Some pharmacies are paying $10,000, $20,000, even $100,000 each year for their business licenses. Some Alabama municipalities calculate pharmacy business license fees based on gross receipts for prescription medication sales. Prescription sales shouldn't be included in the calculation because:
- They are tax exempt and this is just a backdoor tax on prescriptions.
- Pharmacies can't control what the prescriptions cost or what they get reimbursed for them. Unlike other business owners, they can't just shop for a lower cost product nor can they control what they are paid by insurance companies.
- A pharmacy may only profit $1 on a prescription that costs $300 - but the business license fee is based on the $300. The drastic increase in prescription drug prices is causing business license fees to skyrocket. And yet, the pharmacy is not making more money on the prescription.
- The dispensing of prescription medications constitutes a PROFESSIONAL service and should be viewed in the same manner as professional services provided by physicians, dentists, lawyers, etc. Pharmacy is the only health care provider whose professional services are treated as retail.
The Alabama Pharmacy Association is working to pass legislation addressing the business license fees that some cities in Alabama are charging pharmacies. The bill exempts prescription drugs from the calculation of gross receipts for the purposes of business license fee determination. This bill does not impact gross sales from non-pharmaceutical purchases or over-the-counter medications. All retail sales other than prescriptions are not affected by this legislation. You may have heard something different from your city government or the League of Municipalities; however, we're not being greedy as they claim. We just want to be treated fairly!
SB31 has passed the Alabama Senate and the next step is for the bill to be heard in the House Health Committee.
Pharmacies are creating jobs for their communities and provide a vital service to patients. Almost every pharmacy out there contributes to the community in which they are located. They donate to local schools, girl scouts, little league teams, etc. If you live in Alabama, please take a moment to sign our petition supporting a change to fair business license fee practices statewide.
