Pharmacy ownership rules in Ontario

Ontario decides who may own a pharmacy through the Drug and Pharmacies Regulation Act, and the Ontario College of Pharmacists issues the certificate of accreditation that section 139 requires before anyone establishes or operates one. A buyer therefore cannot treat a pharmacy like an ordinary retail business. The Act limits ownership to pharmacists and to corporations that pass its tests, and the College treats the purchase of an existing pharmacy as the opening of a new one. That means the buyer applies for its own Certificate of Accreditation and is assessed afresh, together with each director of a corporate buyer. This guide sets out what the Act and the College’s own pages say, so that buyer and seller can see which steps sit outside the purchase agreement. For the wider buying process, see buying a pharmacy in Canada.

Who the Act lets own a pharmacy

Section 144(1) says no person other than a pharmacist, or a corporation complying with section 142, may own or operate a pharmacy. Under section 142(1), no corporation may own or operate a pharmacy unless a majority of its directors are pharmacists. Section 142(2) adds that a majority of each class of shares must be owned by, and registered in the name of, pharmacists or health profession corporations that each hold a valid certificate of authorization from the College. Shares registered in the name of a deceased pharmacist’s personal representative count as a pharmacist’s for a period not exceeding four years under section 142(3) of the Drug and Pharmacies Regulation Act. Section 142(4) exempts a corporation that was operating a pharmacy on 14 May 1954 from subsection (2), section 142(5) exempts certain non-profit corporations providing health services through more than one health discipline, and sections 142(6) and 144(3) say that “pharmacist” in those sections does not include a person prescribed by the regulations. Section 144(2) of the Drug and Pharmacies Regulation Act also says the right to operate is not affected by a suspension of a pharmacist’s certificate of registration, or by its revocation until six months have passed. A holding company with any non-pharmacist shareholder is a structure to test against these sections, not to assume.

A purchase is treated as a new application

The College states that acquiring an existing pharmacy in Ontario is equivalent to opening a new pharmacy and requires issuance of a new Certificate of Accreditation. To be accredited, the applicants and the new pharmacy must meet the criteria in the Act and its regulations. Under O. Reg. 264/16, an “applicant” is each proposed owner, and where the owner is or includes a corporation, “owner” includes each director. One qualification for a corporation is that the past and present conduct of each director affords reasonable grounds for the belief that the pharmacy will be operated with decency, honesty and integrity and in accordance with the law. The seller’s certificate is therefore not what the buyer closes on. Ask what the agreement says if closing arrives before the College has issued the buyer’s own certificate.

What the College asks of a corporate buyer

The College’s purchasing page lists, for a corporation, a Director of a Corporation Declaration of Good Character for every pharmacist director of the operating corporation. It also lists the articles of incorporation and the share certificates, which it requires only if the corporation has never operated a pharmacy in Ontario. The College evaluates each applicant against Part III of the regulation, including whether the conduct of the proposed owners affords reasonable grounds for the belief just described. If the Registrar is not satisfied that the qualifications for issuance have been met, the Registrar must refer the application to the Accreditation Committee, and the College tells the Director Liaison by letter. Sections 139(2) and 139(3) of the Act set out that process. Under section 143, a person whose certificate of registration has been revoked for cause, or while their licence is suspended for cause, may not be employed or work in a pharmacy, or act as a director or vote as a shareholder in a corporation operating one.

Opening day and the first renewal

Once the requirements are met, the College notifies the Ontario Drug Benefit program of the transaction, the new accreditation number, the owner information and the proposed opening date. The College will not activate the new pharmacy, and the pharmacy will not be permitted to bill third parties, without confirmation. On opening day the College contacts the Director Liaison or the Designated Manager to confirm that the acquisition is complete and the new pharmacy is open to the public, and it emails the certificate to the Designated Manager. Under O. Reg. 264/16, every owner and designated manager must ensure the standards for accreditation are maintained, and a certificate expires on May 10 each year unless renewed on or before that date, subject to exceptions in section 13 of the regulation.

Questions to settle before signing

• Whether every director and shareholder of the buyer, and of any holding company above it, fits sections 142 and 144 of the Act.
• What date the buyer expects the Certificate of Accreditation, and what the agreement provides if the planned closing date comes first.
• Whether each pharmacist director can sign the declaration of good character the College lists.
• Whether the pharmacy has existing access to a clinical viewer. The College says a buyer who knows of such access must communicate the change in accreditation number and update legal agreements if applicable.
• Who the buyer will name as designated manager, meaning the pharmacist the owner designates to the College as responsible for managing the pharmacy.