Pharmaceutical Mfrs. Ass’n v. Whalen, 54 N.Y.2d 486 (1981)
A state law mandating or permitting the substitution of generic drugs for brand-name drugs is constitutional if it is a reasonable exercise of the state’s police power and is rationally related to the legitimate purpose of safely reducing healthcare costs.
Summary
This case addresses the constitutionality of New York’s “Generic Drug Substitution Law,” which allows pharmacists to substitute less expensive generic drugs for brand-name drugs under certain conditions. Pharmaceutical manufacturers challenged the law, arguing it promoted unfair competition, infringed on patents, and violated due process. The New York Court of Appeals upheld the law, finding it a reasonable exercise of the state’s police power to reduce healthcare costs. The Court emphasized the deference given to legislative enactments regarding public health and safety and the rational basis for the law’s enactment.
Facts
In 1977, New York enacted the “Generic Drug Substitution Law” to address rising prescription drug costs. Prior to the law, pharmacists were prohibited from substituting a different article for any prescribed article. The new law required the Commissioner of Health to create a list of therapeutically equivalent drug products approved by the FDA. Prescription forms were modified to include signature lines for “substitution permissible” and “dispense as written,” requiring physicians to indicate their preference. If “substitution permissible” was signed, the pharmacist was required to substitute a less expensive generic drug from the approved list and indicate the drug’s name and manufacturer on the label.
Procedural History
Pharmaceutical manufacturers and associations filed a declaratory judgment action challenging the law’s constitutionality. Special Term granted summary judgment to the defendants, declaring the law constitutional and dismissing several causes of action. The Appellate Division unanimously affirmed. The plaintiffs appealed to the New York Court of Appeals on constitutional grounds.
Issue(s)
Whether the “Generic Drug Substitution Law” is a reasonable exercise of the State’s police power and rationally related to the legitimate purpose of safely reducing health care costs, thereby satisfying due process requirements.
Holding
Yes, because the law is a reasonable exercise of the state’s police power and is rationally related to the legitimate purpose of safely reducing healthcare costs.
Court’s Reasoning
The Court of Appeals applied the “rational basis” test, noting that the law enjoys a strong presumption of constitutionality. The Court found that the legislature had a legitimate interest in providing safe and effective drugs at the lowest possible price, a point conceded by the plaintiffs. The court deferred to the legislature’s determination that generic drugs approved by the FDA are therapeutically equivalent to brand-name drugs, citing legislative hearings and evidence considered prior to enactment. The court stated, “[a]llegations that generic drugs are not as safe and effective as brand name drugs have been disproved by an accumulation of evidence.” The court also found it reasonable for the Department of Health to rely on the FDA’s findings of therapeutically equivalent drug products, given the FDA’s expertise and resources. The Court dismissed claims of unfair competition, patent infringement, and violation of a patient-pharmacist right to privacy, stating, “[t]he decision to use a brand name or generic drug, and which brand name to use, remains as before with the doctor and the patient…” Furthermore, the court reasoned the law did not impose an undue burden on interstate commerce. The court concluded that the law merely facilitates the physician’s responsibility to determine when generic drugs are appropriate.