Tucked into an outside section of her fiscal 2026 spending plan is a proposal by Gov. Maura Healey to reinstitute a long-dormant tax on prescription drugs.
Written into the budget as Section 78 is a plan to reestablish a “pharmacy assessment” on all prescription drugs sold in the Bay State. The assessment would see pharmacies charged 6% per prescription or $2 per, whichever is less.
“Each pharmacy shall pay an assessment per prescription dispensed in Massachusetts. The assessment shall not exceed the lesser of: (i) $2 per prescription dispensed in Massachusetts or (ii) an amount equal to 6 per cent of the revenues received by the pharmacy for the applicable period in Massachusetts,” the budget reads, in part.
The budget doesn’t refer to the assessment as a tax, rather it says the cost will be added as a “a broad-based health care-related fee” that’s due quarterly.
Pharmacies that fail to comply with the plan, according to the governor’s budget, could face fines of up to $25,000, or even risk losing their licenses.
“The executive office may enforce this section by notifying the board of registration in pharmacy of unpaid assessments, and the board shall take prompt steps to revoke the license of, or impose a limitation on operations for, a pharmacy that fails to remit delinquent fees as directed by the executive office,” the budget reads, in part.
According to the Mass Fiscal Alliance, the governor’s plan would result in higher costs for patients, at a time when they’re already paying too much for everything else.
“Governor Maura Healey’s proposal, to increase costs for prescription drugs, is absolutely ‘ill’ advised. Healthcare costs in Massachusetts are already high enough, the Governor wants to make it even worse,” Mass Fiscal spokesman Paul Craney told the Herald.
Though the budget proposes that the fee paid for by the pharmacies, Craney said in practice each $2 charge will come out of a consumer’s pocket, not the business owners’ bottom line.
“The Governor’s assessment cost will be passed onto the customers. Healey’s priorities are not in line with Massachusetts residents. No one is calling for higher healthcare costs, except the Governor,” Craney said.
According to information provided by Healey’s Executive Office of Health and Human Services, the $2 per prescription charge could generate up to $145 million in fees from pharmacies each year. At the same time, the Healey Administration doesn’t expect patients to see any financial impact from the plan, because prescription copays are set by insurers, not the pharmacists.
Massachusetts also isn’t alone in pursuing such a policy, they said. A 70-cent per prescription proposal is under consideration in Maine.
The money raised will go to fund MassHealth, according to the Healey Administration, and would be used to help prevent pharmacy closures in low-income neighborhoods, where people are more likely to be enrolled in a MassHealth program. Providing stability for those pharmacies will benefit all of the state’s pharmacies and patients, the governor’s office said.
This is not the first time the state has considered charging pharmacies for prescriptions. A plan to charge $1.30 per prescription was approved by the Legislature in 2002 and went into effect on Jan 1, 2003.
The law was enforced for about half a year until Massachusetts Superior Court Judge Allan van Gestel overturned it the following summer, ruling that the state had failed to follow the proper procedures for implementing the tax and never secured required federal approval of their plan. The state was ordered to return $18 million it had collected from pharmacies during the months the law was active.
In his order overturning the 2002 law, van Gestel said that “despite political pronouncements to the contrary” offered by lawmakers, “what we are dealing with is an excise tax.”
After the assessment was struck from the books, state budget writers attempted to add the provision to the fiscal 2004 spending plan at the same per-prescription rate, only to have their proposal struck by a line-item veto from former Gov. Mitt Romney.
According to a press release offered by Romney’s office in 2003, he vetoed budget language which would have “renewed the ill-conceived $1.30 pharmacy tax levied on every prescription filled, which has a disproportionate impact on senior citizens and others who live on fixed incomes. This tax was scheduled to be reduced to 65 cents on July 1, 2004, but with Romney’s veto will no longer be imposed.”
The 2003 version of the tax also referred to the fee as a “pharmacy assessment,” but made exemptions for prescriptions filled for Medicare or Medicaid recipients. Gov. Healey’s version of the assessment fee offers no such exemption.
