U.S. Supreme Court rejects challenge to New York tax on opioid companies

Opioid-based hydrocodone tablets in a pharmacy in Portsmouth, Ohio, June 21, 2017. REUTERS / Bryan Woolston

WASHINGTON, Oct. 4 (Reuters) – The U.S. Supreme Court on Monday cleared the way for New York to impose a $ 200 million surcharge on opioid manufacturers and distributors to cover the cost of the To dispute the state, which resulted from the deadly epidemic with the strong pain reliever drugs.

The judges declined to hear an appeal from two trade groups representing drug distributors and generic drug makers and a unit of UK pharmaceutical company Mallinckrodt Plc (MCDG.MU) against a lower court’s decision to uphold the bid.

The law’s challengers included the Association for Accessible Medicines, whose members include drug manufacturers Teva Pharmaceutical Industries Plc (TEVA.TA) and Mallinckrodt, and the Healthcare Distribution Alliance, which represents wholesalers.

Members of the alliance include the three largest opioid distributors in the United States, McKesson Corp (MCK.N), AmerisourceBergen Corp (ABC.N) and Cardinal Health (CAH.N). They proposed paying $ 21 billion in July to settle lawsuits accusing them of fueling the epidemic.

Mallinckrodt filed for bankruptcy protection in 2020 and is trying to finalize a similar $ 1.7 billion settlement.

The payments to New York were owed under the Opioid Stewardship Act, which Democratic former Governor Andrew Cuomo signed in 2018 to cover the costs the epidemic placed on the state.

The law marked the first time a state had attempted to impose a tax or fee on opioid manufacturers and traders in connection with the epidemic. Delaware, Minnesota, and Rhode Island have since introduced their own taxes.

The Association for Accessible Medicines and the Healthcare Distribution Alliance issued separate statements expressing disappointment with the Supreme Court action. The alliance said it is reviewing its options and next steps.

Opioids caused nearly 500,000 deaths from overdose in the United States between 1999 and 2019, according to data from the U.S. Centers for Disease Control and Prevention, part of an ongoing public health crisis.

New York law called for $ 100 million, or a total of $ 600 million, to be raised annually from 2019-2024 from prescription pain reliever manufacturers and distributors based on their market shares.

A federal judge ruled in 2018 that a provision banning businesses from passing the cost of payments on to consumers was unconstitutional and inseparable from the rest of the law.

The state appealed, but following that ruling, New York enacted new tax law that omitted the pass-through ban and limited the case to $ 200 million in payments owed based on 2017 and 2018 market shares.

The New York-based 2nd US Court of Appeals awarded the state a victory in 2020 and ruled that the judge has no power to overturn the law. The challengers then appealed to the Supreme Court.

The judges handled the case on the first day of their new nine-month term.

Reporting by Lawrence Hurley and Nate Raymond; Adaptation by Will Dunham

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