An Open Letter to the Georgia General Assembly Oppose Costly Supplemental Drug Rebates!

Dear Legislator:

On behalf of National Taxpayers Union’s 362,000 members nationwide and our nearly 8,300 members in Georgia, I urge you to reject the Georgia Department of Community Health’s FY 2015 budget proposal, which includes $3.7 million in new “supplemental rebates” on innovators in the pharmaceutical industry. Simply put, this budget gimmick – which would funnel $1.3 million of those proceeds directly into state coffers – amounts to a new sales tax on the drug industry that threatens both pharmaceutical industry leaders and Georgian taxpayers.

By cleverly appropriating a term from the retail economy, governments can employ the word “rebate” in an especially deceptive manner. Like we’ve seen in misguided budget proposals at the federal level, efforts to boost “rebates” simply amount to government-forced price controls on prescription drugs to certain beneficiaries (who would see no personal financial gain even as Georgia’s Treasury got fatter). Unfortunately, this proposed rebate could hurt individuals by leaving patients with fewer viable pharmaceutical treatment options, making prolonged hospitalization or nursing home stays likelier. Ironically, this could prove more financially detrimental to health care systems in the long run.  This is but one reason such tax-like schemes that unfairly target an industry – in this case, cutting-edge medicines – should be avoided.

Attempts to generate illusory savings today through state rebate requirements would deprive innovators of the resources they need to continue creating the life-saving medications of tomorrow – ones that can reduce the need for costly surgeries and hospital stays. Current federal policies have done enough to erode the position of the United States as an island of drug-pricing freedom (and in turn drug development); further rebates at the state level could relegate this economically advantageous topography to desert status in Georgia. They would also set several terrible precedents, including state Medicaid agencies effectively becoming tax collectors. This horrible idea, which allows bureaucracies rather than elected institutions to set tax policy, should be resisted strenuously by Georgia’s public officials.

On behalf of our members in the Peach State, I urge you to reject this proposal. Taxpayers across the nation are counting on you to draw the line now.


Lee Schalk
State Government Affairs Manager