MASS. RETAILERS VEXED BY RX TAX

Stephanie Loughran

BOSTON -- To tax or not to tax? For pharmacists in Massachusetts, that is the question, as a new $1.30 prescription tax recently enacted by the state Division of Health Care Finance and Policy here has caused a dilemma over whether pharmacists should absorb the new fee or pass the tax onto consumers.

The tax is designed to raise $36 million this fiscal year to shore up sky-rocketing costs under the state's Medicaid program, the state-administered health insurance program for the poor and disabled. The new fee is tacked onto all non-Medicaid and non-Medicare prescriptions, said Carmelo Cinqueonce, executive vice president of the Massachusetts Pharmacists Association, Waltham, Mass.

Retailers like Stop & Shop, Quincy, Mass., decided to pass the tax onto consumers, said John Fegan, corporate VP, pharmacy, Ahold USA, Chantilly, Va. He called the new tax dilemma "an unfortunate situation" for all parties.

Some retailers have opted to absorb the tax, like BJ's Wholesale Club, Natick, Mass.

"We've chosen to absorb the prescription assessment because our mission is to save our members money on the products and services at BJ's, and we're able to do it now with prescriptions," said Julie Somers, spokeswoman for the warehouse club.

State representative John H. Rogers, the chairman of the House Ways and Means Committee, told pharmacy retailers at a recent meeting that the House may push for legislation barring them from passing along the tax.

Meanwhile, the MPA, which represents more than 1,000 community pharmacists throughout the state, recently called on the state legislature to repeal the prescription drug tax, saying that the tax is ill-advised and has caused confusion and frustration among consumers and pharmacies, according to published reports.

Cinqueonce said the state did not make it clear who is responsible for paying the levy.

"At $1.30 per prescription, when you look at the razor-thin margins gained by pharmacies, it's causing a huge financial burden, if not an impossibility, to absorb this tax," he told SN. "Hopefully, we can sit down with the state legislature and repeal this and discuss alternatives."

Alternatives to the tax include "increasing generic rates and looking at supplemental rebates from manufacturers," he added.

This mandate affects 55 million prescriptions filled in Massachusetts.

Other states like Missouri have imposed similar taxes, Cinqueonce said. "Pharmacies have already put in their fair share to deal with the state's fiscal crisis," he said.