Reed Smith Client Alerts

Authors: Gary A. Jeffrey

Type: Client Alerts

The United States Supreme Court has declined to hear a challenge to the Alameda County Drug Disposal Ordinance (“Ordinance”) brought by three pharmaceutical trade organizations. The Court’s decision leaves in force the Ninth Circuit decision, which found that the Ordinance, requiring pharmaceutical manufacturers to fund drug take-back programs in the county, did not interfere with interstate commerce or discriminate against out-of-state pharmaceutical manufacturers. Its refusal to hear the challenge to the Ordinance significantly expands the duties of the pharmaceutical industry in Alameda County, and perhaps in other venues that are evaluating the implementation of similar laws.

The Ordinance was first challenged in the U.S. District Court for the Northern District of California in December 2012, by the Pharmaceutical Research and Manufacturers of America (”PhRMA”), Biotechnology Industry Organization (“BIO”), and Generic Pharmaceutical Association’s (“GPhA”). On April 4, 2013, these pharmaceutical trade organizations brought a motion for summary judgment arguing the Ordinance violated the dormant commerce. When the motion was denied, they appealed to the Ninth Circuit, which unanimously upheld the Ordinance as constitutional. In December 2014, the industry groups filed a petition with the Supreme Court asking for a review of the appellate decision. On May 26, 2015, the United States Supreme Court denied petitioners’ Writ of Certiorari. The Court has not published its reasoning on the denial.

As previously reported here and here, the Ordinance calls for pharmaceutical manufacturers who sell or distribute their products in Alameda County to create and maintain “take-back” programs for the collection and disposal of unused drugs. The Ordinance encompasses not only collection/ disposal of their own products, but also pharmaceuticals, including controlled substances, manufactured by other businesses. Previously, such services were conducted by the county, and funded by local taxpayers.

The new Ordinance would obligate any manufacturer, no matter its own location, to create and maintain secured drug “disposal kiosks” in Alameda County, promote its program to the local public through “educational and outreach” materials, and physically transport and dispose of the unused drugs at medical waste facilities. Although the Ordinance clearly seeks to mitigate the effects of controlled substances and medical waste on local health, its purported and stated purpose is to shift pharmaceutical waste costs away from local agencies and taxpayers to outsiders.

The pharmaceutical trade organizations argued that the Ordinance violated the dormant Commerce Clause in that, instead of regulating harmful products to protect local citizens’ health or safety, it conditioned the local sale of products by having interstate producers come into Alameda County and provide a valuable service to its residents at the expense of outsiders. The dormant commerce clause arguments appears to have been weakened because the pharmaceutical organizations are comprised of manufacturers located both inside and outside of Alameda County, which allowed the county to assert that the Ordinance did not apply in a discriminatory fashion. In addition, industry briefing did not focus on whether the Ordinance itself was a rational expression of a legitimate state interest and whether the burden imposed exceeded local benefit, nor was there an emphasis on the seemingly arbitrary provisions requiring one company to collect disused drugs made by its competitors, including controlled substances for which they otherwise have no connection.

Since we last reported, there has been continuing activity outside of Alameda concerning the implementation of similar regulations. These were located primarily in Washington, California, and Massachusetts.

In California, various countries are now considering whether to pass drug disposal ordinances similar to Alameda’s. The San Francisco Board of Supervisors passed the Safe Drug Disposal Stewardship Ordinance March 17 and it became effective April 25, 2015. This ordinance would require a company that manufactures one or more prescription or over-the-counter medicines sold in the City and County of San Francisco, to participate in an approved drug stewardship program for the collection and disposal of unwanted drugs from residential sources. It also imposes a periodic reporting condition onto these same manufacturers.

San Mateo, Marin, and Santa Barbara Counties in California are considering similar drug take-back ordinances. Santa Clara County’s Board of Supervisors unanimously passed a Safe Drug Disposal Ordinance May 19, 2015. Meanwhile, California State Senator Hannah-Beth Jackson from Ventura County introduced statewide drug take-back legislation, Senate Bill 1014. On April 16, 2014, she announced that because of lack of support from her legislative colleagues, she had shelved her bill, but planned to reintroduce the bill in 2015.

In Seattle (Washington, King County), the Secure Medical Return Regulation was stayed until petitioners in Alameda’s case had exhausted appellate review in the Supreme Court. With this recent denial, the stay will be lifted. In addition, a statewide regulation modeled on the Alameda Ordinance was drafted in Massachusetts, in 2014. The Massachusetts bill appears to be held up in committee. The widespread consideration of drug disposal ordinances demonstrates that the potential repercussions of this Supreme Court decision may be far-reaching.

 

Client Alert 2015-150