Shoppers Drug Mart faces proposed class action for alleged 'unethical corporate practices'

A former Shoppers Drug Mart franchise owner has filed a proposed class action lawsuit against the Canadian retail pharmacy chain, and its parent company Loblaw, alleging the companies imposed "unsafe and unethical" corporate practices on franchise owner pharmacists to increase profits.

The claim was filed in Ontario Superior Court last week and intends to cover both franchise owners whose agreements have been terminated since 2014 and current franchise owners in Ontario.

It has not yet been certified or tested in court.

The crux of the lawsuit concerns how corporate practices like imposing targets on the volume of medication reviews, cutting back support staff hours, and other mandates to increase revenue, have allegedly put Shoppers Drug Mart franchise owners, who are also pharmacists, in an "irredeemable conflict of interest."

"When you put policies on the associate owner that require [them] to breach their professional obligations at the risk of losing their franchise ... you place them in a conflict of interest between their obligations to patients and their obligations to the business," said lawyer Aly Haji, from Ricketts Harris law firm, which filed the proposed class action.

The consequences of that conflict could include a pharmacist having their licence suspended or revoked, according to the lawsuit.

WATCH |Shoppers Drug Mart faces proposed class actionlawsuit:

Shoppers pharmacy owners launch class-action lawsuit

6 months ago

Duration 2:47

Proposed class-action lawsuit alleges the Shoppers Drug Mart imposed unsafe and unethical corporate practices on pharmacy owners to increase profits. CBC's Angelina King reports.

'Case has no merit': Loblaw

Loblaw and Shoppers Drug Mart have not yet filed statements of defence in the case. But in an email statement,Loblaw spokesperson Dave Bauer told CBC News "this case has no merit whatsoever, and we intend to vigorously defend it."

The lawsuit was filed in the wake of a CBC News investigation, which revealed how some former Shoppers Drug Mart pharmacy employees believe the company is taking advantage of Ontario's medication reviews program, MedsCheck, by pushing staff to bill the government for consultations patients don't necessarily need.

And how despite the chain's president denying the existence of targets for those services, dozens of internal records from frustrated pharmacists showed the chain has targets for those professional services and corporate management pressured owners to meet those numbers.

The Ontario College of Pharmacists has since said it's working with a legal team to explore its options after thousands of pharmacy employees came forward to share "deeply troubling" stories about corporate pressure to perform those billable services.

Former owner 'distraught' when franchise was revoked

In the case of former franchise owners like the lead plaintiff, Sivajanan Sivapalan, the claim alleges he and others had their franchises revoked, or not renewed, for criticizing the allegedly unethical practices.

According to the court filing, Shoppers informed Sivapalan that his franchise in Beamsville, Ont. had been terminated in January 2023. Shoppers did not provide Sivapalan any reasons for its decision.

"He was distraught when this happened. It was a very difficult time in his life," said Haji about his client.

"[Sivapalan] just wanted to seek justice and see redress for the pain and the kind of difficulties that many associates are going through."

WATCH | Pharmacy owners speak out:

More pharmacists call out Shoppers for unethical medical service targets

7 months ago

Duration 3:06

Dozens of current and former Shoppers Drug Mart owners and pharmacists say corporate management pressured them to meet unethical targets for unnecessary medical services. Emails and internal records from Shoppers provided to CBC News back up this claim.

For the proposed class of current franchise owners, the lawsuit alleges corporate practices, like medication review targets, interfere with their ability to use their professional judgment as pharmacists and to care for patients safely and effectively.

"Shoppers Drug Mart has taken no action to address the clear risks posed by the Corporate Practices to patient safety, the resulting breach of Franchisees' professional and ethical obligations, and the consequent risk of regulatory scrutiny and sanction by the Ontario College of Pharmacists," reads the claim.

"Instead, Shoppers Drug Mart has more aggressively implemented the Corporate Practices to maximize profits."

A Shoppers Drug Mart spokesperson previously told CBC News the decision to deliver a professional service, like a medication review, must be made by a pharmacist using their judgment.

"Our role is to assist associate owners and their pharmacy teams to deliver these services. That includes working with the associates on a yearly plan that is specific to the pharmacy's unique situation and patient needs in the community," said the previous statement from spokesperson Catherine Thomas.

In practice, the lawsuit alleges the pharmacy chain is acting in a way that defeats the purpose of its franchise agreements because if a pharmacy owner faces sanctions from the provincial regulator, as a result of corporate practices, it would give Shoppers grounds to terminate its franchise agreement with that franchise owner.

As a result, the proposed class action is looking for the court to determine that Shoppers breached its franchise agreements with the class and to award damages for those alleged breaches.