Johnson & Johnson. Photo via FlickrIn 2007, Vermont implemented a fee on drug companies that do business with the state. The fees, equal to 1.75% of a company’s yearly medication sales to state programs, help fund a variety of Vermont initiatives related to drug safety and substance use disorder.But according to state data from this fall, many drug companies are late — sometimes years late — in paying those fees.“We unfortunately do see a lot of delinquent payments,” Alex McCracken, a spokesperson for the Department of Vermont Health Access, said in an interview. “That’s something that can be a little difficult to get pharmaceutical companies to pay, despite the state’s best efforts.”According to a state list of delinquent payers, drug companies owed Vermont about $2.9 million as of Oct. 16, when it was last updated. Over the past two years, the fees have brought in roughly $4 million annually — meaning the unpaid balance amounts to about 70% of what a full year’s fees would bring in. The fees are collected from drug companies that sell to Vermont Medicaid, Dr. Dynasaur or VPharm, a pharmaceutical assistance program for Medicare patients. According to statute, the money goes into the Evidence-Based Education and Advertising Fund. The money can be used for various drug-related programs: naloxone distribution, medication disposal and tracking controlled substances dispensed by pharmacies, among others.It’s not clear whether the underpayments are depriving any program of funding. The Evidence-Based Education and Advertising Fund is not short on cash. According to a Legislative Joint Fiscal Office analysis in March, officials expected the fund to have an unspent balance of more than $5 million at the end of the 2024 fiscal year.Kyle Casteel, a spokesperson for the Vermont Department of Health, which administers the program, said in an email that the state currently collects 80% of the assessed fees — up from about 50% prior to 2019.“Our collections experience consistently indicates that past due accounts are not intentional,” Casteel said in an email.Generally, unpaid fees are due to mergers, acquisitions or bankruptcies of drug companies, he said. When mergers and acquisitions take place, he said, it’s often difficult to find the staffer responsible for making sure the fees are paid.   In those cases, “persistent collections are usually more successful than litigation, and in (bankruptcies) there’s little chance of collection,” Casteel said.The department sends drug companies an annual bill each May and informs companies about unpaid balances quarterly, according to the health department.Roughly half of the approximately $2.9 million that was unpaid as of October was from fees assessed this year, Casteel said, and a quarter of the unpaid balance was due in 2023. Only about 4% — nearly $90,000 — was more than three years overdue.READ MORE According to state data, six companies account for nearly a quarter of the unpaid balances listed in the October report: Janssen, Novo Nordisk, Novartis, Merck, Gilead and BioMarin. Merck and Gilead have since paid their balances, Casteel said. Janssen, which is owned by the multinational Johnson & Johnson, had the largest unpaid balance, with a total of roughly $1.3 million. That includes fees billed in both 2024 and 2023, according to Casteel.A Johnson & Johnson spokesperson did not respond to an emailed request for comment.  Novartis, a Swiss pharmaceutical giant, owed Vermont nearly $170,000 in fees assessed in the past two years. “We are actively working with the state to address the discrepancy, which appears to be a simple invoicing issue,” Nicole Longo, a spokesperson for Novartis, said in an email.BioMarin, a California biotech company, owed the state $44,051. That balance included fees that had gone unpaid since 2016, according to Casteel, the health department spokesperson. A spokesperson for BioMarin did not respond to an emailed request for comment. Novo Nordisk, a Denmark pharmaceutical giant that makes the popular diabetes and weight-loss drugs Ozempic and Wegovy, owed the state about $460,000 in unpaid fees from 2024 and 2023.“Novo Nordisk takes seriously its obligations under VT law and will look into this issue,” Jamie Bennett, a Novo Nordisk spokesperson, said in an email.Read the story on VTDigger here: Drug companies owed Vermont nearly $3 million in unpaid fees as of this fall.