Royal Flush? Trade Groups Challenge a Second Drug Stewardship Program; This Time the Target is King County, Washington

December 18, 2013

By Kurt R. Karst –      

In a recent Complaint filed in the U.S. District Court for the Western District of Washington (at Seattle), several trade groups – the Pharmaceutical Research and Manufacturers of America (“PhRMA”), the Generic Pharmaceutical Association (“GPhA”), the Biotechnology Industry Organization (“BIO”), and the Consumer Healthcare Products Association (“CHPA”) – are challenging as unconstitutional a King County, Washington Board of Health regulation establishing an industry-funded stewardship program for the collection and disposal of unwanted household medicines from county residents.  Known as the Secure Medicine Return Regulations, King County’s regulation is the second such extended producer responsibility drug take-back program created in the United States, according to King County Board of Health Chair Joe McDermott.  The regulation was passed on June 20, 2013, and, according to an implementation timeline, requires covered entities to express their intent to participate in a stewardship plan by December 20, 2013.

The first drug stewardship law – the Safe Drug Disposal Ordinance – was passed by the Alameda County, California Board of Supervisors in July 2012 and was amended in October 2013 to extend the deadline for submitting disposal plans from November 1, 2013 to May 1, 2014, and to narrow the definition of a “producer” by removing wholesaler distributors from the scope of the ordinance (see here).  The Alameda County ordinance is also the focus of a lawsuit filed by PhRMA, GPhA and BIO, as we previously reported (here and here).  That case is currently on appeal to the U.S. Court of Appeals for the Ninth Circuit (Case No. 13-16833) after the U.S. District Court for the Northern District of California refused to find that the Alameda County ordinance is a per se violation of the Commerce Clause of the U.S. Constitution.  Briefing in that case has been expedited somewhat, with an opening brief filed on November 15, 2013, an answering brief that is due on January 6, 2014, and an optional reply brief that is due on January 24, 2014.  Amicus briefs in support of the trade organization appellants and urging reversal of the district court decision have been filed by the Chamber of Commerce of the United States of America and the Washington Legal Foundation, on behalf of itself and the California Healthcare Institute (here and here). 

King County’s Secure Medicine Return Regulations is quite similar to Alameda County’s Safe Drug Disposal Ordinance.  Both measures require brand-name and generic drug manufacturers to shoulder the financial burden of local take-back obligations, including collection, transportation, disposal, public outreach, and administrative expenses.  But the King County regulations do have a few distinctive features vis-à-vis the Alameda County ordinance. 

First and foremost, the King County law applies to both “prescription” and “nonprescription” brand-name and generic drugs.  That might explain why CHPA, “a non-profit organization representing leading manufacturers and marketers of over-the-counter medicines and dietary supplements,” joined the lawsuit against King County, but not against Alameda County. 

Second, the King County regulation states that “[a]lthough producers may not charge specific point-of-sale or point-of-collection fee, the board does not otherwise intend to preclude producers from recouping the costs of their program through other means, including allocating costs to the price of their covered drugs in King County.”  This provision might have been included in an attempt to immunize the King County regulation against the cost-shifting argument that PhRMA et al. have raised in their challenge to the Alameda County ordinance. 

Third, the King County regulation provides that pharmacies (which, like the Alameda County ordinance, are exempt from coverage) may receive “incentives” or “payment” in exchange for their willingness to serve as “collectors” – i.e., “a person that gathers unwanted covered drugs from covered entities for the purpose of collection, transportation and disposal.” 

Finally, the King County regulation imposes a specific regulatory duty on drug wholesalers.  Section 11.50.110 of the regulation states that “each drug wholesaler that sells any covered drugs in or into the county must provide a list of producers of covered drugs to the local hazardous waste management program local authorities,” and must update that list each January.  Although the inclusion of this provision in the regulation is not entirely clear, it is presumably designed to facilitate enforcement by virtue of a ready-made producers list.

The trade organizations’ Complaint alleges that the King County regulation is a per se violation of the Commerce Clause of the U.S. Constitution and violates 42 U.S.C. § 1983.  These are the same counts alleged in the Alameda County lawsuit.  According to the Complaint:

The Regulation represents a per se violation of the Commerce Clause for three principal reasons.  First, the Regulation impermissibly directly regulates and burdens interstate commerce by transferring the County’s traditional police power responsibility of waste disposal to interstate actors solely on the basis that one of their products is sold in King County after being delivered there through an interstate distribution chain.  Second, the Regulation has the impermissible primary purpose and effect of burdening interstate commerce for local advantage by shifting costs and responsibilities of a local regulatory program away from local consumers and taxpayers and directly onto entities identified by their participation in interstate commerce.  Because the Regulation prohibits charging fees to recoup the costs of the take-back program, out-of-county consumers will necessarily have to pay for a program that serves only King County residents.  Finally, the Regulation has impermissible extraterritorial effect by reaching entities with no significant connection to King County and by compelling conduct across county lines.

For its part, the U.S. Congress is not currently considering legislation to create a nationwide drug take-back program.  Although a bill was introduced in 2011 – H.R. 2939, the Pharmaceutical Stewardship Act of 2011 – it did not gain much traction.  Rather, Congress may address the issue piecemeal and supplement local and state laws and regulations as needed.  For example, last week, Representative Matt Cartwright (D-PA) introduced H.R. 3714, the Servicemembers and Veterans Prescription Drug Safety Act of 2013.  That bill would provide for a prescription drug take-back program for members of the Armed Forces and veterans.

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