Drug Companies Sue New York Over New Opioid Tax
By Bethany Bump
A national trade group representing drug distributors is suing New York in an attempt to block a new law that holds its members financially responsible for the havoc wrought by the opioid epidemic.
In a federal complaint filed Friday in the Southern District of New York, the Healthcare Distribution Alliance argues that the state's new Opioid Stewardship Act is unconstitutional because it singles out and punishes drug manufacturers and distributors for their alleged role in a "complex public health epidemic" that involves "myriad actors."
The law directs the state Health Department to impose an annual $100 million surcharge on opioid manufacturers and distributors through 2024. The surcharge will be divided and apportioned based on each entity's share of the market -- the more painkillers a company sells or distributes within state lines, in other words, the more it must pay.
"The act imposes a $600 million surcharge on pharmaceutical manufacturers and wholesale distributors to punish those companies for the opioid epidemic, the roots of which are extraordinarily complex and stretch back decades," the complaint says.
"The state has no right to single out distributors for punishment, at least not without due process," it contends.
Due process is currently being sought through the courts. States, counties and cities have filed more than 1,000 opioid-related lawsuits against pharmaceutical companies in state and federal courts in the past year and a half, and there are active investigations into the crisis by attorneys general nationwide.
New York's surcharge, the complaint argues, is an attempt to blame and punish the alliance's "politically unpopular" members before due process has had a chance to play out.
The suit names state Attorney General Barbara Underwood and state Health Commissioner Howard Zucker as defendants. Both declined comment Wednesday.
It's unclear just how many distributors and manufacturers will be affected by the new Opioid Stewardship Act.
The Healthcare Distribution Alliance represents 36 national, regional and specialty primary distribution companies, including the drug giants Cardinal, McKesson and AmerisourceBergen. All three have been accused of doing little to monitor, investigate or report large and suspicious shipments of prescription painkillers to local communities.
The opioid epidemic has its roots in prescription drugs. Many Americans became addicted to painkillers such as oxycodone and vicodin, and turned to heroin after prescriptions dried up. The emergence of extremely potent fentanyl in heroin and other drug supplies in recent years has fueled a spike in overdose deaths. In 2016, more than 3,000 New Yorkers overdosed on opioid drugs and died.
Gov. Andrew Cuomo pushed for the stewardship act during this year's budget process, arguing that pharmaceutical companies played a major role in creating the epidemic and should therefore help pay for it. He initially proposed a 2-cent-per-milligram tax on all opioids in the state, but Senate Republicans pushed back on a "tax" and agreed instead to a "surcharge."
"We have yet to be served, but it's no surprise that Big Pharma will fight tooth and nail to avoid responsibility for the opioid epidemic they helped fuel," Cuomo spokesman Richard Azzopardi said Wednesday.
The law took effect July 1. All licensed opioid distributors and manufacturers are required to report their 2017 sales and distributions by Aug. 1 so the Health Department can assess a surcharge by Oct. 15. The first payment will be due Jan. 1, 2019.
All payments into the "opioid stewardship fund" will be used to cover the costs of addiction prevention, treatment and recovery programs statewide.
(c)2018 the Times Union (Albany, N.Y.)