Erik Nelson: Legislators must work to help pharmacies – not squeeze them

By Erik Nelson

I own and operate pharmacies in Spokane and just across the border in Idaho. We serve patients on both sides of the state line, which include families, seniors, folks with complex health needs, and people who rely on us for everything from routine prescriptions to vaccines, medication counseling, and chronic disease management.

In my experience, there’s a growing gap between how Washington and Idaho treat small, independent pharmacies. In Idaho, we’ve seen lawmakers and regulators take steps to support access to care, simplify operations, and reduce unnecessary burdens. In Washington, despite our best efforts to provide high-quality, patient-centered care, we’re up against constant financial pressure.

Now, new proposals in Olympia could make it even harder to survive. The repeal of the preferred Business & Occupation tax rate for drug warehousing and distribution (part of SB 5794) and the proposed 1% B&O surcharge on health care businesses (in HB 2045) and increases to B&O tax (HB 2081 and SB 5815) would add more costs to an already strained system. It’s hard to overstate how much damage that could do to pharmacies across the state, especially those that operate close to the margin. Our average margin over the cost of medications in Washington is about 1%, and nearly half of that is already lost to taxes. These new proposals would chip away at what little we have left to work with to pay rent, salaries and our other costs.

Pharmacies cannot pass on increased cost of goods because of their contracts with pharmacy benefit managers. As a state we must create an environment where pharmacies can stay open, care for their communities, and keep our staff employed. We are health care providers, not just retail operations, and this means we regularly counsel patients, administer vaccines, and catch medication errors before they become emergencies. All of that takes time, resources and people, and the work becomes much more challenging when our margins are cut so thin we’re choosing between payroll and basic operations.

In my Idaho locations, I’ve been able to invest more confidently in services, technology and staff. Meanwhile, in Washington, I’m constantly running the numbers, trying to make everything stretch just a little further. And I know I’m not alone. Many of my colleagues across the state are facing the same issues, and some have even closed their doors.

If we want Washington to remain a leader in progressive, patient-focused pharmacy care, we need policies that reflect that. These tax proposals do the opposite. They threaten to undercut the very pharmacies that have stepped up to fill care gaps in our communities – especially in rural and border areas like Spokane. I hope that our lawmakers will change course and work to protect pharmacies in our state instead of breaking us down. With the crises facing small, independent pharmacies only growing, time is of the essence.