(The Center Square) — Gov. Janet Mills’ proposal to set a new tax on prescription drugs is drawing widespread criticism from the industry, which argues that it will force family-owned pharmacies to pass the added costs onto consumers or shut down.
The taxing plan, tucked into Mills’ two-year $118 billion preliminary budget, calls for charging Maine pharmacies 70 cents for each prescription they fill in the state. Revenue from the proposed levy would be used to leverage matching federal funds to increase MaineCare reimbursements for pharmacies, according to the Mills administration.
The Mills administration said the plan will be aggregately revenue neutral to pharmacies because the revenue collected would ultimately be returned to them in the form of higher Medicaid reimbursement rates.
However, Amy Dowling, executive director of the Maine Pharmacy Association, disputes those claims. She said while all pharmacies will be taxed at the same rate, only those that fill a high degree of MaineCare prescriptions will have an opportunity to be made whole, as reimbursements will only be made on the Medicaid-backed prescriptions.
“We have grave concerns that pharmacies will close if this initiative passes,” she said in a statement. “There are not enough pharmacies to fill the gaps we’re seeing.”
Dowling said the new tax would only apply to in-state pharmacies, not mail-order prescription drug companies like Amazon and Express Scripts, which would put Maine pharmacies at a competitive disadvantage.
David Clough, state director for the Maine chapter of the National Federation of Independent Businesses, said aside from the impact of the new tax on Maine pharmacies, the move could also potentially drive up health insurance costs for employers, which he said continues to be a top concern for small business owners.
He noted that “tens of thousands of people with individual or employer health insurance will be paying the charge but not directly benefiting from increased Medicaid funding of MaineCare.”
Maine is facing a projected $450 million budget gap over the next two years and a Medicaid funding gap of $118 million during the current fiscal year, which state officials say could disrupt payments for health care providers.
Mills’ budget proposal also calls for a $1 tobacco tax increase and new taxes on streaming and ambulance services to help whittle down the projected revenue cap.
Meanwhile, some groups are urging legislative budget writers to consider other tax proposals in the spending plan to help close the state’s projected shortfall.
“We urge you to support policies that ensure everyone pays their fair share like a millionaire’s tax, higher corporate taxes, and fairer capital gains taxes,” Maura Pillsbury, a tax policy analyst at Maine Center for Economic Policy, a left-leaning think tank, said in testimony. “Together, these steps could raise hundreds of millions to close the gap and invest in Maine’s future.”
