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House Votes to Repeal Prescription Drug Tax

By Brandon Moseley
Alabama Political Reporter

In the 2015 Special Session, the Alabama legislature passed a new tax on the dispensing of prescriptions. The purpose of the tax was to raise more money for the beleaguered Alabama Medicaid program. On Wednesday August 17, 2016, the Alabama House of Representatives voted to repeal the tax after the US Center for Medicare and Medicaid Services (CMS) denied the request to allow the tax, which was costing Medicaid money. Since the federal government more than doubles the $700 million the state spends on the joint program most of the cost of the higher dispensing fees would have been federal dollars so CMS had veto power in the original 2015 legislation, which they chose to exercise.

State Representative Elaine Beech (D-Chatom) told the House Ways and Means committee on Tuesday that the state has already collected $11 million from the 15 cent per prescription filled tax and that money has to be repaid to the pharmacists.

Rep. Beech said that the state would do that over the course of the next two years by allowing the pharmacies to get their money back by applying for a tax credit. Beech said that under her plan the money would not have to be paid back directly from Alabama Medicaid, but rather by a credit on future monies that were due to the General Fund.

House Bill 27 repeals the controversial tax which was also sponsored by Rep. Beech (who is a pharmacist herself) eleven months ago.

State Representative Phil Williams (R-Huntsville) was among a group of conservatives who opposed the tax when it was first passed. Rep. Williams said, “The House just voted to repeal a tax that the Republican legislature passed a year or so ago on Pharmacies. I wish I could have the opportunity to vote to repeal many more taxes.”

The bill now goes to the Alabama Senate. While the House was passing legislation, including how to distribute the BP oil money on Wednesday, the Senate got bogged down in a debate over whether or not to pass a State lottery and what version of lottery that they wanted.

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Brandon Moseley is a former reporter at the Alabama Political Reporter.

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