E-drug: Pakistan: Sales Tax on Medicines (cont)
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Dear E-Druggers,
I would like to thank all the friends who has supported our CAMPAIGN
AGAINST GST ON MEDICINES and provided us with the supporting
information.
Latest update on our campaign is available at our website address
www.thenetwork.org.pk
Azhar Hussain
Project Coordinator Pharmaceuticals
The Network for Consumer Protection
40-A, Ramzan Plaza, G-9 Markaz
Islamabad
Pakistan.
Tel:00-92-51-2261085
Fax:00-92-51-2262495
Azhar Hussain <azhar@thenetwork.org.pk>
[Azhar Hussain has also supplied the following two articles on this topic. BS]
Taxing Right to Live
Azhar Hussain
Dawn Monday 1st April, 2002.
The government's decision to impose 15 per cent General Sales Tax
(GST) on medicines is unjust, exploitative and inequitable. Despite
President Musharraf's announcement to exempt life-saving drugs from
the GST, the scenario still looks grim as all medicines are
important for the consumers.
Drug prices in Pakistan are already very high and any further
increase is tantamount to denying the people access to health care.
Access to health care is a fundamental human right that also includes
access to medicines. However, the government, instead of protecting
the poor, has planned to earn revenue by taxing their right to live
and have a healthy life. The decision to withdraw GST on life saving
drugs is not enough as price of all kinds of medicines is a matter of
life and death for the patient. Pakistan currently ranks 135th in
the human development scale out of 174 countries and its health care
system ranks 122nd among 191 countries in terms of "over all health
system performance".
Looking at the health sector spending pattern of the government it
is clear that it has an urban bias, 80% of the health budget is spent
on the urban based secondary and tertiary care hospitals while
remaining 20% on the primary care hospitals.
Around sixty million people, out of a total population of 133
million, do not have access to healthcare facilities in Pakistan. Up
to 80 per cent of the health care is provided by the private sector.
Almost per cent of the medicines are sold through private channels.
With increasing poverty - 33 million people living under absolute
poverty line - soaring drug prices and public health care system
not being able to meet the medical needs of the majority of population,
masses' access to essential treatment is further decreasing.
The government has failed to ensure provision of basic health services to
the people. According to an estimate, 50 to 60 per cent of the
people in the country do not have access to needed medicines. High
prices of drugs, coupled with low income levels, pose a serious
problem to common man.
Although, the number of sick people keep on increasing, the per capita use
of drugs has not increased, mainly due to affordability restraint. Prices of
essential commodities are increasing regularly, while income of people
remains the same for years.
A sum of 4 billion that the government hopes to collect by imposing sales
tax on medicines will cost precious lives to people.
The main objective of the National Drug Policy is "to encourage the
availability and accessibility of drugs in all parts of the country
with emphasis on those which are included in the National Essential
Drugs List". However, these objectives can not be achieved by
stunting people's access to drugs.
On December 10, 2001, the government announced price increase of
three percent on controlled and four percent on decontrolled
categories of drugs. Apparently, a very benign increase in drug
price has
charged consumers up to 40% in a number of cases. Such an increase in
medicine prices is due to the faulty policies, and the ultimate suffers are
the poor consumers.
The government spending on health in Pakistan is 0.7 per cent of the GDP,
which is contrary to the global health agreement that ensures at
least three percent expenditure on people's health, out of the
GDP. The imposition of GST will also decrease the government's per
capita spending in the country.
In public sector, up to 40 per cent of recurrent health budget is spent on
buying medicines, and 90 per cent of this spending goes to urban based
tertiary and secondary public sector hospitals.
More than 90 percent of the house holds' budget is spent on drugs in the
country, one of the highest in the world. According to Household Integrated
Income and Expenditure Survey 1996-97 (HISE) and budget document,
house hold and government spent Rs. 15.4 billion on health care.
Growing cost of healthcare is a contributing factor in the rise of
disease in developing countries. Poverty leads to disease and
disease to poverty; it's a vicious cycle and, at time, it is
difficult to guess
which comes first.
Pakistan ranks 5th among the countries suffering at the hands of TB.
With the rising resistance to existing anti-TB drugs, there are
increasing numbers of Multi Drug Resistant (MDR) TB cases. A course
for
treatment of MDR TB for two years costs about Rs250,000 which is not
affordable for the poor people.
In developed countries like Sweden and United Kingdom, there is no sales
tax charged on prescription drugs. Interestingly, even the developed
countries with very strong socio economic indicators charge a small
amount in terms of sales tax on medicines. Health coverage in these
countries is embedded in different formats like insurance, social
security and reimbursements; nothing goes out of the pocket of the
sick.
The percentage of sales tax on medicines in different developed
countries is as follows. In Finland, sales tax on all drugs is
eight per cent; Greece, eight percent; Belgium, six percent;
Netherlands, six per cent;
Portugal, five per cent; Spain, four percent; France, 5.5 percent;
Switzerland, 2.3 per cent.
The imposition of GST on medicines in Pakistan has evoked a bitter
reaction from all sections of the society, specially the poor
and downtrodden.