September 14, 2020
From the article below:”…The proceeds from the law, which are based on 2017 and 2018 market shares, will support statewide programs that offer opioid treatment and services for recovery, prevention and education, according to the ruling…”
This is huge and a significant victory for all New Yorkers. Note: The ruling also prohibits manufacturers and distributors from passing the costs associated with the Opioid Surcharge on to consumers. There is a link in the article (below) to the ruling issued earlier today.
Score one for relentless advocacy/advocates! Thank you Governor Cuomo and NYS Attorney General Letitia James!
Federal appeals court upholds New York opioid law, allows state to collect $200M for treatment, prevention
By Amanda Eisenberg
A federal appeals court on Monday allowed New York to impose a surcharge on drug manufacturers and distributors for their role in the opioid crisis, allowing the state to collect $200 million, after a lower court found the 2018 law unconstitutional.
Impact: The 2nd U.S. Circuit Court of Appeals overturned a district court judgment that invalidated the state’s ability to collect $100 million a year after the Legislature updated the law, according to the ruling.
Key context: The state Opioid Stewardship Act, signed into law by Gov. Andrew Cuomo in 2018, “requires opioid manufacturers and distributors to make an annual payment to fund statewide opioid-related services but prohibits them from passing the costs of those payments through to their customers,” wrote the three-judge panel of the Manhattan-based appeals court. The “pass-through” prohibition violated the federal commerce clause, and U.S. District Judge Katherine Polk Failla invalidated the law in its entirety.
“The New York State Legislature subsequently amended the OSA so that its provisions expired in December 2018. It then enacted a new payment mandate, effective July 2019, that does not include a pass-through prohibition. In light of this legislative development, the State has elected not to seek reversal of the District Court’s invalidation of the pass-through prohibition,” wrote Judge Raymond Lohier. “On appeal, therefore, New York asks us only to reverse the District Court’s invalidation of the remainder of the Act, including the opioid stewardship payment requirement. We conclude that the payment is a tax within the meaning of the Tax Injunction Act (TIA), thus depriving the District Court of subject matter jurisdiction to adjudicate the plaintiffs’ challenges to the payment.”
The proceeds from the law, which are based on 2017 and 2018 market shares, will support statewide programs that offer opioid treatment and services for recovery, prevention and education, according to the ruling.
“Since the beginning we’ve been seeking to hold these huge corporations accountable for the opioid crisis that they helped create and fuel,” Rich Azzopardi, senior adviser to the governor, said in a statement. “We commend the court for their thoughtful consideration of all the facts and are reviewing the decision.”
What’s next: The Association for Accessible Medicines, one of three plaintiffs in the appeal, said it is reviewing the decision.
“We are encouraged that the Second Circuit’s decision does not affect the district court’s holding that the anti-pass-through provision of the Opioid Stewardship Act was unconstitutional, because the State of New York lacks the authority to regulate sales of medicines that occur outside of New York,” AAM general counsel Jeff Francer said in a statement. “This provision would have upset pharmaceutical competition nationally and thus harmed patients who rely on affordable generic medicines.”
Trade group Healthcare Distribution Alliance did not return a request for comment. Mallinckrodt Pharmaceuticals, the parent company of plaintiff SpecGx LLC, declined to comment.