[A] controversial proposal to tax opioid manufacturers may have found new life in the waning days of the 2018 legislative session.
The Senate Finance Committee on Monday approved H.922, a wide-ranging tax and fee bill that now includes language authorizing the Vermont Department of Taxes to levy an “assessment” on companies that make prescription opioids.
The assessment is expected to bring in $3.1 million annually, which would go toward prevention, treatment and recovery programs throughout the state. Advocates say it’s a way to recoup some of the costs the state has incurred in dealing with an epidemic of opioid addiction.
“The opioid crisis has brought a huge cost to the state of Vermont — to every state,” said Sen. Ann Cummings, D-Washington and Finance Committee chair.
One member of the committee dissented, saying there are too many risks and unanswered questions.
“I think it is ill-advised to pass something that could have such unintended consequences based on our ignorance,” said Sen. Randy Brock, R-Franklin. “We haven’t done our homework on this.”
The opioid tax proposal first emerged in late March as members of the Senate Health and Welfare Committee searched for new ways to raise money for addiction-related programs.
The idea hadn’t progressed much since then, as lawmakers and trade groups raised questions about the tax. Gov. Phil Scott’s administration also opposes the plan.
But in the last week or so, two significant changes happened. The first was that the opioid tax became an “assessment.”
Lawmakers initially planned to charge manufacturers one penny per morphine milligram equivalent — a value that measures opioids’ potency relative to morphine. Now, the state instead would set a target — $3.1 million in the current version of the bill — and assess a “ratable share” of that target to drug manufacturers based on how many morphine milligram equivalents of each company’s opioids were distributed in Vermont.
The second change is that, rather than pushing the opioid assessment forward as a standalone bill, the Senate Finance Committee has included it within the larger tax-and-fee changes in H.922.
Before voting on the bill Monday, the committee sought legal advice from Peter Griffin of the Office of Legislative Council. Griffin didn’t tell the committee to drop the opioid assessment, but he acknowledged potential legal risks from the drug industry.
“There’s an element of unpredictability,” Griffin said. “It’s a new assessment. As far as I know, it’s not something that’s widely used in other states.”
Lawmakers say they’ve modeled their new assessment plan in part on a similar effort in New York. But Brock said that doesn’t provide ample precedent, and he believes Vermont’s assessment could expose the state to lawsuits.
“We’ve been down this road a number of times before, in which the only job we create for Vermonters is for trial lawyers,” Brock said.
Brock also argued that the state assessment could adversely impact makers of generic opioids, possibly making it cost-prohibitive to operate in Vermont.
In that sense, Brock said, the assessment wouldn’t be targeting the name-brand drug companies that have been criticized for marketing practices that rapidly spread the use of highly addictive opioids.
“We heard in here that many of these drugs are now generic and don’t have the history of the same kind of behavior,” Brock said. “Beyond that, I think that punishing people for past behavior is something the court should do, not legislators.”
Brock proposed amendment that would have eliminated language that says opioid manufacturers cannot increase their prices to cover or offset Vermont’s assessment. He said the state would be “assessing a fee but not allowing anyone to recover the fee.”
Others said that provision is necessary to protect consumers. Too often with prescription drugs, “prices go up and up and up, and people who can ill afford it are made to pay,” said Sen. Ginny Lyons, D-Chittenden. “We don’t want that to happen in this case.”
The committee voted 6-1 to defeat Brock’s amendment, then voted 6-1 to advance H.922. Cummings said the bill next goes to Senate Appropriations before the full Senate can consider it.
