A unanimous Supreme Court of Canada ruling that upholds the Ontario government’s ban on pharmacies selling their own generic drugs is just what the doctor ordered for the cash-strapped province.

In a blow to Shoppers Drug Mart and Katz Group, which owns Rexall and PharmaPlus, the high court on Friday determined Queen’s Park was within its right to outlaw the companies selling their own private-label medicines under the province’s drug benefit programs.

Speaking to reporters during a campaign-style stop in Windsor, Premier Kathleen Wynne applauded the court decision.

“We’re very pleased that our program and our initiative has been supported because there’s no reason that people in Ontario should pay more for the same drugs than people in other parts of the country,” said Wynne, adding it’s a boost for the provincial treasury.

“We’ve already saved $500 million,” the premier said, referring to the reforms the government made to contain the cost of dispensing prescription drugs, which are covered for seniors and people on social assistance.

Shoppers Drug Mart’s Tammy Smitham said in a statement that the company “is disappointed with the outcome,” but “respects the decision of the Supreme Court of Canada.”

The 34-page ruling said the government’s legislative change in 2010 closed a loophole the big pharmacies could use to keep “drug prices inflated.”

“If pharmacies were permitted to create their own affiliated manufacturers whom they controlled, they would be directly involved in setting the formulary prices and have strong incentives to keep those prices high,” the justices wrote in the 7-0 decision.

“For decades, Ontario has been involved in an ongoing struggle to control rising drug costs. Generic drugs have been a key part of the strategy for dealing with this problem. Persistent market practices, however, have kept generic prices high. In Ontario, the result has been an episodic and totemic tug-of-war between regulators and those engaged in the manufacture, distribution and sale of generic drugs,” they wrote.

Health Minister Deb Matthews said it is also good news for consumers.

“Our government reduced the costs of generic drugs so that we can provide better value for Ontarians and our health-care system,” Matthews said in a statement.

“Today’s Supreme Court of Canada ruling upholds the changes we made to give people across the province access to the medication they need at the lowest possible price,” she said.

Matthews noted that since 2006 the Ontario government has added more than 300 generic and brand-name medicines to the provincial drug formulary.

“We have cut generic prices in half and eliminated the rebate that pharmacists used to receive from manufacturers,” the minister said.

“We continue to reinvest these savings to give our patients greater access to new drugs, while also expanding access to care at home and in the community. Today’s decision upholds this progress and is a victory for Ontarians.”

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The court ruling comes as the province is struggling to pay down an $11.7 billion deficit.

With files from Rob Ferguson

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