All Aboard the Opioid Tax BOAT
Jessica Mehta • Fri, April 14th, 2017
On May 24, 2016, a bill to amend the Internal Revenue Code’s Public Health Service Act (PHSA) to impose a one cent per milligram excise tax on opioid sales was read twice before the Senate before being referred to the Committee on Finance. The Committee’s decision is still pending.
The Budgeting for Opioid Addiction Treatment Act, or BOAT, proposes a tax on sales of “active opioids” by the importer, manufacturer or producers, excluding prescription drugs solely for treating opioid addiction. As part of the proposed amendment, the Department of Health and Human Services (HHS) would create a program offering discounts and/or rebates to cancer and hospice patients to guarantee they won’t have to pay the tax.
Currently, the PHSA doesn’t apply any excise taxes on opioids. The proposed bill will also require any increases in federal revenues from the tax post-rebates/discounts to be subtracted before distribution to states. This falls under the Substance Abuse Prevention and Treatment Block Grant program governing substance (including opioid) abuse programs. Outside of substance abuse programs and treatment, opioids are most often prescribed by orthopedic surgeons, dentists, and when treating elderly patients.
HHS must tell Congress:
- About the impact on this bill in regards to retail cost of opioids
- Statistics on patient access to such medications
- How effective the rebate/discount requirement is
- How funds are utilized to improve substance abuse efforts
- Suggestions for streamlining opioid access for cancer patients, hospice patients, and those in substance abuse treatment
A Penny for Your Opioids
One penny per milligram of opioids might not sounds like much—but America is in the midst of an opioid crisis. CNBC reports that “Americans consume the vast majority of the world’s opioids.” Dina Gusovsky of CNBC notes that Americans use 80% of the world’s total opioid supply, and painkillers are the second biggest pharmaceutical class on a global scale (nipping on the heels of cancer drugs).
Mizuho Securities USA senior analyst Irina Koffler says, “There was [sic] about 300 million pain prescriptions written in 2015 [around the world],” which totals about $24 billion. The U.S.’ cut of that is $19.2 billion. Considering opioid prescriptions can range dramatically from about 12 milligrams – 90 milligrams, the potential revenue from a one cent tax is astonishing. Bill co-sponsor Senator Joe Manchin (West Virginia) estimates that the tax could create between $1.5 – 2 billion annually. Although the U.S. makes up just around 5% of the world’s population, it seems to be gobbling up opioids like candy. And that’s only accounting for prescribed opiates. It’s also a very popular street drug.
To further contrast the opioid disparity, if you take America’s 80% and add in Canada and Western Europe, the total consumption combined is 95%. Assistant professor of medicine and the director of the Pancreatitis Center at Johns Hopkins University Vikesh Singh, Ph.D., M.Sc. says, “The remaining countries only have access to about 5% of the opioid supply,” a troublesome fact—but one that the U.S. might just be banking on.
The majority of (non-Western) countries prescribe opioids exclusively for trauma and acute hospitalization. Surgery, burns, end of life care, childbirth and sometimes cancer or terminal diseases are cause for opioid prescriptions in these countries. That isn’t the case in the U.S., where opioid abuse is rampant particularly in some regions and industries like professional sports. U.S. Surgeon General Vivek Murthy has gone on record saying every American adult “can have a bottle of pills and then some.”
The Opioid Ouroboros
The BOAT tax is meant to help fund addiction treatment in a potential ouroboros-style, self-feeding approach. Those who will potentially be paying the taxes, such as short-term trauma patients, might end up being the exact people who need opioid addiction treatment in the future.
Specifically, Manchin says the $1.5 – $2 billion in funds would be earmarked for residential and outpatient treatment facilities. The funds would ultimately expand into long-term residential treatment programming. Funds for recruiting mental health professionals, increasing their reimbursement, and offering housing, support and employment services to those in treatment as they transition into society are also in the bill’s plans.
BOAT is also designed to fund facilities for newborns suffering from neonatal abstinence syndrome and treatment programs working with “drug courts.” Manchin says:
“A major barrier that those suffering from opioid addiction face is insufficient access to substance abuse treatment. These are people who have recognized that they need help, but have been turned away because there simply weren’t enough facilities, beds, or mental health providers in their community. This legislation will bridge that gap and make sure that we can provide treatment to everyone who makes the decision to get help. I look forward to working with my colleagues to get this bill passed so we can take another step forward in the fight against opioid abuse.”
However, one big concern comes from the patients. How will the BOAT tax impact those who will pay it? The Centers for Disease Control and Prevention (CDC) estimates the average daily dose is 52 milligrams per day. Even though opioids are meant to be a short-term prescription, that’s not always the case.
Would an increase of $15 per month, on average, hurt those who depend on opioid prescriptions—and is there an alternative to the BOAT?
Family physician and doctor of osteopathic medicine in Upper Darby, Pennsylvania, George Avetian, D.O., is well aware of the opioid crisis. Pennsylvanians are the biggest users and abusers of opioids in the U.S. Dr. Avetian says, “One of the greatest problems in prescribing opioids is the often missed educational opportunity between doctors and patients regarding the potential risks associated with opioid use. This is especially important when patients are on a long-term prescription opioid treatment regimen, and may be unaware of the increased likelihood of developing a dependency due to prolonged opioid use.”
Like many medical professionals, Dr. Avetian sees the need to address opioid usage from a holistic perspective. “The opioid epidemic has no boundaries and our nation’s response needs to be comprehensive,” he says. “We have to work together to adequately address this epidemic.”
Others in the medical field are offering opioid alternatives, such as Stimwave Technologies. Their pharmaceutical drug is designed for long-term pain management and chronic pain, and the Wireless Pain Relief technology is gaining momentum in alternative care circles—especially as deaths from painkiller overdoses are on the rise. With the CDC calling the U.S. “in the midst of an opioid epidemic” with over 33,000 people killed from opioid overdoses in 2015 alone, seeking out alternatives is one solution. Is another solution an excise tax on opioids? Although it’s unlikely that the BOAT tax will deter opioid users and abusers from taking the painkiller, the result of the fund usage may be a step in the right direction towards treating opioid addiction.
Still, one has to wonder if using opioid prescriptions to fund opioid treatment centers is a feasible, long-term approach. What happens to the tax funds if and when opioid prescriptions are no longer rampant?