Governor Andrew Cuomo wants to impose a tax on manufacturers of prescription opioids to help pay for state programs that help people who are addicted to them. But some say it will be patients who will ultimately have to pay the price.
Cuomo laid out the opioid tax proposal in his state budget address nearly two months ago, saying it’s only fair that the makers of the pain pills shoulder some of the financial burdens of treating people who became addicted to the medicines.
“Opioid manufacturers have created an epidemic. We would have an opioid surcharge, 2 cents per milligram will be paid by the manufacturer and would go to offset the costs that we're spending to fight opioid abuse,” Cuomo said on January 16th.
The proposal would charge the drug makers two cents per what is known as a morphine milligram equivalent. It would go into a new fund to help subsidize treatment costs, which Cuomo estimates are more than $170 million dollars a year.
The governor’s budget director, Robert Mujica, says it’s hoped the tax will also discourage the use of the highly addictive drugs.
“Similar to a tax on cigarettes,” said Mujica. “Ideally, if it gets too expensive to use those drugs, perhaps they’ll move on to other, less addictive drugs.”
But Mujica says patients won’t have to pay for it.
“The manufacturers will likely have to eat it,” he said.
But the lobbying group for the pharmaceutical industry says that’s not likely. The Pharmaceutical Research and Manufacturers of America, or PhRMA, commissioned a study that found the tax would actually lead to higher insurance and medical costs for New Yorkers.
Bill Hammond, a health policy analyst with the fiscal watchdog group the Empire Center agrees that the tax would likely be passed on to patients who need the drugs, including terminally ill people and patients with chronic conditions, as well as addicts who are sometimes prescribed medicines that contain a form of an opioid.
“This is a way of closing the budget gap,” Hammond said. “And it’s a convenient target.”
New York faces a nearly $4 billion dollar budget shortfall.
Hammond says in addition, the surcharge on opioids would result in New York State essentially taxing itself.
One-third of all New Yorkers are on a state-funded Medicaid related program for their health care.
“And, as a result of that, it buys a lot of the opioids,” Hammond said. “If you tax opioids and you make them more expensive, it’s the state that’s going to end up paying a third or more of the tax.”
He says the state would pay around $40 million of the estimated $125 million dollars a year that the new tax would bring in. Hammond says it’s unlikely that the federal government, which splits most Medicaid costs with the state, would help pay for the tax.
Both the state Senate and Assembly are due to release their budget plans later this week. The Senate Leader, John Flanagan, has already said he’s against including any new taxes in the budget.
The state Assembly has not ruled out the tax. The state budget is due in about three weeks.