NACDS outlined concerns about the border adjustment tax (BAT) to the Senate Finance Committee before its hearing this week, “Comprehensive Tax Reform: Prospects and Challenges.” NACDS expressed support for corporate tax reform, however noted that a BAT would impede patient access to affordable medications and also negatively affect pharmacies because pharmacies would pay a higher price for imported products, which would not be offset by a lower corporate tax rate.

Pharmacies rely on purchasing drugs manufactured overseas in facilities under FDA oversight—generic drugs in particular—and if those drugs are affected by a BAT, those increases may be passed along to patients. Increased prices might put needed medications out of financial reach for patients, which would impact medication adherence if patients cannot afford to buy their medications.
NACDS cited studies, including one from Health Affairs, which found that a “one percent increase in overall prescription use is associated with decreases in overall Medicaid costs by as much as $760 million annually.” NACDS stated that the findings show that higher drug costs affects patient adherence, which leads to poorer health outcomes and higher healthcare costs, whereas lower drug costs increase medication adherence, which improves overall outcomes and reduces costs.

Beyond negatively impacting patient healthcare and quality, the comments state, “a BAT would be extremely financially damaging to many chain pharmacies.” The comments explain that “not only would pharmacies pay a higher price for these imported products, but they would no longer be allowed to take a tax deduction on the cost of imported drugs.”

In May, NACDS submitted comments in coordination with the Americans for Affordable Products (AAP) coalition to the House Ways and Means Committee noting that a BAT would “financially harm chain pharmacies, interfere with patient access to affordable medications and potentially cause pharmacies to cut jobs.” NACDS also joined AAP in February, sending a letter to the bipartisan congressional leadership opposing the BAT stating that it is a “massive tax increase on consumers.”