Proposed Opioid Tax Could Be Big Hit to Comp Payers

Monday, June 6, 2016 | 0

Six U.S. senators have introduced legislation that would tax prescription opioid drugs to provide funding for substance abuse treatment, a move that would create substantial additional cost in workers’ compensation, where opioids are the most highly used class of medication.

The bill, called the Budgeting for Opioid Addiction Treatment Act, or LifeBOAT, would tax prescription opioids at a rate of 1 cent per milligram of active ingredient.

The legislation was introduced May 24 by Sen. Joe Manchin, D-West Virginia, and co-sponsored by Democratic Senators Amy Klobuchar of Minnesota, Jeanne Shaheen of New Hampshire, Heidi Heitkamp of North Dakota and Tammy Baldwin of Wisconsin, along with one independent, Angus King of Maine.

The bill is expected to generate $1.5 billion to $2 billion a year. And much of that could come from workers’ comp payers.

“Opioids continue to be the most expensive and highly utilized class of medications for work-related injuries,” said a 2015 Express Scripts Workers’ Comp Drug Trend Report released in April.

Express Scripts said opioids account for 28.3% of per-user per-year spend and 25.7% of utilization. The California Workers’ Compensation Institute recently reported that 27.2% of prescriptions dispensed to injured workers in the state were opioids in 2014, down from 31.8% in 2008.

Figures weren’t immediately available for how many milligrams of opioids are prescribed to workers’ comp patients each year. But Brian Allen, vice president of government affairs at Optum for Workers’ Compensation, said the 1 cent per milligram tax could add up quickly. Oxycodone taken at 100 milligrams per day would be taxed at a dollar a day under the proposed legislation, or $30 a month, Allen noted.

With workers’ comp payers shouldering a large part of the tax, Allen said, payers would likely want to see some benefit to the workers’ comp system. What form that might take remains to be determined.

The proposed opioid tax isn’t likely to influence prescriber behavior because it is directed at payers rather than prescribers, Allen said. There’s also a concern that if the bill is passed, it could open the door for additional taxes on prescription drugs, which now are taxed in only a few states.

“The federal government has a voracious appetite for spending,” Allen said. “Once the barrier’s broken, it’s a lot easier to go there again.”

Although the prospect of a new tax is likely to face opposition, the opioid tax is a logical step, according to Manchin, the bill’s sponsor.

“When you think about it … we have an alcohol tax — all states have it,” Manchin said during a May 24 news conference. “For cigarettes, we have a cigarette tax, because we know it does harm to you and we know that we have to deal with it. We have nothing with opiates.”

Manchin said that 51 people die each day from a prescription opioid overdose on average, and the number is growing. But opioid addicts don’t have sufficient access to substance abuse treatment, he said.

Funding generated by the opioid tax would go toward establishing residential and outpatient addiction treatment facilities; recruiting and increasing reimbursement for certified providers of substance abuse treatment; expanding addicts’ access to residential treatment programs; and establishing support programs that provide employment, and housing services, to recovering addicts.

The bill would exempt opioids used in addiction treatment. Cancer or hospice patients would be eligible for a rebate of opioid tax paid.

The proposal for an opioid tax comes after the Senate in March approved a bipartisan bill intended to address the national opioid crisis. The Comprehensive Addiction and Recovery Act, or CARA, is now awaiting a conference committee with the House of Representatives.

The wide-ranging bill would expand prevention and educational efforts on opioid abuse; improve the availability of overdose antidote naloxone to first responders; strengthen prescription-drug monitoring programs; launch a medication-assisted-treatment demonstration program; and expand the use of evidence-based opioid treatment.

But Democrats have complained that the bill’s provisions lack funding. Shaheen, the New Hampshire senator and one of CARA’s sponsors, offered an amendment that would have added $600 million in emergency funding to the bill. Republicans blocked it.

“We just passed CARA with no money,” Manchin said in announcing the proposed opioid tax. “Nobody’s willing to step up to the plate.”