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Focus on Regulation

Ninth Circuit Upholds Alameda County’s Safe Drug Disposal Ordinance

On September 30, 2014, a three-judge panel of the United States Court of Appeals for the Ninth Circuit unanimously affirmed the U.S. District Court for the Northern District of California’s August 2013 ruling in Pharmaceutical Research and Manufacturers of America (PhRMA), et al. v.  Alameda County, et. al., No. 13-136833, holding that Alameda County’s Safe Drug Disposal Ordinance is constitutional under the Commerce Clause of the U.S. Constitution.  The ordinance, which Alameda County enacted in 2012 and which is the first of its kind in the nation, requires pharmaceutical companies whose products are sold in Alameda County to establish, administer, and finance a drug take-back program for unused and unwanted medications.  The ordinance grew out of concerns that consumers have been disposing of drugs by flushing medications into wastewater systems where they allegedly can impact the environment.

A consortium of non-profit trade organizations representing the manufacturers and distributors of pharmaceutical products challenged the Alameda County ordinance under the Commerce Clause, under which states and localities may not unduly interfere with interstate commerce.  The Ninth Circuit rejected the plaintiffs’ argument under the Supreme Court precedents that apply a two-pronged approach to determine whether a state or local law violates the Commerce Clause.  Under the first prong, the Ninth Circuit had to determine whether the ordinance “either discriminates against or directly regulates interstate commerce.”  The court held that it does neither.  In the court’s view, the ordinance is not discriminatory because it treats all drug manufactures exactly the same regardless of where they are located, and it does not directly regulate interstate commerce because, as two stipulations between the parties revealed, the ordinance does not control conduct beyond the borders of Alameda County.  The court then moved onto the second prong, which required the court to assess whether the burden the ordinance imposes on interstate commerce is excessive when compared to the benefits it conveys on Alameda County.  The court, finding that the plaintiffs “provide[d] no evidence” that the ordinance will affect the interstate flow of goods, determined that it does not.  The court’s decision remains subject to appeal.

Alameda County began implementing the ordinance in July 2014 but is still working with companies to develop their required stewardship plans.  Although no product collection has been undertaken pursuant to the ordinance, absent a successful appeal, the Ninth Circuit’s recent decision clears the way for product collection to commence, likely sometime in 2015.  Implementation of a similar ordinance in King County, Washington, is expected to proceed as well.  Additional State and local governments across the country will undoubtedly consider adopting pharmaceutical take back programs as well and producer take-back programs for other products may not be far behind.  Producers will need to look closely at these programs to see if they are covered, and if so, will need to assess the most cost-effective means of achieving compliance.