National Association Of Pharma Manufacturers Propose Zero Value-Added Taxes On Essential Medicines
By Lori Clapper
The National Association of Pharmaceutical Manufacturers (NAPM) is pushing for a zero Value Added Tax (VAT) rating on medicines in South Africa to make drugs more affordable for those in need of treatment. Indeed, according to NAPM’s press release, levied taxes, which account for 20 -30 percent of the price consumers pay for the drug, both heighten overall drug costs and often limit patient access.
The Davis Tax Committee, which is responsible for assessing South African tax policy and framework, will be considering the VAT tax request, in hopes that it will be implemented for all medicines, particularly Schedule 3 to Schedule 6 drugs prescribed for more serious illnesses.
According to a recent World Health Organization (WHO) report, 48 percent of household incomes are spent on out-of pocket healthcare costs. So if approved, the zero VAT request would have tremendous impact on the economic and social status of patients. In fact, the NAPM projects that there will be an immediate 14 percent price decrease for medicine.
“These passed on savings on healthcare expenses could in turn be used towards education, savings, house bonds etc., and those with private medical aids would also benefit as their medical aid expenses for medicines would allow for greater funding towards other medical aid benefits,” NAPM says.
In the past 12 years, multiple plans have been put in place to lower taxes, with the most effective being price control on medicines under the Single Exit Price legislation within the Medicines and Related Substances Act. The next step the country’s government intends to create is International Bench Marking, in which the government will compare South African pharmaceuticals with those in Canada, Australia, New Zealand, and Spain
A zero VAT rate request has also been submitted for essential food products in the country. The NAPM believes that healthcare is just as much of a “necessity and not a discretionary purchase.” The organization expects its request to be taken seriously, arguing that prescription medicines can be considered just as essential as foodstuffs, especially for patients who are seriously ill.