COMPETITION TRIBUNAL THE COMPETITION TRIBUNAL TRIBUNAL DE LA CONCURRENCE p File No. L,\- ~Dot.\- DOfo F R Registry Document No.: \ lb) I O L ~b'1~ 14 2004 D E V D I REGISTRAR • REGISTRAIRE T
OTTAWA, ON BETWEEN: 1177057 ONTARIO INC. c.o.b. as BROADVIEW PHARMACY
Applicant
AND: PFIZER CANADA INC. Respondent
APPLICATION PURSUANT TO SECTION 103.1 OF THE COMPETITION ACT FOR LEAV E TO MAKE APPLICATION UNDER SECTION 75 OF THE ACT
AFFIDAVIT OF HERBERT COHEN I, HERBERT COHEN, of the City of Toronto, in the Province of Ontario, MAKE OATH AND SAY AS FOLLOWS:
1. I am the manager of the Applicant, 1177057 Ontario Inc., carrying on business as Broadview Pharmacy ("Broadview Pharmacy"), and as such I have knowledge of the matters to which I hereinafter depose, except where such matters are stated to be based on information and belief, and where so stated, I verily believe those matters to be true.
2. I make this affidavit in support of an application made by Broadview Pharmacy for leave to make an application against the Respondent, Pfizer Canada Inc. ("Pfizer Canada") pursuant to section 75 of the Competition Act, R.S.C. 1985, c.34 (the "Act").
2 Background 3. Broadview Pharmacy is an Ontario corporation which carries on business at 381 Broadview Avenue, Toronto. I have managed the retail store at that location for the past 44 years. I am a licensed pharmacist in Ontario.
4. From its location, Broadview Pharmacy offers its customers a wide selection of products and services, including prescription and over the counter medicines, health and beauty aides, and cosmetics and fragrances, as is customary with a neighbourhood pharmacy.
5. There is a very significant competition among retail pharmacies in the Broadview and Gerrard area of Toronto where the Broadview Pharmacy is located. In fact, six other retail pharmacies are located within a two block radius of Broadview Pharmacy’s location.
6. By their very nature, retail pharmacies such as Broadview Pharmacy are heavily dependent upon the supply of pharmaceutical medicines from the manufacturers of those products. In some cases, a generic version of a drug is available. Where no generic drug is available, however, the drug manufacturers are the sole source of ongoing, longer-term pharmaceutical supply for retail pharmacies such as Broadview Pharmacy. Such is particularly the case with the patented pharmaceutical medicines produced by Pfizer Canada, the dominant pharmaceutical manufacturer serving the Canadian market.
7. Broadview Pharmacy has sold Pfizer Canada products for many years. Of Broadview Pharmacy’s total annual sales of approximately $1.5 million in pharmaceutical drugs, approximately 20% (or $300,000 a year) is derived from the sale of drugs manufactured by Pfizer Canada.
8. Among the important patented medicines available only through Pfizer Canada
3 are the following: Drug Indication Lipitor - high cholesterol Accupril - high blood pressure Norvasc - high blood pressure Minestrin - birth control Loestrin - birth control Bextra - arthritis Arthrotec - arthritis Detrol - bladder incontinence Neurontin - anti-convulsive Celebrex - anti-arthritic Dipentum - gastro intestinal Chronovera - hypertension angina Pfizer Canada’s Demands and Broadview Pharmacy’s Responses 9. By letter dated April 23, 2004, a copy of which is attached hereto and marked as Exhibit “A”, Pfizer Canada demanded a written explanation of Broadview Pharmacy’s monthly purchase variations of major Pfizer Canada pharmaceutical products for the twelve month period ending March 31, 2004.
10. By undated letter, sent by telefax on April 30, 2004, a copy of which is attached hereto and marked as Exhibit “B”, Broadview Pharmacy advised Pfizer Canada that in the past, because it considered it to be its right to do so, Broadview Pharmacy had supplied some internet pharmacies with some pharmaceutical products, but that Broadview Pharmacy would no longer be doing so.
11. By letter dated May 21, 2004, a copy of which is attached hereto and marked as Exhibit “C”, Pfizer Canada advised Broadview Pharmacy that it required an affidavit or statutory declaration by June 1, 2004 regarding the matters set out below, failing which Broadview Pharmacy’s “approved purchaser status” would be terminated and Broadview
4 Pharmacy would no longer be able to purchase Pfizer Canada products. The letter required an affidavit or statutory declaration which confirmed the following:
(a) that Broadview Pharmacy place a notice prominently in any website linked to it advising that Pfizer Canada pharmaceutical products are not available for sale outside of Canada;
(b) that Broadview Pharmacy would not sell Pfizer Canada pharmaceutical products outside Canada or to any one exporting products out of Canada;
(c) that none of Broadview Pharmacy’s owners, directors or officers, either owns, controls or has an interest, in any pharmacy in Canada which is an unapproved purchaser of Pfizer Canada pharmaceutical products or which Broadview Pharmacy knows, or has reason to know, sells or intends to sell Pfizer Canada pharmaceutical products for export from Canada (the “cross-ownership undertaking”); and
(d) that Broadview Pharmacy acknowledge that Pfizer Canada will only consider continuing supply of its products on this occasion only and that further breaches of Pfizer Canada’s terms of sale will result in immediate termination of supply.
In addition, Pfizer Canada, in its letter of May 21, 2004, required that Broadview Pharmacy, among other things, permit Pfizer Canada to conduct a maximum of four audits annually to confirm whether Broadview Pharmacy has complied with Pfizer Canada’s terms and conditions of sale throughout the audit period. The letter also required a twelve-month projection of expected Pfizer Canada pharmaceutical product purchases, on a product by product basis.
12. Broadview Pharmacy’s counsel, D.H. Jack, responded to Pfizer Canada by letter dated May 26, 2004, a copy of which is attached hereto and marked as Exhibit “D”.
5 That letter confirmed, as indicated in Broadview Pharmacy’s undated letter faxed on April 30, 2004, that Broadview Pharmacy was fully prepared to give an undertaking not to sell Pfizer Canada pharmaceutical products outside of Canada, or to any person or pharmacy in Canada that it knows or has reason to know will either directly or indirectly export Pfizer Canada pharmaceutical products (the “no export undertaking”).
13. However, Mr. Jack’s May 26, 2004 letter took issue with the cross-ownership undertaking demanded by Pfizer Canada (sub-paragraph 11(c), above), and expressed the view that the undertaking that Broadview Pharmacy not sell outside of Canada, or to other exporters, which Broadview Pharmacy was fully prepared to give, should suffice. The May 26, 2004 letter also raised concerns about the maintenance of patient confidentiality in the context of Pfizer Canada’s requirement of a maximum of four audits per year of Broadview Pharmacy, and asked for a full review of the proposed audit process in order to ensure the maintenance of such confidentiality.
14. I am advised by Mr. Jack, and verily believe that, following his May 26, 2004 letter, he and counsel for Pfizer Canada engaged in a series of off-the-record and without prejudice discussions with respect to Pfizer Canada’s May 21, 2004 letter to Broadview Pharmacy, and that, as a result of those off-the-record discussions, it appeared clear that the parties would be able to reach an agreement with respect to most of the undertakings sought in Pfizer Canada’s May 21, 2004 letter, including the manner in which Pfizer Canada pharmaceutical product would be advertised on any website used by Broadview Pharmacy, and as well as the form of the no export undertaking to be given by Broadview Pharmacy not to export any Pfizer Canada products out of Canada or to sell to other exporters. As well, it appeared clear that suitable assurances would be received from Pfizer Canada to ensure the continued confidentiality of patient personal health information in respect of the proposed audits referred to in Pfizer Canada’s May 21, 2004 letter. See Mr. Jack’s letter to Frank Monteleone, Pfizer Canada’s counsel, dated June 1, 2004, and Mr. Monteleone’s response, of the same date, copies of which are attached hereto and marked respectively as Exhibits “E” and “F” , which clearly set forth this state of matters as between Broadview Pharmacy and Pfizer Canada.
6 15. However, as Exhibits “E” and “F” also show, Broadview Pharmacy and Pfizer Canada were unable to agree on the cross-ownership undertaking required by Pfizer Canada’s May 21, 2004 letter. One of the co-owners of Broadview Pharmacy also has an interest in another and separate pharmacy which sells Pfizer Canada products outside of Canada. Broadview Pharmacy cannot change its ownership structure. It is Broadview Pharmacy’s position that the no export undertaking, which it is fully prepared to give, namely, that it not export Pfizer Canada pharmaceutical products out of Canada, or supply those who do so, together with the agreed to audits to be conducted by Pfizer Canada, are entirely sufficient for Pfizer Canada’s purposes.
Pfizer Canada Cuts Off Supply to Broadview Pharmacy 16. Notwithstanding the foregoing, Pfizer Canada has now taken the step of terminating Broadview Pharmacy’s approved purchaser status, effective June 2, 2004. Broadview Pharmacy is no longer able to purchase Pfizer Canada products. In this regard, attached hereto and marked as Exhibit “G” is a copy of Pfizer Canada’s letter to one of Broadview Pharmacy’s main distributors, Nu-Quest Distribution Inc., dated June 2, 2004, which indicates on the second page that Broadview Pharmacy was made an “unapproved purchaser” of Pfizer Canada products effective June 2, 2004.
17. Many customers of Broadview Pharmacy have regular multiple prescriptions and have habitually come to Broadview Pharmacy to fill all of their prescription needs in one visit. If Broadview Pharmacy is not able to serve such patients’ needs, because for example it has no supply of Pfizer Canada products, such customers will very likely choose to fill the ir prescriptions at other pharmacies which can serve all of their needs. As Pfizer Canada products are now no longer available to Broadview Pharmacy, many of its patients will be going elsewhere for their pharmaceutical needs, and Broadview Pharmacy will likely lose such customers for good.
7 18. Pfizer Canada’s actions thus seriously threaten the financial viability of Broadview Pharmacy. Pfizer Canada occupies a dominant position in the Canadian marketplace with respect to its patented pharmaceutical products, as exemplified by the fact, referred to at paragraph 7, above, that Pfizer Canada products have in the past accounted for approximately 20% of Broadview Pharmacy’s annual sales.
Terminated Catalogue Information Access 19. A further important issue has arisen regarding the ordering of pharmaceutical products. Within the last two weeks, the largest distributor of pharmaceutical products in Canada, McKesson Canada, has commenced the practice of restricting access to its catalogue of products to any “unapproved purchasers”, that is, any pharmacy that has been cut-off of supply by any of the large pharmaceutical manufacturers, including Pfizer Canada. This step means that pharmacists are no longer able to access important information for their patients about drug quantities, characteristics and pricing through the McKesson website, or from McKesson sales sta ff who answer telephone inquiries from pharmacies such as Broadview Pharmacy. Broadview Pharmacy’s patients’ interests have been adversely affected accordingly.
SWORN before me at the City of ) Toronto, in the Province of ) Ontario, this day of June, ) 2004. ) Herbert Cohen A Commissioner for Taking Affidavits, etc.