Sacramento Update: A Victory on Opioid Taxes, but a Growing Battle on Physician Payment Restrictions

May 19, 2017

Taking a look beyond CLSA’s two most significant legislative battles of the year, Senate Bill 17 (Hernandez) and Assembly Bill 265 (Wood), CLSA notched a significant victory against opioid taxes, though the fight against state-level restrictions on physician payments has grown in intensity.

First, AB 1512 (McCarty) would have imposed a $0.01 per milligram tax on any “active opioid ingredient” to be paid by the manufacturer to fund opioid addiction prevention and rehabilitation programs. CLSA opposed the bill and fought aggressively with its partners, including distributors and wholesalers, to defeat the bill.

The bill failed in the Assembly Revenue and Tax Committee on procedural grounds.

Beyond the potential costs the bill would impose on the legitimate medication supply chain, CLSA was concerned with the precedent such a bill might set by targeting the industry as a funding source for such a broad, complex problem.

Second, SB 790 (McGuire) would restrict anything provided to physicians that might be considered a “gift” under the bill’s comprehensive definition. Much of the bill is modeled on a 2009 Vermont law, though it also duplicates much of what can be found in federal law. It does, however, go beyond federal law in several important ways, capping the value of meals to physicians at $250 and generally prohibiting anything beyond a salary to physicians conducting clinical trials.

CLSA and its industry partners vigorously opposed the bill on the grounds that it is unnecessarily duplicative of existing law and it will unduly restrict manufacturers from conducting critical education, outreach, and research activities. The author asserts the bill’s goal is to address the “direct correlation between pharmaceutical industry payments to medical professionals and the price of prescription drugs.” Organized labor and the Medical Board of California comprise the notable support behind the bill.

The bill was passed out of the Senate on May 18 on an essentially party-line vote (23-13) after another party-line vote in the Senate Health Committee (it was not required to be heard in the Appropriations Committee).

While CLSA is more optimistic regarding the Assembly, the bill has been wrapped up in the anti-industry narratives around SB 17 and AB 265 (both extensively discussed here previously) and may gain momentum as those bills move as well.

CLSA will continue working hard towards this legislation’s defeat and protect the life sciences sectors’ ability to discover new treatments and cures for patients. Questions? Please contact Brett Johnson, CLSA’s Senior Director, Policy and Regulatory Affairs (