BILL NUMBER: S8389

SPONSOR: SEWARD
 
TITLE OF BILL:

An act to amend the tax law, in relation to suspending the excise tax on
certain drugs during a declared state of emergency

 
PURPOSE:

To reduce the cost of COVID-19 treatment and obviate a shortage of crit-
ical pain medication.

 
SUMMARY OF PROVISIONS:

Section 1 amends the tax law to suspend the excise tax on certain opioid
products during a declared state of emergency. Section 2 provides the
effective date.

 
EXISTING LAW:
              

New York currently imposes a tax on certain opioid products.

 
JUSTIFICATION:

The ongoing COVID-I 9 crisis has put an enormous strain on our state's
hospital system. While the state has been doing everything in its power
to stave off shortages of personal protective equipment and ventilators,
products necessary to help fight this epidemic, the threat of shortages
of controlled substances used to help patients during these trying times
is looming. As hospitals have had to put patients on ventilators, the
demand for morphine, hydromorphone, fentanyl and other opioids used to
manage patients' pain while on ventilation has spiked. As of April 1,
2020, fentanyl, morphine and hydromorphone all appeared on the American
Society of Health-System Pharmacists drug shortage list. .A potential
national shortage is why the American Medical Association, American
Hospital Association, and American Society for Anesthesiologists have
all called for the Drug Enforcement Agency to increase their production
quotas of these products.

Here in New York though, we have an additional hurdle for providers and
patients to clear to get the medicine they need. An excise tax on the
sale of opioids enacted in the 2019 executive budget created a new tax
on medicines for the first time, and instead of placing the tax on sales
or cost, it was placed on the potency. This has created an instance now
where high-potency medications, such as fentanyl, are taxed at a
disproportionate rate that is often higher than the cost of the product.
Even before the current crisis hit, according to Fortune Magazine in
September of 2019, "The tax, which went into effect July 1, has already
set off a ripple effect across the entire supply chain, as manufacturers
and distributors have either stopped shipping to the state altogether or
passed the tax onto each other." Any disruption in the supply chain
could have a disastrous impact on New Yorkers who are already suffering
during this pandemic.

This legislation would simply suspend the tax on products that are
necessary to help the State combat the COVID crisis during the declared
state of emergency.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
Immediate and shall apply to all returns effective April 1, 2020.