Option Consommateurs v. Novopharm: the Québec Court of Appeal Releases Decision in $3.9 Billion Class Action Lawsuit

On May 23, 2008, the Québec Court of Appeal (the “QCA”) released its highly anticipated decision in the Piro case (Option Consommateurs v. Novopharm et al.) – a $3.9 billion proposed class action instituted on behalf of all Québecers against nine drug manufacturers – and dismissed the appeal from the decision, which refused to authorize the class action.

In February 2003, a newspaper article appeared in La Presse reporting that certain unnamed pharmaceutical manufacturers would have given “illegal” rebates and other benefits to pharmacists in Québec and other provinces. Two days later, based solely on this newspaper article, a proposed class action was launched. The action sought $3.9 billion in damages against nine drug manufacturers on the grounds that these manufacturers would have allegedly failed to deduct the “value” of these rebates and other “benefits” from the prices of medications that all Québecers would have paid either under Québec's publicly administered drug insurance plan or under private insurance plans.

By judgment of January 17, 2006, Québec Superior Court Judge, Claudine Roy, refused to allow the proposed class action to proceed. Judge Roy held that although the 2003 amendments to Québec's class action authorization (certification) regime had reduced the criteria for authorization to a minimum, a motion seeking authorization of a class action had to, at least, contain a sufficient factual foundation for the court to appreciate the seriousness of the proposed class action.

Judge Roy held that in this case, this information was severely lacking and that there simply was no basis for the Court to find that there was any appearance of fault, damages, or a causal link that would have triggered the liability of the manufacturers. Judge Roy held that the proposed action, which had been amended and modified on numerous occasions, was a “moving target” that lacked serious factual allegations and that she was simply not prepared to conclude that this was a serious case based on “pure speculations” drawn from a newspaper article.

In its judgment, the QCA agreed with Judge Roy's holding that there was no causal link between the alleged fault (i.e. the alleged payment of rebates to pharmacists) and the alleged prejudice suffered by Quebecers (i.e. the alleged higher prices for medications) and that the claims that Quebecers paid higher contributions as a result of the alleged actions of the drug manufacturers was hypothetical, purely speculative and had not been established.

The QCA also held, subsidiarily, that the two proposed designated representatives of the class, who had only purchased medications from four of the manufacturers in question, had failed to establish any standing vis-à-vis the remaining manufacturers and that in the result they were not adequate representatives for the entire proposed class. In so doing, the Court reaffirmed its earlier decision in Bouchard v. Agropur Coopérative, (2006) R.J.Q. 2349.

Finally, the QCA reiterated that a judge of the Superior Court exercise discretion in determining whether the criteria for authorization are met and that Option Consommateurs failed to establish that the trial judge had incorrectly exercised this discretion.

Before the QCA, Defendant Pharmascience Inc. was represented by Guy Du Pont, Nick Rodrigo and David Stolow of Davies Ward Phillips & Vineberg LLP.

Novopharm Limited and Ratiopharm Inc. were represented by Laurent Nahmiash of Fraser Milner Casgrain LLP, and Gary D.D. Morrison of Heenan Blaikie LLP.

Genpharm Inc., Apotex Inc. and Pharmascience Inc. were represented by Irwin Liebman and Moe F. Liebman of Liebman & Associés.

Laboratoire Riva Inc. was represented by Robert Torralbo and Nassif BouMalhab of Blake, Cassels & Graydon LLP.

Langlois Kronström Desjardins, LLP's Chantal Chatelain acted for RhoxalPharma Inc. Linson Pharma Inc. was represented by Laurent Nahmiash, and Luc Lachance and Alain Brophy of Sébastien Downs Astell Lachance Avocats acted for Pro Doc Ltée.

Option Consommateurs was represented by Gordon Kugler, Stuart Kugler and Robert Kugler of Kugler Kandestin, L.L.P.