Midterms could open door for more states to tax opioid manufacturers

After almost slapping a tax on makers of opioid pills earlier this year, Minnesota lawmakers are set to try again when they meet in January.

The drug manufacturers that helped create the opioid addiction crisis should help fix it, said state Sen. Chris Eaton, whose daughter died of an overdose.

“I’m definitely going to pursue it” in the next legislative session, said Eaton, a Democrat. “Whether it has a chance or not kind of depends on the election.”

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Lawmakers in at least 10 other states intend to consider opioid taxes in upcoming legislative sessions. Many pin their hopes on the November midterm elections.

If Democrats retake governorships and legislatures this fall, lawmakers and policy analysts predict other states would be more likely to follow New York, whose groundbreaking opioid tax to raise $100 million a year took effect July 1.

November results “are absolutely going to drive some of this,” said Tara Ryan, vice president of state government affairs for the Association for Accessible Medicines, which represents makers of generic medications and opposes opioid taxes. “If the Democrats take the elections, like some people say they will, it could definitely change the votes.”

California, Delaware, Iowa, Kentucky, Maine, Massachusetts, Montana, New Jersey, Tennessee and Vermont are all eyeing renewed attempts to pass opioid taxes, officials in those states say. The proceeds would mostly pay for addiction treatment and prevention.

“We’ll be back come January,” said Tim Ashe, president pro tempore of the Vermont Senate, which overwhelmingly passed a tax measure this year that faded in the House and was opposed by the state’s Republican governor, Phil Scott, who is up for re-election.

New York’s law taxes manufacturers and distributors according to an opioid medication’s strength and will direct proceeds toward addiction treatment, prevention and education. The tax is expected to amount to roughly a dime per lower-strength opioid pill and higher for more powerful ones.

“I think it’s a good idea,” said Andrew Kolodny, an opioid-policy researcher at Brandeis University and frequent critic of the pharma industry. “The human and economic costs of these meds are enormous.”

Adding to the momentum is frequent support from Republicans, who are normally reluctant to tax businesses.

“I’m probably the No. 2 or 3 most conservative individual in the legislature, and I’m standing up there proposing a[n opioid] sales tax,” said Montana Republican Sen. Roger Webb.

But an industry backlash is growing. An association representing pharmaceutical distributors sued in July to block the New York law, arguing that those businesses were unfairly targeted.

Pharma’s main trade group has also fought hard against such measures, arguing they drive up the cost of medicine and unfairly penalize patients with chronic pain.

“We do not believe levying a tax on prescribed medicines that meet legitimate medical needs is an appropriate funding mechanism for a state’s budget,” said Priscilla VanderVeer, spokeswoman for the Pharmaceutical Research and Manufacturers of America, or PhRMA.

New York’s law prohibits passing the tax on to consumers and other purchasers such as insurance companies, but enforcing that could be tricky, according to legal experts.

The Association for Accessible Medicines opposes all opioid taxes but especially objects to that measure because it taxes drugs per pill rather than according to revenue. That puts most of the burden on makers of cheap generics and largely spares brand-name sellers, whose marketing helped fuel the addiction crisis, Ryan said.

Drugmakers will prove to be tough opponents regardless of electoral outcomes, said Regina LaBelle, a visiting fellow at Duke-Margolis Center for Health Policy who worked on drug strategy in the Obama White House.

“These types of taxes face an uphill battle in state legislatures as powerful forces, including industry and industry-funded groups, ally against them,” she said. Pharma-funded chronic-pain patients can be a powerful lobby, she said.

Surging mortality rates caused by fentanyl, heroin and other illegal opioids give pharma companies a chance to deny blame, even if many of those victims became addicted through prescription pills, LaBelle said.

Drug overdoses killed more than 70,000 people last year, a record, according to new, preliminary estimates from the Centers for Disease Control and Prevention.

Dozens of cities, counties and states have sued opioid makers and distributors, arguing the companies downplayed the dangers of addictive pills and ignored signs they were being abused on a massive scale. Often compared to litigation against tobacco companies in the 1990s, the cases could produce billions of dollars in government revenue to fight addiction and overdose.

But that could take years. Through opioid taxes and related measures, states could quickly supplement addiction-prevention funds made available by Washington, which many consider inadequate and unpredictable.

Members of Congress have pushed more opioid legislation this summer, but the House’s package so far has no clear path to becoming law.

Federal funding “is a drop in the bucket,” said Patrick Diegnan, a Democratic New Jersey state senator who backed an opioid tax this year. “We really basically have to put in place the infrastructure for treatment. It will cost a lot of money.”

Minnesota’s proposed opioid tax had bipartisan support this year, passing the state Senate by a huge margin. But under heavy pressure from drug companies, a measure in the Republican-controlled house failed at the end of the legislative session in May.

In the governor’s race this fall, Tim Walz, a Democratic congressman, faces Jeff Johnson, a county commissioner who upset former Gov. Tim Pawlenty in the Republican primary.

Minnesota recently got Washington’s permission to bill Medicaid, the state and federal program designed for low-income people, for psychiatric hospital stays for those with intense addiction-treatment needs.

But none of the moves so far will furnish resources adequate to relieve the crisis, argue patient advocates. Many see an element of justice in making opioid companies contribute.

“Why is it important for the drug industry to pay reparations?” said Lexi Reed Holtum, executive director of the Steve Rummler Hope Network, a Minnesota advocacy group named for her fiancé, who died of an overdose in 2011. “No matter what, this is going to go on for decades to come.”