Congress Considers Taxing Opioids

August 18, 2017

In an effort to combat the ongoing opioid epidemic, Representative Michelle Lujan Grisham (D-NM) submitted a bill last week that would apply a federal excise tax of 1 cent per milligram of active opioid, mirroring a similar bill submitted in the Senate in June. The tax would be levied on drug manufacturers and is estimated to raise between $1.5 billion to $2 billion each year.

Would the tax reduce opioid consumption? The tax would officially be on drug manufacturers, but as with most excise taxes on products, the actual tax would be borne by the consumers purchasing them. With prescription drugs it gets tricky, because health insurers make most of the payments for opioids in the United States. Insurers could recoup their costs in higher co-pays or higher premiums, but at least in the case of premiums, that is shifting the costs to the broader insured population.

Critics of a possible tax on opioids worry that the tax would harm the large percentage of user who are not addicted but rather suffering from chronic pain conditions; only a relatively small fraction of chronic pain users ultimately become addicted to painkillers. The proposed tax would be roughly 75 cents to $3 of tax for a 30-day prescription, according to Sen. Angus King (I-ME), a sponsor of the Senate bill. He supports carving out exceptions for patients with chronic conditions. But if the tax is imposed at the manufacturer level, as he wants, it may be tough to limit the scope of those exceptions.

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