Facing a high-profile proposal at the State Capitol to add a “penny-a-pill” tax on opioids before a Senate panel earlier this year, the pharmaceutical industry took an unusual approach: silence.
Sen. Jim Abeler, R-Anoka, scanned the hearing room: “Some of the lobbyists are in the room, and I’m astounded they’re not testifying. Is there someone in the room who could testify on behalf of pharma their position on this bill?” he asked. “I see one person crouching down.”
The silence was no accident. In the face of a damaged public reputation and a politically volatile issue, the pharmaceutical industry has turned to the inside game this legislative session, deploying an army of more than three dozen lobbyists to try to kill the effort to tax them. The measure’s lead backers, a pair of greater Minnesota Republicans with support from DFL Gov. Mark Dayton, wanted the money raised to go to prevention, emergency response, law enforcement, treatment and recovery in the face of an epidemic that killed nearly 400 Minnesotans and 53,000 people nationwide in 2016.
“It’s all been one-on-one with key lawmakers behind the scenes, and they will not discuss the issue publicly,” said Mary Krinkie, vice president of government affairs for the Minnesota Hospital Association. The hospitals support the tax in the face a 146 percent increase between 2010 and 2016 in substance abuse patients coming into Minnesota emergency rooms. “They know they have more political muscle but not great public rationale,” Krinkie said.
Nick McGee, a spokesman for the Pharmaceutical Research and Manufacturers of America, said the organization has engaged with lawmakers and the public on an entire range of issues related to the opioid epidemic, and not just the proposed tax: “Our efforts in Minnesota have been looking at this issue holistically,” he said, including grants to local organizations like the Minnesota Farm Bureau and the Lakeville Public Safety Foundation, a partnership with the Addiction Policy Forum to create an online portal of resources for families and an ad campaign about how to get help.
Thus far, industry is winning: With just two weeks to go in the legislative session, “penny-a-pill” appears to be dead. The sponsors, Sen. Julie Rosen, R-Vernon Center, and Rep. Dave Baker, R-Willmar, have been unable to win over fellow members of the Legislature’s GOP majority. Baker and another key backer, Sen. Chris Eaton, DFL-Brooklyn Center, both lost children to opioid overdose.
Lawmakers may still set aside some new money to combat the epidemic, which has hit rural Minnesota hard.
Rosen recently revised her proposal to charge pharmaceutical companies a licensing fee instead of a per-pill tax; Baker said he’s still working on an alternative. Both expressed confidence the industry would be forced to pay something, but they face a difficult battle.
Speaker Kurt Daudt, R-Crown, said House Republicans are committed to new policies and money for treatment and enforcement, but against specifically taxing the pharmaceutical industry.
“Our caucus has had concerns, and rightfully so, about not wanting to raise the cost of health care,” Daudt said. “It raises the cost of a prescription, and a lot of people need this drug — and for many of them it’s at the end of their life and this is providing important comfort.”
In addition to policy arguments that resonate with Republicans, the companies and relevant trade groups are represented by influential lobbyists with years of relationships, as well as the understanding — never publicly uttered, but always hovering — that rich companies help pay for increasingly expensive election campaigns.
The myriad ways of concealing campaign donations make it nearly impossible to know how much is actually spent. But the pharmaceutical industry spent $325,000 directly on 2016 Minnesota campaigns, according to the National Institute on Money in State Politics. Of the top 20 contributors to the Republican State Leadership Committee — which distributes money to Republican-aligned groups in Minnesota and other states to spend on legislative races — three are from the pharmaceutical industry, and they spent more than $1.2 million. Like many industries, drugmakers and distributors hedge their bets and give to Democrats here and nationally.
During 2016 (the most recently available data) the companies and industry trade groups spent at least $700,000 lobbying in Minnesota, according to Minnesota Campaign Finance and Public Disclosure Board records. Since then, drug firms have added to their presence. Purdue Pharma, the maker of OxyContin, did not have a lobbyist in Minnesota in 2016. Christopher DeLaForest, a former GOP legislator and aide to former Gov. Tim Pawlenty, has represented the company since 2017.
Bobby Patrick, director of government relations for Medical Alley Association — an influential health care group — was until last year a senior aide to the House Republican caucus. Judy Cook, a top Republican lobbyist with clients including 3M and the Vikings, is also engaged on the issue on behalf of generic drug companies.
At the federal level, the pharmaceutical industry spent more than any other industry on lobbying between 2013 and 2017 — $1.2 billion, according to the Center for Responsive Politics, which tracks lobbyist spending. “They view this as a small cost of doing business relative to the rewards or protection from harm,” said Sheila Krumholz, the center’s executive director.
Last week, Rosen’s bill regained momentum after she dropped the penny-a-pill tax in favor of a licensing fee on drug manufacturers and distributors; companies would pay a fee based on market share.
As details of Rosen’s new proposal became public, Cody Wiberg, the executive director of the state Board of Pharmacy, said he got a phone call from an out-of-state lobbyist named Bryan Lowe, from the Healthcare Distribution Alliance. Lowe posed a question: What would happen if the three largest drug distributors, which control 90 percent of the market and have combined annual revenue of nearly $500 billion, stopped selling opioids altogether in Minnesota?
“I don’t know if that was a veiled threat or not,” Wiberg wrote to Rosen in an e-mail reviewed by the Star Tribune.
Lowe confirmed that he asked the question, but declined to comment.
A statement from the Healthcare Distribution Alliance said the group “has been engaged in ongoing, positive and productive dialogue with many stakeholders in the state, including the Board of Pharmacy. The questions raised in our discussions are intended to better understand the proposed legislation.” It added that “we do not speak to individual business decisions. Period. Individual companies will make their own choices about market operations.”
Baker said his conversations with drug industry lobbyists have been one-sided. He’s demanded they provide revenue to help with the costs of battling the epidemic, if nothing else as a show of good faith. “I’ve approached them to say, ‘If not this, then what? I’ll keep pushing you guys up through the fan blades until you figure this out, because I’m not afraid of you,’ ” Baker said.
Robert Josephson, a spokesman for Purdue Pharma, said the company opposes new money from industry.
“We share policymakers’ concerns about the opioid crisis and support a number of policies limiting excessive opioid prescribing,” Josephson said. “However, these taxes or fees may have unintended consequences for the legitimate patients who rely on these FDA-approved medicines.”
Rosen said if the money comes from the state’s general fund and not from the pharmaceutical industry, the Legislature would be making a mistake: “It’s an admission that we’ve given up, and the pharmaceutical companies have walked away in another state where we’re taking care of the problem they created. And I don’t think that’s appropriate.”