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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 6254

November 8, 1984

PUBLIC HEALTH, DEPARTMENT OF:

Authority to engage in the business of selling pharmaceutical products to a private, profit corporation for resale outside of the state

The Department of Public Health is not authorized to engage in the business of selling pharmaceutical products to a private, profit corporation for resale by that corporation outside the state.

Gloria R. Smith

Director

Department of Public Health

3500 North Logan

Lansing, Michigan

You have requested my opinion whether the Department of Public Health (Department) has authority to sell pharmaceutical products that are produced in its laboratory to a private, profit corporation for resale by that corporation outside the state.

It is my understanding that your request is prompted by the fact that the Department is considering entering into a long-term contract with a private, profit corporation giving that corporation the exclusive right to promote and market the department's pharmaceutical products to persons outside the State of Michigan, including, but not limited to, the federal government and other states.

Implicit in your question is the threshold question whether the Department has authority to conduct the sale of its pharmaceutical products directly, rather than through a distributor, on a nationwide basis.

The current authority of the Department to distribute pharmaceuticals outside the state is found in the Public Health Code, 1978 PA 368, Sec. 9111; MCLA 333.9111; MSA 14.15(9111), which provides:

'The department may manufacture, purchase, and receive by gift pharmaceuticals, including biological products, antimicrobial agents, and antitumor compounds for use in the prevention and control of diseases and disabilities. The department, when necessary, may engage in research to improve these pharmaceuticals or develop new ones to protect the public health. The department shall provide and distribute these pharmaceuticals throughout this state when deemed necessary for such use. Local health departments, hospitals, and physicians may request the pharmaceuticals from the department. The department may distribute the pharmaceuticals outside this state for compensation adequate to cover all costs in connection therewith, if the distribution will not impair any program in this state. Distribution outside this state may be made without cost if approved by the governor in emergency situations and if the pharmaceuticals are available and are not required for immediate needs in this state.' (Emphasis added.)

An analysis of the scope of this authority should begin with an examination of the legislative history of the power reposed in the Department and its predecessors to manufacture and distribute pharmaceutical products outside the state.

1921 PA 370 authorized the State Health Commission, when directed by the State Administrative Board, to establish a suitable plant for the manufacture of antitoxin and other biological products suitable for the prevention and treatment of diphtheria for distribution to local health officers and health boards throughout the state. 1921 PA 370 was amended by 1923 PA 121 and 1925 PA 189, but the authority to manufacture and distribute antitoxins and other biological products to local health officers and boards for the purpose of prevention and treatment of diphtheria was not expanded to include distribution outside the state. 1927 PA 105 amended 1921 PA 370 in order to permit the manufacture of antitoxin and other biological products for use in the control of all communicable diseases.

1942 Second Ex Sess PA 20 amended 1927 PA 105, Sec. 1 to enumerate the antitoxins and other biological products which may be manufactured by the State Commissioner of Health. Thus, up to the enactment of 1978 PA 368, Sec. 9111, supra, no authority was conferred upon the commissioner to distribute the products outside the state.

As the foregoing legislative history of the Department's pharmaceutical program makes clear, until the enactment in 1978 of the Public Health Code, supra, distribution of pharmaceutical products manufactured by the Department was restricted to Michigan health officials and boards.

Section 9111 of the Public Health Code, supra, authorized the Department to distribute its pharmaceutical products outside the state, but only under the following terms and conditions:

--The compensation received must be adequate to cover all costs.

--The distribution may not impair any program in this state.

In emergency situations, the statute also authorized distribution outside the state without costs:

--if the Governor approves,

--if the pharmaceutical products are available, and

--if the pharmaceutical products are not required for immediate needs in this state.

Section 9111 of the Michigan Public Health Code does not, by its terms, authorize the Department to sell pharmaceutical products it produces to private, profit corporations for resale by that corporation outside the state. As our Supreme Court has said, in Paselli v Utley, 286 Mich 638, 643; 282 NW 849 (1938), one 'cannot write into the statutes provisions that the legislature has not seen fit to enact.'

No power to engage in the business of selling its pharmaceutical products outside the state on a nation-wide basis has been expressly conferred upon the Department. Had the Legislature intended to confer authority upon the Department to engage in the business of selling such products nationwide, it would have made suitable provision therefor. Instead, the Legislature conferred only limited authority upon the Department to distribute such products to the federal government, other states and their health departments out of state at cost, provided that such distribution not impair any program in this state, and without charge if approved by the Governor in emergency situations if the products are available and not required for the immediate health needs of the people of this state.

It is noted that the Department was created by the Legislature by means of 1965 PA 380, Sec. 425; MCLA 16.525; MSA 3.29(425). The grant of authority made to the Department, a creature of the Legislature, by means of 1978 PA 368, Sec. 9111, supra, delineates the powers of distribution of pharmaceuticals outside the state. The Legislature has conditioned the exercise of this authority upon availability, nonimpairment of state programs, and at cost or without charge upon the approval of the Governor in emergency situations only.

Where the Legislature establishes an agency and delineates its powers in a particular field, powers not conferred are deemed to be withheld. Further, when a statute grants powers to an agency and specifies the mode of their exercise, that mode must be followed. Sebewaing Industries, Inc v Village of Sebewaing, 337 Mich 530, 545; 60 NW2d 444 (1953).

It is a general principle of statutory construction that inclusion of a thing by specific mention excludes that which is not mentioned, expressio unius est exclusio alterius. Stowers v Wolodzko, 386 Mich 119, 133; 191 NW2d 355 (1971). Sebewaing Industries, Inc, supra; VanEtten v Manufacturers Nat'l Bank of Detroit, 119 Mich App 277, 287; 326 NW2d 479 (1982); In re Vellenga Estate, 120 Mich App 699, 703; 327 NW2d 340 (1982), lv den, 418 Mich 873 (1983); OAG, 1981-1982, No 6088, p 700, 703 (July 30, 1982).

Nor may the authority to sell pharmaceutical products outside the state be founded upon the grant of distribution authority to the Department. The Florida Supreme Court in Bedenbaugh v Adams, 88 So 2d 765 (Fla, 1956), considered the meaning of the term 'distribute' as used in a state statute dealing with the distribution of animal cholera serum. Citing Websters New International Dictionary, the court held that the term 'distribute' meant a division "among several or many; to deal out; allot."

The Michigan Supreme Court also relied upon the definition from Webster in Fairbairn v Moody, (on rehearing) 116 Mich 61, 65; 74 NW 386 (1898), for the meaning of 'distribution' as the act of dispensing; the act of dividing or apportioning among several or many. The power of distribution, so defined, does not include the authority to engage in the business of selling pharmaceutical products to persons outside the state, other than to allot such products to the federal government or other states and their agencies at cost or without charge if approved by the Governor in emergency situations. There is no language contained in the Public Health Code, Sec. 9111, supra, that suggests, let alone states, that the Legislature was authorizing the establishment of a pharmaceutical business enterprise authorized to sell its pharmaceutical products to persons in other states.

It is noted that the Public Health Code, supra, Sec. 2226, empowers the Department to enter into agreement and contracts with persons to assist it in carrying out its duties and functions. While this statutory authority may serve as a basis for entering into a contract for distribution of pharmaceuticals outstate, subject to the restrictions set forth in the Public Health Code, Sec. 9111, supra, as explicated above, it does not authorize the proposed contract with a private, profit corporation for resale of pharmaceutical products by that corporation outside the state.

It is my opinion, therefore, that while the Michigan Department of Public Health is authorized, pursuant to 1978 PA 368, Sec. 9111, supra, to distribute pharmaceutical products to the federal government or states and their agencies, at cost or without charge, outside of Michigan, it is not authorized to engage in the business of selling pharmaceutical products to a private, profit corporation for resale by that corporation outside the state.

Frank J. Kelley

Attorney General


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