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Jonathan Lamantia

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A federal judge today struck down a New York state law intended to raise $600 million from opioid manufacturers and distributors to pay for treatment and enforcement.


The Opioid Stewardship Act, which took effect July 1, created a fund to support treatment for people dependent on opioids and to prevent new cases of addiction. That same month, the Healthcare Distribution Alliance, representing drug distributors, sued the state on the grounds that the law was unconstitutional.


In September the Association for Accessible Medicines—a coalition of makers of generic drugs—and Dublin-based Mallinckrodt subsidiary SpecGx also filed lawsuits, seeking an injunction on the provision barring drugmakers and distributors from passing on costs to purchasers.


U.S. District Judge Katherine Polk Failla ruled in favor of the pharmaceutical industry.

First the good news. While we are in the midst of an opioid epidemic, large employers have seen prescription rates fall significantly since peaking in 2009. That year, 17.3 percent of covered employees or dependents had at least one opioid prescription.

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"While the animating concerns of the OSA are plainly valid," Polk Failla said, "the method by which the act extracts payments from opioid manufactures [sic] and distributors to redress those concerns violates the Dormant Commerce Clause of the United States Constitution."


The judge continued, "The OSA is not a tax but is rather a regulatory penalty on opioid manufacturers and distributors. And as currently structured, it improperly burdens interstate commerce."


The ruling, which is likely to be appealed, deals a blow to Cuomo's efforts to force Big Pharma to cough up hundreds of millions of dollars for programming to reduce the number of overdose deaths from prescription painkillers.


"The opioid crisis was manufactured, literally and figuratively. Unscrupulous distributors developed a $400 billion industry selling opioids, and they were conveniently blind to the consequences of their actions," Cuomo said in his State of the State speech in January. "We will make them pay for their illegal and reprehensible conduct."


The funds were to be raised over six years by a tax on the amount of "morphine milligram equivalents" that a company sold or distributed in New York annually.


SpecGx, one of the plaintiffs, said its required payment on some of the generic opioids it sells would exceed the average manufacturer price it charges. It is responsible for a nearly $1.3 million payment to the state for 2018.


Polk Failla said New York's goals in creating the law were "commendable" but that it used "unconstitutional means" to raise the money.


"New York's interest in the public health of its residents cannot trump the Commerce Clause," she wrote. "Additionally, the perhaps-unforeseen consequence that the OSA could well reduce the availability of opioid medications for those who need them also runs counter to the public interest."