A federal judge struck down a New York law that aimed to collect $600 million from the pharmaceutical industry to help combat the opioid crisis. The ruling could shape opioid legislation being weighed in other states, reports the Wall Street Journal. U.S. District Judge Katherine Polk Failla called the novel law an unconstitutional regulatory penalty on the makers and distributors of opioid painkillers, as she acknowledged the validity of trying to legislate a solution to the epidemic gripping the nation. The ruling comes days before a deadline set by New York’s health department to pay the first installment of the levy. Under the Opioid Stewardship Act, $100 million was to be paid collectively each year for six years by companies that sold or distributed opioids in the state. The first round of bills, retroactive to 2017, were sent to 75 companies in November.
Two trade groups and a generic drug manufacturer sued to block the law on constitutional grounds. Failla said the law runs afoul of a provision of the U.S. Constitution prohibiting state regulation of interstate commerce. The judge based her analysis on a clause in the law that said companies risked fines of $1 million per incident if they passed on the costs of the surcharge to customers. The judge raised the hypothetical of an opioid manufacturer in Maine that faced a million-dollar penalty if it sought to pass on the surcharge for its New York transactions by selling opioids at a markup to a pharmacy in New Mexico. Since the law was enacted, some companies have threatened to pull out of New York to avoid the surcharge or revamped supply chains to work around it.