Recently, the Healthcare Distribution Alliance filed a federal complaint in the Southern District of New York, arguing that the New York Opioid Stewardship Act is unconstitutional because it singles out and punishes drug manufacturers and distributors for their alleged role in a “complex public health epidemic” that involves “myriad actors.”
The New York Law
The New York Opioid Stewardship Act is the first in the nation of its kind and is intended to force manufacturers, distributors, and importers to “fund the fight against the opioid epidemic.”
The law, effective July 1, 2018, requires all manufacturers, distributors and importers licensed in New York State as of January 1, 2017, to report transaction information for all opioids sold or distributed to or within the state to the Department of Health’s Bureau of Narcotic Enforcement. The Department will then calculate ratable shares of an assessment based on the reported data and will issue invoices for the shares of the assessment to each licensee no later than October 15, 2018. Invoice payments are due January 1, 2019. Future year assessments, beginning with the 2018 calendar year, will be payable quarterly beginning in 2020.
A reading of the law and the lawsuit together make it seem that the $600 million in charges would be spread out over the course of six years, meaning the first invoice payments due January 1, 2019, would total $100 million.
The Lawsuit
The lawsuit, filed in the U.S. District Court for the Southern District of New York, attempts to block the enforcement of the Law. The lawsuit argues that the act “imposes an unconstitutional $600 million punitive surcharge on pharmaceutical distributors and manufacturers. It bypasses judicial process and impedes the industry’s comprehensive efforts to mitigate opioid abuse and misuse.”
The Healthcare Distribution Alliance acknowledges that distributors play a critical role in the pharmaceutical supply chain, but that the industry’s primary responsibility is to ensure safe-secure transportation of prescription medicines – they have no role in clinical decisions, nor do they manufacture, prescribe, or dispense opioids to patients.
In a press release announcing the lawsuit, the Alliance states,
HDA’s suit seeks an injunction blocking enforcement of the act on several grounds. Among other things, the surcharge is an illegal bill of attainder, as it determines guilt and imposes punishment on a narrow group without judicial due process. The law also violates due process by imposing liability retroactively for activities that occurred prior to enactment. Furthermore, the act illegally regulates distribution outside of New York by prohibiting distributors from passing the cost of the surcharge to “any” purchaser. This provision will jeopardize access to critical medicines for out-of-state patients. In addition, the act is unconstitutionally vague because it gives the New York Commissioner of Health unfettered discretion to determine the amount of any distributor’s surcharge.
The Alliance also takes issue with the retroactive liability of the law, covering eighteen months before the Act’s effective date.
For more in-depth coverage on this lawsuit and more on opioids, keep an eye on upcoming issues of our sister publication, Life Science Compliance Update.