Court support for drug price controls will hurt health care
Whether it’s moving beer across provincial boundaries, living free of a federal carbon tax or making their own pandemic choices, Canadians and their rights haven’t done very well in the courts lately. And just last month a Quebec court of appeal made a ruling in Merck et. al. v. Attorney General of Canada that threatens both our already weakened health care and our Constitution, too.
The case, which concerned the constitutional division of powers between Ottawa and the provinces, was prompted by new regulations for the federal Patented Medicine Prices Review Board (PMPRB), which controls wholesale drug prices in Canada. The new regulations are so confiscatory they will limit access to life-saving pharmaceuticals and stunt the country’s life sciences sector. Plaintiffs from industry, interveners representing patients, and the government of Quebec challenged the constitutionality of these new regulations and, in the industry’s case, of the legislation creating and sustaining the PMPRB itself, as well. Both seem clearly unconstitutional, yet courts demur, unwilling to upset a politically comfortable status quo.
The appeal court did strike down many aspects of the new regulations but not the provisions of the Patent Act creating and governing the PMPRB. Under the Constitution, prices and other aspects of contract are matters of provincial jurisdiction and the court was unambiguous that the federal government cannot have a universal right to regulate prices in an industry just because patents are involved — which, astonishingly, the Attorney General of Canada argued it did. But it also ruled that patented drugs are different: because they relate to health it’s a federal matter to control their prices. That’s plainly wrong: health care is a provincial responsibility, not a federal one. How can the court turn jurisdiction for health on its head to sustain this federal meddling? After all, the provinces have the institutions and expertise to value drugs and negotiate their prices.
The constitutional pretext for federal drug price controls has always been the avoidance of patent abuse. But abuse of drug patents has never been an issue in Canada and, if it were, it could be controlled with the same Patent Act abuse provisions that limit abuse of other patents. There is no need for a PMPRB. Abuse has never been anything but a flimsy excuse for federal adventuring in a provincial domain.
To reach the conclusion that the PMPRB is constitutional because drug patents are somehow special, the court replaces the evidence it was given with a simple, one-sided narrative of patent history and economics. It asserts that drug patents have always been special — when, in fact the clear trend in legislation and treaties has been to extend full patent benefits to drugs as to any other invention. Indeed, the trend for drugs has been to augment patent protection with lengthened maturities, data protection rules and special incentives for pediatric and orphan illnesses. Patent history doesn’t justify PMPRB’S confiscatory regime; it undermines it. Drugs aren’t even unique in relating to health: many patented inventions do also.
The court further suggests that drugs face no competition, which will be news to participants in the pharmaceuticals market.
But even these serious flaws in the court’s reasoning are surpassed by its failure to establish a legitimate constitutional purpose for the PMPRB. The court was presented with evidence that price controls reduce the availability of medicines and of new discoveries. If it wanted to encourage Canadians’ good health, it would invalidate drug price controls, not uphold them.
Instead, the part of the ruling sustaining the PMPRB sections of the Patent Act seems based on an institutional or cognitive bias favouring the status quo and selective, and questionable, assertions to justify it. These weaknesses of reasoning exemplify the problem with judges ruling in favour of what they believe is a beneficial outcome rather than what is legal. Judges can never see all the ramifications of their decisions. They have only limited evidence before them regarding the narrow legal issue to be decided — just enough to do what they are supposed to do: discern and enforce the law. Larger consequences are for legislatures.
Unconstitutional laws cause damage, affecting both plaintiffs and the whole country. The Government of Quebec, the pharmaceutical company complainants, and the patient groups that intervened deserve their remedies. And all Canadians are entitled to consistent and principled enforcement of our Constitution, the legal foundation of our nation.
As Freedom of Information Act disclosures put into evidence in the Merck case demonstrate, a history of constitutionally lax decisions favouring the federal government has given rise to nonchalance and even recklessness when Ottawa weighs the constitutionality of new programs. The result is gross overreach, as in the new PMPRB regulations, and erosion of the courts’ credibility. If legislators and the courts don’t take the Constitution more seriously, we will become a country reshaped not by law or principle but by judicial whim.
JUDGES RULING IN FAVOUR OF WHAT THEY BELIEVE IS A BENEFICIAL OUTCOME RATHER THAN WHAT IS LEGAL.