Alameda County, CA, is defending its landmark industry-financed drug take-back program against industry arguments that the approach is unconstitutional, telling a federal appellate court in a recent brief that any cost to pharmaceutical manufacturers is de minimis compared to the program’s health and safety benefits.
“Alameda demonstrated that the Ordinance is constitutional because it is not protectionist, does not discriminate in favor of in-county competitors against substantially similar out-of-county competitors, does not act like a tariff, does not require any conduct outside of the county, does not directly regulate interstate commerce, [and] will not inhibit the flow of commerce,” the county says in a Jan. 15 reply brief inPharmaceutical Research and Manufacturers of America (PhRMA), et al., v. Alameda County, et al. The case is on appeal to the U.S. Court of Appeals for the 9th Circuit after the U.S. District Court for the Northern District of California rejected PhRMA’s arguments. The brief is available on InsideEPA.com. (Doc. ID: 2458493
PhRMA and two other pharmaceutical organizations are suing Alameda County over a 2012 first-in-the-nation ordinance requiring pharmaceutical companies whose products are sold in the county to establish and finance a drug take-back program for unwanted medications. Many local governments and citizen groups are concerned that a lack of such programs leads consumers to flush medications into wastewater systems, where they are eventually discharged into waterbodies and cause adverse developmental effects in fish and possibly humans.
But industry charges the ordinance violates the Constitution’s Commerce Clause because it shifts the costs from a local program directly onto interstate commerce.
Judge Richard Seeborg of the U.S. District Court for the Northern District of California rejected industry’s arguments against the Alameda County regulations in August, ruling the ordinance does not meet any of three criteria for proving a violation of the Commerce Clause (Superfund Report, Sept. 19).
But the pharmaceutical companies quickly appealed the case to the 9th Circuit Sept. 12, reiterating their Commerce Clause arguments and adding that the district court erred when it concluded that local company favoritism is the only way to impermissibly burden interstate commerce.
Free-market and industry groups have backed PhRMA’s arguments, telling the 9th Circuit in amicus briefs that the district court’s endorsement of the ordinance could lead to the widespread transfer of local disposal costs to other industry sectors (Superfund Report, Dec. 9).
Alameda County, however, is dismissive of industry’s arguments, saying they can be divided into two categories, “1) arguments premised on matters that are irrelevant to the dormant Commerce Clause, and 2) arguments premised on facts that are not in the record.”
The county acknowledges the ordinance may be a first-in-the-nation rule with regard to medication disposal, but adds that it falls squarely under the type of extended producer responsibility (EPR) requirements allowed under the California Health and Safety Code. EPR is a form of mandatory product stewardship that shifts the costs of products’ end-of-life management from local governments to manufacturers.
The county also reiterates that the rule did not discriminate against drug producers because it applied to all of the more than 100 pharmaceutical companies that distribute medications within the county.
A main point in PhRMA’s appeal is that Alameda’s ordinance violates the dormant Commerce Clause because compliance costs may not be recouped by a point-of-sale or point-of-disposal fee–a rule stipulated in the ordinance. In the brief, Alameda acknowledged that the program would make drug producers pay the administrative and operational fees of their product stewardship programs and the enforcement costs incurred by the county, which they estimated to be $530,000 annually. But with a membership of approximately 100 companies, the annual cost-per-producer would be less than $5,300, the county argues.
Even so, the overall cost of the program is immaterial because “the dormant Commerce Clause is not intended to protect companies’ profits,” and PhRMA cannot meet the clause’s high burden of proof that the “incidental burden imposed on interstate commerce ‘is clearly excessive in relation to the putative local benefits,'” as the district court noted, the county says.
PhRMA’s reply brief is due Jan. 31.