Nate Raymond and Lawrence Hurley

WASHINGTON, (Reuters) – Monday’s ruling by the U.S. Supreme Court allowed New York to recover a $200,000,000 surcharge imposed upon opioid distributors and manufacturers to help cover the state’s expenses resulting from the epidemic involving powerful painkillers.

Two trade associations representing generic and drug distributors, as well as a British-based unit of a pharmaceutical company appealed to the justices. Mallinckrodt (OTC-:) Plc of an lower court’s decision upholding this surcharge

The Association for Accessible Medicines was one of the law’s opponents. Its members included drugmakers Teva Pharmaceutical Industries Plc and Mallinckrodt and the Healthcare Distribution Alliance which represents wholesale distributors.

The alliance includes three of the largest drug distributors: McKesson Corp (NYSE :), AmerisourceBergen Corp (NYSE 🙂 and Corp. Cardinal Health (NYSE:). The company recently offered to pay $21 billion in settlements for lawsuits claiming they fuelled the epidemic.

Mallinckrodt applied for bankruptcy protection in 2020. He has since been trying to reach a $1.7 billion similar settlement.

New York was obligated to pay the Opioid Stewardship Act. This law, signed by Democratic ex-Gov. Andrew Cuomo in 2018, addresses the cost of the epidemic.

According to the U.S. Centers for Disease Control and Prevention (part of a continuing public health emergency), opioids have caused overdose deaths in nearly 500,000 Americans between 1999 and 2019.

This law was the first state to try to impose any tax or fee on the opioid epidemic. Since then, Rhode Island, Minnesota, Delaware and Minnesota have adopted their own tax systems.

New York’s law provided for $100 million per year in revenue from both prescription painkiller distributors and manufacturers based on their market share. The 2018 ruling by a federal judge was that a clause prohibiting the distributors and manufacturers from making payments to the consumers was not constitutional. It could not be separated from the rest.

New York issued a new tax law following the appeal. It did not include the prohibition against pass-through, and capped the case at $200 million in outstanding payments, which were based upon 2017 and 2018.

New York-based, 2nd U.S. Circuit Court of Appeals in 2020 handed a victory https://www.reuters.com/article/us-new-york-opioids/u-s-appeals-court-revives-new-york-tax-on-opioid-companies-idUSKBN26536E to the state, ruling that the judge lacked authority to strike down the law. The Supreme Court was appealed to by the opponents.

New York Attorney General Letitia James in July separately announced an agreement https://ag.ny.gov/press-release/2021/attorney-general-james-reaches-11-billion-agreement-big-three-distributors-treat with three of the nation’s largest drug distributors that will deliver up to $1.1 billion to the state to combat the opioid epidemic.