Supporters of bills to fight opioid abuse and addiction think they have the votes at the Minnesota Legislature to pass a comprehensive response to the crisis.
That, in itself, isn’t new. Back in 2018, a similar bill failed to get through the Minnesota House after easily making it through the state Senate, even though the basics of the legislation had widespread support.
At the time, the measures included treatment, education and grants to local governments for expenses related to opioid addiction — provisions for which it is hard to find opponents. Yet lobbying by the pharmaceutical industry blocked passage of increased registration fees for drug makers and distributors that would have raised $20 million a year to pay for the programs. Those lobbyists argued that prescription drugs that are vital to many people in the state should not be taxed for health-related programs.
Last year, such opposition mattered. This year, it likely does not. The politics of the issue have changed at the Capitol, thanks to the DFL takeover of the House from Republicans.
That has gotten the attention of the industry. “They didn’t even come to my office last year, at all,” said Sen. Julie Rosen, R-Vernon Center, who has been the lead lawmaker on the issue in the state Senate. “This year they’re coming to the office, bringing people from their home office and they explain they want to be a part of the process, to help. And I ask them what does that look like, and I have not received an answer.”
“My plea to them is you can be part of the process, you can help us with this,” she says. “Help us figure out how we are going to help the next family and child. They have not done this yet.” Rosen’s bill, Senate File 751, and its counterpart in the House, HF 400, have significant support from lawmakers from both parties.
Sen. Chris Eaton, DFL-Brooklyn Center, said she too has drawn the attention of industry lobbyists. “They’ve come to my office and I’ve asked them to put some skin in the game, and they explain to me how small their profit margin is and how they can’t afford this bill,” Eaton said. “Well, I don’t buy it. It’s time.”
The DFL leader on the House’s version of the bill, Rep. Liz Olson of Duluth, also noted a change in tack by the industry. “The Senate passed a great bill off the floor,” she said of the 2018 efforts. “Rep. [Dave] Baker put forward a good bill that had bipartisan support that didn’t get anywhere. I think you can look behind what happened there and see it’s a new day. There is a shift in a split government now. A new reality is upon us.”
Even Gov. Tim Walz has joined in the effort to get the industry to see that new reality. At the urging of legislative leaders, Walz convened a conference call with representatives of drug makers and distributors to, as he put it, give them “the lay of the land.”
“It was my expectation before this session started, and it has been reinforced now, that a piece of meaningful legislation will wind up on my desk that I will sign,” Walz said after the private conference call. “This affects all of our families. These are our children dying, these are our neighbors dying. It is taking an incredible human toll as well as an economic toll on our state. We’re not alone in that.”
How the drug industry is responding
The impact of industry lobbying last year was top of mind for Walz. “We had the hearings, we had some potential solutions, we had ways to start to address this, and then we had a lobbying blitz and we had confusion and we got nothing, we got nothing out of that. I do not want that to happen again,” the governor said.
So what if it does? What if the industry brings in a phalanx of lobbyists to work lawmakers, or — as several drug companies did last year — they threaten to stop selling opioid medications in Minnesota?
“I did not get assurances,” Walz said. “But I made it clear that one of the things that I know is reputation management. One thing I need to be fairly good at is understanding public will. There will be no tolerance this year for that. It is my best estimate that these pieces of legislation will pass the House and the Senate and they will end up on my desk. And I think it is in their best interest to engage now in a constructive manner to improve these bills, not just for their bottom line but to improve them. …”
Unlike last session, the industry is talking publicly, not just with proponents of the bills but at public hearings. Its basic position, however, hasn’t changed. Industry representatives agree that the addictive drugs have created massive problems. But they also outline the steps they’ve taken so far to address the issue, and remain opposed to assessments on the industry’s revenue stream to raise money for state programs.
“This crisis is too broad and complex for any one group to solve alone,” Kristina Moorhead, senior director of state policy for the industry group Pharmaceutical Research and Manufacturers of America (PhARMA), told the House Commerce Committee last week. “It’s being driven by a confluence of factors that must be addressed holistically, with solutions that bring everyone — including manufacturers, prescribers, distributors, government, law enforcement and nonprofits — to the table. And that’s why we’re here today.”
She said that only about 4 percent of the opioids sold in Minnesota are name-brand drugs, the types represented by PhARMA. The bulk are generic versions. Still, PhARMA has a grant program for local governments and local programs to help pay for treatments and interventions. It also distributes kits to safely dispose of unused drugs and funds public education efforts.
The industry also supports changes that would cap the length of opioid prescriptions to 30 days and increased state monitoring of the volume of prescriptions by doctors and pharmacies “while assuring appropriate patient access to needed medications.”
Yet the drug companies disagree with the proposed funding mechanism included in the current legislation. Those bills increase the state licensing fee system to collect $20 million a year — $12 million from drug manufacturers and $8 million from drug distributors — to help pay for the state’s response to the opioid crisis. Those fees, which now top out at $235 a year, could reach as high as $500,000 for the largest players in the opioid supply chain.
“Taxing prescribed medicines intended to treat legitimate medical needs to raise funding will not help in this committee’s efforts to address the opioid crisis,” PhARMA’s Moorhead said. “Patients in hospice care, battling cancer or other diagnosis that have a legitimate need for these prescribed medicines.”
“PhARMA believes it is bad public policy to fund programs based on taxing any type of health care services — be it prescription drugs or physician visit or hospital visit,” she said.
Instead, PhARMA believes the state should use existing Medicaid rebates that it receives from all drug manufacturers, which helps states pay for Medicaid programs by requiring rebates on drug prices in exchange for those states including coverage of those drugs in its Medicaid program. In 2017, $270 million was rebated to the state from drug manufacturers under the program.
Todd Hill, a Minnesota contract lobbyist who is representing the Healthcare Distribution Alliance, told the Commerce Committee that the companies he represents “do not market, do not prescribe, are not providers or prescribers and don’t influence prescribers.”
Therefore, Hill said, it is unfair to assess what he termed a punitive tax on distributors. “This is a no-win situation that could raise health care costs or deny medical experts’ requested orders, decreasing access to treatments and denying activity fueled by legitimate prescribers,” he said.
Some lawmakers remain skeptical of funding mechanism
There remains some opposition among legislators, too. At the end of the Commerce Committee hearing last week, Rep. Greg Davids, R-Preston, objected to the funding plan. “If this bill is so important, which I think it is, why aren’t we going just for general fund money?” Davids said. “If you plan works, which I hope it does, and we eliminate or greatly reduce the problem, are we still going to be charging $20 million for something that’s been taken care of?”
Bills such as HF 400 will make many stops along with way, with any committee that oversees any aspect of it getting to weigh in. After leaving the Commerce Committee, for instance, HF 400 went to the House Government Operations Committee, where it passed on a voice vote, and now goes to Ways and Means, where the financing aspects of the legislation will take center stage.
During its stop Tuesday in Government Operations, similar concerns about the funding mechanism were raised by GOP committee lead Rep. Nick Zerwas of Elk River. The licensing fees, he said, are different from anywhere else in state government in that the system starts with a desired dollar amount and then sets license fees to get there. It is also based on volume of sales, which would be akin to setting doctor license fees based on how many patients are seen.
Zerwas said the goal of the program — reducing the use and abuse of opioids — could either reduce the amount of money raised by the fees or increase the cost of the drugs. “As this is more effective and the companies become more responsible, the per unit cost goes up,” he said. Like Davids, he said the money should come out of the general fund.
That drew a response from Rep. Aisha Gomez, DFL-Minneapolis, who said she has lost many friends to opioid addiction and knows others battling the disease. “I’d like to express my frustration about some of the conversations that are happening around the funding source,” Gomez said. “It feels very much like all those folks representing the pharmaceutical industry who are here today and were here last year are influencing this discussion.”
She then started to suggest that opponents of the licensing fee are being influenced by campaign contributions, but was interrupted with a point of order by an angry Zerwas. “This, Mr. Chair, is out of line,” Zerwas said. “I think at any point that a member would suggest that there is a quid pro quo or anything of the such, you are dangerously close to coming up to an ethical boundary. I think you should advise your members to take a moment to reflect on where they’re headed.”
The Legislature’s rules do not allow members to address each other directly — they have to go through the chair — and do not allow members to “impugn” the motives of one another, and Zerwas called Gomez’s comments “highly inappropriate and unprofessional” and “beneath this body.” Committee Chair Mike Freiberg, DFL-Golden Valley, later told Gomez to refrain from references to campaign finance.