Big Pharma Assails $600M Demand by NY on Opioid Crisis

MANHATTAN (CN) – Casting itself as a scapegoat of the opioid epidemic, a drug-distribution trade group brought a federal complaint in protest of New York’s attempt to make Big Pharma pay $600 million toward the cost of treating drug abusers.

Represented by the firm McDermott Will & Emery, the Healthcare Distribution Alliance filed its suit on Friday in the Southern District of New York, taking aim at the Opioid Stewardship Act, which took effect on July 1.

“The act imposes a $600 million surcharge on pharmaceutical manufacturers and wholesale distributors to punish those companies for the opioid epidemic, to punish those companies for the opioid epidemic, the roots of which are extraordinarily complex and stretch back decades,” the 20-page complaint states.

Based in Arlington, Virginia, the trade group accuses the state of conducting a “trial by legislature,” short-circuiting judicial process in other pending lawsuits against the pharmaceutical industry.

The law “demands the same recompense as the pending litigation but accomplishes this objective by stripping pharmaceutical manufacturers and distributors of their due process and other legal protections,” the complaint states.

A month before he signed the law, Governor Andrew Cuomo had proposed a 2-cents-per-milligram tax on all opioids in New York as part of his March 2018 budget proposal. The stewardship was set up in its place after Senate Republicans pushed back against a tax.

Representatives for New York Attorney General Barbara Underwood and state Health Commissioner Harold Zucker have not responded to requests for comment.

By its terms, according to the complaint, the stewardship law would spread out the $600 million on drugmakers and drug distributors through 2024. The first of what will be six $100 million payments is due on Jan. 1, 2019. New York vows to use the proceeds exclusively to to create a registry where prescriptions can be monitored, and to support the cost of programs operated by New York’s Office of Alcoholism and Substance Abuse Services (OASAS) that provide opioid treatment, recovery, prevention, educational services.

“In urging passage of the act,” the complaint states, “Governor Cuomo repeatedly revealed this punitive intent, expressing a desire to ‘hold pharmaceutical companies accountable for perpetuating the [opioid] epidemic’ and to ‘place the share of societal costs from opioid use on the manufacturers, producers and distributors who financially gain from the use of these drugs.’” (Brackets in original.)

Healthcare Distribution Alliance claims the surcharge violates constitutional due-process protections, and its takes issue with the retroactive liability that the law imposes, covering 18 months before the act’s effective date.

“This retroactive liability is severe and interferes significantly with reasonable, investment-backed expectations,” the complaint states.

Pharmaceutical companies have argued that the surcharge will result in higher prices that would be passed on to consumers.

President Donald Trump designated the opioid epidemic a national emergency in August 2017, and the Departments of Justice and Health and Human Services unveiled charges last month against 601 defendants as part of a nationwide crackdown against health care schemes.

Attorney General Jeff Sessions called the charges “the largest health care fraud takedown operation in American history.”

Sessions praised the data analytics teams Opioid Fraud and Abuse Detection as effective tool to trace the distribution of pharmaceutical drugs.

Sessions will speak in Concord, New Hampshire, on Thursday specifically regarding the opioid and fentanyl crisis.

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