Business license cost reduction for pharmacies dies in 2018 session

Pharmacies would have been able to remove prescription drug sales from their gross receipts when calculating the cost of their business license, under a bill approved by a Senate committee. The bill never received floor consideration.

The Senate County and Municipal Government Committee unanimously approved SB349 by Sen. Billy Beasley, D-Clayton, but the full Senate never considered it. The Senate approved an identical bill in 2017, but the House never considered it.

The current method of calculating pharmacy business license costs for many cities is based on total sales, rather than taxed sales. While prescription drugs can account for up to 90 percent of a pharmacy’s inventory, they are not taxed in Alabama. What pharmacies can charge for medications is determined by the drug companies, insurance companies, Medicaid and Medicare. The average independent pharmacy profit margin from prescription and non-prescription products is 22.3 percent, according to the National Community Pharmacists Association. Over-the-counter drugs were not included in this legislation.

Mike Vinson, owner of Adams Drugs, an Alabama Retail Association member since 1993, told legislators his business license at one of his eight Montgomery stores is $31,000. His license cost for his Wetumpka store is $22,000.

The 12 Adams Drugs stores serve 60,000 active patients in the River Region, Vinson said. “What happens to them if we go out of business?,” he asked committee members.

City officials for those cities that base business licenses on gross receipts object ed to the legislation as it would mean a loss of revenue for those municipal governments. Cities also contend the legislation would set a precedent for other industries to reduce their business license obligations.

This article is part of the Alabama Retail Report, a communication for Alabama Retail Association members. Not a member? Join us!

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