In Ontario, the ownership of pharmacies by corporations is prohibited because of a special loophole in business charters predating 1954. This practice even more troublingly raises concerns of regulatory capture. These charters can be worth millions of dollars in traded value. They provide an incredibly profitable trump card for corporations hungry to jump into the pharmacy space while circumventing the heavier regulations that newcomers must endure.
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Aly Haji, the founder of the Rx law firm, stresses the harmful effects of these charters. He argues that they permit companies to “escape accountability.”
In 1954, Ontario passed a law mandating that pharmacies be at least 51 percent owned by pharmacists. However, the law included a significant exemption: any corporation operating a pharmacy on May 14, 1954, was grandfathered in under this rule. Consequently, such a lucky bunch of companies has become very, very unique. Many of them continue to prosper today, operating under far fewer regulatory burdens than their latter-day counterparts, largely chain pharmacies owned by licensed pharmacists.
Representing one of the more high-profile owners of a pre-1954 charter is Al Simpson, the owner of Saskatoon-based PharmaCorp Rx Inc. Then on May 1, PharmaCorp announced the purchase of a different pre-1954 charter for $2.1 million. This figure is a huge jump from 2017 and earlier where such charters averaged the sale price of $500,000 or $600,000. Even when the market was up and down, the cost of these charters stayed inflated.
“The opportunity to grow certainly offsets the price, I would say,” Mr. Simpson remarked, indicating that the potential for expansion justifies the substantial investment in these charters.
The promise of pre-1954 charters is similar to what it would have been like to own a taxi medallion in New York at its height. Peter Saad, who has studied the implications of these charters, noted, “It’s literally like a taxi medallion in New York at its peak.” This disturbing comparison further highlights the vast market value and exclusivity such charters provide to their owners.
Currently, there are 84 inactive pre-1954 charter corporations which no longer own accredited pharmacies. The result is a strange double standard in Ontario’s pharmacy world. In order to establish a new pharmacy in the province, you need to either be a licensed pharmacist. If you’re not, you’ll have to budget an additional $2 million just to get through the current regulatory gauntlet.
No wonder the College of Pharmacists registered that by 2024, there are 5,019 community pharmacies doing business in Ontario. Of these, 2,712 run on franchises or banners. This is one of the most powerful portraits of how corporate ownership directly impacts disadvantageous access to the competitive pharmacy market.
Pharmacy ownership Quebec requires that only pharmacists may own pharmacies. Ontario’s regulations allow for a much wider ownership base due to charters granted before 1954. This disparity raises questions about consumer protection and the level of oversight applied to corporations operating under older laws.
Haji points out the possible dangers associated with legacy charters. He goes on to say that “the real shareholders of the corporation” enjoy much less oversight than operators of pharmacies owned by pharmacy schools. This minimal oversight raises alarm bells on issues related to accountability and patient care.
Now, corporations such as the fictional PharmaCorp are buying up these pre-1954 charters and multiplying their own pharmacy empires. Observers remain concerned over how this will affect competition and regulation in Ontario’s publicly funded healthcare system. This rapidly changing environment has brought increased scrutiny from regulators and the public as they try to understand these opaque corporate structures.
