September 25, 2020

Drugmakers lose bid to abolish Alameda take-back program


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Pills - metoclopramideBy Ross Todd, from The Recorder

SAN FRANCISCO — The U.S. Court of Appeals for the Ninth Circuit on Tuesday found that an Alameda County ordinance requiring pharmaceutical companies to fund a program to dispose of unused drugs is constitutional.

A three-judge Ninth Circuit panel upheld a lower court ruling on summary judgment that the ordinance—the first of its kind targeting the pharmaceutical industry—doesn’t violate the dormant Commerce Clause of the U.S. Constitution.

“Without any evidence that the ordinance will affect the interstate flow of goods, we cannot say that the ordinance substantially burdens interstate commerce,” wrote Judge N. Randy Smith in the 17-page decision.

In a sign of how important the case could be to similar laws seeking to hold manufacturers responsible for safely disposing of other potentially harmful products, several business and environmental organizations weighed in at the Ninth Circuit with amicus briefs, as did officials from the state and other local governments.

Alameda County’s Board of Supervisors passed the Safe Drug Disposal Ordinance in July 2012 requiring companies who sell or distribute prescription drugs in the county to fund a program to collect and dispose of any unwanted drugs. The county estimated the annual cost for each drugmaker would fall between $5,300 and $12,000, a tiny fraction of the $965 million the companies collected in Alameda County in 2010.

The trade group Pharmaceutical Research and Manufacturers of America, or PhRMA, filed suit in December 2012, claiming the ordinance violated the Commerce Clause of the U.S. Constitution by directly regulating interstate trade, forcing interstate producers to perform a local duty, and shifting costs of a local regulatory program onto its members and other consumers outside the county.

But U.S. District Judge Richard Seeborg of the Northern District of California sided with the county on summary judgment in August 2013. Seeborg wrote that the county showed “that the ordinance serves a legitimate public health and safety interest, and that the relatively modest compliance costs producers will incur should they choose to sell their products in the county do not unduly burden interstate commerce.”

At oral arguments before the Ninth Circuit in July, Jones Day partner Michael Carvin further argued that the measure was unconstitutional because it, in essence, imposed a tariff on interstate drug companies and created an affirmative obligation that they fund Alameda County’s programs.

But in Tuesday’s decision, Smith and the other panel members—Judge Morgan Christen and Judge Lawrence Piersol of South Dakota, sitting by designation—rejected the pharmaceutical industry’s arguments.

“The ordinance, both on its face and in effect, applies to all manufacturers that make their drugs available in Alameda County—without respect to the geographic location of the manufacturer,” Smith wrote.

Arthur Shartsis of San Francisco’s Shartsis Friese, who argued on behalf of Alameda County, said in a phone interview that “this was a pretty heavyweight, national battle in the end.” He pointed out that California Attorney General Kamala Harris filed a brief in support of Alameda County as did the Natural Resources Defense Council, the California State Association of Counties, and League of California Cities.

The U.S. Chamber of Commerce and Washington Legal Foundation filed briefs siding with PhRMA.

Alameda County Counsel Donna Ziegler said in a phone interview that “the county is very pleased to continue to defend what we believe is good law and good policy” and to have established precedent that will support similar local ordinances.

The decision, Shartsis said, “establishes that a political entity smaller than a state can, in a limited and legal way, regulate an element of an industry.” Shartsis said that he sees little chance of either the Ninth Circuit or the U.S. Supreme Court granting further review, especially with the opinion being written by Smith, a conservative member of the court appointed by former President George W. Bush.

Smith said that opinions “vary widely” as to whether the ordinance was a good idea or not. “We leave that debate to other institutions and the public at large,” he wrote. “We needed only to review the ordinance and determine whether it violates the dormant Commerce Clause of the United States Constitution. We did; it does not.”

Jones Day’s Carvin didn’t immediately respond to phone and email messages.

PhRMA’s general counsel Mit Spears said the trade group is reviewing its options and backs community-sponsored programs for “safe, free and efficient” disposal of unused pharmaceuticals.

“Off-loading the costs of a local take-back program onto out-of-state consumers and businesses, as is the situation in Alameda, is not an appropriate way to address any of the problems associated with the misuse of prescription medicines,” Spears said in an emailed statement.

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