Corporate Tax Measures Disproportionately Impact Healthcare Distributors

Healthcare distribution represents a high-volume, low-profit margin business that is impacted disproportionately under certain tax proposals, such as instituting gross receipts taxes or levying corporate activity taxes.

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Gross Receipts Tax

A gross receipts tax, which generally is based on total sales revenue without consideration of operating costs or expenses (cost of medicine), has a disproportional financial impact on pharmaceutical distributors given the high volume and value of pharmaceutical products they sell to providers.

Given the business realities of operating in this competitive market, it is impossible for companies to absorb the resulting negative financial impact of a gross receipts tax. Distributors’ revenues are almost entirely and immediately offset by the costs of purchasing the medicines, since there is relatively no distributor markup.



The following resources provide further information on the Last-in, First-out (LIFO) inventory accounting method, Gross Receipts Tax and other important industry issues.


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