This post was written by Gary Jeffrey and Charlene Chen.
On December 29, 2014, the Pharmaceutical Research and Manufacturers of America (“PhRMA”), the Biotechnology Industry Organization (“BIO”), and the Generic Pharmaceutical Association (“GPhA”) jointly filed a Petition for a Writ of Certiorari (Case No. 14-751) with the United States Supreme Court, asking for review of a case with widespread implications for pharmaceutical manufacturers and distributors throughout the nation. The Writ seeks reversal of the Ninth Circuit’s decision, PhRMA v. County of Alameda, No. 13-16833, 2014 WL 414407 (9th Cir. Sept. 30, 2014), which affirmed the constitutionality – under the dormant Commerce Clause – of Alameda County’s Safe Drug Disposal Ordinance, enacted in July 2012.
As previously reported here, the Ordinance requires pharmaceutical manufacturers – who sell or distribute their products in Alameda County – to initiate a “take-back” program for the collection and disposal of unused drugs. Any such manufacturer, regardless of its geographic location, would be obligated to create and maintain secured drug “disposal kiosks” in the county, promote the program to the public through “educational and outreach materials, and physically dispose of the unused drugs at medical waste facilities. The companies are responsible for collecting not only their own pharmaceuticals, but also any company’s unused drugs, including controlled substances. The county has not attempted to conceal its motivations in enacting these regulations. The Ordinance’s stated purpose is to shift costs away from local agencies and taxpayers to outsiders.
Petitioners question the Ninth Circuit’s “unqualified endorsement of local laws requiring interstate producers to enter the locality, to perform an uncompensated local public service at the expense of the instate market,” and remark that its holding “sharply conflicts” with U.S. Supreme Court precedent. The filing emphasizes that “[w]hile the dormant Commerce Clause provides states with broad leeway to regulate interstate products to protect local residents, it imposes a virtually per se prohibition against leveraging the local presence of products to coerce interstate producers to enrich local residents at the expense of non-local businesses and consumers.” The Writ argues that the Ordinance is worse than an interstate tariff because the increased costs are not borne primarily by local consumers, “but by non-local consumers, and interstate producers are not only burdened financially, but are forced to engage in a new business in a new location—disposal of unused medicines in Alameda.”
Since the Ordinance allows for manufacturers to form drug disposal groups to meet the requirements, and because of the arbitrary nature of the poorly written regulations, the economic costs of such programs are not yet known with any precision. However, the Petitioners correctly point out it will be expensive. According to court findings, a county program will cost $530,000 to $1.2 million annually to operate. Of course, that amount would need to be multiplied by the number of other counties passing similar regulations.
Thus, the decision could have far-reaching consequences, and Petitioners caution against the economic “balkanizing” effect of the Ordinance. Out-of-state producers of any product may be “affirmatively obligated” to enter every county where their product is sold to dispose of the product once a consumer elects to discard it. Further, this type of decision-making could easily encompass various industries, not just prescription pharmaceuticals. For example, non-resident newspaper publishers could be forced to operate local paper-recycling centers; automotive manufacturers could be commanded to establish local scrap-metal depositories; brewers and vintners could be obligated to establish local glass-recycling facilities.
Meanwhile, efforts to expand the number of counties with such “take-back” ordinances continue in California and Washington state. San Francisco and Seattle (King County, Washington) have enacted regulations similar to the Alameda County Safe Drug Disposal Ordinance. The California counties of Sonoma and Turlock are currently considering the adoption of similar ordinances. On October 30, 2014, California Senator Hannah-Beth Jackson (representing Santa Barbara and parts of Ventura County) sent a letter to every county in the state, noting the Ninth Circuit’s decision and encouraging similar programs statewide.
In Washington, King County’s Secure Medicine Return Regulations were also challenged by the Petitioners in conjunction with the Consumer Healthcare Products Association, but the lawsuit is stalled at the moment. According to an order from the Court, the matter “is stayed until such time as the Alameda County plaintiffs exhaust United States Supreme Court review or until the time for seeking such review has lapsed.” According to the Supreme Court case docket, a response to the Writ is due January 28, 2015. We will be watching closely to see if the Supreme Court accepts this challenge to address the nation’s first ordinance that obligates non-residents of a county to fund its drug disposal program.