E. Werner Reschke and Anna Scharf

Reschke, who represents Oregon House District 56-Southern Klamath and Lake counties, is vice chair of the House Revenue Committee. Scharf represents Oregon House District 23-Amity. Both are Republicans.

Since 2019, more than 70 pharmacies have closed in Oregon, according to the Oregon State Pharmacy Association. Long lines and longer distances to pick up prescription drugs are creating a health care crisis across the state. Legislators have been told repeatedly that a labor shortage and increased taxation are the cause. We have an opportunity to address the crisis for Oregonians this month.

State budgets across the country are booming. Oregon is expected to bring in roughly $800 million more in tax revenue in the next biennium than originally forecast. A Pew Charitable Trusts Stateline story reports that Democratic and Republican leaders from other states are responding to surging revenues with tax cuts to help businesses, individuals and families weather inflationary increases. Oregon should too – and the Legislature can start with House Bill 4094, which would exempt pharmacies from Oregon’s corporate activity tax.

The corporate activity tax, passed in 2019, levies a 0.57% tax on most business transactions regardless of actual profit. This includes the sales of prescription drugs. While the Legislature has exempted some items from this tax, it has failed to act on medicines.

HB 4094, of which Rep. Scharf is a sponsor, is a third attempt in three years to alleviate the burden on pharmacies. Oregon is one of only two states in the country that taxes prescription drugs, and it is taking its toll. The high-profile closure of Bi-Mart pharmacies last year created a new sense of urgency which is why lawmakers are taking up the issue with proposals in the House and Senate.

According to data from the Oregon Pharmacy Bureau, 60% of Oregon’s counties have fewer than two pharmacies per 10,000 residents. Two counties have no pharmacies at all. This is not a rural or urban issue; this is an Oregon issue.

Steve Hirons owns two drug stores in Eugene that were opened by his grandfather in 1930. In testimony on a similar Senate bill, he pointed out that pharmacies cannot control the price of the prescription drugs they dispense and that medication is “just as important to many people as food.”

Small multi-generational pharmacies are not the only ones feeling the pinch. Bi-Mart cited the new business tax and labor shortages when it closed its pharmacies. The plan was to transfer existing prescriptions to local Walgreens stores or allow Walgreens to take over operations inside Bi-Mart stores. Today, Walgreens is operating inside only six of those Bi-Mart locations, leaving 31 other communities with one less pharmacy. Some Oregonians waited several days for their prescription to transfer to Walgreens. Any wait at all can be life threatening.

Most businesses have found ways to pass the cost of the gross-receipts tax onto consumers by raising prices, like a sales tax. Major utility providers include a line item for the tax on monthly statements. Some businesses that cannot cover the cost by increasing prices have already secured exemptions to survive.

Pharmacies do not have the flexibility to pass this additional tax to anyone because they cannot alter the price of prescription drugs. As a result, pharmacies are closing. Oregonians are waiting in long lines and driving hours to pick up prescription drugs, only to be told they need to return the next day.

The Legislature should use our unexpected revenue gains and follow bipartisan examples from across the country by cutting taxes to help struggling individuals, families and industries. Let’s exempt pharmacies from the corporate activity tax before lines grow even longer.