Cuomo takes another stab at taxing opioids
Bill would allow cost to be passed on to purchaser
Gov. Andrew Cuomo is trying once again to tax the sale of opioids in New York, after a previous attempt was ruled unconstitutional last year by a federal judge.
In a budget bill introduced Friday, the governor proposed an excise tax on opioid manufacturers and distributors based on the total morphine milligram equivalents they sell in the state as well
as wholesale acquisition costs. But unlike previous legislation that forbid a tax from being passed down to purchasers and patients, the new law would allow just that.
“The economic incidence of the tax imposed by this article may be passed to a purchaser,” the proposal reads.
John Mcdonald III, a state Assemblyman and owner of Marra’s Pharmacy in Cohoes, anticipates that’s exactly what will happen, and said pharmacies and consumers are the ones who will end up paying.
“They’re at the end of the line,” he said. “That’s where costs go, until they can’t anymore.”
Uninsured and cashpaying customers are the ones who would be impacted, he guessed, since insurance companies are unlikely to increase reimbursements to offset an opioid tax. For insured customers, Mcdonald guessed that pharmacies would either eat the extra cost or decide to stop carrying certain opioids altogether.
“They’re difficult,” he said. “Reimbursement on opioid products is very lean to begin with. They’re highly regulated. There are threats of diversion. There’s a whole multitude of issues when it comes to dispensing opioids. So there may come a time when they decide, you know, this isn’t worth it anymore.”
It’s not just pharmacies that may decide that, he said, but wholesalers too.
The pass-through language may be the only way to achieve an opioid tax in New York, though.
Lawmakers passed a bill last spring that would
In December 2018, U.S. District Judge Katherine Polk Failla declared New York’s law unconstitutional, in large part because the ban on pass-through costs would violate the Dormant Commerce Clause, which says states cannot pass legislation that favors state citizens and business at the expense of out-of-state citizens and business.
have imposed a surcharge on opioid manufacturers and distributors based on their share of the market in New York and allowed the state to collect $100 million a year. That money was intended to be used to offset the cost of addiction services statewide, which have soared as the nationwide opioid epidemic rages.
The Healthcare Distribution Alliance, an organization representing distributors, sued the state in federal court just as the law went into effect, claiming it singled them out for their alleged role in a “complex public health epidemic” that involved multiple actors.
In December 2018, U.S. District Judge Katherine Polk Failla declared New York’s law unconstitutional, in large part because the ban on pass-through costs would violate the Dormant Commerce Clause, which says states cannot pass legislation that favors state citizens and business at the expense of out-of-state citizens and business.
In other words, if New York were to forbid drugmakers and distributors from passing the cost of a tax onto New York citizens and business, there would be nothing stopping them from passing the cost onto out-of-state citizens and business.
“The underlying goals of the (law) are commendable,” Failla wrote. “However, the court cannot permit New York to achieve these goals through unconstitutional means.”
New York filed a notice of appeal Jan. 17.
The Healthcare Distribution Alliance on Wednesday urged the Legislature not to pass the governor’s bill, arguing that it places a significant financial penalty on wholesalers for completing legitimate orders placed by licensed health care practitioners and pharmacies.
It also argued that the tax will raise costs across the supply chain, including for consumers, as evidenced by “basic economics” and the recent court decision.
“At a time when New York is taking many policy steps to address the high cost of prescription medications, it seems counterproductive to place a notable assessment on the same products lawmakers are attempting to control,” it said.
The revised tax proposal was published Friday along with the rest of the governor’s 30-day budget amendments, which attempt to address a largerthan-anticipated state budget shortfall of $2.6 billion in the upcoming fiscal year.
Mcdonald said lawmakers deserve to know more about the potential impact on consumers, especially those who need opioids for chronic pain, before they vote on the plan.
“My biggest concern, my fear, and this is just gut, is that patients who are in chronic pain who have been treated appropriately are going to struggle,” he said.