The pharmaceutical supply chain industry is now funding New York’s efforts to combat the opioid crisis through two separate mechanisms.
Originally New York state legislature passed the Opioid Stewardship Act (OSA) that was designed to collect $100 million per year for six years from manufacturers and distributors depending on their market share. Market share is simply calculated by adding up the total amount of opioids being sold into the state using MME (read more here) and dividing up the $100 million bill accordingly. The “ratable share” approach is similar to Rhode Island’s approach (although their total is much less at only $5 million). However, industry groups sued to block the bill, and won, based on only one provision that was deemed unconstitutional by the NY District Court on December 19, 2018. The unconstitutional provision was a “pass-through prohibition” that prevented opioid sellers from charging downstream customers (including, eventually, patients).
The second version of the OSA removed that the provision and that was deemed unconstitutional. Accordingly, the District Court reversed its ruling and deemed the OSA as constitutional on September 14, 2020.
Unfortunately for industry, Governor Cuomo additionally signed the Opioid Excise Tax into effect on April 12, 2019 in response to the defeat of the first version of the OSA. The tax levies $.0025 on each MME for products with a WAC of less than $0.50 per unit and $.015 on each MME for opioids with a WAC of $0.50 or more per unit. Between the second version of the OSA and the Opioid Excise Tax, manufacturers and distributors are now facing two separate bills.
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