Law Times

Law Times • June 3, 2013 Page 11 FOCUS Online pharmacy shut down BY MICHAEL McKIERNAN For Law Times A groundbreaking decision that shut down an Internet pharmacy's Mississauga, Ont., call centre provides muchneeded guidance to the nation's professional regulators across a number of disciplines in their approach to online practitioners, according to a Toronto lawyer. In her March 15 decision in Ontario College of Pharmacists v. 1724665 Ontario Inc., Ontario Superior Court Justice Janet Wilson granted an injunction against RX Processing Services Inc., the call and processing centre for Belize-based Global Pharmacy Canada Inc. The injunction stops RX Processing Services from taking online orders for Global Pharmacy's discounted generic drugs manufactured in India and shipped to clients all over the world until they can show they're in compliance with provincial legislation regulating pharmacies. The college stepped in a number of years ago as it claimed after an investigation that the operation was selling drugs in Ontario without using a pharmacist accredited by it. Richard Steinecke, who represents dozens of associations and regulators, says the decision is rare since Canadian courts have weighed in surprisingly infrequently on the jurisdiction of regulators in cases of professions practised over the Internet. "It's about time. The World Wide Web is 20 years old, and I think it's crazy that the issue hasn't been tackled in any meaningful way in all that time. The courts really have to start giving some guidance on this," says Steinecke, senior partner at Steinecke Maciura LeBlanc. "Pharmacy and optometry are the most obvious where this decision will be useful because they're selling products, like contact lenses, that could be easily ordered over the Internet. But the reality is that many, many professions can and in effect are being practised electronically. You can have psychiatry done over the Internet, dietary assessment, and counselling. With technology, I understand you could even have surgery done over the Internet, so we're not talking just about products. This is important for providers of services, too." The college began investigating Global Pharmacy in 2009 after receiving complaints from Americans about the firm and an inquiry from its California counterparts, the California Board of Pharmacy, about whether the business had a licence in Ontario. Until that point, the company was an Ontario corporation with its call centre in Mississauga and took orders for discount pharmaceuticals from consumers worldwide through its web site, globalpharmacycanada.com. In its current iteration, the site claims customers can save up to 75 per cent on generic medications thanks to its Indian suppliers. According to Wilson's decision, clients can place orders for drugs using photocopies of prescriptions or photographs of a prescription bottle with an option to automatically refill the prescription every three months regardless of whether a doctor continues to prescribe it. Responding to the college's investigation, Global Pharmacy made a number of changes that it claimed took it outside the regulatory reach of the college. First, the company sold its tangible assets, including its Mississauga call centre property, network infrastructure, and software, to the newly formed RX Processing Services. It sold its intangible assets, which included the web site, logos, trademarks, and customer database, to a Belize corporation with the same name. The company also blocked its web site from computers with a Canadian Internet protocol address and stopped shipping to addresses inside the country. Global Pharmacy argued in court that after the restructuring, it was no longer selling drugs in Ontario or to Ontario residents as any sale took place in India or Belize and was therefore outside the college's jurisdiction. In any case, the laws empowering the college are constitutionally limited in scope to protect Ontarians, the company argued. Despite the new setup, the college claimed sales were still taking place in Ontario and accused Global Pharmacy of trading on the credibility of Ontario pharmacies without subjecting itself to the same regulation. "The difficulty I think is faced by regulators is that these sorts of operations aren't always so obvious about where they are operating," says Nick Coleman, the partner at Paliare Roland Rosenberg Rothstein LLP who acted for the college before the Superior Court. "I don't think there was any doubt that it was part of their business model to have customers draw the connection with the Canadian location with a view to encouraging people to trust that they were operating in a strong regulatory environment. If you can't trust a Canadian operation to buy prescription drugs from, who can you trust?" Wilson sided with the college, finding that there was sufficient connection to Ontario to engage its jurisdiction. "If the respondents wish to rely upon the credibility and reputation of Ontario pharmacies and pharmacists, fair play as well as public safety dictates that the respondents need to comply with the rigours of the Ontario legislation," wrote Wilson. "The unregulated sale of prescription drugs by a non-pharmacist poses obvious dangers to customers outside the jurisdiction. It is appropriate that Ontario regulate the sale of the drugs taking place in Ontario, 'I'm hopeful that a court will say that someone who is physically outside Ontario is practising in Ontario if the client is here,' says Richard Steinecke. destined for customers across our borders. As one of the original complainants to the college stated, Global Pharmacy Canada Inc. 'should not be allowed to prey on U.S. citizens.'" She noted that RX Processing's Mississauga facility employed virtually the same staff as before the restructuring and performed the same basic functions. The structural lines between RX Processing and the new Belize company were "blurred," Wilson added. "There is a wealth of evidence in support of the finding that there is a sufficient connection between the activities of RXP in Ontario to provide the college with jurisdiction to proceed with this application," wrote Wilson. "There is merit to the college's concern that the restructuring PEEL BACK THE LAYERS WITH WESTLAW® CANADA CASELOGISTIX One of the fastest document-review tools available, Westlaw CaseLogistix will assist your discovery teams in quickly and intuitively organizing, reviewing, analyzing, and producing anything from paper to Electronically Stored Information (ESI) – significantly reducing the cost, time, and risk associated with e-discovery. For more information, visit www.westlawcanada.com CaseLogistix Litigator Case Notebook Case Timeline AUTHORITATIVE. INNOVATIVE. TRUSTED. www.lawtimesnews.com appears to be an attempt to avoid regulation. However, this finding does not underpin my finding that the college has jurisdiction in this matter. It is the sufficiency of the connection that has persuaded me." On the location of the sales, Wilson said, "the only rational conclusion" was that they happened in Ontario. "All documentation — including the patient order form, confirmation of the order, the invoice, and the packing slip — are in the name of Global Pharmacy Canada bearing the Mississauga address," she wrote. Steinecke says the decision still leaves some questions open, such as the jurisdiction of a regulator over out-of-province providers selling services to customers in Ontario. "I'm hopeful that a court will say that someone who is physically outside Ontario is practising in Ontario if the client is here. The difficulty is going to be the enforcement piece. This is one reason that I think regulators need to enhance their links with regulators in other jurisdictions so that there can be co-ordination of this." RX Processing has already won a stay pending an appeal of Wilson's decision, but according to Coleman, it was granted on the understanding that the Court of Appeal for Ontario would hear an expedited appeal. Following an April 22 hearing, the appeal court reserved its decision. RX Processing's lawyer, Alan Lenczner, declined to comment while the case was before the courts. LT

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