The Ninth Circuit Court of Appeals has upheld the validity of an Alameda County ordinance that requires prescription drug producers that sell brand name and generic drugs in the county to operate and fund a “Product Stewardship Program” for collecting and safely disposing of the county’s unwanted prescription drugs, regardless of the manufacturer that made the drug in question. Pharm. Research & Mfrs. of Am. v. Cnty. of Alameda, No. 13-16833 (9th Cir. Sept. 30, 2014). So ruling, the court affirmed the lower court and rejected trade organization claims that the ordinance violates the dormant Commerce Clause.
Because the ordinance applies equally to manufacturers located within the county and those outside the county, the court found that it did not directly discriminate under Brown-Forman Distillers Corp. v. N.Y. State Liquor Authority, 476 U.S. 573 (1986). The court also determined that it does not directly regulate interstate commerce or control conduct beyond the county’s boundaries.
As to the second tier of dormant Commerce Clause analysis under Pike v. Bruce Church, Inc., 397 U.S. 137 (1970)—whether the burdens imposed on interstate commerce are clearly excessive in relation to the putative local benefits—the court noted that the parties only briefly discussed the costs of running the stewardship program. The county compared the cost of running the program ($530,000 to $1.2 million annually) to the manufacturers’ revenue stream in Alameda County, some $950 million per year, to argue that the burden was minimal. On this issue, the court found significant the plaintiffs’ failure to provide evidence that the ordinance will interrupt or decrease the flow of goods into or out of the county. The court also rejected the plaintiffs’ argument that there were no local benefits because the county could run a drug-disposal program that would achieve the same effects as a manufacturer-funded stewardship program. In this regard, the court stated, “The fact that the county could run a similar program does not nullify the program’s [environmental and safety] benefits,” previously identified by joint stipulation as uncontested.