Op-Ed: Transplant Advocates Warn WA Drug Supply Tax Could Raise Medication Costs

The following op-ed was submitted by David Hall.

[Editor’s note: Opinions expressed are those of the author and do not necessarily reflect the views of The Highline Journal.]

Context: Washington lawmakers are considering SB 6228, which passed the Senate and is now before the House. The bill would increase the Business & Occupation tax on prescription drug warehousing and reselling.

At a time when pharmacies are closing across our state and drug shortages remain an everyday concern for American patients, Washington lawmakers are considering a dramatic tax increase on the very supply chain that delivers medicines when and where people need them.

SB 6228 is currently up for debate [in Olympia]. This legislation would repeal RCW 82.04.272 and raise the Business & Occupation (B&O) tax on prescription drug warehousing and reselling from 0.138% to 0.5%. That increase would stack on top of a new 0.5% B&O surcharge already enacted, bringing the effective rate to 1.0%. In practical terms, that represents roughly a seven-fold increase on a segment of the healthcare supply chain that operates on some of the thinnest margins in our economy.

The Transplant Recipients International Organization (TRIO) are concerned that the scheduled implementation of SB 6228 could negatively affect many of the transplant patients, seniors, and disabled Americans we work to assist.

For patients undergoing organ transplantation, access to appropriate post-surgical care and medication is essential to recovery and long-term health. Anti-rejection and immunosuppressive drugs are not optional — they are required for life. SB 6228 may increase the cost of necessary medicines, creating new barriers to care for patients who already face complex medical, financial, and logistical challenges. Organ transplants are already difficult to obtain, with many patients waiting years on donation lists. Policies that raise costs or restrict access risk undermining the success of these lifesaving procedures.

Pharmaceutical distribution is a high-volume, low-margin business. For more than a decade, average net profit margins have typically remained under 1%. These companies do not set patient prices; they ensure pharmacies are stocked and prescriptions are delivered safely and on time.

Gross-receipts taxes are particularly challenging because they apply to revenue rather than profit. The tax is owed regardless of whether a company makes money on a transaction. When layered on top of already narrow margins, the impact cannot simply be absorbed.

The downstream consequences are predictable. First, costs will ripple through the supply chain, hitting independent and rural pharmacies hardest. Because reimbursement rates are largely fixed by insurers and pharmacy benefit managers, pharmacies cannot easily offset higher expenses.

Second, higher gross-receipts taxes reduce the ability to hold inventory and respond to drug shortages. Distribution resilience depends on scale, efficiency, and adequate working capital. Weakening those fundamentals makes it harder to respond during disruptions.

Finally, sustained tax increases create incentives to shift distribution activity elsewhere, risking Washington jobs and investment without improving patient access or affordability.

Access to medication depends on a stable, efficient distribution network. Before moving forward with SB 6228, lawmakers must carefully consider whether dramatically increasing gross-receipts taxes on this sector truly serves the long-term interests of Washington patients, providers, and communities.

David Hall is executive director of the Pacific Northwest chapter of Transplant Recipients International Organization, an independent, not-for-profit, international organization committed to improving the quality of life of transplant candidates, recipients, their families and the families of organ and tissue donors. Transplant Recipients International Organization (TRIO) is dedicated to improving the quality of life for transplant candidates, recipients, and their families, as well as the families of organ and tissue donors.

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