U.S. Supreme Court rejects problem to New York tax on opioid corporations

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WASHINGTON, Oct 4 (Reuters) – The U.S. Supreme Court on Monday cleared the way in which for New York to gather a $200 million surcharge imposed on opioid producers and distributors to defray the state’s prices arising from the lethal epidemic involving the highly effective painkilling medicine.

The justices declined to listen to an attraction by two commerce teams representing drug distributors and generic drug makers and a unit of British-based pharmaceutical firm Mallinckrodt Plc (MCDG.MU) of a decrease court docket’s resolution upholding the surcharge.

The legislation’s challengers included the Association for Accessible Medicines, whose members embrace drugmakers Teva Pharmaceutical Industries Plc(TEVA.TA) and Mallinckrodt, and the Healthcare Distribution Alliance, which represents wholesale distributors.

The alliance’s members embrace the three largest drug distributors, McKesson Corp(MCK.N), AmerisourceBergen Corp(ABC.N) and Cardinal Health(CAH.N). They just lately proposed paying $21 billion to resolve lawsuits accusing them of fueling the epidemic.

Mallinckrodt filed for chapter safety in 2020 and has been searching for to finalize an identical, $1.7 billion settlement.

The funds to New York have been owed below the Opioid Stewardship Act, which Democratic former Governor Andrew Cuomo signed into legislation in 2018 to handle the prices the epidemic imposed on the state.

Opioids have resulted within the overdose deaths of almost 500,000 individuals from 1999 to 2019 within the United States, in line with U.S. Centers for Disease Control and Prevention, a part of an ongoing public well being disaster.

The legislation marked the primary time a state had sought to impose a tax or price associated to the epidemic on opioid producers and distributors. Delaware, Minnesota and Rhode Island have since adopted their very own taxes.

The New York legislation envisioned gathering $100 million yearly from prescription painkiller producers and distributors based mostly on their market share. A federal choose in 2018 dominated {that a} provision barring the businesses from passing on the prices of constructing the funds to shoppers was unconstitutional and couldn’t be severed from the remainder of the legislation.

The state appealed, however following that ruling New York enacted a brand new tax legislation that didn’t embrace the pass-through prohibition, limiting the case to $200 million in funds owed based mostly on 2017 and 2018 market shares.

The New York-based 2nd U.S. Circuit Court of Appeals in 2020 handed a victory to the state, ruling that the choose lacked authority to strike down the legislation. The challengers then appealed to the Supreme Court.

New York Attorney General Letitia James in July individually announced an agreement with three of the nation’s largest drug distributors that can ship as much as $1.1 billion to the state to fight the opioid epidemic.

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

Tablets of the opioid-based Hydrocodone at a pharmacy in Portsmouth, Ohio, June 21, 2017. REUTERS/Bryan Woolston

A general view of the Supreme Court building at the start of the court's new term in Washington, U.S. October 4, 2021. REUTERS/Jonathan Ernst

Tablets of the opioid-based Hydrocodone at a pharmacy in Portsmouth, Ohio, June 21, 2017. REUTERS/Bryan Woolston