GST EXEMPTION ON MORE DRUGS
Redrawn list will include another 220 generic drugs
By Syed M. Aslam
July 29 - Aug 04, 2002
President Pervez Musharraf directed the ministries of health and finance this week to redraw the list of life-savings drugs. The decision will provide relief to hundreds of thousands of sick who were made to dig deeper in their pockets to absorb the 15 per cent general sales tax on all kinds of drugs — allopathic, homeopathic, herbal and traditional; non-essential and life-savings, imported or locally produced — on March 21 this year.
Though a wave of strong protests by the public and the media forced the Central Board of Revenue (CBR), the country's apex tax collecting agency, issue a list of 256 life-saving drugs exempted from the GST a month later, almost two-thirds of the drugs previously accepted as life-saving were not included in the list. The observers said that the list was not only incomplete leaving out many life-savings drugs of which were very expensive but also contained many anomalies.
The decision to redraw the list, sources told PAGE, will now expand to all life-saving drugs bringing it at par with the number of formulas exempted from the tax prior to March 21 when 852 generic drugs were recognized as essential or life-saving. In many ways the expanded list will help bring 'almost all drugs into the tax-exemption barring the vitamins."
Talking to PAGE, the vice president of Wholesale Chemist Council of Pakistan Shakeel Nagar, said that the redrawn list will include another 220 generic drugs, or rather salts, used in the manufacture of between 9,000 to 10,000 formulas by both the multinationals and local pharmaceutical companies. "The list of 256 generic drugs exempted from the sales tax in April represented manufacture of around 11,000 formulas and with the addition of new formulas made possible from the additional 220 generic drugs the majority of drugs, both non-essential and life-saving, some 20,000 formulas will be emempted from the tax — at par with the number of drugs enjoying the tax-free status prior to March 21."
Shakeel informed PAGE that the National Security Council will approve the additional list of 220 generic drugs on Saturday July 27 and the relevant SRO will be issued on Monday July 29. "We will be receiving the SRO on Tuesday July 30."
He said that unlike the previous list the addition of the 220 generic life-saving drugs in the tax-exemption list this time around will cover all essential drugs be they anti-cancer, anti-diarrhoea and anti-diabetic or treatment of cholesterol, ulcers, high blood pressure, etc. "Unlike the previous list of 256 generic drugs, the inclusion of 220 additional generic drugs this time around will cover all essential drugs and also almost all other non-essential drugs.
"This will be so as the original list of 852 generic drugs, or salts, included many drugs which were used in the manufacture of single medicine or a single formula. For instance, in the original list only ampicillin was exempted while the latest list will encourage many third-generation formulas which use two, three and even more formulas where ampicillin alone is not enough like the formulas which use cloxcillin in addition to ampicillin."
SUPPLY OF LOW-PRICED ESSENTIAL MEDICINES IMPROVES
Shakeel said that the flow of low-priced essential medicines has improved recently due primarily to an arrangement between the government and the manufacturers. "Many of these low-priced but essential drugs were in short supply for last many years as many multinational and local companies see them as unprofitable." The pharmaceutical companies have started producing these low-priced essential drugs as the new Drug Policy 2002-03 compensates the companies by allowing free registration of new drugs which will push the prices for the inconvenience of the people. The people, thus, will have to pay increased prices of drugs in the future for the tax-relief accorded at present.
Shakeel said that many of the low-priced essential medicines have started to flow into the wholesale market after years of absence from the shelves. "For instance, Throxcin, a drug used in the treatment of thyroid produced exclusively by multinational Glaxo-Wellcome has started to flow into the market in small quantities after remaining unavailable for years. A 30-tablet pack of the drug costs around Rs 8. Similarly Heno-Barbatone, an anti-mirgi drug, which costs around Rs 8 for a bottle of 100 tablets had been in total short supply for last many years. The extremely important drug manufactured by a number of multinational and local companies has started once again to flow into the wholesale market albeit in small quantities recently."
While the government has decided to expand the list of essential drugs to accord tax-exemption status on them as previously, the fate of homeopathic, herbal and traditional medicines still remain unknown. The silence is resulting in great confusion whether these other varieties of medicines still remain taxed. This is all the more inconvenient for hundreds of thousands of people, the majority of whom reside in the urban areas deprived of basic health facilities where the sicks are turning to alternative cure as they cannot afford the costs of expensive allopathic treatment. It is imperative to address the issue relating to the tax status of homeopathic, herbal and traditional medicines for the benefit and relief of the thousands of people turning to these alternate treatment systems due to choice or necessity.