Deference prevails: a public drug funding decision in Québec is upheld on reasonableness review

In Avir Pharma Inc. c. Minister of Health and Social Services¹, the Québec Superior Court dismissed an application for judicial review challenging the Minister’s refusal to include Jorveza—a drug used to treat a rare disease which is commercialized by Avir Pharma Inc. (Avir)—on the list of medications covered under Québec’s general prescription drug insurance plan.

What you need to know

• In their application, Avir and others alleged that (i) the Minister’s decision infringed the fundamental rights to life and security of the person protected under the Canadian Charter of Rights and Freedoms and the Québec Charter of Human Rights and Freedoms; (ii) the Minister’s decision was unreasonable; and (iii) the role assigned to the pan‑Canadian Pharmaceutical Alliance improperly tainted the Minister’s decision‑making process.
• The ruling confirms that Courts will show significant deference to government decisions involving public health funding and budgetary decisions. Moreover, the refusal to list a drug on a public formulary does not, in itself, infringe Charter rights.

Context

Under section 60 of the Act respecting prescription drug insurance², the Québec Minister of Health and Social Services (Minister) is responsible for establishing and periodically updating by regulation the list of medications whose cost is covered under the Québec basic prescription drug insurance plan (the List).

In 2019, Jorveza was approved by Health Canada for the treatment of eosinophilic esophagitis in adults—a rare condition that significantly impairs the quality of life of affected individuals and for which no other treatment had, at that time, been approved in Canada.

Avir applied to the Minister to have Jorveza added to the List (which would trigger mandatory coverage by the Régie de l’assurance maladie du Québec and private insurers). The Minister’s listing decision requires consideration of recommendations made by the Institut national d’excellence en santé et en services sociaux (INESSS) and negotiations with the pan‑Canadian Pharmaceutical Alliance (pCPA).

• INESSS is a legal entity and mandatary of the province, established by the Québec legislature. Under its enabling statute³, INESSS is mandated to promote the efficient use of resources in the health and social services sector and to make recommendations to the Minister in the context of updating the List.
• The pCPA is a collaboration of the federal, provincial and territorial governments, established to strengthen public bargaining power with pharmaceutical manufacturers. pCPA negotiates drug prices with manufacturers. These negotiations may result in the signing of a letter of intent; however, if negotiations fail, the manufacturer has no recourse other than submitting a new offer.

In April 2021, INESSS issued a recommendation to the Minister to include Jorveza on the List, subject to the mitigation of the economic burden—i.e., subject to the negotiation of a price reduction between Avir and pCPA.

Negotiations between Avir and pCPA followed but ultimately failed. As a result, no letter of intent concerning Jorveza was executed with pCPA, and none of the provinces participating in pCPA—including Québec—entered into a listing agreement with Avir for reimbursement of Jorveza.

Following this outcome, the Minister did not proceed with the listing request, as INESSS’s condition on price reduction was not satisfied. The Minister did not issue a formal decision.

Avir, along with two individuals affected by eosinophilic esophagitis, commenced an application for judicial review of the Minister’s failure to add Jorzeva to the List, alleging that (i) the Minister’s decision infringed the fundamental rights to life and security of the person protected under the Canadian Charter of Rights and Freedoms and the Québec Charter of Human Rights and Freedoms; (ii) the Minister’s decision was unreasonable; and (iii) the role assigned to pCPA improperly tainted the Minister’s decision‑making process.

The right to life and security of the person

The applicants argued that the failure to include Jorveza on the List infringed the right to life and security of the person of individuals suffering from eosinophilic esophagitis, who lack the financial means to purchase the drug at full retail price. Reviewing the decision on a reasonableness standard, the Court rejected this argument.

The applicants argued that section 7 imposes on the government a positive obligation to allocate a minimum threshold of resources to the public funding of medications. But the Court noted that section 7 protects individuals from state interference with the right to life and security of the person. It does not impose a positive obligation on the government to take specific action to promote life or security of the person (including any minimum level of health care services). Moreover, the decision was grounded in multiple polycentric considerations, including budgetary and policy concerns—matters that Courts are “ill equipped” to interfere with. Finally, applying the Supreme Court’s decision in Doré v. Barreau du Québec, (2012 SCC 12), the Court held that the decision was reasonable: Charter protections were inherently accounted for in the statutory scheme, which was about promoting health and safety by ensuring that all residents of Québec have reasonable access to drugs, in the context of limited resources.

Reasonableness review of the Minister’s decision

The applicants also challenged the reasonableness of the Minister’s decision on administrative law grounds.

The applicants argued that the Minister’s refusal to list Jorveza was unreasonable because it produced a result that was contrary to the object and purpose of the legislation by undermining the interests of the very individuals the statute seeks to protect. Moreover, Avir argued that it had satisfied the economic burden mitigation requirement established by INESSS.

The Attorney General of Québec disagreed, maintaining that it was precisely because this condition had not been met that the Minister declined to add Jorveza to the List.

The Court found that the prescribed decision‑making process, including the steps involving pCPA, had been followed meticulously. The applicants failed to demonstrate how the conclusion that the economic burden mitigation requirement remained unsatisfied was flawed, or otherwise unreasonable.

The Court further emphasized that the executive branch enjoys very broad discretion in the management of public funds, an area into which courts should not intrude. The existing framework, designed to ensure reasonable and equitable—but not unlimited—access to medications for the population of Québec, does not guarantee that every request to add a drug to the List will succeed.

The legality of the role of the pan‑Canadian Pharmaceutical Alliance

The applicants also argued that pCPA’s involvement interfered with the exercise of the Minister’s discretionary authority.

Relying on the principles established by the Court of Appeal in Janssen⁴, the Court held that the involvement of pCPA was neither an unlawful delegation of power by the Minister nor a relinquishment of power. Acting in the public interest, the Minister is entitled to seek the most favourable bargaining position possible by negotiating jointly with other provinces—which is precisely the purpose of pCPA.

The Court nevertheless emphasized that the present case was somewhat distinctive, in that the Minister’s ultimate decision depended on the outcome of negotiations between the manufacturer and pCPA. However, given the legal framework established by the legislature under the Act respecting prescription drug insurance, the Minister’s authority to establish and update the List may legitimately involve a negotiation process, the outcome of which may or may not be successful.

The framework of the pCPA process effectively requires that manufacturers engage in a joint negotiation with the public plans in order to access public formularies. The Court noted that the Minister will not negotiate a listing agreement with a manufacturer if negotiations with the pCPA have not resulted in a letter of intent.

The Court further held that there was no basis for judicial scrutiny of the internal conduct of the negotiations themselves. Reiterating that the success of negotiations between a manufacturer and the pCPA is by no means guaranteed, the Court concluded that the applicants had failed to demonstrate any illegality in the Minister’s approach or decision‑making process.

Conclusion

Ultimately, the Court rejected all of the grounds raised by the applicants. The government’s decision was reasonable.

This case demonstrates one approach to how courts may approach judicial review of funding decisions. It remains to be seen whether the applicants intend to appeal, and whether this approach will be adopted by other Canadian courts going forward.