Senate backs opioid levy; Scott doesn’t
The state Senate on Thursday supported imposing a new financial assessment on opioid manufacturers, soundly defeating efforts to eliminate or modify the controversial levy.
The assessment, to be divided among manufacturers according to the amount of opioids each has distributed in Vermont, is expected to generate millions of dollars for drug prevention and addiction-treatment programs.
Though some senators have decried the advertising practices of drug manufacturers, the state’s proposed levy “is really not about assessing blame,” said Sen. Ann Cummings, D-Washington and chair of the Senate Finance Committee.
“It’s saying, you’re selling a product that is costing the state of Vermont a lot of money to deal with the consequences … and we think you should share in the costs of remediating those consequences,” Cummings said.
A majority of the Senate voted multiple times in favor of the tax in spite of dire warnings from Sen. Randy Brock, R-Franklin.
“I guarantee you, we’re going to get sued,” Brock said.
The proposal first emerged in late March as a tax on opioid manufacturers. At the time, lawmakers envisioned the state collecting a penny per morphine milligram equivalent — a measure of an opioid’s potency relative to morphine.
The current proposal is labeled an “assessment” rather than a tax. It says each manufacturer would pay a “ratable share” of a target set by the state – in this case $3.1 million – based on how many morphine milligram equivalents of each company’s opioids were distributed in Vermont.
Earlier this week, the Senate Finance Committee inserted the assessment language into a larger tax bill, H.922.
The bill also allocates proceeds from the assessment to a newly created Substance Use Disorder Prevention, Treatment and Recovery Fund. From there, the money would be distributed in fiscal 2019 as follows:
• The Department for Children and Families would get $188,000 for mentoring and after-school programs for kids.
“This is a way of helping on the prevention end,” said Sen. Jane Kitchel, D-Caledonia and chair of the Senate Appropriations Committee.
• The Department of Health would receive $215,000 for needle exchange and distribution of naloxone, the overdose-reversal drug.
• The Agency of Human Services would get $137,500 to support the governor’s Opioid Coordination Council, which “was created but never specifically funded,” Kitchel said.
• The Department of Corrections would receive $400,000 for expansion of medication-assisted addiction treatment in prisons.
The levy would go into effect halfway through fiscal 2019, so the allocations are based on six months of anticipated revenue from the opioid assessment.
The bill also says the Legislature intends to double the allocations for the Department of Corrections, the Health Department and the Department for Children and Families in fiscal 2020, when an entire year’s collections would be available.
When calculating allocations, lawmakers factored in administrative costs associated with the opioid assessment as well as the fact that some manufacturers may not comply with the assessment.
Revenues from the assessment would help alleviate the state’s costs related to the opioid epidemic. But they won’t come close to covering those costs, Kitchel said.
“In terms of the state budget, between treatment and payment for medication and so forth, we’re over $100 million,” she said. “And that does not include the cost to our child welfare system, to our law enforcement, to our criminal justice system, to our correctional system.”
For some lawmakers, the proposed opioid assessment also has a symbolic meaning.
Sen. Dick Sears, D-Bennington, said he has worked with troubled youth for more than three decades. He recounted the story of one teenager who was prescribed opioids after an all-terrain vehicle accident.
“He became a heroin addict. Died of a heroin overdose,” Sears said.
He compared opioid manufacturers to salesmen peddling “the latest elixir” in the Old West.
“This wasn’t about what’s going to help people. This was about profits,” Sears said. “So if we have to hold them accountable, I’m fine with that.”
Brock, who has vehemently opposed the proposal, said he’s not disputing the myriad impacts of addiction and its cost to the state. But he argues that the opioid assessment has been poorly conceived and inadequately vetted.
“When we pass bills on the basis of emotion, and on the basis of, ‘Well, we think it will be all right,’ that’s not, in my opinion, a good way to legislate,” Brock said.
Brock warned that legislators have no idea how the assessment may affect drug-makers.
“The unintended consequence is that we make it uneconomic to produce low-cost generics,” he said. “And therefore, we buy brand-name drugs at a higher cost, and we increase the cost of health care. That would not be a very good solution.”
Cummings disputed that notion, and she downplayed the impact of Vermont’s levy.
“Anything we do here is not going to make a drug cost-prohibitive to sell on a national basis,” Cummings said. “And as long as there’s a market, they’ll sell it here.”
Brock twice tried to amend the section of H.922 dealing with the opioid assessment during Thursday’s debate.
His first proposal – to kill the assessment entirely – failed on a 24-6 roll call vote.
Brock then attempted to delete a provision, which he described as “unprecedented,” forbidding opioid manufacturers from raising their prices to compensate for a Vermont assessment, but was defeated.
Despite the Senate’s endorsement, the opioid assessment faces an uncertain future. One more Senate vote is required before the bill goes back to the House, which did not contemplate an opioid tax in its version of the bill.
Also, Gov. Phil Scott’s administration has argued against the assessment. On Thursday, Scott reiterated his opposition.
“It’s a tax and fee as far as I’m concerned, and if (the bill) arrives with a tax, I’ll veto it,” he said.