Montana Legislative Leadership - Oppose Increased Pharmaceutical Taxes | Council For Citizens Against Government Waste

Montana Legislative Leadership - Oppose Increased Pharmaceutical Taxes

State Action

March 25, 2019

Speaker Greg Hertz
State Capitol
Helena, MT 59601

Dear Mr. Speaker,

On behalf of the 9,601 members and supporters of the Council for Citizens Against Government Waste in Montana, I urge you to oppose two bills, SB 322 and HB 654, that will be considered this week in the Senate and House Taxation Committees. 

These bills would impose substantial costs on drug manufacturers in an attempt to fight the opioid crisis.  SB 322 would impose a fee of $5 million annually on wholesale distributors for a license endorsement.  HB 654 would impose a 10 percent tax on the sale of opioids into the state.  CCAGW understands and agrees with the concerns of legislators regarding this crisis in Montana.  Unfortunately, these bills will not solve the opioid crisis, which has numerous components that require different solutions.

In a time rife with complaints about high drug prices, taxing manufacturers and wholesalers is a nonsensical response, as these extra taxes will either be passed along to patients and taxpayers or drug manufacturers will choose not to sell their products, which means less competition and higher prices.  Since 90 percent of all prescriptions dispensed are generics, these taxes would be particularly harmful to generic manufacturers, whose products behave more like commodities and have low profit margins.

According to the Center for Disease Control (CDC), the opioid prescribing rate has dropped by approximately 28 percent between 2012 and 2017.  Limiting prescription quantities, implementing drug monitoring programs, and educating doctors on the proper use of opioids have helped to reduce their use, while allowing access to them by patients that desperately need the medications.  However, the opioid addition problem is wide-ranging and goes beyond legal prescription drugs and patients using these drugs correctly.

Matrix Global Advisors pointed out that approximately 36 percent of people who are misusing painkillers get their drugs from doctors.  The rest, 64 percent, get their drugs from a friend or relative, a drug dealer, or some other way.  A large and increasing number of people are getting their drugs from non-prescription opioids, like heroin and illegally manufactured fentanyl.  The CDC reported that in 2017, more than 28,000 deaths that year were due to synthetic opioids (other than methadone), which is more deaths than from any other opioid.  

According to the DEA, most of the illicit fentanyl being brought into the U.S. is coming from China and Mexico.  Fentanyl is also being mixed with other controlled substances, often being sold as a counterfeit prescription pain reliever.  On January 31, 2019, AP reported that the largest illegal shipment of fentanyl, nearly 254 pounds, was seized at the Mexican border by U.S. Customs and Border Protection officers.  And it is not just fentanyl; other drugs such as heroin, cocaine, and methamphetamine are coming in as well from Mexico.

Legitimate pharmaceutical companies and wholesalers should not be punished for the illicit use of opioids and they should not shoulder the entire burden of addressing this crisis.  These taxes and fees will ultimately hurt taxpayers and patients with higher pharmaceutical costs and less competition.

Please oppose SB 322 and HB 654.


Thomas A. Schatz

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