Quebec Consumer Protection Act does not apply to sale of prescription drugs, rules appeal court

In a resounding victory for the pharmaceutical industry, the Quebec Court of Appeal held that the province’s consumer protection law does not apply to the sale of prescription drugs, jettisoning a legal avenue a growing number of class action plaintiffs were using to sue the industry.

In what has been described as a landmark ruling by experts, the Quebec appeal court examined for the first time the merits of a class action regarding a drug manufacturer’s duty to warn. In dismissing a class action that alleged that Abbott Laboratories Inc. failed to provide sufficient information over the risks of a prescription drug, the appeal court provided critical guidance on the liability regime in Quebec for drug manufacturers facing product liability claims, confirmed for the first time the applicability of the learned intermediary doctrine in the province, and held that compliance with regulatory standards tends to indicate that drug manufacturers fulfilled its obligation to provide adequate information.

“It’s definitely a landmark case,” remarked Marianne Ignacz, a Montreal commercial, corporate and civil litigator with an expertise in class actions, product liability and professional liability. “It’s the first case in the pharma space that went on the merits because most cases are settled before going to trial. What’s also very interesting about this case is that the Court of Appeal clarified many principles, including the application of the Quebec Consumer Protection Act (CPA) to pharmaceutical companies and prescription medications they manufacture.”

In 2011, a class action was certified against Abbott after class members testified they suffered from neuropsychiatric-related disorders while taking Biaxin, an antibiotic drug prescribed for more than two decades to treat certain bacterial respiratory infections. The class, which maintained that the risks should have been disclosed, was based on section 53 of the CPA which allows a consumer to launch an action in damages directly against the manufacturer of a good affected by a defect. The class also relied on provisions of the Civil Code of Quebec that outline a manufacturer’s liability related to security defects. In October 2016, Quebec Superior Court Justice Suzanne Hardy-Lemieux dismissed the class action, a decision that was upheld unanimously by the Quebec appeal court in Brousseau c. Laboratoires Abbott limitée 2019 QCCA 801 issued on May 8th.

In dismissing the class action by holding that Abbott had adequately disclosed the risks associated with the product, the appeal court concluded that the prescription drugs do not fall within the scope of the CPA. While a pharmacy may be viewed as a “hybrid” operation, engaging in both commercial or professional activities, a pharmacist who sells prescription drugs does not act as a merchant within the meaning of the CPA, held the appeal court. The sale of prescription drugs entails the “professional judgment” of a physician and a pharmacist when advising the patient on the “appropriate use of the drug,” said Quebec appeal Justice Simon Ruel. As a result, the sale of prescription drugs by a pharmacist is not a consumer contract that triggers a manufacturer’s liability under s. 53 of the CPA, held Justice Ruel.

On top of that, the appeal court found that the application of the CPA would be “difficult to reconcile” with the realities of drug development. “The legislature could not have intended to impose on manufacturers an absolute presumption of knowledge of all the possible risks and dangers of a drug that could materialize” after the drug entered the market, added Justice Ruel.

According to François-David Paré, a Montreal litigator with Norton Rose Fulbright LLP who handles class actions, that is an important finding as the means of defence that can be raised to oppose an action based on section 53 is more limited than under the Civil Code. Under section 53 of the CPA, a manufacturer is not allowed to claim that the state of scientific knowledge made it impossible to know of the defect.

“The finding by the appeal court that the CPA does not apply to the sale of prescription drugs will have the most important impact on class actions as they will no longer be able to perform short-cuts regarding the assumption of liability,” said Paré. “That will necessarily involve finding scientific and technical evidence that some plaintiffs had hoped to skirt by using the CPA.”

That finding also means that punitive damages under the CPA will not be available to plaintiffs in product liability lawsuits related to prescription drugs. “It doesn’t eliminate the ability of the plaintiffs to seek damages, but it limits it,” pointed out Ignacz. “That was one of the very important principles in that case.”

Though many decisions from lower courts applied the learned intermediary doctrine, this is the first decision from the Quebec appeal court that found application in Quebec civil law. As a general rule, manufacturers must directly inform users in order to fulfill its duty to inform. But under the learned intermediary doctrine, a manufacturer fulfils its obligation if it warns competent intermediaries such as doctors and pharmacists involved in prescribing and distributing the drug to its users. “The learned intermediary rule only applies if a company has disclosed all the risks in the product monograph,” noted Ignacz. “You have to fully disclose the risks in the product monograph and to the extent that you did it well then it falls on health professionals to advise accordingly.”

While the ruling is favorable to drug manufacturers, Ignacz maintains that they still have obligations that they must fulfill. Drug companies still face a “very high burden” to disclose risks when they become aware of them. As soon as they become of a problem with a medication, they have to advise Health Canada, said Ignacz. “It’s very clear in my mind that the Court of Appeal is not giving a free pass to companies who know of dangers and who failed to report them – that’s clear,” said Ignacz.

David Bourgoin, a Quebec City lawyer who plead the case for the class action plaintiffs, said they will seek leave to appeal before the Supreme Court of Canada. Bourgoin acknowledged that he is pleased that the appeal court also held that a drug manufacturer must disclose the existence of a possible risk even in the absence of evidence that a drug can cause a particular side effect if the mere fact a serious side effect occurred concurrently with the consumption of the drug. But Bourgoin argues that the appeal court did not go far enough by imposing a duty of care, and not a strict obligation to warn against dangerous side effects. Further, following the appeal court decision plaintiffs will now have to demonstrate causation through scientific evidence, “rather than relying” on the legal notion of balance of probabilities.

“As far as we’re concerned the ruling diminishes the duty to inform by drug manufacturers and takes away certain means by consumers” to fight pharmaceutical companies, added Bourgoin.

This story was originally published in The Lawyer’s Daily.

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