Committee on Taxation hears bill to extend sales-tax exemption to community pharmacies serving medically underserved Kansans

The Committee on Taxation heard House Bill 2,081, which would expand an existing sales-tax exemption to include community pharmacies that provide services to medically underserved individuals and families, a representative from the reviser’s office summarized.

Under the bill, the existing sales-tax exemption in statute cited in the hearing (79-3606(c), as read into the record) that applies to primary care clinics would be extended to community pharmacies that meet the bill’s requirements. The bill would exempt purchases made by qualifying community pharmacies and purchases made by a contractor for facility construction for those pharmacies.

The measure matters, advocates said, because it would lower operating and capital costs for nonprofit and free pharmacies that serve low-income and rural Kansans. Amber Beck, executive director of Karen House, told the committee her organization opened a statewide community pharmacy to serve medically underserved and underinsured people and that the operation relies heavily on donated medications and outside funding. “The fiscal impact is minimal, but the public impact is significant and long lasting,” Beck said. She described clients who were able to obtain 90 days of medication for $10 and said those savings can prevent hospitalizations and help people maintain employment.

During committee questioning, the reviser and Department of Revenue staff clarified elements of the proposal. The reviser said the bill defines “community pharmacy” as “a retail pharmacy engaged in the dispensing of prescriptions” that may also provide other health-care products or services and that the exemption applies to entities that provide services to medically underserved individuals and families and meet the nonprofit criteria in the statute referred to in the hearing. Representative inquiries focused on how “medically underserved” would be identified; the reviser said the term links to geographic definitions used elsewhere in statute.

Kathleen Smith of the Department of Revenue summarized the fiscal note. She said the bill would reduce state revenues in fiscal year 2026 by about $53,000, with approximately $43,500 from the state general fund and about $9,500 from the state highway fund. Smith said the estimate falls to about $8,080 in fiscal year 2027 and levels off thereafter, and she confirmed the exemption in the bill is written as a facility sales-tax exemption that applies to the pharmacy’s purchases (including capital expenditures) rather than to tax exemption at the point of sale for individual customers.

Proponents described how qualifying community pharmacies operate. Beck said her pharmacy is a closed‑door, mail‑order operation that serves clients across Kansas, including rural residents who cannot easily travel to a pharmacy. She said eligible clients apply and are approved based on income and insurance status; Beck said clients must meet an eligibility threshold (she described it as 85% of the poverty level or below and uninsured). She told the committee that about 90% of the pharmacy’s medications are donated through programs such as Dispensary of Hope and AmeriCares and that the pharmacy purchases roughly 10% of medications it dispenses.

Committee members asked whether construction purchases by contractors would be exempt; the reviser confirmed the bill’s language extends exemption for purchases made by a contractor for facility construction for qualifying entities. Members also asked whether any exclusion language applies; the reviser noted the current exemption language that excludes entities that perform abortions would also apply to the community pharmacies under the bill for any prescription drugs intended to be used for abortion.

The committee took no final action on House Bill 2,081 at the hearing. The chair closed the public hearing after proponent testimony; the clerk reported written testimony from Dr. Nathan Madden and no neutral or opponent witnesses were present in the room.

The bill will return to the committee for any subsequent action or scheduling as the legislative process continues.