COURT FILE NO.: CV-10-414774-00CP

DATE: 2020/06/27

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

GIOVANNI SPINA, JOHN SPINA DRUGS LTD., ROMEO VANDENBURG and ROMEO VANDENBURG DRUG COMPANY LTD.

Plaintiffs

• and -

SHOPPERS DRUG MART INC. and SHOPPERS DRUG MART (LONDON) LIMITED

Defendants

Ken Rosenberg, Odette Soriano and Paul Davis for the Plaintiffs

Mark A. Gelowitz and Evan Thomas for the Defendants

Proceedings under the Class Proceedings Act, 1992.

HEARD: June 17-19, 2020

PERELL, J.

REASONS FOR DECISION

Lou Costello: “Alright, you tell me the names of the guys on the baseball team.”

Bud Abbott: “Okay, Who’s on first. What’s on second, I Don’t’ Know’s on third.”

Lou: “You ain’t tellin’ me nothin’ yet. Go ahead and tell me.”

Bud: “I am telling you.

Lou: “You ain’t tellin’ me nothin’ yet. Go ahead and tell me.”

Bud: “Who’s on first. What’s on second, I Don’t’ Know’s on third.”

Lou: “You know the guys’ names on the baseball team?

Bud: “Yes”

Lou: “Okay go ahead. Who’s on first?

Bud: “Yes.”

Lou: “I mean the guy’s name?”

Bud: “Who.”

Lou: “The guy playing first?”

Bud: “Who.”

Lou: “The guy playing first base?”

Bud: “Who.”

Lou: “The guy on first base?”

Bud: “Who’s on first.

Lou: “What are ya asking me for? I don’t know”

Bud: “Now wait a minute.”

Lou: “I’m asking you, who’s on first?”

Bud: “That’s his name.”

Lou: “Well, go ahead and tell me.

Bud: “Who.”

Lou: “The guy on first.”

Bud: “That’s it. That’s his name.

Lou: “You ain’t said nothing. […]

[Abbot and Costello, The Baseball Sketch, circa 1936]

A. Introduction

[1] In 2010, the Plaintiffs Giovanni Spina, John Spina Drugs Ltd., Romeo Vandenburg, and Romeo Vandenburg Drug Company Ltd. sued Shoppers Drug Mart Inc., Shoppers Drug Mart (London) Limited, Shoppers Drug Mart Corporation, and 919979 Alberta Ltd. in a national class action under the Class Proceedings Act, 1992.[^1]

[2] The Plaintiffs represent the following two certified classes:

All current and former Shoppers Drug Mart franchisees, except those whose businesses were located in Quebec, who entered into two versions of the standard-form franchise agreement with Shoppers between January 1, 2002 and July 9, 2013; and,

All current and former Shoppers Drug Mart franchisees in Ontario who performed direct patient care services between October 1, 2006 and March 31, 2013.

[3] The Plaintiffs discontinued their claims against Shoppers Drug Mart Corporation, which is the parent company of Shoppers, and against 919979 Alberta Ltd., an associated company. The action continued against Shoppers Drug Mart Inc. and Shoppers Drug Mart (London) Limited (collectively “Shoppers”). The Plaintiffs and the Class Members, who are referred to as “Associates”, are franchisees of Shoppers.

[4] In 2013, the multi-billion-dollar action was certified as a class proceeding and it moved into the documentary and oral discovery phase. Seven years of tough litigation-slogging followed. The Plaintiffs now bring a motion for the following relief:

a. First, they seek an order requiring Shoppers to answer the questions set out in the refusals chart attached as Schedule “B” to these Reasons for Decision. Schedule “B” is the version of the Refusal’s Chart with both parties’ annotations.

b. Second, the Plaintiffs seek an order for the examination for discovery of Virginia Cirocco, Esther Law, and Brad Lukow. Ms. Cirocco, Ms. Law, and Mr. Lukow are non-parties but former employees of Shoppers with knowledge about the Plaintiffs’ professional allowance claim, which is an over billion-dollar claim in the litigation.

c. Third, the Plaintiffs seek a documentary production order against Ranbaxy Pharmaceuticals Canada Inc. and Sandoz Canada Inc. Ranbaxy and Sandoz are generic drug manufacturers; they are third parties that supplied pharmaceuticals to Shoppers during the 2006-2013 time-period. Ranbaxy and Sandoz paid professional allowances to Shoppers. The Plaintiffs seek an order that Ranbaxy and Sandoz preserve and produce for inspection the following documents:

Any and all documents in their power, possession, or control relevant to the issues in the class proceeding, including documents pertaining to:

1. professional allowances, warehouse allowances, educational allowances, over and above ("O&A") amounts, or any other sums paid by, credited by, or otherwise provided by Ranbaxy or Sandoz (as applicable) to Shoppers Drug Mart in respect of drugs dispensed in Ontario, including invoices rendered by Shoppers Drug Mart to Ranbaxy or Sandoz (as applicable) in respect of any such amounts or sums payable to Shoppers Drug Mart pertaining to the period October 1, 2006 to March 31, 2013 and including purchase orders or other documents showing the purchase price of those drugs;

2. invoices rendered by Shoppers Drug Mart to Ranbaxy or Sandoz (as applicable) in respect of rebates or any other vendor funds paid by, credited by, or otherwise provided by Ranbaxy or Sandoz (as applicable) to Shoppers Drug Mart anywhere in Canada pertaining to the period October 1, 2006 to March 31, 2013;

3. proof of payment of any such amounts by Ranbaxy or Sandoz (as applicable) to Shoppers Drug Mart;

4. rates used to calculate the rebates paid by Ranbaxy or Sandoz (as applicable) to Shoppers Drug Mart between October 1, 2006 to March 31, 2013 and, to the extent they differ from the rebate rates, the rates used to calculate professional allowances paid by Ranbaxy or Sandoz (as applicable) to Shoppers Drug Mart during the same period; and

5. agreements pertaining to the payment of any such amounts by Ranbaxy or Sandoz (as applicable) to Shoppers Drug Mart, and any correspondence between Shoppers Drug Mart and Ranbaxy or Sandoz (as applicable) pertaining to same.

[5] For the reasons that follow, the Plaintiffs’ motion is dismissed subject to Shoppers searching for and producing, for the professional allowances class period, the invoices or in the absence of invoices any other documents evidencing an “O&A amount” (over and above amount) charged to or classified as an O&A amount for the following drug manufacturers: Apotex, Cobalt, Genpha, Novoph, Pendopharm, Pharma, Prempharm, Ranbaxy, Ratiop, Sandoz, Taro, Taropharma. I further order that there shall be no follow up examinations.

[6] In my opinion, Shoppers has already answered the questions or Shoppers justified the refusals on the grounds of irrelevancy, and, moreover, further questioning would offend the proportionality principle. In the immediate case, like Abbot and Costello in the famous baseball sketch, the parties asked questions and made arguments, they heard each other, but they were not listening to understand the answers or the arguments. They each accuse the other of “You ain’t said nothing” but a great deal has been said. For the purpose of this motion, Shoppers justified its refusals, and the Plaintiffs have not made a case for the examinations for discovery of Ms. Cirocco, Ms. Law, and Mr. Lukow. The Plaintiffs have not made a case for documentary discovery from Ranbaxy and Sandoz.

[7] Thus, with the above qualification, I dismiss the Plaintiffs’ motion.

B. Ontario’s Regime for Professional Allowances for Pharmacists and Pharmacies.

[8] The Plaintiffs’ essential and preeminent allegation in this action is that Shoppers took money that belonged to the Class Members. The motion now before the court focuses on the Plaintiffs’ allegation that Shoppers unlawfully took over $1.0 billion in “professional allowances”. On this discovery motion, the dispute between the parties is about whether Shoppers is correct in refusing to provide more information about the professional allowances. To resolve this dispute, it is necessary at the outset of these Reasons for Decision to describe Ontario’s former statutory regime for professional allowance revenues for pharmacists and pharmacies.

[9] In 2006, the Ontario government introduced, the Transparent Drug System for Patients Act,[^2] which amended the Drug Interchangeability and Dispensing Fee Act[^3] and the Ontario Drug Benefit Act.[^4] For present purposes, the relevant provisions of the statutory scheme are set out in Schedule “A” to these Reasons for Decision. The legislation prohibited generic drug manufacturers paying rebates to pharmacies, pharmacy owners, franchisors, and others. The Act also introduced the concept of professional allowances, which could be paid by drug manufacturers. Under the statutory regimes, rebates are prohibited, but professional allowances are permitted.

[10] Section 11.5 (18) of the Ontario Drug Benefit Act, defines rebates as follows:

"rebate", subject to the regulations, includes, without being limited to, currency, a discount, refund, trip, free goods or any other prescribed benefit, but does not include,

(a) a discount for prompt payment offered in the ordinary course of business, or

(b) a professional allowance.

[11] Professional allowance is defined in s. 1(8) of O. Reg. 201/96 [Ontario Drug Benefit Act] as follows:

s. 1(8) For the purposes of section 11.5 of the Act,

"professional allowance", in the definition of "rebate", means, subject to subsections (9) and (10), a benefit, in the form of currency, services or educational materials that are provided by a manufacturer to persons listed in subsection 11.5 (1) of the Act for the purposes of direct patient care as set out in paragraphs 1 to 8 of this subsection:

1. Continuing education programs that enhance the scientific knowledge or professional skills of pharmacists, if held in Ontario.

2. Continuing education programs for specialized pharmacy services or specialized certifications, if held in North America.

3. Clinic days provided by pharmacists to disseminate disease or drug-related information targeted to the general public including flu shot clinics, asthma clinics, diabetes management clinics, and similar clinics. For this purpose, a “clinic day” includes any additional staff to support the clinic day or the regular pharmacy business while the pharmacist is hosting a clinic day, during that day.

4. Education days provided by pharmacists that are targeted to the general public for health protection and promotion activities. Such education days must be held in the pharmacy, or a school, long-term care home, community centre, place of worship, shopping mall, or a place that is generally similar to any of these. For this purpose, an “education day” includes any additional staff to support the education day or the regular pharmacy business while the pharmacist is hosting an education day, during that day.

5. Compliance packaging that assists their patients with complicated medication regimes.

6. Disease management and prevention initiatives such as patient information material and services, blood pressure monitoring, blood glucose meter training, asthma management and smoking cessation, used in their pharmacy. For this purpose, “disease management and prevention initiatives” includes any additional staff required to support these initiatives or the regular pharmacy business while the pharmacist is hosting a disease management and prevention initiative, during the time it is being held.

7. Private counselling areas within their pharmacy.

8. Hospital in-patient or long-term care home resident clinical pharmacy services, such as medication reconciliation initiatives or other hospital or long-term care home-identified clinical pharmacy priorities. For this purpose, “clinical pharmacy services” includes the costs of any additional staff required to support these services or the regular pharmacy business while the pharmacist is hosting a clinical pharmacy service, during the time it is being held.

[12] Debates about the legislation indicate that the Ontario government wished to stop drug manufacturers paying rebates, which increased the cost of the drugs to the consumer, including governments and hospitals. The government, however, apparently wanted to allow the manufacturers to subsidize patient care by pharmacists, and thus the Ontario government created and permitted a particular kind of payment by manufacturers, which it called a professional allowance and the government exempted this payment from the prohibition of manufacturers paying rebates. As noted above, the legislation expressly excluded “professional allowances” from the definition of “rebate.”[^5]

[13] Under the statutory regime, professional allowances are connected to “direct patient care.” The legislation defines what is “direct patient care,” and, to me at least, some of the statutorily defined examples of direct patient care seem rather indirect and remote from the patient. For example, continuing education programs for specialized pharmacy services or specialized certifications are rather remote from direct patient care. Other examples, however, come closer to what actually resembles direct patient care. For example, professional allowances are for clinic days provided by pharmacists to disseminate disease or drug-related information including flu shot clinics and asthma clinics.

[14] Under the statutory regime, while the professional allowances are connected to direct patient care, it is be noted that the direct patient care is not necessarily connected to direct patient care with respect to the particular drug being sold by the manufacturer. In other words, to use an example that was discussed during the argument of this motion, a manufacturer of a medication to treat erectile dysfunction can pay professional allowances measured against the price of its drug, if the pharmacist who is supplied the medication provided a flu shot clinic for some other manufacturer’s flu vaccine.

[15] For present purposes, several features of the operation of the statutory regime for professional allowances should be noted.

• Pursuant to a Code of Conduct prescribed by regulations, pharmacies were prohibited from making procurement and purchasing decisions based solely on their receipt of professional allowances.[^6]

• The professional allowance is a ratio of the price of the manufacturers’ drug. In the immediate case, for example, under discrete agreements, Shoppers calculated a professional allowance amount based upon a percentage of the price of the drug purchased from the manufacturer. Shoppers invoiced the manufacturer for the professional allowance.

• Recipients of professional allowances could not receive more in professional allowances in the aggregate than they expended on direct patient care activities in the aggregate.

• Under the statutory regime, from October 1, 2006 until July 1, 2010, when professional allowances were prohibited for drugs distributed under the Ontario Drug Benefit Plan (ODB Plan), the amount of professional allowances permitted was capped at 20% of the drug price.

• Professional allowances on non-ODB Plan drugs were not subject to a cap from October 1, 2006 to July 1, 2010.

• On July 1, 2010, professional allowances on non-ODB Plan drugs became subject to a 50% cap of the drug price and thereafter at declining rates until professional allowances were eliminated on April 1, 2013.

• From July 1, 2007, to July 1, 2010, Shoppers was statutorily obliged to report to the Ministry of Health and Long-Term Care the total amount of professional allowances received and the corresponding total amount of direct patient care expenditures. Contemporaneously, the drug manufacturers were statutorily obliged to report the amount of professional allowances that they paid. These obligations to report to the government ceased on July 1, 2010.

[16] For present purposes, having a hypothetical example of the operation of the statutory regime for professional allowances is helpful. The context of the hypothetical is a national franchised drug store chain, like Shoppers. In this illustration, I shall name the hypothetical national drug store “Prescriptions Rx Co.” and the hypothetical drug manufacturer “Pills Co.”

a. In this illustration, Pills Co. agrees to sell its drugs to Prescriptions Rx Co. The price of the drugs is $1.0 million, but Pills Co. agrees to pay $650,000 in rebates and professional allowances. The net return to Pills Co. will be $350,000. (This 65:35 ratio is apparently typical in the pharmaceutical trade.)

b. Pills Co. invoices Prescriptions Rx Co. $1.0 million for the drugs.

c. Prescriptions Rx Co. pays $1.0 million for the drugs and it distributes $600,000 of the drugs in Ontario of which $300,000 is distributed under the Ontario Drug Benefit Plan and $300,000 is distributed but not under the ODB-Plan. The rest of the drugs, worth $400,000, are distributed outside of Ontario; i.e. distributed in the rest of Canada (“ROC”).

d. After the drugs are distributed, Prescriptions Rx Co. invoices Pills Co. for professional allowances and rebates. Prescriptions Rx Co. calculates the professional allowances as 20% of the $300,000 distributed under the ODB Plan ($60,000) plus 100% of the $300,000 distributed not under the ODB plan ($300,000) for a professional allowance totaling $360,000. Prescriptions Rx Co. calculates the rebates for the drugs distributed outside of Ontario as $650,000 less the professional allowances for a rebate claim of $290,000.

e. Thus, after the drugs have been distributed, Prescriptions Rx Co. invoices Pills Co. for $360,000 for professional allowances in Ontario and reports to the Ministry that it received $360,000 in professional allowances. It also reports that its pharmacists provided “direct patient care” worth $400,000, which more than justifies the receipt of professional allowances of $360,000. And, thus, after the drugs have been distributed, Prescriptions Rx Co. invoices Pills Co. for $290,000 for rebates for the $400,000 of drugs distributed ROC. It may be noted that the notional rebate rate for these ROC drugs is ($290,000/$400,000) 73%.

[17] For the present purposes of understanding the arguments made by the parties on the discovery motion and still using the above hypothetical, it should be noted that had Prescriptions Rx Co. calculated the professional allowances as 20% of the $300,000 distributed under the ODB Plan ($60,000) plus 50% (instead of 100%) of the $300,000 distributed not under the ODB plan ($150,000) for an aggregate professional allowance of $210,000, the rebate claim would be $440,000 ($650,000 less the professional allowances); i.e., instead of a notional rebate of 73%, the notional rebate rate for ROC would be 110% ($440,000/$400,000). In this example, the rebate is notionally more than the price of the drugs distributed for ROC. (In their factum, the Plaintiffs provided an example of a rebate rate of 198%.)

C. Procedural Background

[18] The procedural history of this action is an important part of the factual background to the Plaintiffs’ requests for relief on this motion. It is, therefore, necessary to review in some detail the procedural history of this action. The procedural history is particularly important because some of the relevancy and proportionality issues on this motion have already been considered in the context of previous motions during these proceedings.

[19] The Plaintiffs commenced their action by Notice of Action issued on November 19, 2010. They delivered several iterations of their Statement of Claim over the following almost ten years.

[20] In the Plaintiffs’ original Statement of Claim, they advanced two major claims that were challenged by Shoppers as not demonstrating a reasonable cause of action. One of the Plaintiffs’ claims was a claim for rebates paid by generic manufacturers in respect of generic drugs dispensed by Shoppers. The other major claim was for professional allowances. For both claims, the essential allegation was that Shoppers took money that belonged to the Class Members. (The Plaintiffs’ other major claims were for breaches of several provisions of the Franchise Agreements.)

[21] In their Amended Second Fresh as Amended Statement of Claim, the Plaintiffs claim:

(a) an order pursuant to the Class Proceedings Act, 1992, certifying this action as a class proceeding and appointing the Plaintiffs as representative plaintiffs;

(b) a declaration that the Defendants:

(i) have breached their franchise agreements with the Class;

(ii) have breached their common law duty of dealing in good faith and/or their statutory duty of fair dealing with the Class in respect of the manner in which the Defendants have operated the Shoppers Franchise System (as defined below);

(iii) have been unjustly enriched as a result of systematically and unlawfully collecting, receiving and/or retaining funds and/or benefits over and above the amounts to which they are entitled under the terms of their franchise agreements with the Class;

and

(iv) are holding in trust for the benefit of the Class those funds and/or benefits that the Defendants collected, received and/or retained over and above the amounts to which they are entitled under the terms of their franchise agreements with the Class;

(c) an order that all monies collected, received and/or retained unlawfully by the Defendants shall be paid by the Defendants to the Class Members and/or the Professional Allowances Class (defined below) in such amounts and proportions as is determined by the common issues trial judge;

(d) damages in the amount of $500,000,000 or such other amount as particularized prior to trial;

(e) punitive damages in an amount to be fixed by the court;

(f) pre-judgment and post-judgment interest, compounded annually, at a rate fixed pursuant to the Courts of Justice Act, R.S.O. '1990 c. C.43; and

(g) costs of this action fixed on a substantial indemnity basis.

[22] With respect to the professional allowance claim, the Plaintiffs plead in particular:

71. The Professional Allowance Class Members are entitled to damages equal to the amount the Defendants have received or could have received as Professional Allowances…

72. Moreover, the Defendants have made procurement and purchasing decisions for generic drugs in a manner intended to bypass, or which has the effect of bypassing, the statutory scheme in Ontario. In so doing, the Defendants have acted without due regard for the Professional Allowance Class Members’ legitimate interests and reasonable expectation, in breach of their common law duty of good faith and their statutory duty of fair dealing.

73. On behalf of the Professional Allowance Class, the Plaintiffs are seeking damages in an amount to be determined for all amounts collected, received and/or retained (or which could and/or should have been collected, received and/or retained) as Professional Allowances for all direct patient care services provided by Class Members.

[23] With respect to the calculation of professional allowances, in 2010, in response to Shoppers’ Demand for Particulars, the Plaintiffs referenced paragraph 59 of John Spina’s affidavit for the certification motion, which stated:

59. However, since starting this action, I have been advised by Tony Gagliese, a representative for Ranbaxy Canada, a generic drug manufacturer, and I believe it to be true, that [Shoppers] has compensated for the introduction of limited professional allowances in Ontario by negotiating higher rebates in other parts of Canada that are not subject to similar restrictions. I have seen no evidence and am not aware that [Shoppers] has passed the benefit of this strategy on to Associates.

[24] With respect to the professional allowance claim that is the subject matter of this refusals motion, it shall be important to note and keep in mind that: (a) rebates were permitted in other provinces; (b) rebates and professional allowances are a matter of discrete agreements between Shoppers and each drug manufacturer; and (c) Shoppers negotiated bulk purchases on a national basis for its national franchise network.

[25] The Plaintiffs’ certification motion began in October 2012. The motion was bifurcated. In the first stage, I decided Shoppers’ Rule 21 cross-motion, which, practically speaking, addressed the first certification criterion, the cause of action criterion.[^7]

[26] On the Rule 21 cross-motion, I struck out the rebate claim because of the following provisions of the Associate Agreement. These provisions expressly reserved discounts, rebates, allowances, and other advantages to Shoppers not to the Associates:

11.04 In addition to the compensation provided for in Section 11.01 hereof and to contribute to the Company's cost of providing national and/or regional advertising and/or promotion and/or merchandising, and the development and marketing of house brand products, the Associate shall pay to the Company an additional amount as determined by the Company's marketing department not to exceed in any year two percent (2%) of Gross Sales. The Company reserves the right to place and develop advertising as agent for and on behalf of the Associate. The Associate and Pharmacist acknowledge and agree that the Company shall be entitled to the benefit of any and all discounts, volume rebates, advertising allowances or other similar advantages that the Company or its Affiliates may obtain from any person, firm or corporation by reason of its supplying merchandise or services to the Associate or to associates of the Company or its Affiliates.

11.10 The Associate and the Pharmacist acknowledge and agree that the Company shall be entitled to the benefit of any and all discounts, rebates, advertising or other allowances, concessions, or other similar advantages obtainable from any person by reason of the supply of merchandise or services to the Company, the Associate or to Associates of the Company or its Affiliates.

[27] I, however, did not strike out the claim for professional allowances. I held that it was not plain and obvious that the claim to these professional allowances would inevitably fail. In my Reasons for Decision, I observed that the claim for professional allowances was different from the claim for rebates. I stated:

253. The Plaintiffs’ position is that professional allowances are different from rebates, which are paid by a manufacturer as an incentive to induce purchases and are paid in exchange for and in recognition of the provision of specific services by pharmacists. The Plaintiffs submit that unlike rebates, professional allowances are compensatory in nature; they do not act as an incentive to purchase a product but are intended to compensate pharmacies for the costs they actually incur delivering services to pharmacy patients in Ontario.

[28] After the Rule 21 motion, the second stage of the certification motion was heard, and on July 9, 2013, I certified the action as a class proceeding.[^8]

[29] In certifying the claims for professional allowances, I noted that the Plaintiffs advanced two theories of liability: (1) that Shoppers breached the Associate Agreement or were unjustly enriched because professional allowances should have been shared with the Associates under the terms of the Associate Agreement; or (2) Shoppers was unjustly enriched because professional allowances should have been paid to Associates independent of the Associate Agreement (the Franchise Agreement). I described the two theories as follows:

63. Before I describe the background to the Plaintiff’s professional allowances claim, it is also helpful to describe the general nature of the arguments and counterarguments about the claim. The Plaintiffs advance two theories for their claim for professional allowances. The first theory is that professional allowances are revenue of the drug store that Shoppers has unlawfully intercepted and thereby unjustly enriched itself. Shoppers counters that professional allowances are rebates permitted to be paid under the provincial legislation and that pursuant to the terms of the Franchise Agreement, it is entitled to keep them for itself.

64. The Plaintiffs’ second theory is that professional allowances are outside of the Franchise Agreement and professional allowances may be earned by pharmacists, and also by Shoppers, but Shoppers has taken more than its share and has been unjustly enriched by taking the pharmacists’ share of the professional allowances. Shoppers’s counterargument is again that professional allowances are rebates that it may keep under the Franchise Agreement, and it adds that, in any event, the Ontario Pharmacists have no statutory entitlement or other entitlement to the professional allowances and that the second theory cannot satisfy the deprivation element of a claim for unjust enrichment.

65. The essence of the Plaintiffs’ professional allowance claim under two theories is that Shoppers’ has unjustly enriched itself by intercepting the professional allowances that the Plaintiffs submit should either: (1) fall into gross revenues; or (2) should be paid to the pharmacists directly, I have already held that the first theory, which also sounds in breach of contract, shows a cause of action. Despite the argument of Shoppers, I also conclude that the second theory satisfies the cause of action criterion.

66. The first theory and the second theory have some similarities. Both are based on the undoubted facts that Shoppers receives professional allowances but does not remit any portion of them to the Associates. Notwithstanding Shoppers’ argument, in my opinion, both theories also satisfy the deprivation element of the elements of an unjust enrichment claim, and both theories will fail if Shoppers establishes its defence that there is a contractual juristic reason for it keeping the professional allowances.

67. The major difference between the two theories is that the second theory as a claim (but not in its defence) stands outside of the Franchise Agreement and is independent of any breach of contract claim. In this regard, unlike theory 1, where the breach of contract claim is redundant, the breach of contract claim is no alternative because theory 2 stands outside of the contract and assumes that professional allowances are independent right of the pharmacists.

[30] With respect to the professional allowance claim, I certified the following common issues:

a. Did the Defendants, or either of them, breach their contractual obligations under the 2002 and 2010 Associate Agreements, their statutory obligations under section 3 of the AWA [Arthur Wishart Act] and/or their common law duty of good faith to the Professional Allowance Class Members by retaining Professional Allowances and failing to remit Professional Allowances that relate to direct patient care services (as defined in both the Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c. P.23, R.R.O. 1990, Reg. 935, s. 2(1) and the Ontario Drug Benefit Act, R.S.O. 1990, c. O.10, O. Reg. 201/96, s. 1(8)) that were performed by the Professional Allowance Class Members?

b. Were the Defendants, or either of them, unjustly enriched by retaining the Professional Allowances they received that relate to the direct patient care services (as defined in both the Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c. P.23, R.R.O. 1990, Reg. 935, s. 2(1) and the Ontario Drug Benefit Act, R.S.O. 1990, c. O.10, O. Reg. 201/96, s. 1(8)) that were performed by the Professional Allowance Class Members?

c. If the answer to a or b is yes, what is the amount that the Defendants received for professional allowances?

d. If the answer to a or b is yes, what is the amount that the Defendants expended at the central office level for direct patient care?

[31] It should be noted that questions c and d were designed to quantify the amount of professional allowances received by Shoppers and how much Shoppers expended on professional allowance expenditures.

[32] Shoppers delivered its Statement of Defence on April 30, 2014. For present purposes, the following paragraphs of the pleading are pertinent:

[Shoppers] Was Entitled to All Professional Allowances

82. Generic drug manufacturers paid professional allowances to [Shoppers] pursuant to lawful agreements between [Shoppers] and each manufacturer.

83. Under these agreements, [Shoppers] calculated a professional allowance amount based upon a percentage of the price of generic drug molecules purchased from each manufacturer and billed the amount back to the manufacturer. The manufacturer either paid the amount to [Shoppers] or the amount was credited against [Shoppers’] future purchases from the manufacturer.

84. This agreed percentage varied by manufacturer and by generic drug molecule and was subject to “caps” imposed by applicable legislation.

[Shoppers] Was Not Unjustly Enriched by Professional Allowances

89. The agreements between [Shoppers] and the generic drug manufacturers are a juristic reason for SDMI’s receipt and retention of professional allowance payments from the manufacturers.

90. Further, and in any event, the Associate Agreements, and in particular Section 11.04 of the 2002 Associate Agreement and Section 11.10 of the 2010 Associate Agreement, are also juristic reasons for SDMI’s receipt and retention of professional allowances payments.

[33] I foreshadow the discussion below to note that the Plaintiffs adamantly argue that they are entitled to determine: (a) whether Shoppers was in fact collecting professional allowances pursuant to “lawful agreements”, as Shoppers pleads; (b) whether other payments collected by Shoppers should properly be classified as professional allowances; and (c) what is the total amount Shoppers received for professional allowances. Further, the Plaintiffs adamantly argue that they require information from the drug manufacturers about the payment of rebates in excess of 100% outside of Ontario in order to test Shoppers’ pleading that it received professional allowances pursuant to “lawful agreements”.

[34] In January 2015, the parties agreed to a Discovery Plan, and between April 2015 and March 2017, Shoppers delivered in tranches 26,703 documents. The Plaintiffs complain that Shoppers was dilatory in complying with its production obligations. I, however, find no undue delay.

[35] Under the Discovery Plan, the parties agreed that the Plaintiffs could examine two witnesses on behalf of Shoppers: (a) Jeff Leger, then-Executive Vice President of Pharmacy and Health Care; and (b) Angelo Mariano, Vice President Finance, Health Care Businesses.

[36] Mr. Leger joined Shoppers Drug Mart in 2008, and he was part of the team responsible for professional allowances. The team was led by Virginia Cirocco, one of the persons that the Plaintiffs now seek to examine. Mr. Leger succeeded Ms. Cirocco and led the team dealing with professional allowances beginning in spring of 2009 until professional allowances were phased out in 2013. Mr. Leger was responsible for negotiating quality, supply and price of pharmaceutical products, including negotiating rebates and professional allowances.

[37] For ten years, Mr. Mariano was Shoppers’ Vice President of Retail Accounting, overseeing budgeting and accounting for the franchised stores, and then for three years, he was the vice president for the healthcare businesses. In 2013, Mr. Mariano became responsible for Pharmacy Finance, the group responsible for invoicing for professional allowances and rebates. He was involved in reporting on professional allowances to the Ministry of Health and Long-Term Care. He, however, was not involved in the day-to-day invoicing for professional allowances but he was familiar with the process.

[38] The parties disagreed, however, as to the length of the examinations for discovery. After a case conference, I allowed the Plaintiffs seven days of nine hours each – 63 hours in total – including breaks for the examinations of Mr. Leger and Mr. Mariano.

[39] In 2017, Mr. Leger was examined for two days exclusively about professional allowances. He was asked 1,797 questions. In 2017, Mr. Mariano was examined for five days. For three and a half days, he was questioned about professional allowances. He was asked 6,645 questions. Approximately 4,000 questions were about professional allowances. Thus, Shoppers’ representatives were asked 8,442 questions during what turned out to be the first round of discoveries and almost half of the questions were about professional allowances. Shoppers took under advisement or refused to answer approximately 1,200 questions. Many but not all of these questions were answered subsequently.

[40] Between June 28, 2017 and September 2018, Shoppers provided written answers to 533 questions and it produced approximately 1,580 additional documents relating to professional allowances.

[41] The documents about professional allowances included spreadsheets showing, among other things, calculations of professional allowances. The spreadsheets showed the total amount invoiced to each manufacturer and the rates charged by the drug manufacturers for professional allowances and for rebates. Shoppers also produced Excel reports that summarize the amount of professional allowances reported to the Ministry of Health and Long-Term Care. In many instances, Shoppers answered questions subject to Rule 34.12 (2) maintaining its position that the questions were irrelevant and/or improper.[^9]

[42] On April 5, 2018, Shoppers corrected 82 answers concerning professional allowances.

[43] The Plaintiffs attempted to make something nefarious of the fact that Shoppers corrected certain answers. I, however, see nothing untoward about Shoppers taking the opportunity - and the responsibility imposed by rule 31.09 - to correct answers. Discovery is a continuing obligation, and the rules require parties to correct or update information provided in the examination. Rule 31.09 (1) provides:

31.09(1) where a party has been examined for discovery or a person has been examined for discovery on behalf or in place of, or in addition to the party, and the party subsequently discovers that the answer to a question on the examination,

(a) was incorrect or incomplete when made; or

(b) is no longer correct and complete, the party shall forthwith provide the information in writing to every other party.

[44] Under rule 31.09(3), where a party does not comply with 31.09 (1) and “the information subsequently discovered is, (a) favourable to the party’s case, the party may not introduce the information at the trial, except with leave of the trial judge; or (b) not favourable to the party’s case, the court may make such order as is just”.[^10] In general, parties are entitled to correct their discovery answers, and the impact of corrections is a matter to be decided by the trial judge, who is entitled to examine both the original and the amended answers.[^11]

[45] On May 14, 2018, the Plaintiffs brought a discovery motion seeking to require Shoppers to answer 374 questions from the 2017 examinations for discovery. On consent, Shoppers agreed to answer 147 professional allowance questions, and the remainder of the motion was adjourned to the fall of 2018.

[46] In June and July 2018, Shoppers answered the 147 questions and it delivered 1,108 more documents relating to professional allowances.

[47] At the time of the discovery plan motion, Shoppers believed that the quantification of professional allowances was retrievable from its business records system. This belief proved to be mistaken. As a result of this misapprehension, notwithstanding the Discovery Plan, which required Shoppers to produce just a sample of invoices and payment documentation, Shoppers produced all its invoices for professional allowances except for some documents it could not locate. Shoppers produced 1,915 invoices and 251 payment documents.

[48] It will become significant to the discussion below to note that I find as fact that the information disclosed by Shoppers reveals or discloses: (a) the extent of Shoppers’ record-keeping around professional allowances, including the documents created to track professional allowances; (b) Shoppers’ process for reporting professional allowances to the Ministry; (c) the rates used to calculate professional allowances; (d) the rates charged for ODB and for non-ODB professional allowances; (e) the amount of professional allowances received from manufacturers; (g) the amount of rebates charged by Shoppers to manufacturers; (h) receipts confirming payment by the manufacturers (251 records); and (j) various spreadsheets prepared by Shoppers (the ODB Invoice Spreadsheets) and used by Shoppers to calculate the amounts invoiced to each drug manufacturer.

[49] Further, I find as a fact that Shoppers has provided all the information that is necessary to determine whether the payments received circumvented Ontario’s statutory regime as alleged by the Plaintiffs and denied by Shoppers. This question of whether Shoppers complied with the statutory regime is now a matter for argument based on the evidence produced. (I shall discuss the matter of Shoppers’ compliance with the statutory regime as it relates to this motion in more detail later in these Reasons for Decision.)

[50] However, I find as a fact that Shoppers has not provided all the information that is necessary to determine what Shoppers received as “over and above” ("O&A") amounts. I shall return to the matter of the O&A amounts several times below.

[51] Returning to the procedural background, in the fall of 2018, the Plaintiffs renewed the discovery motion, and they also sought to compel Shoppers to produce Robert Baker for examination. Mr. Baker was Senior Director of Pharmacy Finance. Previously, he had been Director of Pharmacy Finance and Director of Distribution Accounting. Before that, he was Manager of Distribution Accounting for Shoppers. Mr. Baker reported to Mary Lyn Seymour until 2013 and then to Mr. Mariano after Mr. Mariano took over Ms. Seymour’s role. Mr. Baker’s responsibilities included accounting for professional allowances, and he was responsible for invoicing drug manufacturers for professional allowances or rebates.

[52] In seeking to examine Mr. Baker, the Plaintiffs submitted that Shoppers’ representatives (Mr. Leger and Mr. Mariano) had been unable to answer satisfactorily a significant and substantial number of the questions regarding professional allowances. Shoppers consented to Mr. Baker being examined for discovery to answer the questions about professional allowances.

[53] Shoppers did not concede that there was a basis to order Mr. Baker to be examined, and it just voluntarily offered him up for examination. There has never been a court ruling that Mr. Leger and Mr. Mariano were inadequate to represent Shoppers for the purposes of examinations for discovery. Based on what I understand now from this discovery motion and with the benefit of this hindsight, I doubt that I would have ordered Mr. Baker to be examined in the fall of 2018 had Shoppers resisted producing him for an examination. I only say this now because the Plaintiffs repeatedly asserted that Mr. Leger, Mr. Mariano, and Mr. Baker have been inadequate as representatives of Shoppers and that there are gaps in the evidence. I find as a fact that these assertions have not been made out.

[54] Returning to the narrative of the procedural background, the parties argued the remaining refusal and production issues on the discovery motion. There was divided success.[^12]

[55] Between May and July 2019, Mr. Baker and Mr. Mariano were examined for discovery for four days, two days each. Mr. Baker testified about professional allowances, and Mr. Mariano testified about all claims, including the professional allowance claim. I was not told how many questions Mr. Baker was asked over the two days but one can assume it was between 1,000 to 2,000 more questions about professional allowances. He was examined on the various forms of professional allowances spreadsheets used for invoicing, as well as spreadsheets summarizing the total amount of professional allowances collected by Shoppers. I was not told how many questions Mr. Mariano was asked. I was told that Shoppers took under advisement, gave undertakings, or refused to answer 220 questions from these four days of examinations.

[56] On July 22, 2019, the Plaintiffs brought a motion to amend the common issues and their Statement of Claim for reasons unrelated to the professional allowance claims. The motion was resolved on consent, and the Plaintiffs were granted leave to amend their pleading. The Plaintiffs delivered their Amended Second Fresh as Amended Statement of Claim on August 19, 2019.

[57] Between October and November 2019, Shoppers provided 123 answers to undertakings, questions taken under advisements, and refusals from the examinations of Mr. Mariano and Mr. Baker.

[58] On this motion, the Plaintiffs seek answers to 88 questions pertaining to professional allowance claims. The refusals are grouped into seven categories, but the Plaintiffs are not pursuing Category #7. Fifty-eight of the refusals pertain to four spreadsheet documents that Shoppers produced after the 2017 examinations for discovery. (As already noted above, the refusals chart is attached as Schedule “B” to these Reasons for Decision.)

[59] On this motion, the Plaintiffs seek to examine Ms. Cirocco, Ms. Law, and Mr. Lukow.

a. As noted above, Ms. Cirocco, who is no longer employed by Shoppers, led Mr. Leger on the team responsible for professional allowances. The team was responsible for negotiating the agreements with drug manufacturers both before and after professional allowances were introduced in Ontario. Mr. Leger then succeeded Ms. Cirocco as team leader.

b. Ms. Law, who is no longer employed by Shoppers, was responsible for negotiating the agreements with drug manufacturers both before and after professional allowances were introduced in Ontario.

c. During the relevant period, Mr. Lukow was Shoppers’ Senior Vice President, Finance. (He was promoted to Chief Financial Officer in 2009). Mr. Lukow, who is no longer employed by Shoppers, now lives in Arizona.

[60] Class Counsel have communicated directly with Ms. Cirocco, Ms. Law, and Mr. Lukow Mr. Lukow has refused to assist the Plaintiffs voluntarily. Ms. Cirocco and Ms. Law have stopped responding to counsel’s communications, and they too have not agreed to participate voluntarily. Ms. Cirocco, Ms. Law, and Mr. Lukow have been served for this motion. They did not attend, and they took no position with respect to the motion.

[61] As noted above, on this motion, the Plaintiffs seek documentary discovery from Ranbaxy and Sandoz. In July 2018, the Plaintiffs asked Ranbaxy and Sandoz to preserve and produce the documents listed earlier in these Reasons for Decision. Ranbaxy and Sandoz have been served with the notice of motion, and they take no position with respect to the motion.

D. Factual Background

[62] Shoppers was founded in 1962 by Toronto pharmacist Murray Koffler. It is one of the oldest franchise systems in Canada. There are approximately 1,200 Shoppers stores. Approximately 50% of the stores are located in Ontario. The Shoppers stores sell pharmaceuticals and also consumer goods, including cosmetics, groceries, and toiletries. In 2009, the stores had sales of approximately $10 billion.

[63] The Shoppers stores operate as franchises. The franchisees, who are called “Associates” sign a franchise agreement, referred to as the "Associate Agreement." It is a standard form document. Associates are not employees. They are independent business owners operating the "Franchised Business" as governed by the Associates Agreement.

[64] For the purpose of this motion, which largely concerns the matter of rebates and professional allowances, articles 11.04 and 11:10, which are set out above and again below, are the most pertinent provisions from the Franchise Agreement. These articles state:

11.04 In addition to the compensation provided for in Section 11.01 hereof and to contribute to the Company's cost of providing national and/or regional advertising and/or promotion and/or merchandising, and the development and marketing of house brand products, the Associate shall pay to the Company an additional amount as determined by the Company's marketing department not to exceed in any year two percent (2%) of Gross Sales. The Company reserves the right to place and develop advertising as agent for and on behalf of the Associate. The Associate and Pharmacist acknowledge and agree that the Company shall be entitled to the benefit of any and all discounts, volume rebates, advertising allowances or other similar advantages that the Company or its Affiliates may obtain from any person, firm or corporation by reason of its supplying merchandise or services to the Associate or to associates of the Company or its Affiliates.

11.10 The Associate and the Pharmacist acknowledge and agree that the Company shall be entitled to the benefit of any and all discounts, rebates, advertising or other allowances, concessions, or other similar advantages obtainable from any person by reason of the supply of merchandise or services to the Company, the Associate or to Associates of the Company or its Affiliates.

[65] As noted above, on October 1, 2006, the Ontario government introduced a statutory regime that banned pharmacies from receiving rebates from drug manufacturers in respect of the purchase of drugs. The statutory regime, however, permitted pharmacies receiving professional allowances. The pharmacies and the drug manufacturers were required to report the receipt and the payment of professional allowances to the Ministry of Health and Long- Term Care.

[66] More precisely, pursuant to the Drug Interchangeability and Dispensing Fee Act and the Ontario Drug Benefit Act, pharmacies were prohibited from receiving any rebates, including “currency, a discount, refund, trip, free goods or any other prescribed benefit,” in respect of drugs dispensed in Ontario from drug manufacturers effective October 1, 2006. The only exceptions from the prohibition of rebates were for (a) professional allowances; and (b) a discount for a prompt payment offered in the ordinary course of business.

[67] At Shoppers, the majority of the patient services for which professional allowances could be received were provided by the Class Members. For example, for the first reporting period of the statutory regime, (January-June 2007), Shoppers reported $44.9 million in store-level patient services and $4.2 million in corporate-level patient services. The pharmacists’ patient services were charged and calculated based on hourly rates.

[68] Shoppers did not remit any professional allowances to the Class Members. The Associates knew that Shoppers received and did not pass on the professional allowances and it has always been well-known among Associates that Shoppers received professional allowances and did not share them with Associates. Relying on causes of action for unjust enrichment, breach of statutory and common law duties, and breach of contract, the Class Members now claim the professional allowances.

[69] Shoppers admits to receiving almost $1.0 billion in professional allowances over the class period for the professional allowance claim. The Plaintiffs submit, however, that $1 billion may understate the professional allowances because Shoppers underclaimed for professional allowances in three ways; namely: (a) having regard to the services provided by the Class Members a higher professional amount could have been invoiced and claimed; (b) during the period in which the non-ODB Plan drugs were not subject to a cap, a higher rate for professional allowances could have been invoiced and claimed; and (c) Shoppers charged drug manufacturers O&A amounts, which the Plaintiffs submit are actually disguised professional allowances. I will have more to say about these submissions below.

[70] Returning to the factual narrative, Shoppers purchased drugs on a national basis. As of October 1, 2006, Shoppers negotiated a single fixed percentage to be deducted from the standard vendor cost of generic drugs shipped to Shoppers. Invoices for rebates or professional allowances were calculated in accordance with this agreed percentage. In 2010, Shoppers moved to a net cost/fixed net price model based on dead net pricing, in which the net cost of each drug would be agreed upon and then rebates and allowances calculated.

[71] For reasons that will become apparent in the discussion below, it should be emphasized that as of October 1, 2006, when the professional allowances statutory regime came into effect in Ontario, Shoppers and the generic drugs manufacturers negotiated and agreed upon a single fixed percentage to be deducted from the standard vendor cost of generic drugs shipped to Shoppers across Canada. Shoppers bought goods for its national franchise system. With respect to Shoppers’ drug purchases, Ontario accounted for 40 to 60% of drugs dispensed by Shoppers’ stores nationally.

[72] To understand how Shoppers implemented the statutory scheme for professional allowances, it was similar to the hypothetical example of Prescriptions Rx Co. that I provided above in these Reasons for Decision.

[73] Keeping in mind that the purchases were for the whole franchise system, during the period when rebates were prohibited in Ontario, Shoppers received: (a) professional allowances in respect of drugs dispensed in Ontario; (b) rebates with respect to drugs dispensed outside of Ontario; and (c) other payments in respect of drugs dispensed in Ontario, some of which Shoppers classified as “O&A” or “Over and Above” payments.

[74] Shoppers invoiced the drug manufacturers for O&A amounts. O&A amounts were for various services or for charges including warehouse/distribution allowances and other services provided to the drug manufacturers, such as data analysis. Drug manufacturers typically paid a distribution allowance of 5 to 8% of the value of drugs received in exchange for Shoppers distributing the drugs, providing data, managing inventory, and for brand display.

[75] Shoppers decided on the allocation of the payments between professional allowances and rebates and invoiced the drug manufacturers accordingly. Shoppers did not have written purchase agreements with the drug manufacturers, but I learned during this discovery motion that there were purchase orders or other documents about the delivery of the merchandise from the drug manufacturers to Shoppers’ distribution centres. The agreements with the drug manufacturers with respect to rebates, professional allowances, and O&A charges were oral agreements, but the professional allowances, the rebates, and the O&A payments were memorialized in the accounts and invoices of Shoppers and for a period of time, the professional allowances were memorialized in the reports made by Shoppers to the Ministry of Health and Long-Term Care.

[76] Shoppers recorded the percentages charged (the rates against the purchase price) for the professional allowances in Tecsys, its inventory management system. To invoice the manufacturer, Shoppers would: (a) calculate the professional allowances in Ontario under the ODB Plan, which allowances were capped; (b) calculate the professional allowances for the drugs not under the ODB Plan; and (c) issue invoices for the professional allowances in Ontario. Shoppers would issue separate invoices for rebates in other provinces, so that the total amount of professional allowances and rebates received as a percentage of the cost of drugs purchased would be equal to a single fixed percentage of the manufacturer’s cost of drugs. Shoppers would issue separate invoices for O&A amounts.

[77] The invoicing process was complicated because: (a) Shoppers received drugs at warehouses across Canada, including one in Ontario that also serviced Québec stores; (b) there were differences between what could be charged for professional allowances under the ODB Plan drugs and not under the ODB Plan; (c) at the time of receiving drug shipments, it was not known what could be charged and that determination would have to wait until the drugs were dispensed to an ODB Plan patient or to a non-ODB patient. Shoppers’ evidence was that its warehouse systems could not be configured to address all of this complexity and the invoicing process involved calculations using spreadsheets to determine the appropriate amount of allowances and rebates to invoice.

[78] Ms. Cirocco and Ms. Law were responsible for negotiating the agreements with drug manufacturers both before and after professional allowances were introduced. Mr. Baker, who was not involved in the negotiations, testified that Ms. Cirocco told him the different non-ODB rates to apply to the various drug manufacturers when invoicing them for professional allowances in Ontario. Mr. Baker did not know how Ms. Cirocco arrived at the rates.

[79] The Plaintiffs submitted that although one might have anticipated that with the prohibition on rebates on drugs sold in Ontario and with the caps on professional allowances, Shoppers should have received less revenue from drug companies on a national basis after the introduction of professional allowances than it received before the statutory regime was introduced. However, it seems the revenue did not decrease. The Plaintiffs submitted that Shoppers procurement and purchasing decisions for generic drugs was made to bypass or had the effect of bypassing, the statutory scheme in Ontario.

[80] This submission by the Plaintiffs demonstrates that after the production of documents and after the examinations for discovery, the Plaintiffs have acquired extensive knowledge of how the professional allowances were allocated by Shoppers. This knowledge is evident from paragraph 15 of the Plaintiffs’ Reply Factum for this motion, which states:

15. Since then, the evidence elicited from the defendants on discovery about the reallocation of funds from drug manufacturers is even more compelling than the information the Class had at certification. Shoppers’ unequivocal evidence is that it negotiated a national rate with drug manufacturers, which would be deducted from the standard vendor cost of drugs, including drugs dispensed in Ontario.[^13] After collecting the funds on a national basis, Shoppers assigned a rate to PAs in Ontario which, the documents reveal, was lower than the negotiated national rate.[^14] Since drugs dispensed in Ontario account for the 40-60% of all drugs dispensed across Canada, this resulted in an inflated rate – much higher than the negotiated national rate – being assigned to rebates in the rest of Canada. Indeed, Shoppers’ productions show income received from drug manufacturers, ostensibly as rebates for rest of Canada, with rates as high as 198% of the purchase price of the drug.

[81] This submission by the Plaintiffs demonstrates that after the production of documents and after the examinations for discovery, they have analyzed the spreadsheets prepared by Shoppers and the Plaintiffs submit that the spreadsheets reveal that the outcome of the analysis is that in many cases the rebates for outside of Ontario exceed the price of the drugs distributed outside of Ontario. Thus, in their factum at paragraphs 65 and 66, the Plaintiffs make the following submission:

65. Another internal Shoppers’ spreadsheet, authored by Mr. Baker, sets out the receipts of drugs from eight generic drug companies between February 28 and March 27, 2010 (Period 3).

66. This document shows that after Shoppers allocated national income in accordance with the ODB and non-ODB PA rates, the rebate rate paid by Ranbaxy for the rest of Canada was 198%. In other words, the spreadsheet shows that for every $1.00 of drugs Shoppers purchased from Ranbaxy in all provinces other than Ontario and Quebec, Ranbaxy paid Shoppers $1.98.

[82] I finish this description of the factual background by saying my findings of fact and my analysis above and below are exclusively for the purposes of this discovery and production motion. Nothing I say creates any issue estoppels or infringes on the trial judge’s determinations of findings of fact or of law.

E. Refusals

[83] Discovery witnesses are required to answer questions and produce documents relevant to matters at issue as defined in the pleadings and common issues.[^15] There are eight bases upon which a deponent may refuse a question:

(1) unanswerable – the question is not capable of being answered, which is to say that the question is vague, unclear, inconsistent, unintelligible, redundant, superfluous, repetitious, overreaching, beyond the scope of the examination, speculative, unfair, oppressive, or a matter of rhetoric or argument;

(2) immaterial – the question is not material, which is to say that the question falls outside the parameters of the action and does not address a fact in issue;

(3) irrelevant – the question is not relevant, which is to say that the question does not have probative value; it does not adequately contribute to determining the truth or falsity of a material fact;

(4) untimely – the question is not relevant because it concerns events or matters temporally unconnected to a cause of action or defence;

(5) idiosyncratic or uncommon – in an action under the Class Proceedings Act, 1992, the question is not relevant to the common issues because it concerns an individual inquiry that was not certified for the common issues trial;

(6) answered – the question or the documents relevant to the question have already been provided by the party being examined;

(7) disproportionate – the question is disproportionate, which is to say that the question may be relevant but providing an answer offends the proportionality principle; and

(8) privileged – the answer to the question is subject to a privilege, including lawyer and client privilege, litigation privilege, or the privilege for communications in furtherance of settlement.[^16]

[84] Category #1 of the refusals (questions 1-40) pertain to two types of spreadsheets produced after the 2017 examinations for discovery. The Plaintiffs adamantly argued that these questions should be answered because they are entitled to determine: (a) whether Shoppers was in fact collecting professional allowances pursuant to “lawful agreements”, as pleaded in Shoppers’ Statement of Defence; (b) whether the other payments collected by Shoppers (the O&A amounts) should properly be classified as professional allowances, over which the Class has a claim; and (c) what is the total amount Shoppers received for professional allowances.

[85] As I shall explain momentarily, in my opinion, the Plaintiffs’ argument that its questions are relevant to Shoppers’ defence is not made out and Shoppers was justified in refusing to answer the questions on the grounds that the Plaintiffs’ questions were irrelevant to its actual defence or to the calculation of the professional allowances.

[86] As I shall explain momentarily, in any event, if I am wrong in concluding that the questions of Category #1 are irrelevant, then except with respect to the production of O&A documents, I conclude that Shoppers was justified in refusing to answer the Category #1 answers.

[87] In my opinion, Shoppers’ refusals were justified for two related reasons; namely: (a) the questions have already been answered and the associated documents have already been provided; and (b) further questioning offends the proportionality principle.

[88] As foreshadowed above, I find as a fact that Shoppers has provided all the information that is necessary to determine whether the payments it received complied with or circumvented Ontario’s statutory regime. The question of whether Shoppers complied with the statutory regime is now a matter for argument based on the evidence already produced.

[89] It appears that the Plaintiffs justify their questions in Category #1 as relevant because they wish to challenge Shoppers’ assertion that it collected professional allowances pursuant to “lawful agreements” as pleaded in the Statement of Defence. The thrust of the Plaintiffs’ attack is the argument that Shoppers’ agreements with the drug manufacturers cannot be “lawful agreements” because Shoppers illegally circumvented the statutory regime of the Drug Interchangeability and Dispensing Fee Act and the Ontario Drug Benefit Act. The Plaintiffs have all they need to make this attack. Further questioning would be disproportionate.

[90] For these two reasons, with the exception of O&A documents, I conclude that the questions of Category #1 need not be answered.

[91] As for the O&A documents, there are enough documents for the Plaintiffs to make their arguments about the statutory regime and about the claim for professional allowances, but it is possible that there may be O&A documents that are relevant to determining the amount of O&A charges or receipts. I, therefore, order that Shoppers should search for and produce, for the professional allowances class period, the invoices or, in the absence of invoices, any other documents evidencing an “O&A amount” charged to or classified as an O&A amount to the following drug manufacturers: Apotex, Cobalt, Genpha, Novoph, Pendopharm, Pharma, Prempharm, Ranbaxy, Ratiop, Sandoz, Taro, Taropharma.

[92] I further order that there shall be no follow up examinations.

[93] I also conclude that the Plaintiffs’ Category #1 questions are irrelevant to the question of whether Shoppers collected professional allowances pursuant to “lawful agreements” as pleaded in the Statement of Defence.

[94] The explanation of this opinion on relevancy begins with a caveat and with three interrelated observations. The caveat is to repeat that my opinion is not binding on the determinations made later when there is an adjudication of the merits of the Plaintiffs’ claim and Shoppers’ defence. I add that the positions taken on this motion by the parties are not to be taken as admissions or concessions. That all said, I hope that my observations about relevancy will assist the parties in coming to terms about the material issues in the dispute about professional allowances.

[95] The first observation, which was conceded during the oral argument, is that whether Shoppers complied with the statutory regime is irrelevant to the Plaintiffs’ case-in-chief. The case-in-chief is simply that Shoppers took the professional allowances that belonged to the Class Members, including monies received by Shoppers from the drug manufacturers that was disguised as rebates or as O&A amounts. None of the case-in-chief requires proof that Shoppers intentionally or unintentionally contravened the statutory regime.

[96] The second observation, which is corollary to the first observation, is that Shoppers was ill-advised in adding the adjective “lawful” to its pleading of an agreement and in referring to the agreement with the drug manufacturers, and this misspeaking has been a provocation and a source of confusion to the Plaintiffs who, in an Abbott and Costello fashion, appear to me to be obtuse to the doctrinal subtleties of lawful and illegal contracts. In other words, Shoppers’ genuine defence focuses on the interpretation of the Franchise Agreements and not on the agreements with the drug manufacturers being lawful, unlawful, or illegal in the sense of being compliant with the statutory regime.

[97] The third observation, which is corollary to the first two observations, is that the Plaintiffs and Shoppers understand the phrase “lawful agreements” in ways that are both semantically and doctrinally incongruent. It seems that the Plaintiffs understand a lawful agreement to be one that complies with the statutory regime of the Drug Interchangeability and Dispensing Fee Act and the Ontario Drug Benefit Act, while it seems that Shoppers understands a lawful agreement to be one that is enforceable under the law of contract.

[98] With these observations in mind the relevancy analysis may continue by assuming that the Plaintiffs may be correct in their submission that Shoppers’ agreements with the drug manufacturers circumvented the statutory regime and therefore are not “lawful agreements”. In this regard, the Plaintiffs provide in their factum several examples of what they say are unlawful contracts in the sense of allegedly being non-compliant with the statutory regime, which examples, as an aside, I repeat, demonstrates that there has been adequate discovery to at least make the argument.

[99] However, the Plaintiffs’ examples in their factum also demonstrate that the agreements could have been performed lawfully. The Plaintiffs examples reveal that the agreements are only unlawful because of how Shoppers calculated and allocated the professional allowances. This demonstration of how the agreements with the manufacturers came to be unlawful in the sense of not being compliant with the statutory regime is significant to the relevancy arguments for four reasons:

a. First, it demonstrates that the agreements with the manufacturers are not per se unlawful or illegal. The statutory regime does not absolutely prohibit the manufacturer paying professional allowances in Ontario and rebates outside of Ontario. Had Shoppers made different allocations, an agreement with the manufacturer could have been performed lawfully. Whether the agreements were performed lawfully requires a sale by sale analysis.[^17]

b. Second, while the examples in the factum demonstrate a possible violation of the statutory regime, some of the agreements with other drug manufacturers may have been lawfully performed. Thus, the Plaintiffs’ submission must change from a universal submission of unlawfulness to a partial submission of unlawfulness. But, in any event, I repeat that the Plaintiffs have all the evidence they need to make their submissions and further evidence would not add to the proof and are irrelevant and immaterial to the case-in-chief and thus the evidence is of marginal relevancy and not worth the expenditure of forensic resources.

c. Third, it is far from established that there has been a circumvention of the statutory regime insofar as the drug manufacturers are concerned. Visualize, it does not make sense to submit, as the Plaintiffs submit for example, that Ranbaxy was in effect paying to sell its drugs outside of Ontario. The truth is that Ranbaxy was not selling its goods inside or outside of Ontario. Ranbaxy was selling its costs based on a national price and based on national discounts for professional allowances and rebates. From Ranbaxy’s point of view, it was selling goods in Canada that were being distributed across Canada. It was not selling its goods with territorial prices. Although Ranbaxy might have been concerned that Shoppers complied with the law in allocating the discounts between professional allowances and rebates, Ranbaxy would be indifferent to how Shoppers allocated and invoiced and Ranbaxy was certainly never paying to sell its own goods. This observation is significant because illegal contracts are usually a matter between the parties to the contract and the Plaintiffs have no privity of contract with the drug manufacturers.

d. Fourth, assuming that at least some of the agreements with the drug manufacturers and Shoppers were performed illegally in the sense of being a contravention of the statutory regime, the Plaintiffs do not connect the dots as to why this illegality would be answer to Shoppers’ defence that there was a juristic reason for Shoppers keeping the professional allowances for Ontario and the rebates for the rest of the country. As between Shoppers and the drug manufacturers, the agreements have been performed and neither Shoppers nor the drug manufacturers are seeking rescission. If there was a circumvention of the statutory regime, of which I express no opinion, Shoppers would pay a penalty to the province and not return the professional allowances to the drug manufacturers. And, most significantly, the Plaintiffs do not connect the dots of relevancy because notwithstanding the misspoken defence of Shoppers, its pleading and its arguments throughout this litigation show that its genuine defence lies in the Franchise Agreements and the provision that states that: [Shoppers] shall be entitled to the benefit of any and all discounts, rebates, advertising or other allowances, concessions, or other similar advantages obtainable from any person by reason of the supply of merchandise or services to [Shoppers] the Associate or to Associates of the Company or its Affiliates.”

[100] I, therefore, conclude without creating any issue estoppels that Shoppers was justified in refusing to answer the Category #1 questions on the grounds of the questions having been already answered, the principle of proportionality, and based on irrelevancy. I make no finding as to whether Shoppers contravened the statutory regime. I make no finding that there is a gap (a delta) between what Shoppers received from the drug manufacturers that it treated as a professional allowance and what it could have treated as a professional allowance. I make no finding that the O&A amounts are disguised professional allowances or rebates. I make no finding as to whom the professional allowances belong.

[101] Category #2 (questions 41-58) concerns the payments from generic drug companies that have been attributed to O&A amounts. The questions at issue in refusals Category #2 ask for Shoppers’ explanation for the amounts that were recorded as O&A, the basis on which they were paid, and for details of the agreements with the drug manufacturers. After being elicited to tell a great deal about the O&A payments, Shoppers refused to answer further questions about the O&A references on the grounds of irrelevancy.

[102] I have already expressed my conclusion that as for the O&A documents, there are enough documents to make the legal arguments about whether or not they are professional allowances, but it is possible that there may be O&A documents that are relevant to determining the amount of O&A charges or receipts. Therefore, with respect to the Category #2 refusals, I make the Order that I made above.

[103] The Category #3 (questions 59-77) questions are directed at a variety of issues related to understanding the payments Shoppers received from drug companies. For example, question 63 asks whether Shoppers introduced any new charges to generic manufacturers when the caps were imposed for non-ODB professional allowances. The questions in this category seek to determine whether there were other categories of payments that should be examined. The Category #3 questions are a fishing expedition. For the reasons already expressed, Shoppers was justified in refusing to answer these questions.

[104] The Category #4 (questions 78-83) and Category #5 (questions 84-85) essentially concern questions to be posed or that could be posed to Ms. Cirocco, Ms. Law, and Mr. Lukow. For the above reasons, Shoppers was justified in refusing to answer these questions.

[105] Category #6 (questions 86-87) is comprised of two questions where the Plaintiffs seek Shoppers’ legal position on two professional allowances issues. Shoppers has recently provided answers to these two questions.

[106] The Plaintiffs are not pursuing the Category #7 questions (questions 88-89)

[107] Category #8 (questions 90-91) are two questions where the Plaintiffs seek contact information for Shoppers’ third-party payments provider. Shoppers’ evidence is that it does not have access to purchase orders for drugs during the professional class period because they were held by this third party. It does not know the retention policies of the third parties after the decade since the professional allowance regime came to an end. The Plaintiffs say that these purchase orders are the only available documents with the actual purchase price of drugs that were the subject of the national agreements with the drug manufacturers. The Plaintiffs argue that the documents may also contain other information about the national agreements.

[108] Once again for the above reasons, Shoppers was justified in refusing to answer these questions. While additional documents might corroborate what is already known and answered about the price or cost of the drugs, they would not change what is already known and answered about the professional allowances. There is with the production order made above enough evidence on the record to determine what amount of money was received by Shoppers from the drug manufacturers.

[109] It is time to end the discoveries and to bring on the accountants and economists and mathematicians.

F. Examination for Discovery of Ms. Cirocco, Ms. Law, and Mr. Lukow

[110] Ms. Cirocco, Ms. Law, and Mr. Lukow are non-parties. Rule 31.10 of the Rules of Civil Procedure governs the discovery of non-parties. Rule 31.10 states:

DISCOVERY OF NON-PARTIES WITH LEAVE

General

31.10 (1) The court may grant leave, on such terms respecting costs and other matters as are just, to examine for discovery any person who there is reason to believe has information relevant to a material issue in the action, other than an expert engaged by or on behalf of a party in preparation for contemplated or pending litigation.

Test for Granting Leave

(2) An order under subrule (1) shall not be made unless the court is satisfied that,

(a) the moving party has been unable to obtain the information from other persons whom the moving party is entitled to examine for discovery, or from the person the party seeks to examine;

(b) it would be unfair to require the moving party to proceed to trial without having the opportunity of examining the person; and

(c) the examination will not,

(i) unduly delay the commencement of the trial of the action,

(ii) entail unreasonable expense for other parties, or

(iii) result in unfairness to the person the moving party seeks to examine.

Cost Consequences for Examining Party

(3) A party who examines a person orally under this rule shall serve every party who attended or was represented on the examination with the transcript free of charge, unless the court orders otherwise.

(4) The examining party is not entitled to recover the costs of the examination from another party unless the court expressly orders otherwise.

Limitation on Use at Trial

(5) The evidence of a person examined under this rule may not be read into evidence at trial under subrule 31.11(1).

[111] It is not necessary for me to review the case law about rule 31.10. Based on my findings of fact for this motion and my legal analysis above, I conclude that the test set out in 31.10 (2) has not been satisfied.

[112] The Plaintiffs have been able to obtain the information they need to make their case and to respond to Shoppers’ defence. It would not be unfair to require the Plaintiffs to proceed to trial without having an opportunity to examine Ms. Cirocco, Ms. Law, and Mr. Lukow, for among other reasons, that even if my determination of relevance is wrong, the particular questions about how the rates for professional allowances were set is not relevant, nor is what the twelve drug manufacturers thought about the professional allowances relevant. What is already known is how the professional allowances and rebates were allocated and how much was received for professional allowances. Whether and why the allocations were made or could have been made is now a matter for argument.

[113] Given the effect of the Covid-19 pandemic, the examinations of Ms. Cirocco, Ms. Law, and Mr. Lukow would not unduly delay the commencement of the trial of the action, but there have been more than enough examinations to date and for the reasons already expressed examinations of Ms. Cirocco, Ms. Law, and Mr. Lukow are not called for.

G. Documentary Production from Ranbaxy and Sandoz

[114] Rule 30.10 governs documentary discovery from non-parties. Documentary discovery as of right is generally limited to parties to the proceeding. However pursuant to rule 30.10, where necessary, the court may, on motion by a party, order production for inspection of a relevant non-privileged document that is in the possession, control or power of a person who is not a party.

[115] The rule for the production of documents from a non-party requires that the information sought is relevant to a “material issue” in the action. The case law establishes that the disclosure and production of a document from a non-party is a matter of fairness and necessity. The court determines whether it would be unfair to require the moving party to proceed to trial without a document in the possession of a non-party, and balances that against the interests of the non-party, which include concerns about privacy, inconvenience and exposure to liability.[^18] Although production can be ordered from a non-party, it is not routinely sought and the threshold for granting it is high.[^19] An order under rule 30.10 should not be made as a matter of course and should only be made in exceptional circumstances.[^20]

[116] In making this determination, the court may consider the following factors: (1) the importance of the document to the issues in the litigation; (2) whether production at the discovery stage as opposed to production at trial is necessary to avoid unfairness to the moving party; (3) whether the examination of the opposing party with respect to the issues to which the documents are relevant would be adequate to obtain the information in the document; (4) the availability of the document or its information from another source that is accessible to the moving party; (6) the relationship of the non-party from whom production is sought to the litigation and the parties to the litigation; and (6) the position of the non-party with respect to production.[^21]

[117] I shall again be very brief on this aspect of the Plaintiffs’ motion. I simply say that it follows from all that I have said above that the case at bar is not one of the exceptional circumstances where an order should be made under rule 30.10.

H. Conclusion

[118] For the above reasons, the Plaintiffs’ motion is dismissed. It is time to pass the record and set this action down for a common issues trial or for a summary judgment motion.

[119] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Shoppers’ submissions within twenty days of the release of these Reasons for Decision followed by the Plaintiffs’ submissions within a further twenty days.

[120] In the circumstances of the Covid-19 emergency, these Reasons for Decision are deemed to be an Order of the court that is operative and enforceable without any need for a signed or entered, formal, typed order.

[121] The parties may submit formal orders for signing and entry once the court re-opens; however, these Reasons for Decision are an effective and binding Order from the time of release.

Perell, J.

Released: June 27, 2020

Schedule “A”

Pharmaceutical Rebates and Professional Allowance Legislation

Ontario Drug Benefit Act, R.S.O. 1990, c. O.10, s. 11.5 (as it appeared on 30 June 2010)

Rebates, Etc.

11.5 (1) A manufacturer shall not provide a rebate to wholesalers, operators of pharmacies, or companies that own, operate or franchise pharmacies, or to their directors, officers, employees or agents,

(a) for any listed drug product or listed substance; or

(b) for any drug in respect of which the manufacturer has made an application to the executive officer for designation as a listed drug product, while that application is being considered. 2006, c. 14, s. 19.

Extended definition of “manufacturer”

(2) For the purposes of this section and in section 11.6, unless the context requires otherwise, and in section 13.1 and subsection 14 (3),

“manufacturer” includes a supplier, distributor, broker or agent of a manufacturer, except in,

(a) clause (1) (b) of this section,

(b) subsection (6) of this section,

(c) paragraph 2 of subsection (9) of this section, and

(d) subsection (11) of this section. 2006, c. 14, s. 19.

May not accept rebate

(3) No wholesaler, operator, company, director, officer, employee or agent mentioned in subsection (1) shall accept a rebate that is mentioned in subsection (1), either directly or indirectly. 2006, c. 14, s. 19.

Executive officer may make order

(4) If the executive officer believes, on reasonable grounds, that a manufacturer is not complying with subsection (1), the executive officer may make an order requiring the manufacturer to pay to the Minister of Finance the amount calculated under subsection (5). 2006, c. 14, s. 19.

Calculation

(5) For the purposes of this section, the following rules apply to calculating the amount that is to be paid under subsection (4):

1. The amount shall be calculated by determining the difference between the expected value of all units of drug products and listed substances purchased and the actual cost of acquiring those units by the wholesaler, operator of a pharmacy, or company that owns, operates or franchises pharmacies.

2. The expected value mentioned in paragraph 1 shall be determined by multiplying the drug benefit price by the volume of units provided by the manufacturer or wholesaler for all the listed drug products and listed substances.

3. The actual cost of acquiring those products and substances mentioned in paragraph 1 shall be determined by subtracting the monetary value of the rebate from the amount paid for the drug products and listed substances by the wholesaler, operator of a pharmacy, or company that owns, operates or franchises pharmacies. 2006, c. 14, s. 19.

Deemed drug benefit price

(6) For the purposes of subsection (5), the drug benefit price of a drug in respect of which clause (1) (b) applies shall be deemed to be the price submitted by the manufacturer. 2006, c. 14, s. 19.

Reconsideration

(7) Within 14 days of being served with the order, the manufacturer may submit evidence to the executive officer as to its compliance with subsection (1), or that the amount calculated under subsection (5) is not correct, and the executive officer shall reconsider the order based on that evidence. 2006, c. 14, s. 19.

Actions of executive officer after reconsideration

(8) After reconsidering the order, the executive officer may do one of the following, and shall promptly serve the manufacturer with notice of his or her decision.

1. Affirm the order.

2. Rescind the order.

3. Vary the order. 2006, c. 14, s. 19.

Executive officer may act

(9) Where a manufacturer has not complied with an order under subsection (4) within 14 days of being served with it, or has submitted evidence within 14 days under subsection (7) and the order has been affirmed or varied under subsection (8) and the manufacturer has not complied with the affirmed or varied order within 14 days of being served with it, the executive officer may either issue a further order under subsection (4) or do either or both of the following:

1. If the drug that is the subject of the order is a listed drug product, remove its designation.

2. Not make further designations of any of the manufacturer’s drug products as listed drug products under section 1.3, nor consider any of its drug products for approval under section 16, nor designate any of its products as interchangeable under the Drug Interchangeability and Dispensing Fee Act until such time as the executive officer is of the opinion that the manufacturer is no longer offering the rebate. 2006, c. 14, s. 19.

Limit on reconsideration

(10) Subsections (7) and (8) do not apply to a further order mentioned in subsection (9). 2006, c. 14, s. 19.

Required notice

(11) Where the executive officer proposes to act under paragraph 2 of subsection (9), the executive officer shall serve the manufacturer with at least 30 days notice. 2006, c. 14, s. 19.

Executive officer order where rebate accepted

(12) Where the executive officer believes, on reasonable grounds, that a person has accepted a rebate contrary to subsection (3), the executive officer may make an order requiring the person to pay to the Minister of Finance the amount calculated under subsection (5). 2006, c. 14, s. 19.

Reconsideration

(13) Subsections (7) and (8), subsection (9), other than paragraphs 1 and 2, and subsection (10) apply with any necessary modifications where an order has been made under subsection (12). 2006, c. 14, s. 19.

Lesser amount

(14) Despite any other provision of this section, the executive officer may, in an order under subsection (4) or (12), require the manufacturer or other person to pay an amount less than the amount calculated under subsection (5) and, where the executive officer does so, the following apply:

1. The executive officer shall set out in the order both the lesser amount and how it was calculated.

2. Any right of reconsideration that applies with respect to a calculation under subsection (5) applies with respect to the calculation under paragraph 1. 2006, c. 14, s. 19.

Code of conduct

(15) The executive officer shall establish a Code of Conduct respecting professional allowances under this Act and the Drug Interchangeability and Dispensing Fee Act in consultation with the pharmacy and drug manufacturing industries, and shall update the Code of Conduct from time to time in consultation with those industries. 2006, c. 14, s. 19.

Publication

(16) The executive officer shall publish the Code of Conduct on the website of the Ministry and may publish it in any other format that the executive officer considers advisable. 2006, c. 14, s. 19.

Where conflict

(17) In the event of conflict between what is published on the Ministry’s website under subsection (15) and what is published in another format, the Ministry’s website prevails. 2006, c. 14, s. 19.

Definition

(18) In this section,

“rebate”, subject to the regulations, includes, without being limited to, currency, a discount, refund, trip, free goods or any other prescribed benefit, but does not include,

(a) a discount for prompt payment offered in the ordinary course of business, or

(b) a professional allowance. 2006, c. 14, s. 19.

Drug Interchangeability and Dispensing Fee Act, R.S.O. 1990, c. P.23, s. 12.1 (as it appeared on 30 June 2010)

Rebate, etc.

12.1 (1) A manufacturer shall not provide a rebate to wholesalers, operators of pharmacies, or companies that own, operate or franchise pharmacies, or to their directors, officers, employees or agents,

(a) for any interchangeable product; or

(b) for any product in respect of which the manufacturer has made an application to the executive officer for designation as an interchangeable product, while that application is being considered. 2006, c. 14, s. 3.

Extended definition of “manufacturer”

(2) For the purposes of this section and in section 12.2, unless the context requires otherwise, “manufacturer” includes a supplier, distributor, broker or agent of a manufacturer, except in,

(a) clause (1) (b) of this section,

(b) paragraph 2 of subsection (8) of this section,

(c) subsection (10) of this section, and

(d) clauses (b) and (c) of the definition of “drug benefit price” in subsection (14) of this section. 2006, c. 14, s. 3.

May not accept rebate

(3) No wholesaler, operator, company, director, officer, employee or agent mentioned in subsection (1) shall accept a rebate that is mentioned in subsection (1), either directly or indirectly. 2006, c. 14, s. 3.

Executive officer may make order

(4) If the executive officer believes, on reasonable grounds, that a manufacturer is not complying with subsection (1), the executive officer may make an order requiring the manufacturer to pay to the Minister of Finance the amount calculated under subsection (5). 2006, c. 14, s. 3.

Calculation

(5) For the purposes of this section, the following rules apply to calculating the amount that is to be paid under subsection (4):

1. The amount shall be calculated by determining the difference between the expected value of all units of the drug products purchased and the actual cost of acquiring those units by the wholesaler, operator of a pharmacy, or company that owns, operates or franchises pharmacies.

2. The expected value mentioned in paragraph 1 shall be determined by multiplying the drug benefit price by the volume of units provided by the manufacturer or wholesaler for all the products.

3. The actual cost of acquiring those products mentioned in paragraph 1 shall be determined by subtracting the monetary value of the rebate from the amount paid for all the products by the wholesaler, operator of a pharmacy, or company that owns, operates or franchises pharmacies. 2006, c. 14, s. 3.

Reconsideration

(6) Within 14 days of being served with the order, the manufacturer may submit evidence to the executive officer as to its compliance with subsection (1), or that the amount calculated under subsection (5) is not correct, and the executive officer shall reconsider the order based on that evidence. 2006, c. 14, s. 3.

Actions of executive officer after reconsideration

(7) After reconsidering the order, the executive officer may do one of the following, and shall promptly serve the manufacturer with notice of his or her decision:

1. Affirm the order.

2. Rescind the order.

3. Vary the order. 2006, c. 14, s. 3.

Executive officer may act

(8) Where a manufacturer has not complied with an order under subsection (4) within 14 days of being served with it, or has submitted evidence within 14 days under subsection (6) and the order has been affirmed or varied under subsection (7) and the manufacturer has not complied with the affirmed or varied order within 14 days of being served with it, the executive officer may either issue a further order under subsection (4) requiring the manufacturer to pay a revised amount calculated under subsection (5), or do either or both of the following:

1. If the drug that is the subject of the order is an interchangeable product, remove its designation.

2. Not make further designations of any of the manufacturer’s products as interchangeable under this Act, or as listed drug products under section 1.3 of the Ontario Drug Benefit Act, nor consider any of its products for approval under section 16 of that Act, until such time as the executive officer is of the opinion that the manufacturer is no longer offering the rebate. 2006, c. 14, s. 3.

Limit on reconsideration

(9) Subsections (6) and (7) do not apply to a further order mentioned in subsection (8). 2006, c. 14, s. 3.

Required notice

(10) Where the executive officer proposes to act under paragraph 2 of subsection (8), the executive officer shall serve the manufacturer with at least 30 days notice. 2006, c. 14, s. 3.

Executive officer order where rebate accepted

(11) Where the executive officer believes, on reasonable grounds, that a person has accepted a rebate contrary to subsection (3), the executive officer may make an order requiring the person to pay to the Minister of Finance the amount calculated under subsection (5). 2006, c. 14, s. 3.

Reconsideration

(12) Subsections (6) and (7), subsection (8), other than paragraphs 1 and 2, and subsection (9) apply with any necessary modifications where an order has been made under subsection (11). 2006, c. 14, s. 3.

Lesser amount

(13) Despite any other provision of this section, the executive officer may, in an order under subsection (4) or (11), require the manufacturer or other person to pay an amount less than the amount calculated under subsection (5) and, where the executive officer does so, the following apply:

1. The executive officer shall set out in the order both the lesser amount and how it was calculated.

2. Any right of reconsideration that applies with respect to a calculation under subsection (5) applies with respect to the calculation under paragraph 1. 2006, c. 14, s. 3.

Definitions

(14) In this section,

“drug benefit price” means, with respect to a product,

(a) its drug benefit price under the Ontario Drug Benefit Act,

(b) in the case of a product that is not a benefit under the Ontario Drug Benefit Act, a price submitted by the manufacturer under the regulations that has been posted by the executive officer in the Formulary, or

(c) in the case of a product mentioned in clause (1) (b), the price submitted by the manufacturer; (“prix au titre du régime de médicaments”)

“rebate”, subject to the regulations, includes, without being limited to, currency, a discount, refund, trip, free goods or any other prescribed benefit, but does not include,

(a) a discount for prompt payment offered in the ordinary course of business, or

(b) a professional allowance. (“rabais”) 2006, c. 14, s. 3.

Regulations

(15) The Lieutenant Governor in Council may make regulations clarifying the definition of “rebate” in this section, including providing that certain benefits are not rebates, prescribing benefits for the purpose of that definition, clarifying how the calculations are to be made in this section and defining “professional allowance” for the purposes of that definition, including governing how professional allowances are to be calculated, setting limits on professional allowances and incorporating the content of the Code of Conduct referred to in subsection 11.5 (15) of the Ontario Drug Benefit Act as amended from time to time. 2006, c. 14, s. 3.

O. Reg. 201/96 [Ontario Drug Benefit Act] (as it appeared on 30 June 2010)

DEFINITIONS

1(8) For the purposes of section 11.5 of the Act,

“professional allowance”, in the definition of “rebate”, means, subject to subsections (9) and (10), a benefit, in the form of currency, services or educational materials that are provided by a manufacturer to persons listed in subsection 11.5 (1) of the Act for the purposes of direct patient care as set out in paragraphs 1 to 8 of this subsection:

1. Continuing education programs that enhance the scientific knowledge or professional skills of pharmacists, if held in Ontario.

2. Continuing education programs for specialized pharmacy services or specialized certifications, if held in North America.

3. Clinic days provided by pharmacists to disseminate disease or drug-related information targeted to the general public including flu shot clinics, asthma clinics, diabetes management clinics, and similar clinics. For this purpose, a “clinic day” includes any additional staff to support the clinic day or the regular pharmacy business while the pharmacist is hosting a clinic day, during that day.

4. Education days provided by pharmacists that are targeted to the general public for health protection and promotion activities. Such education days must be held in the pharmacy, or a school, long-term care home, community centre, place of worship, shopping mall, or a place that is generally similar to any of these. For this purpose, an “education day” includes any additional staff to support the education day or the regular pharmacy business while the pharmacist is hosting an education day, during that day.

5. Compliance packaging that assists their patients with complicated medication regimes.

6. Disease management and prevention initiatives such as patient information material and services, blood pressure monitoring, blood glucose meter training, asthma management and smoking cessation, used in their pharmacy. For this purpose, “disease management and prevention initiatives” includes any additional staff required to support these initiatives or the regular pharmacy business while the pharmacist is hosting a disease management and prevention initiative, during the time it is being held.

7. Private counselling areas within their pharmacy.

8. Hospital in-patient or long-term care home resident clinical pharmacy services, such as medication reconciliation initiatives or other hospital or long-term care home-identified clinical pharmacy priorities. For this purpose, “clinical pharmacy services” includes the costs of any additional staff required to support these services or the regular pharmacy business while the pharmacist is hosting a clinical pharmacy service, during the time it is being held.

1(9) Where the value of all of the benefits provided for in subsection (8) exceeds, with respect to all of a manufacturer’s listed drug products or listed substances, the value of X in the formula below, then the benefits that are in excess of X are a rebate and not a professional allowance:

X = 20% of (P – V)

where,

“X” is the total dollar amount of professional allowances that may be provided by a manufacturer to persons listed in subsection 11.5 (1) of the Act,

“P” is the total dollar amount of a manufacturer’s drug products reimbursed under the Act based on the number of units reimbursed at each product’s drug benefit price,

“V” is the total dollar value of any volume discount or any other amount of payment that was made to the Minister of Finance under an agreement entered into under this Regulation or Regulation 935 of the Revised Regulation of Ontario, 1990 (General) made under the Drug Interchangeability and Dispensing Fee Act for those products reflected in P.

SCHEDULE 3 - CODE OF CONDUCT

The Code of Conduct is intended to establish system-wide guidance governing the use of professional allowances to be paid by manufacturers to operators of pharmacies, or companies that own, operate or franchise pharmacies, or to their directors, officers, employees or agents.

Where the term “representative” is used in this Code of Conduct, it means an officer, director, employee, or agent.

Fundamental Principles

1. Payments from manufacturers to operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents, in the form of a professional allowance must be used only for any or all of the activities set out in paragraphs 1 to 8 of the definition of “professional allowance” in subsection 1 (8) of the regulation.

2. All persons involved in the drug distribution system must operate transparently. To act transparently, manufacturers, operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents must make the executive officer and other stakeholders knowledgeable of, and fully understand, the flow of funds in the drug products supply chain. This includes recording and reporting all such payments as required by the executive officer and being subject to audit by the Ministry or a third party.

3. All suppliers of drug products as well as operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents, must commit to abide by this Code of Conduct. Any breach of the Code will be subject to enforcement as set out in the Ontario Drug Benefit Act and the Drug Interchangeability and Dispensing Fee Act.

Use of Professional Allowances

Operators of pharmacies or companies that own, operate or franchise pharmacies may use professional allowances. Programs and information contained in educational materials must be full, factual and without intent to mislead.

Professional allowances may never be used for:

1. Advertising or promotional materials, such as store flyers, except in association with clinic days, education days, disease management and prevention initiatives and clinical pharmacy services mentioned in paragraphs 3, 4, 6 and 8 of the definition of “professional allowance” in subsection 1 (8) of the regulation.

2. Entertainment, social and sporting events.

3. Meals and travel not directly associated with a program referred to in paragraphs 1 to 4 of the definition of “professional allowance” in subsection 1 (8) of the regulation.

4. Convention displays.

5. Personal gifts provided to operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents.

6. Revoked: O. Reg. 559/06, s. 4 (2).

7. Packaging costs and delivery services in respect of a prescription and dispensing fees.

8. Taxes.

9. Inventory costs.

10. Fees or penalties for inventory adjustments.

11. Purchases of sales and prescription-related data.

12. Fees for listing products in inventory.

13. Renovations, leasehold improvements and similar matters, except as directly related to a private counselling area mentioned in paragraph 7 of the definition of “professional allowance” in subsection 1 (8) of the regulation.

14. Store fixtures.

15. Real estate purchases or sales, encumbrances, leases or rent.

Professional allowances are to be calculated based on the following criteria:

1. Reasonable costs to provide direct patient care as set out in paragraphs 1 to 8 of the definition of “professional allowance” in subsection 1 (8) of the regulation.

2. Reasonable frequency of providing direct patient care as set out in paragraphs 1 to 8 of the definition of “professional allowance” in subsection 1 (8) of the regulation.

3. A reasonable number of patients per pharmacy.

Manufacturers’ Representatives

Manufacturers’ representatives shall conduct business ethically and in a manner that is in the best interest of patients.

Any information provided by manufacturers’ representatives, whether written or oral, must be full, factual and without misrepresentation.

Manufacturers shall be held responsible for the behaviour of their representatives.

Pharmacy Representatives

Pharmacy representatives shall conduct business ethically and in a manner that is in the best interest of their patients.

Pharmacies must not make procurement and purchasing decisions based solely on the provision of professional allowances.

Reporting

Manufacturers will report to the executive officer the amount of professional allowance paid to each operator of a pharmacy, or company that owns, operates or franchises pharmacies, including their directors, officers, employees or agents, in as much detail as is required by the executive officer and at times required by the executive officer. The report must be signed by two officers of the manufacturer or by the manufacturer’s auditors, as may be required by the executive officer.

Operators of pharmacies, or companies that own, operate or franchise pharmacies will report to the executive officer the amount of professional allowance received from each manufacturer in as much detail as is required by the executive officer and at times required by the executive officer. The report must be signed by two officers of the operator of the pharmacy, or company that owns, operates or franchises pharmacies, or by their auditors, as may be required by the executive officer.

R.R.O. 1990, Reg. 935 [Drug Interchangeability and Dispensing Fee Act] (as it appeared on 30 June 2010)

Definitions

2. (1) For the purposes of section 12.1 of the Act,

“professional allowance”, in the definition of “rebate”, means, subject to subsection (2), a benefit, in the form of currency, services or educational materials that are provided by a manufacturer to persons listed in subsection 12.1 (1) of the Act for the purposes of direct patient care as set out in paragraphs 1 to 8 of this subsection:

1. Continuing education programs that enhance the scientific knowledge or professional skills of pharmacists, if held in Ontario.

2. Continuing education programs for specialized pharmacy services or specialized certifications, if held in North America.

3. Clinic days provided by pharmacists to disseminate disease or drug-related information targeted to the general public including flu shot clinics, asthma clinics, diabetes management clinics, and similar clinics. For this purpose, a “clinic day” includes any additional staff to support the clinic day or the regular pharmacy business while the pharmacist is hosting a clinic day, during that day.

4. Education days provided by pharmacists that are targeted to the general public for health protection and promotion activities. Such education days must be held in the pharmacy, or a school, long-term care home, community centre, place of worship, shopping mall, or a place that is generally similar to any of these. For this purpose, an “education day” includes any additional staff to support the education day or the regular pharmacy business while the pharmacist is hosting an education day, during that day.

5. Compliance packaging that assists their patients with complicated medication regimes.

6. Disease management and prevention initiatives such as patient information material and services, blood pressure monitoring, blood glucose meter training, asthma management and smoking cessation, used in their pharmacy. For this purpose, “disease management and prevention initiatives” includes any additional staff required to support these initiatives or the regular pharmacy business while the pharmacist is hosting a disease management and prevention initiative, during the time it is being held.

7. Private counselling areas within their pharmacy.

8. Hospital in-patient or long-term care home resident clinical pharmacy services, such as medication reconciliation initiatives or other hospital or long-term care home-identified clinical pharmacy priorities. For this purpose, “clinical pharmacy services” includes the costs of any additional staff required to support these services or the regular pharmacy business while the pharmacist is hosting a clinical pharmacy service, during the time it is being held.

SCHEDULE 1 - CODE OF CONDUCT

The Code of Conduct is intended to establish system-wide guidance governing the use of professional allowances to be paid by manufacturers to operators of pharmacies, or companies that own, operate or franchise pharmacies, or to their directors, officers, employees or agents.

Where the term “representative” is used in this Code of Conduct, it means an officer, director, employee, or agent.

Fundamental Principles

1. Payments from manufacturers to operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents, in the form of a professional allowance must be used only for any or all of the activities set out in paragraphs 1 to 8 of the definition of “professional allowance” in subsection 2 (1) of the regulation.

2. All persons involved in the drug distribution system must operate transparently. To act transparently, manufacturers, operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents must make the executive officer and other stakeholders knowledgeable of, and fully understand, the flow of funds in the drug products supply chain. This includes recording and reporting all such payments as required by the executive officer, and being subject to audit by the Ministry or a third party.

3. All suppliers of drug products as well as operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents, must commit to abide by this Code of Conduct. Any breach of the Code will be subject to enforcement as set out in the Ontario Drug Benefit Act and the Drug Interchangeability and Dispensing Fee Act.

Use of Professional Allowances

Operators of pharmacies or companies that own, operate or franchise pharmacies may use professional allowances. Programs and information contained in educational materials must be full, factual and without intent to mislead.

Professional allowances may never be used for:

1. Advertising or promotional materials, such as store flyers, except in association with clinic days, education days, disease management and prevention initiatives and clinical pharmacy services mentioned in paragraphs 3, 4, 6 and 8 of the definition of “professional allowance” in subsection 2 (1) of the regulation.

2. Entertainment, social and sporting events.

3. Meals and travel not directly associated with a program referred to in paragraphs 1 to 4 of the definition of “professional allowance” in subsection 2 (1) of the regulation.

4. Convention displays.

5. Personal gifts provided to operators of pharmacies, or companies that own, operate or franchise pharmacies, including their directors, officers, employees or agents.

6. Revoked: O. Reg. 558/06, s. 4 (3).

7. Packaging costs and delivery services in respect of a prescription and dispensing fees.

8. Taxes.

9. Inventory costs.

10. Fees or penalties for inventory adjustments.

11. Purchases of sales and prescription-related data.

12. Fees for listing products in inventory.

13. Renovations, leasehold improvements and similar matters, except as directly related to a private counselling area mentioned in paragraph 7 of the definition of “professional allowance” in subsection 2 (1) of the regulation.

14. Store fixtures.

15. Real estate purchases or sales, encumbrances, leases or rent.

Professional allowances are to be calculated based on the following criteria:

1. Reasonable costs to provide direct patient care as set out in paragraphs 1 to 8 of the definition of “professional allowance” in subsection 2 (1) of the regulation.

2. Reasonable frequency of providing direct patient care as set out in paragraphs 1 to 8 of the definition of “professional allowance” in subsection 2 (1) of the regulation.

3. A reasonable number of patients per pharmacy.

Manufacturers’ Representatives

Manufacturers’ representatives shall conduct business ethically and in a manner that is in the best interest of patients.

Any information provided by manufacturers’ representatives, whether written or oral, must be full, factual and without misrepresentation.

Manufacturers shall be held responsible for the behaviour of their representatives.

Pharmacy Representatives

Pharmacy representatives shall conduct business ethically and in a manner that is in the best interest of their patients.

Pharmacies must not make procurement and purchasing decisions based solely on the provision of professional allowances.

Reporting

Manufacturers will report to the executive officer the amount of professional allowance paid to each operator of a pharmacy, or company that owns, operates or franchises pharmacies, including their directors, officers, employees or agents, in as much detail as is required by the executive officer and at times required by the executive officer. The report must be signed by two officers of the manufacturer or by the manufacturer’s auditors, as may be required by the executive officer.

Operators of pharmacies, or companies that own, operate or franchise pharmacies will report to the executive officer the amount of professional allowance received from each manufacturer in as much detail as is required by the executive officer and at times required by the executive officer. The report must be signed by two officers of the operator of the pharmacy, or company that owns, operates or franchises pharmacies, or by their auditors, as may be required by the executive officer.

R.R.O. 1990, Reg 935 [Drug Interchangeability and Dispensing Fee Act] (as it appeared on 31 March 2013)

Definitions

2(1.1) Where the value of all of the benefits provided under subsection (1) exceeds the value of X in the formula below, in respect of all of a manufacturer’s interchangeable products that are dispensed by a pharmacy and that are not reimbursed under the Ontario Drug Benefit Act, then the benefits that are in excess of X are a rebate and not a professional allowance,

X = 25% of P

where,

“X” is the total dollar amount of professional allowances that may be provided by a manufacturer to persons listed in subsection 12.1 (1) of the Act, and

“P” is the total dollar amount of a manufacturer’s interchangeable products, whether or not the products are listed drug products under the Ontario Drug Benefit Act, that are not reimbursed under the Ontario Drug Benefit Act, based on the number of units dispensed by the pharmacy, at each product’s price, which shall not exceed the price the product may be sold at under subsection 8 (1) where that subsection applies to the product.

Schedule “B”

REFUSALS AND UNDERTAKINGS CHART UPDATED JUNE 3, 2020 EXAMINATIONS FOR DISCOVERY OF ROBERT BAKER AND ANGELO MARIANO

(As Completed by the Defendants)

No.

Issue & Relationship to the pleadings & common issues

Witness

Q. #

Question

Disposition by the Court

Response

Category 1: Amount of Professional Allowances Received-Rate >95% (Docs SDM0028180 Tab 25, & SDM0028184 Tab 41) [Questions 1-40]

Defendants’ Response: As the plaintiffs assert in their Factum, the questions in this category pertain to worksheets titled “ROC Income (Max – 95% / 99%)” contained in ODB Invoice Spreadsheets.[^22] “ROC” stands for “rest of country” or “rest of Canada”, and refers to rebates received outside of Ontario and Quebec.[^23] Similarly, the information contained in these worksheets – and the information requested by the plaintiffs – pertains to rebate rates outside of Ontario. The plaintiffs’ claim for rebates has been struck out, and this information is irrelevant.

In addition, the plaintiffs take the position certain of this information is relevant to the defendants’ receipt of “over and above” or “O&A” income. O&A income – which is received from generic vendors in exchange for services or programs provided by SDM – is income distinct from rebates and professional allowances, and so it is irrelevant to the amount of professional allowances collected in Ontario during the class period.[^24] See Category #2 for further information.

Defendants' receipt of monies from generic drug manufacturers / circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1377

To provide Shoppers' full facts, information, and evidence as to what the heading, "ROC income [Max 95/99 %]," in the "Summary for Billing" tab of SDM0028180, is in reference to.

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker confirmed during his examination that “ROC income” means “rest of the country income rate”, that is, the income rate outside of Ontario.[^25]

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

The defendants note that the amount of and rates for professional allowances invoiced to generic drug manufacturers (including Sandoz and Ranbaxy) for the period to which this spreadsheet pertains are included in the “Summary final” tab of SDM0028180.

Defendants' receipt of monies from generic drug manufacturers / circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1377

To advise in particular whether the vendors had indicated the "ROC income [Max 95/99 %]" in the "Summary for Billing" tab of SDM0028180 was the maximum rest of Canada rate that they were prepared to pay, who those discussions were with, who on the Shoppers team were involved in those discussions or negotiations, and with which vendors.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #1.

For the reasons given in SDM’s factum, the following are not relevant to the common issues:

• any agreements with generic vendors regarding the maximum rates they were prepared to pay in respect of the “rest of Canada” (i.e., outside Ontario);

• who they discussed those agreements with;

• who represented Shoppers in such discussions; and

• which vendors were involved in such agreements.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1378

To advise whether the decision or directive that the rest of Canada rate would be at a max of 99 or 95 percent arose out of the percentages in documents that were in excess of 100 percent.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #1.

For the reasons given in SDM’s factum, the reasons for any decision or directive regarding any maximum income rate in the rest of Canada are not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1378

To provide Shoppers' full facts and evidence as to why the rest of Canada rates (at a max of 99% or 95%) were reached and all negotiations behind that.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #1.

For the reasons given in SDM’s factum, the reasons for any maximum income rate in the rest of Canada and negotiations underlying any such agreements are not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1383

To advise of the full facts and evidence explaining what data is reflected in rows 168 through 182 of the "Summary of Billings" tab of SDM0028180, using Ranbaxy as an example (cells P167-P173 and P176), and to advise for what purpose this data was created and recorded.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #1.

As shown on the face of the document, this data relates to the rest of Canada. For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1386

In relation to the "Summary Sent" tab of SDM0028180, to explain:

the purpose of the tab,

why it was created,

what is reflected in "ROC Income Rate %" in column F,

the purpose of the analysis in ROC,

if ROC max 95 in column H [sic],

the purpose of column I "Fourth Advisor/No Invoice",

the meaning of the heading "Fourth Advisor/No Invoice", and

the meaning of the data reflected in column I.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #1.

As shown on the face of the document, and as reflected in the wording of the question, this data relates to the rest of Canada. For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1445

To make inquiries with Mr. Potter and anyone else at Shoppers who would have relevant information as to the entry in the tab "Rate >95%" of SDM0028180, at line 32, dealing with Ratiopharm and the evidence that's been provided by Mr. Baker.

Refusal justified: Question: Answered Disproportionate Irrelevant

These questions arose out of a reference to “an invoice to Ratiopharm for a listing fee with the description outside Ontario and Québec.”[^26]

As reflected by the question and prior answers, and as shown on the face of the document, this relates to matters not involving professional allowances in Ontario. For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1445

To provide the full facts, information, and evidence if Shoppers has any further evidence or information concerning the entries in line 32 in tab "Rate >95%" of SDM0028180.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #7.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1445

To provide Shoppers' full facts and evidence in relation to the purpose behind the comments resolution column (column P) in tab "Rate >95%" of SDM0028180, the information that is being reflected there, and whether the invoicing decisions in those rows reflect pre-existing agreements with the generic vendors.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #7. Matters relating to invoices for rebates or other income, such as listing fees, outside of Ontario are not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1455

To advise what cell G97 in the tab "Rate >95%" of SDM0028180 is doing and also what entries are in column G more generally, under the heading "REG INV".

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker testified that “REG INV” means “regular invoice”[^27] There is nothing to suggest this invoice is for professional allowances.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Further, it is disproportionate to make inquiries regarding a single cell of a single spreadsheet.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1463

To make inquiries of the appropriate individuals at Shoppers who would have information concerning the information in cell P97 in the tab "Rate >95%" of SDM0028180, including Mr. Leger, Ms. Gould (if she is still at Shoppers), and to provide Shoppers' full facts, information, and evidence as to what is being proposed in this comments resolution box, in particular the words: "Jeff to potentially get money through OTC products. Joanne to confirm if we remove income and show as OTC, therefore deferred on front store inventory."

To advise as to what was in fact done in relation to this fourth advisor/no invoice dollar amount of $1,098,033.

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker testified that “OTC products” means “over the counter products”.[^28] Accordingly, it appears that this refers to income relating to “over the counter products”.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Further, it is disproportionate to make inquiries regarding a single invoice.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1468

To provide Shoppers' full facts, evidence, and information, as to what the comment in cell P101 in the tab "Rate >95%" of SDM0028180 is referencing and proposing and what in fact occurred with the dollar amount in the Ratiopharm line of $553, 841.

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker testified that he wrote what was in cell P101, which stated "Yes to invoice – need to get description from Chris/Jeff” but did not recall what he meant by it.[^29]

Information about an individual invoice to one generic manufacturer that does not appear to relate to professional allowances is not relevant.

Further, Mr. Baker could not recall what he meant, and making further efforts to reconstruct the surrounding circumstances of a solitary spreadsheet entry involving a single invoice with an apparent value of $553,841 is not proportionate.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1470

To review and make necessary inquiries with the individuals referenced in the rows, or the individuals who would have information about them, and to provide Shopper's full facts and evidence regarding cells P185, P193, P220, and P419-425 in the tab "Rate >95%" of SDM0028180.

Refusal justified: Question: Answered Disproportionate Irrelevant

Cell P185 appears to exclude Ontario. Cell P193 appears to be about amounts not billed. P220 appears to pertain to a “regular ROC invoice”. P419-425 appear to be about ROC invoices.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Accordingly, information about individual invoices to one generic manufacturer that do not appear to relate to professional allowances is not relevant and gatherig that information is not proportionate.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1483

To make inquiries with Mr. Potter and provide Shoppers' full information and evidence as to whether Ranbaxy had agreed by period 3, 2012 to pay a rest of country rebate of 99%.

Refusal justified: Question: Answered Disproportionate Irrelevant

On its face, the question is about rebates in the rest of Canada (i.e., not Ontario). For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1483

If Ranbaxy had agreed by period 3, 2012 to pay a rest of country rebate of 99%, to advise with whom at Ranbaxy the deal was made, and whether there's any documentation of that.

Refusal justified: Question: Answered Disproportionate Irrelevant

On its face, the question is about rebates in the rest of Canada (i.e., not Ontario). For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1483

To advise whether in row 547 of SDM0028180, Auro had agreed to pay a rest of Canada rebate rate at 95%.

Refusal justified: Question: Answered Disproportionate Irrelevant

On its face, the question is about rebates in the rest of Canada (i.e., not Ontario). For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1505

To provide Shoppers' full facts, information, and evidence explaining the entry in S545 in the tab "Rate >95%" of SDM0028180.

Refusal justified: Question: Answered Disproportionate Irrelevant

S545 states: "Added +30,876 from net deal to regular invoice and $291,550 not accrued net deal from P2 + $387,654 accrued in P2 as O&A now moved to ROC income less -315,396 ND from P1 not yet booked."

Not relevant. There is nothing in S545 that suggests it relates to professional allowances.

Further, reconstructing the surrounding circumstances of a solitary spreadsheet entry involving amounts less than $1M is not proportionate.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1506

To provide Shoppers' full facts, information, and evidence as to what the headings in rows 540, 560, 574, 583, 590, 598, and 602 in the tab "Rate >95%" of SDM SDM0028184 relate to and what they describe.

Refusal justified: Question: Answered Disproportionate Irrelevant

The labels on the referenced rows (with the exception of Row 540) do not contain headings. Based on the document, the headings referred to appear to be those set out below:

Row 540 – “Rcpts at Full Price” and “Adjusted Rate on Full Price Row 563 - "Items under deal – net pricing."· Row 577 - "Status apply.” Row 586 - "Brand display."· Row 595 - "ROP." Row 603 - "Master services [MSA]." Row 607 - "IMA.”

There is nothing in these row labels that suggests the information relates to professional allowances or that even if they did, that the information is relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1053

To make the necessary inquiries for the defendants' full facts and evidence explaining why the rest of Canada rate in SDM0028184, Tab "Summary for billing," cell G17 is negative with the corresponding negative rate based rest of Canada income at negative $249,243 in cell H17.

Refusal justified: Question: Answered Disproportionate Irrelevant

As shown by the question and the document, the information sought relates to “rest of Canada income”.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1063

To advise what happens to the rest of Canada with the negative 4% rate and the income of negative $249,243 (as per SDM0028184, Tab "Summary for billing")

Refusal justified: Question: Answered Disproportionate Irrelevant

As shown by the question and the document, the information sought relates to the “rest of Canada”.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1073

To explain what appears to be a discrepancy between the rates given in the answer to question 3602 of the May 2017 examination for discovery of A. Mariano (47.5%) and the national combined rates that are reflected in SDM0028184 (10.63%), recognizing that SDM0028184 is one period (period 6) in that year.

Refusal justified: Question: Answered Disproportionate Irrelevant

Any explanation regarding apparent discrepancies in specific national rates (which reflect both professional allowances in Ontario and rebates in other provinces), particularly in (as the question acknowledges) one period of one year, is not relevant to the common issues or proportionate.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1074

To advise if there are additional invoices or categories of funds received from the manufacturers during Period 6 that would account for the difference between rates given in the answer to question 3602 of the May 2017 examination for discovery of A. Mariano and the national combined rates that are reflected in SDM0028184?

Refusal justified: Question: Answered Disproportionate Irrelevant

Question 1074 was: “1074· Q.· ·I guess my question is whether there are additional invoices or categories of funds received from the manufacturers during this period that would account for this difference, because the amounts that appear to be invoiced for professional allowances and rebates as reflected on the ODB invoice spreadsheet -- SDM 0028184 -- we've been looking at, the similar spreadsheets for the full year suggest that there must have been other funds received from the generic companies to get to a rate of 47.5 percent as provided in answer to undertaking 3602.”

As the question shows, it is seeking information about “other funds received from the generic companies”, other than professional allowances and rebates.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1075

To provide Shoppers' full facts and evidence explaining the discrepancy between 47.5% and 10.63% as referenced in the answer to question 3602 of the May 2017 examination for discovery of A. Mariano and SDM0028184, tab "Period 6". To the extent that other funds were received from the manufacturers during Period 6, to include that in the answer.

Refusal justified: Question: Answered Disproportionate Irrelevant

See responses to #21 and #22.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1090-1091

To advise what the two rates, 48.90% and 10.25%, are referencing in SDM0028184, tab "Rates >95%" at cell I540 and I541.

Refusal justified: Question: Answered Disproportionate Irrelevant

These are labelled “Adjusted rate on full price” and “original rate on full price”, in a table labeled as “Rates Over 95% for ROC”. Income rates (other than solely with respect to professional allowances) are not relevant to the common issues or proportionate.

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1092

To advise what the "adjusted rate on full price" at 48.90% in SDM0028184, Tab "Rates >95%," cells I540, and J540 represents.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #24.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1093

To advise what "original DAR rate on full price" at 10.25% in SDM0028184, Tab "Rates>95%," cells I541 and J541 represents.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #24.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1094

To advise whether amounts were billed to the drug manufacturers at the rates of 48.90% or 10.25% (as per SDM0028184, Tab "Rates >95%," cells I540, J540, I541, and J541).

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #24. What was billed to drug manufacturers – other than for professional allowances – is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1095-1096

To advise whether the adjusted rate on full price of 48.90% (as per SDM0028184, Tab "Rates >95%," cells I540 and J540) is a reflection of the national rate on which vendor funds were received by Shoppers for manufacturers during this period.

If not, to provide Shoppers' full facts and evidence as to what it is.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #24.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1098-1099

To advise if Shoppers receive vendor funds at a rate of 48.9% of $82,464,827 (as per SDM0028184, Tab "Rates >95%," cells I540, J540, and F540 and G540).

If so, to advise what the basis for the receipt of those funds from the manufacturers, namely whether they were in payment for professional allowances, rest of Canada rebates, and anything else?

Refusal justified: Question: Answered Disproportionate Irrelevant

Whether the defendants received any of the specific funds referred to in this spreadsheet and, if so, on what basis are not relevant to the common issues or proportionate, particularly when the amounts of professional allowances billed to individual vendors is available from other sources.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1099-1100

In SDM0028184, Tab "Rates >95%," to advise what column I, titled "Income >/< than rate allowed" represents and whether the amount was billed to Apotex in relation to drugs received on a national basis.

Refusal justified: Question: Answered Disproportionate Irrelevant

There is no evidence that column I relates to professional allowances. Further, what was billed to Apotex in relation to drugs received on a national basis is not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1101

To provide the full facts and evidence as to what the non-ODB rate of 33% for Apotex (per SDM0028184, Tab "Rates >95%," cell C543) and the rest of Canada income rate percentage before any adjustment of negative 0.74%(cell D543), represent.

Refusal justified: Question: Answered Disproportionate Irrelevant

This information is contained in a chart labeled as “Rates Over 95% for ROC”. For the reasons given in the defendants’ factum, information about rebates or “the rest of Canada income rate” is not relevant to the common issues. As such, information in this table is irrelevant.

The defendants note that the non-ODB rate charged to Apotex during this period is contained in cell G9 in the Summary tab of this document. These numbers appear to match. Information about non-ODB professional allowances charged to Apotex (and other vendors) has been disclosed in other sources, as set out in the defendants’ factum.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1102

To advise what the percentages of 33% (SDM0028184, Tab "Rates >95%," cell C546) and negative 168.64% (cell D546) reflect.

Refusal justified: Question: Answered Disproportionate Irrelevant

The percentages are described as “non-ODB Ontario rate” and “rest of Canada income rate”.

This information is contained in a chart labeled as “Rates Over 95% for ROC”. For the reasons given in the defendants’ factum, information about rebates or “the rest of Canada income rate” is not relevant to the common issues. As such, information in this table is irrelevant.

The defendants note that the non-ODB rate charged to Cobalt during this period is contained in cell S9 in the Summary tab of this document. These numbers appear to match.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1103

To advise what is meant by "if ROC max 95%" in SDM0028184, Tab "Rates >95%," cell E542 and what was ultimately charged to Cobalt in this period, both for non-ODB and the rest of Canada.

Refusal justified: Question: Answered Disproportionate Irrelevant

Information about the “rest of Canada” and what was charged to Cobalt for the “rest of Canada”, particularly in a single period, is not relevant to the common issues and not proportionate to obtain.

The non-ODB professional allowance rate charged to Cobalt during this period is contained in cell S9 in the Summary tab of this document. Also, information about non-ODB professional allowances charged to Cobalt (and other vendors) has been disclosed in other sources, as set out in the defendants’ factum.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1104

To advise how the O&A agreements bear on the amounts received from the generic manufacturers during Period 6- June 16 (period for SDM0028184, "Rates >95%").

Refusal justified: Question: Answered Disproportionate Irrelevant

Agreements relating to O&A and what may have been received from generic manufacturers with respect to O&A agreements is not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1107

To confirm that the data in SDM0028184, Tab "Rates >95%" row 562 reveals what was booked in Shoppers' general ledger as monies received from the manufacturers during this period (Period 6)?

Refusal justified: Question: Answered Disproportionate Irrelevant

Information about what was received from generic manufacturers, other than professional allowances, is not relevant to the common issues.

The plaintiffs have requested, and the defendants have produced, line entries for Allowances set up in the Tecsys system through the professional allowances class period in the income line credited in Shoppers Drug Mart Inc.’s accounting system for invoices for professional allowances (account 64000-8381-70, named “Prescriptions”) See: document SDM0029406; June 29, 2018 answer to question 3854 (Mariano examination).

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1108

To advise if Shoppers booked $40,322,821 as recorded in SDM0028184, Tab "Rates >95%," cell F562?

Refusal justified: Question: Answered Disproportionate Irrelevant

Information about what was received from generic manufacturers, other than professional allowances, is not relevant to the common issues.

The plaintiffs have requested, and the defendants have produced, line entries for Allowances set up in the Tecsys system through the professional allowances class period in the income line credited in Shoppers Drug Mart Inc.’s accounting system for invoices for professional allowances (account 64000-8381-70, named “Prescriptions”) See: document SDM0029406; June 29, 2018 answer to question 3854 (Mariano examination).

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1109-1110

To advise whether the amount $40,322,821 (as recorded in SDM0028184, Tab "Rates >95%," cell F562) is based on a national combined rate for rebates and professional allowances of 49.45 percent as reflected in cell G562, as contrasted with the data in row 563, which appears to be a forecasted amount based on 46.36%?

Refusal justified: Question: Answered Disproportionate Irrelevant

Information about what the defendants received, or forecasted to receive, for both rebates and professional allowances on a national basis from generic manufacturers is not relevant to the common issues. Information about professional allowances received from generic manufacturers has been disclosed in other sources, as set out in the defendants’ factum.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1111

What portion of the data in SDM0028184, Tab "Rates >95%," row 563 related to drugs dispensed in Ontario?

Refusal justified: Question: Answered Disproportionate Irrelevant

The question is asking what portion of the amount of $40,322,821 (see F562) and the associated rates in G562 and row F563 relates to drugs dispensed in Ontario. Answering the question would permit inferences about what was received in respect of the rest of Canada, which is not relevant, and information about what was received for professional allowances in Ontario has been provided elsewhere, as set out in the defendants’ factum. The question is not relevant or proportionate.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1112

To advise if and how the percentages reflected in SDM0028184, Tab "Rates >95%," cells G562 and G563 pertain to the national combined rates for rebates and professional allowances provided in answer to question 3602 of the May 2017 examination for discovery of A. Mariano.

Refusal justified: Question: Answered Disproportionate Irrelevant

National combined rates for rebates and professional allowances are not relevant to the common issues.

The defendants note that the answer to question 3602 was provided subject to objection on relevance, pursuant to Rule 34.12(2).

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1112

To advise as to what is reflected in SDM0028184, Tab "Rates >95%," column L starting at row 577 and following under the heading O&A (the entire column L with the heading "O&A").

To advise what those figures represent in relation to the generic manufacturers listed by row and whether those were funds received from those generic manufacturers in relation to drugs dispensed, including drugs dispensed in Ontario.

Refusal justified: Question: Answered Disproportionate Irrelevant

For reasons given in the defendants’ factum, information about O&A income is not relevant to the common issues.

Category 2: Amount of Professional Allowances Received - O&A ("Over and Above") [Questions 41-58]

Defendants’ Response: The questions in this category pertain to the defendants’ receipt of “over and above” or “O&A” income. The defendants have informed the plaintiffs in answers to undertakings that O&A income refers to income over and above rebates and professional allowances, and is received from generic vendors in exchange for services or programs provided by Shoppers. Notably, O&A income is distinct from professional allowances and is generally not collected on a volume basis. Contrary to the plaintiffs’ assertion, rebates and professional allowances were not “allocated” to O&A. Rather, O&A income is distinct from rebates and professional allowances, and is irrelevant to the amount of professional allowances collected in Ontario during the class period.[^30]

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

965

To make inquiries and advise whether "rate-based" income as referred to in cell A63 of the "Reported Rates" tab of SDM0027926 includes the percentage-based O&A?

Refusal justified: Question: Answered Disproportionate Irrelevant

Whether O&A income was included in the “rate-based” income (which Mr. Baker testified is “invoicing for warehouse allowance, professional allowance, the income that’s based on the purchases”[^31]) is not relevant to any certified common issues.

The defendants note that the total amount of professional allowances received during periods between January of 2007 to June of 2012 appear to be reflected in rows 25, 48 and 51, columns AO to AZ of the Reported Rates tab of SDM0027296. Further details regarding the amounts received by each generic manufacturer during six-month period within this time frame are included in the remaining tabs of this document.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

969

To advise what is encompassed in row 65 of the "Reported Rates" tab of SDM0027926.

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker testified that row 65 (O&A) references “any non-rate based income or non-McKesson income as per the financial statements” and “would be the national invoicing for that non-rate-based and non-McKesson income”. He did not know if it “include[d] income that pertained to DC30”.

Based on Mr. Baker’s testimony, row 65 does not relate to professional allowances and hence is not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

969

To advise whether row 65 of the "Reported Rates" tab of SDM0027926 has anything to do with DC30 and whether it relates in any way to generic drugs dispensed in Ontario.

See response to #42. The information in row 65 does not relate to professional allowances. Even if row 65 related to DC30 (the Ontario distribution centre, which also served stores in Quebec) or generic drugs dispensed in Ontario, that does not make it relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

985

To advise what the two percentages in rows 27 and 28 DK (Ontario portion of the total – 51.7; ODB portion of ON – 42.7%) in the "Reported Rates" tab of SDM0027926 are referencing.

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker testified that he believed row 27 was the calculation of the “Ontario portion of the total” but could not determine from the spreadsheet what the total represented.[^32] However, what Ontario may have represented of a larger total is not relevant to the common issues, regardless of what the total was.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

872

To explain what O&A of 2.5% would mean, as referenced in cells AD-AG of the "MYL_Scenario" tab of SDM0027681 and if they were paid by the generic manufacturer to SDM in addition to PAs and rebates.

Refusal justified: Question: Answered Disproportionate Irrelevant

What this O&A income was for and whether it was paid or not are not relevant to the common issues.

Further, this spreadsheet is from 2010. Mr. Baker testified that he did not know or recall what the O&A of 2.5% meant or whether it was paid.[^33] It is not proportionate to attempt to make inquiries to determine what this was for and whether it was paid, 10 years later.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

879

To make inquiries of Ms. Cirocco and provide her full facts and evidence as to what was encompassed in the O&A of 2.5% referenced in cells AD-AG of the "MYL_Scenario" tab of SDM0027681, whether these amounts were agreed to by the generic manufacturers

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #45. What any O&A income encompassed and what as agreed with generic manufacturers is not relevant to the common issues.

Further, it is not proportionate to make inquiries to obtain this information, particular of a former employee such as Ms. Cirocco, about matters from 2010. The defendants have already provided information on the rate and amount of professional allowances received from generic drug manufacturers during the period.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

879

To advise whether there is anyone else at Shoppers with any evidence in relation to the below questions and to make inquiries with them as well: What was encompassed in the O&A of 2.5% referenced in cells AD-AG of the "MYL_Scenario" tab of SDM0027681, and whether these amounts were agreed to by the generic manufacturers

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #45.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

886

To explain what O&A of 2.5% would mean, as referenced in cells AD-AG of the " MYL_Scenario" tab of SDM0027681 and if they were paid by the generic manufacturer to SDM in addition to PAs and rebates.

Refusal justified: Question: Answered Disproportionate Irrelevant

See responses to #45.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

886

To make inquiries of Ms. Cirocco and provide her full facts and evidence as to what was encompassed in the O&A of 2.5% referenced in cells AD-AG of the "O&A" tab of SDM0027681, whether these amounts were agreed to by the generic manufacturers.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #46.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

886

To advise whether there is anyone else at Shoppers with any evidence in relation to the below questions and to make inquiries with them as well: What was encompassed in the O&A of 2.5% referenced in cells AD-AG of the " MYL_Scenario" tab of SDM0027681, whether these amounts were agreed to by the generic manufacturers.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #45.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

886

To provide SDM's full facts and evidence in relation to what is being charged, what was agreed to, and the basis for the charges of O&A in cells AD-AG of the " MYL_Scenario" tab of SDM0027681.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #45. What was charged, what was agreed to, and the basis for charges with respect to O&A are not relevant to the common issues, and making inquiries to determine this information is not proportionate when this spreadsheet relates to only one period in 2010.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

886

To answer whether the O&A charges in cells AD-AG of the " MYL_Scenario" tab of SDM0027681 have been paid by the generic manufacturers.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #45.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

889

To answer whether there is a formula for the listing fee and whether it is a percentage (as referred to in column G of the O&A tab of SDM0027681).

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker testified that a “listing fee” is where “The vendor would pay to have that product listed with Shoppers.”[^34]

For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

893

To make inquiries of Ms. Cirocco, or others at Shoppers to get full facts and evidence as to what was meant by the notation: "pay to get listed in Manitoba. Two to 3 percent. Confirm cost of doing business," in column G of the "O&A" tab of SDM0027681

Refusal justified: Question: Answered Disproportionate Irrelevant

On its face, the question relates to matters in Manitoba, apparently a listing fee. It is therefore not relevant to the common issues.

Further, it is not proportionate to make inquiries to obtain this information, particular of a former employee such as Ms. Cirocco, about a single entry in a spreadsheet from 2010.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1547-1549

To make inquiries of Mr. Potter and advise if there is anything else (beyond particular agreements recorded under generic O&A e.g. data supply agreement, inventory management agreement, brand display agreement, inventory management income, the billing and McKesson income) that falls under generic income (as referred to in SDM0013241) that is receipt-based.

Refusal justified: Question: Answered Disproportionate Irrelevant

This question is a fishing expedition into other types of income received from generic vendors. For the reasons set out in SDM’s factum, information about income from generic manufacturers other than professional allowances (such as distribution/warehouse allowances, rebates on generic drugs dispensed in other provinces or O&A activities) is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1552

To advise if any of the resolutions listed in the comment section of SDM00028180 would have resulted in invoices and revenue that would be characterized as generic income O&A.

Refusal justified: Question: Answered Disproportionate Irrelevant

For reasons given in the defendants’ factum, information on O&A income from generic vendors is not relevant.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1563

To make inquiries with Chris Potter and advise whether the new/unanticipated O&A agreements (as referenced in SDM0015905) entered into by SDM were in writing, and if so, to produce them.

Refusal justified: Question: Answered Disproportionate Irrelevant

For reasons given in the defendants’ factum, information on agreements pertaining to O&A income from generic vendors is not relevant.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1563

If the new/unanticipated O&A agreements (as referenced in SDM0015905) entered into by SDM are not in writing, to provide Shoppers' full facts and evidence as to the terms of those agreements.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #57. For reasons given in the defendants’ factum, information on agreements pertaining to O&A income from generic vendors is not relevant.

Category 3: Amount of Professional Allowances Received – Miscellaneous [Questions 59-77]

Defendants’ Response: The plaintiffs take the position the questions in this category are relevant to determining whether there are other categories of payments beyond professional allowances, rebates and O&A income that should be examined. The plaintiffs seek answers pertaining to unspecified amounts that have not been particularized or tied to the certified common issues. Rather, they seek to conduct a fishing expedition in search of other amounts not included in their claim, none of which are relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

152

To advise whether, other than those deductions that result in the dead net price (rebates, professional allowances, warehouse allowance, cash discounts representing other commercial terms, O&A, and the flow-through discount), Shoppers receives any other payments from the generic manufacturers in respect of drugs dispensed in Ontario?

Refusal justified: Question: Answered Disproportionate Irrelevant

The question – which explicitly seeks information about amounts other than professional allowances – is not relevant to the plaintiffs’ alleged entitlement to professional allowances, the quantum of professional allowances received, or any other certified common issue.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

196

To advise whether it's Shoppers's evidence that Shoppers and Apotex agreed that Apotex would pay rest of country rebate rates at 121 percent for January to June of 2008, as indicated in SDM0015706.

Refusal justified: Question: Answered Disproportionate Irrelevant

The question, which pertains to rebates in the rest of Canada, is not relevant to the common issues, for the reasons given in the defendants’ factum.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

215

To provide a sample of the documents that show the process undertaken on a store-by-store basis to calculate and provide credit back to associates for the portion of their purchases that related to the ODB product that was two-tiered.

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker explained two-tiered pricing as follows:

“In Ontario at that particular time, there were what we call two-tiered pricing.· So ODB product would be sold to stores at a different price lower than the non-ODB product…The individual product would have the regular price and the two-tiered price for the public payers.· When Shoppers sold to the store, they initially charged the invoice which showed for all of the product the full price.· Then we would weekly give a credit to the store for that portion of their purchases that related to the ODB product that was two-tiered…The purchases that the store made was tracked, was downloaded from our DAR system.· And then the applicable stores ODB percentage of -- percentage that was based on these scripts, what scripts they had issued, that portion that was ODB of the total scripts was multiplied by the purchases that · they made to come up with a volume that's related to the ODB product.· That ODB product is at the lower -- had the lower price in cases where there was a difference between the ODB price and the non-ODB· price….Their weekly statement would have showed an adjustment to the invoices that were issued.”[^35]

The refusal pertains to the process through which Shoppers credited Associates for two-tiered pricing for certain drugs. This process is not relevant to the amount of professional allowances collected by the defendants. In any case, the defendants have advised the plaintiffs of the prices charged to associates for generic drugs, including two-tiered pricing.

This request is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

262

To advise whether the over and above payments made by generic manufacturers in relation to pharmaceuticals dispensed in Ontario fall within code T "Distribution," or any of the other categories listed on page three of SDM0028232.

Refusal justified: Question: Answered Disproportionate Irrelevant

Questions about over and above (O&A) income are not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

904

To answer whether Shoppers introduced any new charges to generic manufacturers when the caps were imposed for non-ODB professional allowances.

Refusal justified: Question: Answered Disproportionate Irrelevant

Questions about “new charges to generic manufacturers” are a fishing expedition into income the defendants may have received from generic vendors other than professional allowances. Information about income that the defendants may have received from generic vendors other than professional allowances is not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

905

To answer whether Shoppers introduced any new deals relating to drugs dispensed in Ontario, as seen in TECSYS when the caps were imposed for non-ODB professional allowances.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #63.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

906

To answer whether Shoppers introduced any new or different allowances in relation to drugs dispensed in Ontario when the caps were imposed for non-ODB professional allowances.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #63.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

907

To answer whether Shoppers introduced any additional payments for services or programs relating to drugs dispensed in Ontario when the caps were imposed for non-ODB professional allowances.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #63.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

908

To answer whether Shoppers increased any existing deals, allowances, or other payments by generics to Shoppers in relation to drugs dispensed in Ontario when the caps were imposed for non-ODB professional allowances.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #63.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

922

To answer whether Shoppers took any steps at all in its dealings with generic manufacturers to mitigate the loss of revenue that would have resulted from the legislative caps in Ontario non-ODB professional allowances.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #63.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

923

To answer whether Shoppers took any steps in Canada in relation to the buying of generic drugs, changed the manner or made any modifications in relation to how it bought generic drugs in an effort to mitigate the loss of revenue that would have resulted from the legislative caps in Ontario non-ODB professional allowances.

Refusal justified: Question: Answered Disproportionate Irrelevant

See response to #63.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1023

To produce the underlying data that will show the shipment mix (both the underlying data that's used to calculate the percentage mix and the percentages themselves) for Ontario and Quebec for the 4th quarter of 2006 (the period immediately proceeding January 1, 2007) from DC 30.

Refusal justified: Question: Answered Disproportionate Irrelevant

The defendants will make reasonable efforts to determine if the shipment mix for Ontario and Quebec for the 4th quarter of 2006 is readily available and if so, will disclose it. The underlying data for calculating the shipment mix is not relevant or proportionate.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

1322

To provide Shoppers' full facts, information, and evidence as to the rationale for the changes in the non-ODB professional allowance rates from the time of initial invoicing to the time that they were required to report numbers to the Ministry of Health.

Refusal justified: Question: Answered Disproportionate Irrelevant

Mr. Baker testified: “So I don’t know the rationale of why we changed, whether it was Virginia Cirocco identifying that we had made an error in the first invoicing and we needed to redo them. I don’t know why.”

Why non-ODB professional rates were changed in this instance is not relevant to the common issues. What is relevant is the amount ultimately received.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

940

To advise of the source information for the numbers in SDM0028271 and if Shoppers takes any issue with the accuracy of these numbers representing figures received from the manufacturers/wholesalers listed on the left-hand side in the amounts listed in the columns "distribution allowance" and "prompt payment discount."

Refusal justified: Question: Answered Disproportionate Irrelevant

Information about the distribution allowance and prompt payment discount, which are income other than professional allowances, is not relevant to the certified common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1021

To advise what the new commercial terms in the second paragraph of SDM0015947 and the answer to question 3602 of A. Mariano's initial examination for discovery would encompass.

Refusal justified: Question: Answered Disproportionate Irrelevant

The second paragraph of SDM0015947 states: "The latest model includes ODB 8 percent distribution warehouse allowance plus new 'commercial terms' (assume 7 percent.)"[^36]

Whatever the “’new’ commercial terms” may have referred to, they do not appear to refer to professonal allowances, and so they are not relevant to the common issues.

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Mariano

1023

To provide Mr. Baker's and the defendants full facts and evidence as to what is being described in the third last paragraph of SDM0015947, which begins "when we measure sales…"

In particular, to advise what Mr. Baker means at the end of the paragraph when he writes "so your cost as a percentage of cost of goods sold will look worse and we will have to normalize those measures", which measures will be normalized and what, if anything, was done to normalize those measures?

Refusal justified: Question: Answered Disproportionate Irrelevant

As explained in the answer to undertaking at question 2918 of Mr. Mariano’s first discovery, in the email chain, “Mr. Baker is communicating the impact of the proposed legislation on the DC P&L.”

The email therefore apparently pertains to distribution centre profit & loss, which is not relevant to the common issues, and the question otherwise has no relevant to the common issues.

Further, the question relates to SDM0015947, which was produced prior to Mr. Mariano’s first examination for discovery and examined on during his examination.[^37]

Defendants' receipt of monies from generic drug manufacturers I circumvention of statutory scheme for professional allowances SOC, paras. 61-69, 72-78 SOD, paras. 57-68, 82-84, 89 Reply, para. 7 Cls, 11(a) - (c)

Baker

111

To make inquiries and confirm whether