[Ip-health] New taxes on medicines set to hit hard on poor

[Riaz K. Tayob]

I am, however, surprised that WHO articulates a 0 tariff policy when
countries face ridiculously inflated prices for many imported medicines,
face currency volatility that affects prices and are proscribed by
intellectual property rules from developing local supply capacity
especially in a sector where "learning by doing" is not an option - you
just have to get it right the first time... has WHO consulted on this?
Is it so obvious that developing countries must only be consumers and
not producers?

I agree that the measure needs to be taken to secure supply to patients,
but to "simply" call this policy outrageous is outrageous - especially
when contextualised in 1) the WHO stance on this, 2) the fact that Italy
can use compulsory licenses without a whimper from the mainstream press
but when other countries use it they are slated for "breaking patents"
and threatening the innovation system - are Italians more equal than
Tanzanians?

Funny that an organisation peddling the virtues of the Free Market
supports monopoly IPRs? Perhaps we could check the views of Jagdish
Baghwati on this as he is a pre-eminent free trade theorist?

rt (pers)

Alec van Gelder wrote:
> This is a multi-part message in MIME format.
> --
> [ Picked text/plain from multipart/alternative ]
> I am somewhat surprised this outrageous policy in Tanzania hasn't been di=
scussed.
>
> http://www.ippmedia.com/ipp/guardian/2007/07/26/95148.html
>
> New taxes on medicines set to hit hard on poor
>
> 2007-07-26 09:44:43
> By Perege Gumbo
> Fears are emerging that the poor are likely to be crowded out of access t=
o some basic medication as newly announced taxes tend to make them more exp=
ensive.
>
> A lump sum 10 percent import duty was imposed by the government on all ph=
armaceutical products outside the so called ?essential drugs?. Industry dea=
lers have said this would automatically translate itself into higher market=
 prices for patients.
>
> These concerns are now the subject of dialogue between the pharmaceutical=
 products` dealers and the Tanzania Private Sector Foundation (TPSF) as the=
y seek audience with responsible government authorities to discuss this mat=
ter of public interest.
>
> The matter has brought two business lobby groups at logger heads. The Con=
federation of Tanzania Industries (CTI) is said to have urged the governmen=
t the impose 10 percent import duties on pharmaceutical products, hoping th=
is would protect infant domestic medicine industries.
>
> ``We asked the government to impose the 10 percent duty to capacitate our=
 local pharmaceutical industries grow as they now have big production capac=
ity to sufficiently cater for the local market demand`` the CTI Director of=
 Policy and Research Hussein S. Kamote said.
>
> He refuted the notion that the duty was going to affect poor people sayin=
g that the essential drugs, anti-retrovirals (ARVs), anti-malaria, and anti=
-tuberculosis medicines would be exempted from the duty.
>
> But Kamote`s arguments have vehemently been countered by the pharmaceutic=
al importers who claim that the local pharmaceutical industry was still far=
 behind from meeting the local market demand.
>
> Their side of view is apparently supported by the Tanzania Private Sector=
 Foundation (TPSF) who jointly said that about 80 percent of the drugs circ=
ulating in the local market were being imported.
>
> The Tanzania Association of Pharmaceutical Industries (TAPI) chairman Har=
ish Dhutia said the Tanzania?s medication market was experiencing ``a cut t=
hroat competition whose 10 percent import duty addition would adversely aff=
ect the poor``.
>
> He argued that from simple economic principles, the end buyers of the dru=
g are the sick people who have no alternatives when it comes to getting med=
ication that is not manufactured locally.
>
> The imposition of duty on medics would just worsen the matter bearing in =
mind that the two partner states in the framework of East African Community=
-Kenya and Uganda, have decided to level zero percent on the same products.
>
> Kenya decided to zero-rate the imported pharmaceutical drugs despite the =
fact that it has the largest production capacity as well as numerous indust=
ries as when compared Tanzania.
>
> There are ranges of imported medical products that are not being manufact=
ured by the local pharmaceutical industries.
>
> TAPI and TPSF are of the view that the government should reconsider the i=
ssue by waiving value added tax (VAT) on local pharmaceutical industries, o=
r even better lower income tax rates or other export incentives if it were =
serious about protecting local drug industries.
>
> In a recent breakfast meeting organized by the Tanzania Food and Drugs Au=
thority (TDFA), participants unanimously agreed to seek consultations with =
responsible government authorities over the matter.
>
> The President of the Tanzania Chamber of Commerce, Industries and Agricul=
ture (TCCIA) who is also one of the executives of the TPSF took the respons=
ibilities to lead the dialogue process.
>
> Two years ago, pharmaceutical industries lobbied for the 10 percent impos=
ition as import duty in vain.
>
> The then Minister for Finance Basil Mramba rejected the request on the gr=
ounds that the important person was the patient and not the pharmaceutical =
companies.
> *=09SOURCE: Guardian
>
> Alec van Gelder
> Research Fellow
> International Policy Network
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