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Kentucky House votes to tax opioids to close budget gap

March 1, 2018

FRANKFORT, Ky. (AP) — For six years, a pharmaceutical distributor sent more than 50 million doses of prescription opioids to five eastern Kentucky counties, enough for every person there to have 417 pills each.

Kentucky’s attorney general has sued that company and others like it. Thursday, state lawmakers voted to tax them.

In a state with the fifth highest drug overdose death rate in the country, Kentucky’s Republican-controlled House of Representatives approved a tax on prescription opioids Thursday. If approved by the state Senate, Kentucky could become the first state in the country to tax the addictive prescription painkillers that have spurred a wave of addiction across the country.

Lawmakers say the goal is to reduce the number of opioids available in Kentucky. But they won’t use the money from the tax specifically for drug treatment, instead using it to fund public education and other services.

“These pills are profiting the big pharmaceutical drug companies billions and billions and billions of dollars a year. You know how much our state budget gets? Zero,” Democratic Rep. James Kay said.

As the opioid epidemic rages across the country, state and local governments have filed hundreds of lawsuits against pharmaceutical companies and distributors to recoup some of the costs to their health care systems. Kentucky’s proposal is a step in the other direction, using taxes to fill sparse state coffers while discouraging aggressive prescription of the drugs.

“I think it could help reduce aggressive prescribing,” said Dr. Andrew Kolodny, director of opioid policy research at Brandeis University and an expert advising the court in lawsuits against pharmaceutical companies. “Right now it is too cheap and easy to give a patient a narcotic when they have a pain problem.”

Kentucky is one of at least 13 states with pending legislation to tax opioids, according to the National Conference of State Legislatures. None of those proposals have been enacted.

The Kentucky proposal would tax each dose of opioids 25 cents. State officials say it would generate about $70 million per year. In Minnesota, Gov. Mark Dayton has proposed a “penny a pill” tax on narcotic medications to raise about $20 million to pay for drug treatment programs.

Kentucky’s opioid tax revenue would not be set aside for drug treatment, instead going to fill a budget gap caused by the state’s struggling pension system.

“I think that’s a mistake,” Kolodny said. “States (need) to be investing and building out a treatment system that doesn’t really exist yet. This is a very sensible place to get that money.”

Some Kentucky lawmakers complained that the opioid tax, coupled with an accompanying 50-cent tax hike on cigarettes, disproportionately affects poor people. But the proposal gives Kentucky’s attorney general authority to prosecute drug companies that pass the tax along to their customers.

That might not be legal, according to Nick McGee, spokesman for the Pharmaceutical Research and Manufacturers of America. He said that idea, plus the tax itself, have “some serious legal and policy questions.”

“Taxing prescribed medicines that people legitimately rely on to raise revenue for a budget shortfall is a pretty problematic precedent,” McGee said.

It’s unclear how the proposal will fair in the state Senate, a smaller legislative body that is dominated by Republicans. Senate President Robert Stivers said it would be “difficult” to pass any tax increase without a comprehensive reform of the tax code.

Republican Gov. Matt Bevin told WSON radio he would “reserve my thoughts” on the opioid tax. But later in the interview, he indicated he would not favor raising taxes just to balance the state budget.

“They are trying to put certain monies back in certain areas based on certain political pressure, when I think we need to have a collective effort in Kentucky,” Bevin said.

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AP Health Writer Matthew Perrone contributed from Washington DC

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