitly providing legislative directions for the making of
any such recommendation. Moreover, s. 18(1)(g) of the ODBA
provides that it is the Lieutenant Governor in Council which
prescribes by regulation the drug benefit prices that appear in
the Formulary. In addition, while s. 22(3) of the ODBA provides
that listed drug benefit prices can be raised or lowered, it is
the Lieutenant Governor in Council which does this by
regulation when it considers it advisable to do so in the
public interest.
[33] However, in the circumstances of this case, I am
prepared to proceed on the same basis as the Divisional Court.
I do so for three reasons.
[34] First, in a general sense, the Minister clearly plays a
central and critical role in this complex statutory scheme. For
most matters, the legislation makes the Minister the point of
contact with those involved in the scheme and it is her
Ministry that administers the scheme on a daily basis. For
example, in this case, the respondent directed its standing
authorization to reduce its listed prices to match its
competitors to the Ministry rather than to the Lieutenant
Governor in Council. Moreover, where the listed drug benefit
price is set by agreement with the [page218] manufacturer, it
is the Minister who does so on behalf of the Crown. And, where
the Lieutenant Governor in Council is to act, s. 21 of the ODBA
contemplates that it will be advised by the Minister who, in
doing so, may consider the same things that the Lieutenant
Governor in Council may consider. Thus, it is contemplated that
the Minister will advise on whether or not to make a regulation
changing particular listed drug prices and undoubtedly will be
guided by what she considers advisable in the public interest.
In short, as a matter of reality, the ODBA puts the Minister at
the centre of decisions made about listed drug prices under
Ontario's statutory drug benefit plan, and provides some
guidance to her in playing that role.
[35] Second, in the particular context of this case, while
the change sought by the respondent would be effected by the
Lieutenant Governor in Council making a regulation on the
advice of the Minister, the Minister's refusal to recommend
such a change is the effective decision determining that there
will be no such regulation changing specific listed prices for
a particular drug manufacturer. Moreover, it is an effective
decision about individual rights rather than broad policy.
Indeed, I would take the Minister's refusal to be the advice to
the Lieutenant Governor in Council contemplated by the
legislation and, since it effectively determines the
respondent's rights, it may arguably be said to effectively
constitute the exercise of a statutory power.
[36] Third, both parties to this appeal have proceeded on the
basis that the Minister's refusal to recommend can be subjected
to judicial review. This may reflect an acceptance by those who
work with the statutory drug benefit scheme of several first
instance decisions holding that the Minister's decision to
recommend or not is a statutory power of decision. See Apotex
Inc. v. Ontario (Attorney General) (1984), 1984 1849 (ON SC), 47 O.R. (2d) 176, 11
D.L.R. (4th) 97 (H.C.J.) and Apotex Inc. v. Ontario (Minister of
Health) (1989), 1989 4123 (ON SC), 71 O.R. (2d) 525, 65 D.L.R. (4th) 622 (H.C.J.).
However, we received no argument on this issue.
[37] In light of these considerations, I am prepared to
proceed on the assumption that the Minister's refusal to
recommend is subject to judicial review.
Second issue: The appropriate standard of review
[38] If the Minister's refusal to recommend the change sought
by the respondent is the subject of judicial review, the next
question is the appropriate standard of review to be used by
the court in supervising that administrative action. [page219]
[39] The majority of the Divisional Court proceeded on the
basis that this refusal to recommend, as an exercise of
ministerial discretion, can be subjected to control by judicial
review only if the Minister acted unlawfully as described in
Padfield, supra. There, Lord Upjohn set out four ways in which
a Minister might act unlawfully:
(a) by an outright refusal to consider the relevant matter;
(b) by misdirecting himself in point of law;
(c) by taking into account some wholly irrelevant or extraneous
consideration; or
(d) by wholly omitting to take into account a relevant
consideration.
[40] As I have indicated, the majority of the Divisional
Court went on to find that the Minister acted unlawfully in the
latter two respects.
[41] In this court, both parties accepted the Padfield basis
for judicial review of the Minister's refusal to recommend a
change in the respondent's listed prices.
[42] In my view, since Baker v. Canada (Minister of
Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, 174 D.L.R.
(4th) 193, we are required to proceed on a somewhat
different basis.
[43] In that case, L'Heureux‑Dub‚ J., writing for the court,
laid out a new approach to the judicial review of discretionary
decision‑making. She acknowledged that historically the
exercise of ministerial discretion could be judicially reviewed
only on limited grounds such as those recited in Padfield or
bad faith or improper purpose. However, she clearly felt that
the time has come to determine the standard of review of the
substantive aspect of discretionary decisions by utilizing the
same framework as is employed in the judicial review of
administrative decisions which are more legally constrained
such as those of quasi‑judicial tribunals. That framework is
the pragmatic and functional approach to the determination of
the appropriate standard of review which is most fully
elaborated in Pushpanathan v. Canada (Minister of Citizenship
and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982, 160 D.L.R. (4th) 193.
[44] L'Heureux‑Dub‚ J. made clear that the adoption of the
pragmatic and functional approach should not be seen as
reducing the level of curial deference given to decisions of a
highly discretionary nature but as a recognition that
administrative decisions vary widely in the degree of
discretion left to the administrative actor. A single
overarching approach to determining the degree of [page220]
scrutiny to be given by courts to administrative actions can
accommodate this range of discretion. As she said in Baker,
supra, at para. 56:
The pragmatic and functional approach can take into account
the fact that the more discretion that is left to a decision‑
maker, the more reluctant courts should be to interfere
with the manner in which the decision‑makers have made
choices among various options.
[45] I take the Minister's refusal to recommend to be an
exercise of ministerial discretion constrained by no more than
what she considers advisable in the public interest. What then
does the pragmatic and functional approach suggest to be the
appropriate standard of review of this administrative action?
[46] This approach calls for the consideration of a number of
factors which must be weighed together. See Pushpanathan,
supra.
[47] First, there is no privative clause applicable to the
Minister's action. This favours a lower level of curial
deference.
[48] Second and, in my view, most important, the fact that
the administrative actor here is the Minister with expertise in
the administration of this specialized legislative scheme
suggests the need for very significant deference. As Binnie J.
said in Mount Sinai Hospital Center v. Quebec (Minister of
Health and Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281 at para. 58,
2001 SCC 41, 200 D.L.R. (4th) 193:
Decisions of Ministers of the Crown in the exercise of
discretionary powers in the administrative context should
generally receive the highest standard of deference, namely
patent unreasonableness. This case shows why. The broad
regulatory purpose of the ministerial permit is to regulate
the provision of health services "in the public interest".
This favours a high degree of deference, as does the
expertise of the Minister and his advisors, not to mention
the position of the Minister in the upper echelon of decision
makers under statutory and prerogative powers. The exercise
of the power turns on the Minister's appreciation of the
public interest, which is a function of public policy in its
fullest sense.
[49] Third, while the Minister's refusal relates directly to
the rights of a single party, the respondent, it involves a
very broad discretion engaging legal principles no more precise
than the open‑textured notion of what the Minister considers to
be advisable in the public interest. This too favours greater
curial deference.
[50] Finally, the nature of the problem facing the Minister
requires an appreciation of specific facts rather than an
interpretation of definitive legal rules. The highly
discretionary and fact‑based nature of the Minister's refusal
also points in the direction of greater deference. [page221]
[51] Weighing those considerations together, I conclude that
the appropriate standard of review is that of greatest
deference, namely, patent unreasonableness.
Third issue: Whether the Minister's refusal is patently
unreasonable
[52] In Canada (Attorney General) v. Public Service Alliance
of Canada, 1993 125 (SCC), [1993] 1 S.C.R. 941 at pp. 963‑64, 101 D.L.R. (4th)
673, Cory J. reminds us that patent unreasonableness is a very
strict test and an administrative decision receiving the
significant deference it calls for will be protected from
judicial intervention if it is not clearly irrational.
[53] In my view, the Minister's refusal is not clearly
irrational. Indeed, it seems to me to be quite rational. The
Minister had in hand the respondent's standing authorization to
reduce its listed prices to match its competitor's. A new
competitor with lower prices received approval for listing in
the Formulary. Pursuant to the standing authorization, the
listed prices of the respondent's counterpart drug products
were reduced to match. The regulation approving the Formulary
with those listed prices was filed on February 25, 1999, to be
effective April 15, 1999. After the effective date, the
Minister learned of the new competitor's failure to produce and
the respondent's request for a change in its listed prices. The
Minister quite reasonably took the position that it was too
late to change the Formulary which had been approved in
February and was already in effect.
[54] The Minister further took the position that the
respondent was asking for an increase in its listed prices
which could be done only by the respondent complying with the
Ministry's cost‑neutral price increase policy. Since the
respondent would not comply, the Minister refused to recommend
an increase in its listed prices. This too seems quite
reasonable. Since the April 15, 1999 Formulary had already been
published and was lawfully in effect, the respondent was indeed
asking for an increase in the listed prices of its three drug
products. That the premise upon which the respondent had
authorized these new listed prices to be fixed subsequently
proved wrong was surely a risk for the respondent's account. It
was not something which made the Minister's refusal patently
unreasonable.
[55] Patent unreasonableness could, I think, also be found if
the Minister's refusal was the result of wholly omitting to
take into account a relevant consideration (see Suresh v.
Canada (Minister of Citizenship and Immigration), 2002 SCC 1 at
para. 29, 2002 SCC 1, 208 D.L.R. (4th) 1) or if it was the result of taking
into account some [page222] wholly irrelevant or extraneous
consideration. In other words, in a proper case, those two
circumstances as recited in Padfield, supra, could lead to a
finding of patent unreasonableness.
[56] While it did not do so in the context of patent
unreasonableness, the majority of the Divisional Court applied
both factors in determining that the Minister's refusal
warranted judicial intervention, as I have already described.
[57] With respect, I think the majority erred in each case.
[58] The Minister did not fail to take into consideration the
fact that Nu‑Pharm had no new product for market. The Minister
simply put that fact together with the timing of when it was
discovered to determine that the April 15, 1999 Formulary was
already lawfully in effect and that the respondent was seeking
an increase in its prices as listed in that Formulary, thus
engaging the Ministry's cost neutrality policy.
[59] Equally, it was not an irrelevant consideration for the
Minister to take into account the fact that Nu‑Pharm's prices
were published in the April 15, 1999 Formulary. It explained
why the respondent's listed prices appeared at the same level
in the same Formulary. The respondent's standing authorization
was to lower its published prices to match those of its
competitor. The lower published prices of Nu‑Pharm was a very
relevant consideration.
[60] Thus, in my view, in neither respect can the Minister's
refusal be said to be patently unreasonable.
[61] The respondent also attacked the Minister's refusal as
unfair and discriminatory. Even if that characterization could
make the Minister's actions per se patently unreasonable (which
I doubt), it is not a characterization which applies here. The
respondent noted one other circumstance where the Minister had
recommended a price increase without applying its cost
neutrality policy. However there, the lower listed price
originally supplied by the manufacturer was simply mistakenly
submitted in the beginning. Here, the problem arose because Nu‑
Pharm submitted listed prices which were properly approved
and published in the Formulary and, thereafter, declared itself
unable to make the product. The two circumstances are simply
not comparable.
[62] In summary, while the Minister's refusal is challenged
on a number of fronts, I cannot find that any of those
challenges render that refusal patently unreasonable.
[63] I would therefore allow the appeal, set aside the
judgment below, and dismiss the application for judicial
review.
[64] Counsel for the appellant shall deliver brief written
submissions on costs here and below and any proposed bill of
costs within ten days from the date of this judgment. Counsel
for the respondent may deliver a response, if any, within ten
days thereafter. [page223]
[65] SHARPE J.A. (concurring, CRONK J.A. concurring): ‑‑ I
agree with Goudge J.A. that the appeal should be allowed and
the application for judicial review dismissed. As noted by my
colleague, the parties have proceeded on the assumption that
the Minister's refusal to recommend to the Lieutenant Governor
in Council that a duly enacted regulation be amended is a
statutory power of decision that is subject to judicial review.
As the point was not argued, I prefer to leave to another day
the basic question of the extent to which the Minister's
refusal to make such a recommendation is subject to judicial
review, absent grounds for finding that the limits of the
statute or the constitution have been exceeded. Assuming,
without deciding, that judicial review is available, the most
favourable standard of review the appellants could expect in
the circumstances would be patent unreasonableness. I agree
with Goudge J.A. that the respondent has failed to establish
that this decision was patently unreasonable.
Appeal allowed.
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