New York to pay $200,000 in attorney fees to opioid surtax challenger

  • A trade group of generic drug makers has demanded the right to recover costs from customers

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(Reuters) – New York will pay $200,000 in attorneys’ fees to a trade group of generic drugmakers that successfully challenged part of the state’s opioid management law.

Manhattan-based U.S. District Judge Katherine Polk Failla on Friday approved the cost award negotiated by the state and the Association for Accessible Medicines (AAM), represented by Matthew Rowen of Kirkland & Ellis.

The Opioid Stewardship Act of 2018 set out a plan to cover New York’s costs of fighting opioid addictions by raising $600 million, over six years, from opioid manufacturers and distributors. But AAM argued the law was unconstitutional because it prevented companies from passing the costs on to consumers. Failla agreed with AAM in December 2018, preventing the entire law from coming into effect.

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The state dropped the “passage ban” in 2019, but successfully appealed Failla’s ruling that the rest of the law was unconstitutional. The U.S. Supreme Court declined to review the state’s victory on appeal last October.

Two weeks later, Failla ruled that since the appeal did not address the transmission ban, the association and two other challengers were entitled to attorneys’ fees for successfully opposing it.

The other challengers were SpecGx, which is a subsidiary of generic drug maker Mallinckrodt; and the Healthcare Distribution Alliance, a trade group for opioid distributors.

SpecGx’s attorney at Ropes & Gray informed Failla on Feb. 8 that they were negotiating a separate state costs award and planned to submit it next month. The company filed for bankruptcy protection in Delaware in October 2020 with Mallinckrodt, whose reorganization plan — which includes $1.7 billion to settle thousands of opioid liability lawsuits nationwide — has was approved on February 3.

No claim for attorney fees appears on the record from the Healthcare Distribution Alliance, which is represented by attorneys at McDermott Will & Emery. Alliance members include McKesson Corp, AmerisourceBergen and Cardinal Health, which jointly offered to settle state and local government opioid claims for up to $21 billion.

Lawyers for the parties did not immediately respond to requests for comment on Friday.

The case is Association for Accessible Medicines v. Letitia James, as Attorney General of New York, US District Court for the Southern District of New York No. 18-8180 (associated with SpecGx LLC v. James, No. 18-9830; and Healthcare Distribution Alliance v. James, no. 18-6168).

For AAM: Matthew Rowen of Kirkland & Ellis

For James: Seth Farber and James Hershler of New York State OAG

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