There is no automatic rejection for medical inadmissibility due to excessive demand.
Procedural fairness guarantees established by the Court require that you be advised of the medical officer's concerns and given an opportunity to challenge such a decision.
A challenge may be to the medical opinion or to the cost estimate (which CIC often skips, though it is required according to their own manuals). The other option is to provide a "mitigation plan" - a plan on how you will ensure that you will not create excessive demand on the health and social services system.
Beyond that, the arguments you can put forward are more legal and lay the groundwork for a Federal Court challenge. The Federal Courts in Canada have not been kind to CIC when it comes to medical inadmissibility decisions - they've lost most of the cases that involve applicants or children. They do much better in cases that involve parents. Most people do not challenge a refusal, unfortunately, as a concerted effort here would likely lead to the excessive demand section being struck down. CIC officers are unlikely to consider legal arguments, but when presented as part of your response they can lay the groundwork for the Federal Court to grant Judicial Review (which means they overturn the refusal).
The most successful arguments I've seen are those that are factual based. A medical officer says "your drugs are too expensive" and the applicant then goes and collects objective evidence that the cost of the drugs is below the excessive demand threshold. I've assisted in several cases of this type and in each case the medical officer withdraws the original opinion and submits a new opinion (typically one that gives an "M2" rating - some demand, not excessive).
Mitigation arguments have a choppy history. The Court ruled (in Companioni) that CIC must consider evidence of insurance coverage that would pay the costs - such private coverage is not considered to be at the public expense. The challenge for many applicants is establishing such coverage. Sometimes applicants are obtaining drugs through NGOs in their home country. If the NGO agrees to continue providing drug coverage that can be presented to CIC. I have seen at least one case in which CIC then raised the issue of importation ("Schedule F") of drugs. The only counter-argument of which I'm aware here is to have a Canadian doctor or pharmacist willing to receive the drugs from the NGO on behalf of the client (this is permitted for Schedule F drugs). Sometimes medical officers refuse to consider insurance (this happened to me: I had 100% coverage from two private insurance plans and a Health & Welfare Trust, but the medical officer rejected them out of hand.) Thus far I have not seen a Federal Court case testing this situation.
This is a highly technical field and one in which there are only a small number of experienced attorneys - that is, attorneys with a track record of successfully representing clients.
More troubling are cases like one I recently had brought to my attention of someone here in Canada with a child in the home country. The child requires a surgical procedure that is available in Canada and would be paid for publicly. The surgical procedure is not available to the child in the home country. In that case, the child really is medically inadmissible (excessive demand) but there are strong H&C arguments that can be put forward, since Canada does consider the needs of children and is signatory to international agreements stating that this is the case. If the CIC officer refuses the applicant and child, the child will die.
Personally, I wouldn't want to be the CIC officer in charge of that case: either make a decision that will lead to the death of a child but uphold the requirements of A38, or override the medical officer's decision on H&C grounds and be put in a position of justifying the decision to permit the child into Canada.
I haven't heard the decision in that case.
Routine medical conditions are not the grounds for refusal. If there are concerns, you will be given an opportunity to respond. If you do not respond, they will refuse you. If you do respond, they will consider your response. This can lead to rejection of your response, in which case they will refuse you, or issuance of a new medical opinion. If that medical opinion is you are not excessive demand, they will continue processing your application. If the medical opinion is that you are still excessive demand, they will issue a new fairness letter.
If you require another medical examination, they will normally not reconsider the medical condition that gave rise to the original fairness letter.
Oh, and one final thing: when responding to a fairness letter, an applicant should always ask that they be granted a Temporary Resident Permit (TRP). From what I can tell, CIC routinely ignores that request and the case law states that - by itself - this is grounds for granting Judicial Review and sending the application back to CIC. If an applicant is granted a TRP but not PR they may come to (or remain in) Canada under the terms of the TRP. After three continuous years in Canada on a Temporary Resident Permit, a medically inadmissible permit holder may apply for permanent residence in the "permit holder's class" and may not be refused on the basis of the inadmissibility for which the TRP was issued.