By Kurt R. Karst –
The Pharmaceutical Research and Manufacturers of America (“PhRMA”), the Biotechnology Industry Organization (“BIO”), and the Generic Pharmaceutical Association (“GPhA”) share some common ground. All three of the trade groups oppose a Safe Drug Disposal Ordinance (see here and here [Item No. 69]) passed by the Alameda County, California Board of Supervisors on July 24, 2012, and that is slated to go into effect in July 2013. In a recent Complaint filed in the U.S. District Court for the Northern District of California, PhRMA, BIO, and GPhA contend that the first-in-the-nation county ordinance is a per se violation of the Commerce Clause of the U.S. Constitution and violates 42 U.S.C. § 1983, which allows monetary relief to those whose constitutional rights have been violated by an actor acting under “color of any statute, ordinance, regulation, custom, or usage, of any State. . . .” The trade groups are seeking declaratory and injunctive relief; specifically, a declaration that the ordinance violates the Commerce Clause, and an injunction prohibiting Alameda County and the County’s Department of Environmental Health from implementing the ordinance or seeking enforcement of its requirements.
The Alameda Safe Drug Disposal Ordinance reportedly traces its roots to a so-called “Extended Producer Responsibility” (“EPR”) policy framework adopted several years ago by CalRecycle (formerly the California Integrated Waste Management Board). The Safe Drug Disposal Ordinance, like other EPR (or “manufacturer take-back”) ordinances and laws (see here) place the primary responsibility for end-of-life management of products on the manufacturers of the products. There are several bills that have been introduced in various states to create EPR programs for myriad products, including electronics, batteries, sharps, and mercury thermostats (see here), as well as bills targeting pharmaceuticals in Maine (LD 821), Maryland (HB 648), New York (A04651 and A00211), Pennsylvania (HB 2466), and Washington (SB 5234 and HB 1370). The general intent of drug take-back legislation is allegedly to prevent unintentional poisonings and the improper disposal of products into the water treatment system.
The Alameda Safe Drug Disposal Ordinance requires “producers” of “covered drugs” to operate take-back programs after submitting a plan to the Department of Environmental Health by July 1, 2013. Such operation includes the creation, administration, promotion, and payment of the program (including the payment of Alamada County’s costs to administer and enforce the ordinance). A “covered drug” is defined in the ordinance generally to include “all drugs as defined in 21 U.S.C. § 321(g)(l) of the Federal Food, Drug and Cosmetic Act,” “including both brand name and Generic Drugs;” however, there are several exemptions, including exemptions for “nonprescription drugs,” vitamins, supplements, herbal remedies, cosmetics, soap, detergent, “household cleaning products,” biological products for which the producer already provides a take-back program, and certain “[p]et pesticide products.” Every producer’s take-back program – which may be run by an individual producer or funded by a group of covered producers under a “product stewardship organization” – must accept and dispose of all covered drugs received, no matter who manufactured the drugs, unless excused from that comprehensive obligation by the Department of Environmental Health. The collection, shipping, and destruction of collected items must comply with all state and federal laws. A violation of the ordinance may result in a civil penalty up to $1,000 per day.
In their Complaint, PhRMA, BIO, and GPhA allege that the Alameda Safe Drug Disposal Ordinance is a per se violation of the Commerce Clause, and in particular, the dormant Commerce Clause, which is a doctrine is rooted in the fear that parochial governments might adopt regulations that advance their own interests at the nation’s expense, and therefore, must be declared unconstitutional and the Alameda County government enjoined from implementing it. According to the trade groups:
The Ordinance represents a per se violation of the Commerce Clause for three distinct reasons. First, it directly regulates and burdens interstate commerce and its primary purpose and clear effect is to shift the costs of a local regulatory program directly onto interstate commerce and out-of-county consumers. Second, the Ordinance discriminates against interstate commerce by targeting interstate commerce and products delivered from outside the County for burdens. Finally, the Ordinance favors local interests by deliberately shifting costs away from local consumers and taxpayers and onto drug manufacturers and pharmaceutical consumers nationwide.
And even if the ordinance is not a per se infringement of the Commerce Clause it is still unconstitutional, say the trade groups, because “[i]ts burden on interstate commerce is inherently excessive because the County could accomplish all of the purported benefits of a take-back program without any interstate burden,” such as “by developing and conducting the take-back program through government officials paid by the local taxpayers or consumers served by the program.”
If the Alameda Safe Drug Disposal Ordinance is permissible, then what’s to stop Alameda County (or perhaps other counties from around the nation for that matter) from requiring other interstate producers to implement similar programs? For example, say the trade groups, Alameda County could “require interstate food producers to collect and dispose of all spoiled food or similar garbage.” The bottom line, according to PhRMA, BIO and GPhA, is that “[l]ocalities would be authorized to get something for nothing, simply by free-riding on interstate commerce and transferring the financial burdens to out-of-state consumers. Because such policies offend the dormant Commerce Clause at least as directly as a tariff, the Court should declare the Ordinance unconstitutional and permanently enjoin its implementation.”
A case management statement is due in the case by March 1, 2013, and a case management conference has been set for March 8, 2013 in San Francisco.