Drug Manufacturers Forced To Pay For Drug Take-Back Program
Another blow has been dealt to Big Pharma as a federal appeals court upholds a lower-court ruling that drug manufacturers have to pay for the drug take-back program that Alameda County passed into law in 2012.
In what is to be a first for the nation, the California county ordinance requires drug manufacturers to cover the costs associated with disposal of expired and unused medicine. According to court papers, the county’s officials have put the estimated annual cost of disposal at $330,000 or between $5,300 and $12,000 for each pharmaceutical manufacturer.
In a move that is joined by other local governments, the county seeks to reduce contaminants in drinking water that come from old or unused painkillers stashed away in medicine chests throughout many households. However, disposing of medicine in a safe manner is costly so in order to avoid financial burden on local governments, county officials have pushed for a law that would make drug makers cover these costs.
Of course this did not sit well with Big Pharma as the pharmaceutical industry’s trade group filed a lawsuit claiming that such a law violates the U.S. Constitution by interfering with interstate commerce and discriminating out-of-state drug manufacturers. How is that possible? Well, out-of-state drug manufacturers are required to pay for the take-back programs depending on the number of sales that they have had in the county.
The Pharmaceutical Research and Manufacturers of America or PhRMA, the industry’s trade group, argues that disposing safely of expired or unwanted medicine should be a shared responsibility and this law unfairly puts the burden on the drug manufacturers to develop, manage and ultimately finance disposal operations. PhRMA also warned that these costs would have the unintended effect of higher priced medicine, passing the burden on the consumers.
In a 3-to-0 ruling, the Ninth U.S. Circuit Court of Appeals in San Francisco did not find the arguments convincing enough. The court stated that the ordinance is the same for all drug makers and it does not substantially burden interstate business.
The ordinance applies to all drug manufacturers that sell their drugs in Alameda County – regardless of the geographic location of the manufacturer. The court maintains that no burden is put on interstate business as the ordinance only controls conduct within the county’s borders. Seeing as the ordinance applies across the board, there can be no claim of discrimination.
The Ninth U.S. Circuit Court of Appeals also pointed out that the pharmaceutical industry makes over $950 million a year in sales in Alameda County alone, more than enough to cover the costs associated with the take-back program. PhRMA estimates the cost of the program to be at around $1.2 million annually. County officials argued that since drug manufacturers profit from local sales, it is their duty to also help pay for disposal.
It is unclear if this decision will spur other local governments in implementing similar laws. Until now, a similar effort failed in California legislature and a statewide program was stalled in New York.
Attorneys from the Sedgwick law firm wrote last year that if other local governments follow suit in implementing similar drug take-back programs, it would significantly impact the finances of pharmaceutical companies which could lead to manufacturers selling a majority of their products in counties without such ordinances.
The PhRMA trade group is looking to appeal the decision to the U.S. Supreme Court.
photo credit: Rennett Stowe