Proposed state opioid surcharge draws support, questions

ALBANY — As envisioned by Gov. Andrew M. Cuomo, a proposed surcharge on opioid prescriptions would raise hundreds of millions of dollars for New York and be dedicated to anti-addiction and treatment programs.

But lawmakers and activists, while cautiously supporting the concept, are raising questions about whether the new money would add to what the state already spends on such services or replace other health care funds shifted to different programs. They say it’s also uncertain how the surcharge might affect consumers or how strongly pharmaceutical companies — who say the fee would penalize “vulnerable patients” — will fight to block it.

“We don’t usually tax prescription drugs, so this would be an unusual thing to do,” said Assemb. Richard Gottfried (D-Manhattan), chairman of the Assembly Health Committee. “We would have to do the arithmetic on what a surcharge would mean for the typical prescription. . . . Whether it will be good or not (economically for the state) will depend on what it looks like.”

State Sen. Kemp Hannon (R-Garden City) said the governor’s idea was solid. “They ought to pay,” Hannon said about opioid manufacturers, adding: “It would be a lot more efficient than suing them,” a reference to a multistate lawsuit against drug companies filed in September.

But Hannon stressed that any of the money generated should go to “better prevention, better rehab” programs.

The Cuomo administration says the surcharge — 2 cents per milligram prescribed — would generate $127 million the first year, $171 million the next. But fiscal hawks have noted that under Cuomo’s proposed state budget, published Tuesday, spending on alcohol and substance abuse programs would rise just $18 million, indicating the opioid surcharge would replace some monies that he state has been spending on treatment rather than just add to the total.

An administration spokesman acknowledged overall program spending would grow a limited amount, but said the state is spending $200 million overall on opioid treatment and prevention and that the surcharge money would go into a dedicated fund.

The tax would be imposed on manufacturers of opioids if they are headquartered in New York and, if not, then on distributors. It wouldn’t be imposed on drugstores.

Some lawmakers said they fear eventually the costs will be passed on to patients, many of whom already pay steep pharmacy bills.

“There are actually people that take the painkillers because they’re in pain,” said Assemb. Dean Murray (R-East Patchogue). “They need to take them. You’re going to increase the taxes — if you make it unaffordable, where do they get their pain relief? Are you going to push them to the streets?”

Gottfried said “we have to assume” that at least part of the costs would be passed down eventually.

If adopted, the surcharge would have to be included in the state budget, which Cuomo and lawmakers are supposed to adopt by April 1, the start of the fiscal year. As the countdown to the deadline begins, pharmaceutical manufacturers already have said they will fight the surcharge.

“We are opposed to the proposed tax because it ignores all of the factors that resulted in the current crisis and unfairly penalizes and ostracizes vulnerable patients who legitimately rely on these medicines to treat serious, debilitating and sometimes fatal conditions,” Priscilla VanderVeer, spokeswoman for the Pharmaceutical Research and Manufacturers Association, said in an email. She added the Cuomo proposal “ignores the fact that this crisis” was created by multiple factors including “counterfeit fentanyl and other illegal drugs.”

A Cuomo spokesman likened the opioid manufacturers to tobacco companies.

“Big Pharma and the health insurance companies just got a big federal tax break while at the same time created the machine that ‎fueled the opioid crisis — so spare me the song and dance about corporations crying poverty,” Cuomo aide Rich Azzopardi said in a statement. “Like the tobacco companies, this money is going to help fight the problem they created.”