Free-market and industry groups are urging an appellate court to reject a California county’s ordinance that mandates pharmaceutical companies pay for the collection of unwanted medications, arguing that a district court’s endorsement of the precedent-setting approach could lead to the widespread transfer of local disposal costs to other industry sectors.
The U.S. Chamber of Commerce, the Washington Legal Foundation (WLF) and the California Healthcare Institute echo in Nov. 22 legal filings many of the Commerce Clause constitutional arguments that pharmaceutical manufacturers have already made in Pharmaceutical Research and Manufacturers of America (PhRMA), et al. v. County of Alameda.
But the groups, which are seeking to participate in the litigation as amicus parties, add warnings that if the local ordinance is upheld, the case could clear the way for multiple local governments enacting similar requirements, not only for medications but also for a wide range of unwanted products including old tires and wine bottles. Relevant documents are available on InsideEPA.com. (Doc ID: 2454936)
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 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: directly regulating interstate commerce, discriminating against interstate commerce, or favoring in-state economic interests over out-of-state interests (Superfund Report, Sept. 19).
Seeborg found the Alameda County program treated all pharmaceutical companies equally and therefore did not impose an unequal burden on companies located outside of the state and county. “The ordinance applies to producers who elect to sell their products within Alameda County, regardless of where the producers are based,” he wrote in his ruling.
The pharmaceutical companies quickly appealed the case to the U.S. Court of Appeals for 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.
In its amicus brief, the Chamber calls the Alameda County ordinance “a remarkable exercise of municipal power, and one that violates core federalism principles.” The group, which represents business of all sizes, adds that if upheld, the practical effect of the ordinance “would be to visit local encumbrances on commercial and distribution activities that are national in scope.”
Allowing the county’s requirements to go forward would encourage other municipalities to adopt similar laws, expanding the regulatory burden faced by drug manufacturers, the Chamber says, noting that at least one other local government has already adopted a similar drug take-back law. This would require drug manufacturers to deal with a variety of drug-disposal programs or sell only to distributors that agreed to shun localities with such regulations.
“In either case, the effect of ordinances like Alameda County’s is to create just the type of ‘economic Balkanization’ that the Commerce Clause is designed to curtail,” the Chamber says.
Additionally, upholding the county’s ordinance encourages local governments to adopt similar laws for products in other industries, the Chamber says, noting that California has instituted numerous extended producer responsibility (EPR) laws for batteries, paint, thermostats, carpets and other products. EPR is a mandatory type of product stewardship that requires producers to be responsible for the post-consumer management of their products and packaging, including shifting financial and management responsibility away from the public sector.
“The burden on out-of-state commercial activity, potential for abuse and mischief, and likelihood of harm to competition are manifest, and underscore the need for reversal,” the Chamber says.
WLF filed its amicus brief jointly with the California Healthcare Institute, which advocates for California’s biomedical community, including seeking to advance biomedical research.
The groups argue that if affirmed by the 9th Circuit, the Alameda County ordinance “will usher in a broad array of local ordinances designed to foist onto other jurisdictions costs and responsibilities that traditionally have been borne by local communities.” This includes not only the cost of disposing of pharmaceuticals but also the costs of disposing of old tires and recycling of wine bottles. Further, local governments could seek to shift the costs of fire protection onto interstate manufacturers of flammable products, the groups say.
“When local jurisdictions engage in a reciprocal battle to transfer local costs to the interstate market, no one ends up a net winner,” the groups say. “Indeed, such cost-shifting efforts cause significant harm to the national economy because they are economically inefficient: local jurisdictions have little incentive to impose costs prudently when they know that none of their citizens will bear those costs.”
Industry has long opposed efforts to require drug take-back programs. For example, it opposed H.R. 2939, legislation introduced in 2011 by Rep. Louise Slaughter (D-NY) that had the backing of several environmental and product stewardship organizations.
An industry source said the bill would do little to reduce the “trace” amounts of pharmaceuticals in drinking water sources and noted the Drug Enforcement Agency has developed a voluntary national take-back program in which consumers can twice a year dispose of unused prescription drugs.