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

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WASHINGTON, Oct 4 (Businesshala) – The US Supreme Court on Monday cleared the way for New York to collect a $200 million surcharge imposed on opioid manufacturers and distributors in the state triggered by a deadly epidemic involving powerful painkillers. cost can be paid.

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The judges refused to hear an appeal from a lower court’s decision to uphold the surcharge by two business groups representing drug distributors and generic drug makers and a unit of British-based pharmaceutical company Mallincrodt plc (MCDG.MU) .

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Challengers to the law include the Association for Accessible Medicine, whose members include drugmaker Teva Pharmaceutical Industries plc (TEVA.TA) and Mallincrodt, and the Healthcare Distribution Alliance, which represents wholesale distributors.

Members of the alliance include the three largest drug distributors, McKesson Corp (MCK.N), AmerisourceBergen Corp (ABC.N) and Cardinal Health (CAH.N). He recently proposed paying $21 billion to settle lawsuits accusing him of promoting the pandemic.

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

The payment to New York was owed under the Opioid Stewardship Act, which was signed into law by former Democratic Governor Andrew Cuomo in 2018 to address the cost of the pandemic imposed on the state.

About 500,000 people died from 1999 to 2019 as a result of opioids, according to the Centers for Disease Control and Prevention, part of the ongoing public health crisis in the United States.

The law marked the first time that a state sought to impose epidemic-related taxes or fees on opioid manufacturers and distributors. Delaware, Minnesota and Rhode Island have since adopted their own taxes.

New York law envisions collecting $100 million annually from prescription painkiller manufacturers and distributors based on their market share. In 2018 a federal judge ruled that a provision preventing companies from passing on the cost of paying consumers was unconstitutional and could not be separated from the rest of the law.

The state appealed, but the ruling came after New York enacted a new tax law that did not include a pass-through prohibition, limiting the case to $200 million in outstanding payments based on 2017 and 2018 market shares.

In 2020 the New York-based Second US Circuit Court of Appeals awarded a victory to the state, ruling that the judge did not have authority to overturn the law. Thereafter, the challengers appealed in the Supreme Court.

New York Attorney General Letitia James separately in July announced an agreement With the nation’s three largest drug distributors, that would supply up to $1.1 billion to the state to tackle the opioid epidemic.

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

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