ALBANY - New York is trying to find a way to tax opioid manufacturers to cover the cost of addiction treatment.

But a court ruling last year struck down the state’s initial opioid tax, and now the new state proposal is feared to be a hit on customers.

"Few would argue that addiction treatment and prevention programs will be necessary to ending the epidemic in our state, but enacting this massive tax would have far-reaching consequences," upstate business groups wrote to legislative leaders this month.

With Gov. Andrew Cuomo and legislative leaders this week trying to get a budget deal for the fiscal year that starts April 1, the opioid tax is expected to bring in $100 million for the state's coffers to fund drug treatment services.

Some lawmakers and consumer groups, though, are concerned the tax would be passed down to prescription-drug consumers.

"The tax throws the burden of the epidemic on the back of patients, pharmacists and hospitals, while allowing pharmaceutical and drug makers to again go scot-free," Assemblywoman Linda Rosenthal, D-Manhattan, said at a news conference Monday with lawmakers and health advocates.

Cuomo's office disputed the characterization.

“Our budget amendment is simply a method for collecting opioid resources in the current budget to support investments that respond to the opioid crisis," Freeman Klopott, a spokesman for state Budget Division said Monday.

He said the tax shouldn't fall to consumers, saying their "insurance coverage typically insulates them from retail drug costs."

A tax on opioids

New York last year passed a law that would make the drug companies pay for the surcharge and require them to not pass an additional cost onto consumers.

But drug companies sued, and a federal court judge in December ruled in favor of them, saying the tax would infringe on federal interstate commerce laws.

The way New York constructed the initial law could lead drug companies to pass on the cost of the surcharge to other states' consumers and manufacturers, the judge ruled.

The Opioid Stewardship Act "is not a tax, but is rather a regulatory penalty on opioid manufacturers and distributors. And as currently structured, it improperly burdens interstate commerce," wrote U.S. District Judge Katherine Polk Failla.

The surcharge would have been derived from annual assessments on pharmaceutical manufacturers and wholesale distributors in New York based on their sales in the state.

What's next

The new proposal would operate largely the same way, but it also makes clear that it wouldn't necessarily block the cost of the tax from being passed onto consumers.

"The economic incidence of the tax imposed by this article may be passed to a purchaser," the measure said.

Critics also questioned whether the revenue from the surcharge would directly help fight the opioid crisis in New York.

The USA TODAY Network's Albany Bureau last year found that $200 million pledged to address opioid addiction largely wasn't new money.

In fact, the revenue from the opioid tax would largely supplant existing funds.

Rosenthal said she feared the proposal this year would have a similar outcome: The tax revenue would simply go into the state's general fund and not be directed to its intended purpose.

"This new opioid tax in the state budget has morphed into a punitive proposal that will unfairly tax patients in pain," she said.

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