December 19, 2018 / 7:52 PM / 9 months ago

Judge blocks New York from enforcing opioid tax on companies

Dec 19 (Reuters) - A U.S. federal judge on Wednesday blocked New York state from enforcing a recently-enacted law that aimed to collect $600 million from drug manufacturers and distributors to defray the costs of combating the opioid addiction epidemic.

District Judge Katherine Polk Failla in Manhattan ruled that while the concerns driving New York’s decision to adopt the law were valid, the means by which the state would extract payments from the companies violates the U.S. Constitution.

The ruling came in a trio of lawsuits challenging the law by generic drugmakers group the Association for Accessible Medicines (AAM), drug wholesale distributor group Healthcare Distribution Alliance and opioid generics maker Mallinckrodt Plc’s unit SpecGx.

AAM said in a statement that while it supported proposals to address the opioid crisis, “legislative proposals must reflect an understanding of the pharmaceutical ecosystem and adhere to the tenets of the U.S. Constitution.”

The New York Department of Health did not immediately respond to a request for comment.

According to the U.S. Centers for Disease Control and Prevention, opioids were involved in more than 49,000 overdose deaths nationwide in 2017.

The New York law, the Opioid Stewardship Act, created a fund to finance addiction treatment and education programs that would be bankrolled entirely by manufacturers and distributors of prescription painkillers in New York.

The companies would need to collectively pay $100 million annually into the fund from 2019 to 2024. The exact amount a company owed would be based on the amount of opioid sales it made each year.

The law’s passage earlier this year marked one of the first times a state had sought to create a tax on opioid manufacturers and distributors to combat the drug epidemic, though several other states are considering similar proposals. (Reporting by Nate Raymond in Boston, Editing by Rosalba O’Brien)

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