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Medical - Ontario Drug Benefit Plan

. 2099065 Ontario Inc. v Ontario (Health and Long-term Care)

In 2099065 Ontario Inc. v Ontario (Health and Long-term Care) (Div Ct, 2021) the Divisional Court gave a useful summary of the Ontario Drug Benefit Act (and Program):
[5] The Ontario Drug Benefit Program provides coverage for most of the cost of over 4,400 prescription drug products and therapeutic substances for persons eligible to receive benefits, such as seniors, residents in long-term care homes, and those receiving social assistance. The Program is administered under the authority of the Ontario Drug Benefit Act. Among other things, the purposes of the Act include providing taxpayers with value for money and ensuring the best use of resources at every level of the system.

[6] The Executive Officer is the official charged with administering the Program. She has broad authority under the Act to administer the Program, grant and revoke billing privileges, and make payments for drug claims submitted in accordance with the Act and Ontario Regulation 201/96.

[7] A pharmacy operator that obtains billing privileges under the Act submits claims for payment from the Program electronically. It is an honour system. The pharmacy operator is paid directly by the Program; customers do not have to pay the operator and later seek reimbursement. Pharmacy operators who do not have billing privileges under the Act may still dispense drugs to Program recipients. However, in the absence of billing privileges, Program recipients must pay the pharmacy directly and later seek reimbursement from the Program.

[8] A pharmacy operator cannot bill the Program as of right. Section 4.1 of the Act provides that a pharmacy operator can apply to the Executive Officer for billing privileges. The Executive Officer may grant billing privileges to a pharmacy operator if he or she believes it is in the public interest to do so, after considering any factor that he or she deems appropriate.

[9] The Regulation requires all pharmacy operators to enter into a Health Network System Agreement (“HNS Agreement”). The HNS Agreement sets out the terms governing the pharmacy operator’s submission of claims for payment to the Program and the manner in which the Executive Officer or pharmacy operator may terminate the Agreement. The relationship between the Executive Officer and a pharmacy operator under the Program is governed by the Act, the Regulation, and the HNS Agreement.

[10] Section 27 of the Regulation also requires pharmacy operators to comply with all applicable legislation, including the Drug Interchangeability and Dispensing Fee Act and the Drug and Pharmacies Regulation Act which require pharmacies to keep detailed records of all purchases and sales of drugs. The obligation to comply with these statutes is reiterated in section 3.2 of the HNS Agreement.

[11] The Executive Officer has the authority to revoke a pharmacy operator’s billing privileges under the Act, terminate the HNS Agreement, and permanently suspend the operator’s entitlement to payment under the Act where a significant abuse of the honour system has occurred. A pharmacy operator’s billing privileges under s. 4.1 of the Act are a privilege and not a right. The Executive Office may grant billing privileges in the public interest and may also revoke them.

[12] Section 11.1(1) of the Act provides the Executive Officer with the authority to order the suspension of a pharmacy operator’s entitlement to receive payment under the Act if she has reasonable grounds to believe that the operator has breached a condition prescribed in the Regulation or agreed to by the operator. Section 11.1(2) provides that beginning on the day set out in the order, the operator is not entitled to payment by the Executive Officer under the Act. Section 11.1(6) provides that the Executive Officer may rescind a suspension made under s. 11.1(1) with or without conditions. The rescission of an order under s. 11.1(6) is discretionary, so an order of suspension under s. 11.1(1) may be permanent if the Executive Officer declines to rescind it.

[13] A breach of the prescribed conditions in s. 27 of the Regulation may lead to suspension of billing privileges under s. 11.1 of the Act. The conditions include connecting electronically and submitting claims for payments through the HNS and complying with the terms of the HNS Agreement, the Act, the Regulation, and the Ontario Drug Programs Reference Manual published by the Ministry of Health. Further, the Regulation requires that a pharmacy operator not submit any claims that the operator “knows or reasonably ought to know are false, inaccurate or misleading”.

[14] Inspectors appointed by the Executive Officer as a delegate of the Minister of Health under s. 14 of the Act conduct inspections of pharmacies to assess the validity of claims submitted to, and paid by, the Program. If an inspection leads to the finding that a pharmacy operator has submitted false, inaccurate or misleading claims to the Program, the Executive Officer may issue a Notice of Order and Termination. The notice advises the pharmacy operator that the Executive Officer proposes to terminate its HNS Agreement, revoke its billing privileges, and suspend its entitlement to receive payment under the Act.

[15] Section 12.3 of the HNS Agreement authorizes the Executive Officer to terminate the agreement on 30 days’ notice of the breach of any of its terms by the pharmacy operator. It also allows the pharmacy operator to make written submissions within 21 days to dispute the facts relied upon by the Executive Officer and to make submissions supporting the revocation of the Notice of Order and Termination. After consideration of any submissions made by the pharmacy operator, the Executive Officer’s decision is then sent to the operator in the form of a Notice of Decision.

[16] Section 11.5 of the HNS Agreement prohibits operators from having any relationship with the operator of a pharmacy subject to either a Notice of Order and Termination or Notice of Decision, or any of its officers, directors, designated managers, or shareholders. This provision exists to prevent a suspended or terminated pharmacy from surreptitiously obtaining new billing privileges under another name or from running its suspended business through another subscriber’s computer system.


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